<PAGE>


                                                                    Exhibit 4.15














                    AMENDED AND RESTATED DECLARATION OF TRUST


                                       OF


                          MIDAMERICAN CAPITAL TRUST II






                                 MARCH 12, 2002














<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----

<S>                   <C>                                                                                        <C>
ARTICLE I.            INTERPRETATION AND DEFINITIONS..............................................................1
   SECTION 1.1.       Definitions.................................................................................1

ARTICLE II.           TRUST INDENTURE ACT.........................................................................7
   SECTION 2.1.       Trust Indenture Act;  Application...........................................................7
   SECTION 2.2.       Lists of Holders of Trust Securities........................................................7
   SECTION 2.3.       Reports by the Property Trustee.............................................................7
   SECTION 2.4.       Periodic Reports to Property Trustee........................................................8
   SECTION 2.5.       Evidence of Compliance with Conditions Precedent............................................8
   SECTION 2.6.       Events of Default; Waiver...................................................................8
   SECTION 2.7.       Event of Default; Notice....................................................................9

ARTICLE III.          ORGANIZATION...............................................................................10
   SECTION 3.1.       Name.......................................................................................10
   SECTION 3.2.       Office.....................................................................................10
   SECTION 3.3.       Purpose....................................................................................10
   SECTION 3.4.       Authority..................................................................................10
   SECTION 3.5.       Title to Property of the Trust.............................................................11
   SECTION 3.6.       Powers and Duties of the Regular Trustees..................................................11
   SECTION 3.7.       Prohibition of Actions by the Trust and the Trustees.......................................13
   SECTION 3.8.       Powers and Duties of the Property Trustee..................................................13
   SECTION 3.9.       Certain Duties and Responsibilities of the Property Trustee................................15
   SECTION 3.10.      Certain Rights of Property Trustee.........................................................17
   SECTION 3.11.      Delaware Trustee...........................................................................18
   SECTION 3.12.      Execution of Documents.....................................................................19
   SECTION 3.13.      Not Responsible for Recitals or Issuance of Trust Securities...............................19
   SECTION 3.14.      Duration of Trust..........................................................................19
   SECTION 3.15.      Mergers....................................................................................19

ARTICLE IV.           SPONSOR....................................................................................20
   SECTION 4.1.       Sponsor's Purchase of Common Securities....................................................20
   SECTION 4.2.       Intentionally Left Blank...................................................................20

ARTICLE V.            TRUSTEES...................................................................................21
   SECTION 5.1.       Number of Trustees.........................................................................21
   SECTION 5.2.       Delaware Trustee;  Eligibility.............................................................21
   SECTION 5.3.       Property Trustee;  Eligibility.............................................................21
   SECTION 5.4.       Qualifications of Regular Trustees Generally...............................................22
   SECTION 5.5.       Initial Trustees...........................................................................22
   SECTION 5.6.       Appointment, Removal and Resignation of trustees...........................................23
   SECTION 5.7.       Vacancies among Trustees...................................................................24
   SECTION 5.8.       Effect of Vacancies........................................................................24
   SECTION 5.9.       Meetings...................................................................................24
<PAGE>

   SECTION 5.10.      Delegation of Power........................................................................25

ARTICLE VI.           DISTRIBUTIONS..............................................................................25
   SECTION 6.1.       Distributions..............................................................................25

ARTICLE VII.          ISSUANCE OF TRUST SECURITIES...............................................................26
   SECTION 7.1.       General Provisions regarding Trust Securities..............................................26

ARTICLE VIII.         DISSOLUTION AND TERMINATION................................................................27
   SECTION 8.1.       Dissolution and Termination of Trust.......................................................27

ARTICLE IX.           TRANSFER OF INTEREST.......................................................................27
   SECTION 9.1.       Transfer of Trust Securities...............................................................27
   SECTION 9.2.       Transfer of Certificates...................................................................28
   SECTION 9.3.       Deemed Trust Security Holders..............................................................28
   SECTION 9.4.       Mutilated, Destroyed, Lost or Stolen Certificates..........................................28

ARTICLE X.            LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS.................29
   SECTION 10.1.      Liability..................................................................................29
   SECTION 10.2.      Exculpation................................................................................29
   SECTION 10.3.      Fiduciary Duty.............................................................................30
   SECTION 10.4.      Indemnification............................................................................31
   SECTION 10.5.      Outside Businesses.........................................................................31

ARTICLE XI.           ACCOUNTING.................................................................................32
   SECTION 11.1.      Fiscal Year................................................................................32
   SECTION 11.2.      Certain Accounting Matters.................................................................32
   SECTION 11.3.      Banking....................................................................................32
   SECTION 11.4.      Withholding................................................................................33

ARTICLE XII.          AMENDMENTS AND MEETINGS....................................................................33
   SECTION 12.1.      Amendments.................................................................................33
   SECTION 12.2.      Meetings of the Holders of Trust Securities; Action by Written Consent.....................35

ARTICLE XIII.         REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE....................36
   SECTION 13.1.      Representations and Warranties of Property Trustee.........................................36
   SECTION 13.2.      Representations and Warranties of Delaware Trustee.........................................36

ARTICLE XIV.          MISCELLANEOUS..............................................................................37
   SECTION 14.1.      Notices....................................................................................37
   SECTION 14.2.      Governing Law..............................................................................38
   SECTION 14.3.      Intention of the Parties...................................................................39
   SECTION 14.4.      Headings...................................................................................39
   SECTION 14.5.      Successors and Assigns.....................................................................39
   SECTION 14.6.      Partial Enforceability.....................................................................39

                                       ii
<PAGE>

   SECTION 14.7.      Counterparts...............................................................................39
</TABLE>


Certificate of Trust

Trust Agreement

Exhibit A      Terms of Preferred and Common Securities

         Annex I      Preferred Security (with Assignment)

         Annex II     Common Security (with Assignment)

Exhibit B     Preferred Securities Guarantee

Exhibit C     Common Securities Guarantee







                                     -iii-

<PAGE>

                    AMENDED AND RESTATED DECLARATION OF TRUST

     AMENDED AND RESTATED DECLARATION OF TRUST (this "DECLARATION") of
MidAmerican Capital Trust II (the "TRUST") dated as of March 12, 2002 among (a)
MidAmerican Energy Holdings Company, an Iowa corporation, as trust sponsor (the
"SPONSOR"), (b) The Bank of New York, a New York corporation, as property
trustee (the "PROPERTY TRUSTEE"), (c) The Bank of New York (Delaware), as
Delaware trustee (the "DELAWARE TRUSTEE"), (d) Gregory E. Abel, an individual
whose address is c/o MidAmerican Energy Holdings Company, 666 Grand Avenue, Des
Moines, Iowa 50309 and David L. Sokol, an individual whose address is c/o
MidAmerican Energy Holdings Company, 302 South 36th Street, Suite 400, Omaha,
Nebraska 68131 (each, a "REGULAR TRUSTEE" and, together with the Property
Trustee and the Delaware Trustee, the "TRUSTEES") and (e) the holders, from time
to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration.

     WHEREAS, certain of the Trustees and the Sponsor established the Trust
under the Business Trust Act (as hereinafter defined) pursuant to a Trust
Agreement dated as of March 4, 2002, (the "ORIGINAL DECLARATION") and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on March 4, 2002, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in Subordinated Debentures (as hereinafter
defined);

     WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and

     WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration;

     NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                                   ARTICLE I.

                         INTERPRETATION AND DEFINITIONS

SECTION 1.1. DEFINITIONS

     (a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

     (b) a term defined anywhere in this Declaration has the same meaning
throughout;

     (c) all references to "this Declaration" are to this Declaration as
modified, supplemented or amended from time to time;

<PAGE>

     (d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of, and Exhibits to, this Declaration
unless otherwise specified;

     (e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and

     (f) a reference to the singular includes the plural and vice versa.

     "AFFILIATE" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.

     "AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person and, with respect to the Sponsor, the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer,
any assistant Treasurer, or other officer or agent of the Sponsor duly
authorized by the board of directors of the Sponsor to act in respect of matters
relating to this Declaration.

     "BUSINESS DAY" means any day other than Saturday, Sunday or a day on which
banking institutions in New York, New York are authorized or required by law to
close.

     "BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 ET SEQ., as it may be amended from time to time.

     "CERTIFICATE" means a Common Security Certificate or a Preferred Security
Certificate.

     "CLOSING DATE" means each date upon which the Trust issues Trust Securities
hereunder.

     "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.

     "COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as the same
may be amended from time to time, 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 SECURITIES" has the meaning specified in Section 7.1.

     "COMMON SECURITIES GUARANTEE" means the guarantee agreement of the Sponsor
dated as of March 12, 2002 in respect of the Common Securities in the form of
Exhibit C.

     "COMMON SECURITIES PURCHASE AGREEMENT" means the purchase agreement by and
between the Sponsor and the Trust dated as of March 12, 2002 in respect of the
Common Securities.

                                      -2-
<PAGE>

     "COMMON SECURITY CERTIFICATE" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex II to Exhibit A.

     "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 execution of this Declaration is
located at The Bank of New York, 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration.

     "COVERED PERSON" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Trust Securities.

     "DEBENTURE PURCHASE AGREEMENT" means the purchase agreement by and between
the Sponsor and the Trust dated as of March 12, 2002 in respect of the
Subordinate Debentures.

     "DELAWARE TRUSTEE" has the meaning set forth in the preamble hereof and any
successor trustee meeting the eligibility requirements set forth in Section 5.2.

     "DISTRIBUTION" means a distribution payable to Holders of Trust Securities
in accordance with Section 6.1.

     "EVENT OF DEFAULT" in respect of the Trust Securities, means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Subordinated Debentures.

     "GUARANTEE TRUSTEE" means The Bank of New York, as trustee under the
Preferred Securities Guarantee, until a successor is appointed thereunder and
thereafter means such successor trustee.

     "HOLDER" means a Person in whose name a Certificate representing a Trust
Security is registered on the books and records of the Trust, such Person being
a beneficial owner within the meaning of the Business Trust Act, provided, 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 Sponsor, as guarantor of the Trust Securities, or any
Affiliate of the Sponsor (other than Berkshire Hathaway Inc. or any other
Permitted Holder).

     "INDEMNIFIED PERSON" means (a) any Trustee or the Property Trustee; (b) any
Affiliate of any Trustee or the Property Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Trustee or the Property Trustee; or (d) any employee or agent of the Trust or
its Affiliates.

     "INDENTURE" means the Indenture dated as of March 12, 2002 among the
Sponsor and the Indenture Trustee as modified, supplemented or amended from time
to time.

     "INDENTURE TRUSTEE" means The Bank of New York, as trustee under the
Indenture, until a successor is appointed thereunder, and thereafter means such
successor trustee.

                                      -3-
<PAGE>

     "INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.

     "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as the
same may be amended from time to time, or any successor legislation.

     "LEGAL ACTION" has the meaning set forth in Section 3.6(e).

     "MAJORITY IN LIQUIDATION AMOUNT" means, except as provided in the terms of
the Trust Securities and the Trust Indenture Act, Holders of outstanding Trust
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities voting separately as a class, representing more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Trust Securities of the relevant class.

     "MATURITY DATE" has the meaning set forth in Section 2.02 of the Indenture.

     "OFFICER'S CERTIFICATE" means, with respect to any Person, a certificate
signed by an Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:

          (a) a statement that such officer signing the Certificate has read the
     covenant or condition and the definition relating thereto;

          (b) a brief statement of the nature and scope of the examination or
     investigation undertaken by such officer in rendering the Certificate;

          (c) a statement that 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 such officer, such
     condition or covenant has been complied with.

     "OPINION OF COUNSEL" or "opinion of counsel" means a written opinion of
counsel who may be an employee of the Sponsor.

     "PAYING AGENT" has the meaning specified in Section 3.8(h).

     "PAYMENT AMOUNT" has the meaning specified in Section 6.1.

     "PERMITTED HOLDERS" means (i) Berkshire Hathaway Inc. and any of its
subsidiaries which are directly or indirectly 50% or more owned by it and which
are consolidated with it for financial reporting purposes or (ii) any Person
following any Event of Default specified in Section 4.01 (1), (2), or (3) of the
Indenture that results in an acceleration of the

                                      -4-
<PAGE>

Subordinated Debentures or any Event of Default specified in Section 4.01 (4),
(5) or (6) of the Indenture.

     "PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement between the
Sponsor and the Guarantee Trustee dated as of March 12, 2002, in respect of the
Preferred Securities in the form of Exhibit B.

     "PREFERRED SECURITIES" has the meaning specified in Section 7.1.

     "PREFERRED SECURITY CERTIFICATE" means a certificate representing a
Preferred Security substantially in the form of Annex I to Exhibit A.

     "PROPERTY TRUSTEE" has the meaning set forth in the preamble hereof or any
successor trustee meeting the eligibility requirements set forth in Section 5.3.

     "PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section 3.8(c).

     "QUORUM" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.

     "REGULAR TRUSTEE" has the meaning set forth in the preamble hereof, or any
successor in interest in such capacity, or any successor trustee appointed as
herein provided.

     "RELATED PARTY" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.

     "RESPONSIBLE OFFICER" means, with respect to the Property Trustee, any
vice-president, any assistant vice-president, any assistant treasurer or any
other officer in the Corporate Trust Office of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Declaration 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.

     "RULE 3A-5" means Rule 3a-5 under the Investment Company Act.

     "SECURITIES ACT" means the Securities Act of 1933, as the same may be
amended from time to time, or any successor legislation.

     "66-2/3% IN LIQUIDATION AMOUNT" means, except as provided in the terms of
the Trust Securities and by the Trust Indenture Act, Holders of outstanding
Trust Securities voting together as a single class or, as the context may
require, Holders of outstanding Preferred

                                      -5-
<PAGE>

Securities or Holders of outstanding Common Securities voting separately as a
class, representing at least 66-2/3% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Trust Securities of the
relevant class.

     "SPONSOR" has the meaning set forth in the preamble hereof or any successor
entity in a merger, consolidation or amalgamation.

     "SUBORDINATED DEBENTURES" means up to $332,989,700.00 aggregate principal
amount of 11% Junior Subordinated Deferrable Interest Debentures to be issued by
the Sponsor under the Indenture and to be held by the Property Trustee for the
benefit of the Trust.

     "SUBSCRIPTION AGREEMENT" means that certain subscription agreement between
the Trust and Berkshire Hathaway Inc. (including any of its assignees
thereunder).

     "SUCCESSOR ENTITY" has the meaning set forth in Section 3.15(b).

     "SUCCESSOR SECURITIES" has the meaning set forth in Section 3.15(b).

     "10% IN LIQUIDATION AMOUNT" means, except as provided in the terms of the
Trust Securities or by the Trust Indenture Act, Holders of outstanding Trust
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities voting separately as a class, representing at least 10% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Trust Securities of the relevant class.

     "TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

     "TRUSTEE" or "TRUSTEES" has the meaning set forth in the preamble hereof,
so long as such person shall continue in office in accordance with the terms
hereof, and all other Persons who may from time to time be duly appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
references herein to a Trustee or the Trustees shall refer to such Person or
Persons solely in their capacity as trustees hereunder.

     "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as the same
may be amended from time to time, or any successor legislation.

     "TRUST SECURITIES" means collectively the Common Securities and the
Preferred Securities.

                                      -6-
<PAGE>

                                  ARTICLE II.

                               TRUST INDENTURE ACT

SECTION 2.1. TRUST INDENTURE ACT;  APPLICATION

     (a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required, if any, to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.

     (b) The Property Trustee shall be the only Trustee that is a Trustee for
purposes of the Trust Indenture Act.

     (c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such duties imposed by the Trust
Indenture Act shall control.

     (d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Trust Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.

     (e) The Regular Trustee executing the certificate under Section 3.6(h)
shall be deemed the principal executive officer and chief financial officer of
the Trust for purposes of the Trust Indenture Act.

SECTION 2.2. LISTS OF HOLDERS OF TRUST SECURITIES

     (a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Trust
Securities ("LIST OF HOLDERS") as of such record date, provided that none of the
Sponsor or the Regular Trustees on behalf of the Trust shall 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 Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity) provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.

     (b) The Property Trustee shall comply with the obligations of an indenture
trustee under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE

     Within 60 days after December 31 of each year, the Property Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by Section 313 of the Trust

                                       -7-
<PAGE>

Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE

     Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) of the Trust Indenture Act 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.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).

SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT

     Each of the Sponsor and the Regular 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 Declaration 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 officers of the Sponsor and the Regular
Trustee pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in
the form of an Officer's Certificate.

SECTION 2.6. EVENTS OF DEFAULT; WAIVER

     (a) The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default with respect to the Preferred Securities and its
consequences, provided that, if the underlying Event of Default under the
Indenture:

          (i) is not waivable under the Indenture, the Event of Default under
     this Declaration shall also not be waivable; or

          (ii) requires the consent or vote of all of the holders of the
     Subordinated Debentures to be waived under the Indenture, the Event of
     Default under this Declaration may only be waived by the vote of all of the
     Holders of the Preferred Securities.

Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of an Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.



                                      -8-
<PAGE>


     (b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:

          (i) is not waivable under the Indenture, except where the Holders of
     the Common Securities are deemed to have waived such Event of Default under
     this Declaration as provided below in this Section 2.6(b), the Event of
     Default under this Declaration shall also not be waivable; or

          (ii) requires the consent or vote of all of the holders of the
     Subordinated Debentures to be waived, except where the Holders of the
     Common Securities are deemed to have waived such Event of Default under
     this Declaration as provided below in this Section 2.6(b), the Event of
     Default under this Declaration may only be waived by the vote of all of the
     Holders of Common Securities; provided that, each Holder of Common
     Securities will be deemed to have waived any such Event of Default and all
     Events of Default with respect to the Common Securities and its
     consequences until all Events of Default with respect to the Preferred
     Securities have been cured, waived or otherwise eliminated, and until such
     Events of Default have been so cured, waived or otherwise eliminated, the
     Property Trustee will be deemed to be acting solely on behalf of the
     Holders of the Preferred Securities, and only the Holders of the Preferred
     Securities will have the right to direct the Property Trustee in accordance
     with the terms of the Trust Securities. Subject to the foregoing provisions
     of this Section 2.6(b), upon such waiver, any such default shall cease to
     exist and any Event of Default with respect to the Common Securities
     arising therefrom shall be deemed to have been cured for every purpose of
     this Declaration but no such waiver shall extend to any subsequent or other
     default or Event of Default with respect to the Common Securities or impair
     any right consequent thereon.

     (c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities, constitutes
a waiver of the corresponding Event of Default under this Declaration.

SECTION 2.7. EVENT OF DEFAULT; NOTICE

     (a) The Property Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Trust Securities, notices of all defaults with respect to the Trust
Securities known to the Property Trustee, unless such defaults have been cured
before the giving of such notice (the term "defaults" for the purposes of this
Section 2.7(a) being hereby defined to be an Event of Default as defined in the
Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of or interest on any of the
Subordinated Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as Responsible Officers of the Property Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Trust Securities.


                                      -9-
<PAGE>

     (b) The Property Trustee shall not be deemed to have knowledge of any
default except:

          (i) a default under Sections 4.01(l) and 4.01(2) of the Indenture; or

          (ii) any default as to which a Responsible Officer of the Property
     Trustee charged with the administration of this Declaration shall have
     obtained written or actual notice.

                                  ARTICLE III

                                  ORGANIZATION

SECTION 3.1. NAME

     The Trust is named "MidAmerican Capital Trust II", as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Trust Securities. The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the Regular
Trustees.

SECTION 3.2. OFFICE

     The address of the principal office of the Trust is c/o MidAmerican Energy
Holdings Company, 666 Grand Avenue, Des Moines, Iowa 50303. On ten Business Days
written notice to the Holders of Trust Securities, the Regular Trustees may
designate another principal office.

SECTION 3.3. PURPOSE

     The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Subordinated
Debentures and (b) except as otherwise limited herein, to engage in only those
other activities necessary, convenient or incidental thereto. The Trust shall
not borrow money, issue debt or reinvest proceeds derived from investments,
pledge any of its assets, or otherwise undertake (or permit to be undertaken)
any activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust. All provisions of this
Declaration shall be interpreted in a manner consistent with such purposes.

SECTION 3.4. AUTHORITY

     Subject to the limitations provided in this Declaration, including the
provisions of Sections 3.11 and 5.2, and to the specific duties of the Property
Trustee, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Regular Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Regular Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.


                                      -10-
<PAGE>

SECTION 3.5. TITLE TO PROPERTY OF THE TRUST

     Except as provided in Section 3.8 with respect to the Subordinated
Debentures and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.

SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES

     The Regular Trustees shall have the exclusive power, duty and authority to
cause the Trust to engage in the following activities:

     (a) to issue and sell the Preferred Securities and the Common Securities in
accordance with this Declaration. The Trust may issue one or more series of
Preferred Securities and one or more series of Common Securities, provided,
however, that the original principal amount of each series (other than the final
series) of Preferred Securities must be at least $50,000,000, and, provided
further, that there shall be no interests in the Trust other than the Trust
Securities;

     (b) to acquire each series of Subordinated Debentures with the proceeds of
the sale of a series of Trust Securities; provided, however, that the Regular
Trustees shall cause legal title to the Subordinated Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders of the
Trust Securities;

     (c) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Trust Securities as to such actions and applicable
record dates;

     (d) to take all actions and perform such duties as may be required of the
Regular Trustees pursuant to the terms of the Trust Securities;

     (e) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("LEGAL ACTION"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;

     (f) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;

     (g) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act (if any);

     (h) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by a
Regular Trustee;


                                      -11-
<PAGE>

     (i) to incur expenses that are necessary or incidental to carry out any of
the purposes of the Trust;

     (j) to act as, or appoint another Person to act as, registrar and transfer
agent for the Trust Securities;

     (k) to give prompt written notice to the Holders of the Trust Securities
and the Property Trustee of any notice received from the Sponsor of its election
(i) to defer payments of interest on the Subordinated Debentures by extending
the interest payment period under the Indenture or (ii) to extend the scheduled
maturity date on the Subordinated Debentures pursuant to the Indenture;

     (l) to execute all documents or instruments (including without limitation,
the Debenture Purchase Agreement, the Common Securities Purchase Agreement and,
to the extent not previously executed by the Sponsor on behalf of the Trust
pursuant to the Original Declaration, the Subscription Agreement), perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;

     (m) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Trust
Securities or to enable the Trust to effect the purposes for which the Trust was
created;

     (n) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:

          (i) causing the Trust not to be deemed to be an Investment Company
     required to be registered under the Investment Company Act;

          (ii) causing the Trust to be classified for United States federal
     income tax purposes as a grantor trust; and

          (iii) cooperating with the Sponsor to ensure that the Subordinated
     Debentures will be treated as indebtedness of the Sponsor for United States
     federal income tax purposes,

provided that such action does not adversely affect the interests of Holders or
vary the terms of the Preferred Securities; and

     (o) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Regular Trustees, on behalf of the Trust.

     The Regular Trustees must exercise the powers set forth in this Section 3.6
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.


                                      -12-
<PAGE>

     Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.

SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES

     (a) The Trust shall not, and the Trustees and the Property Trustee shall
not, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Trustees and the
Property Trustee shall cause the Trust not to:

          (i) invest any proceeds received by the Trust from holding the
     Subordinated Debentures, but shall distribute all such proceeds to Holders
     of Trust Securities pursuant to the terms of this Declaration and of the
     Trust Securities;

          (ii) acquire any assets other than as expressly provided herein;

          (iii) possess Trust property for other than a Trust purpose;

          (iv) make any loans or incur any indebtedness other than loans
     represented by the Subordinated Debentures;

          (v) possess any power or otherwise act in such a way as to vary the
     Trust assets or the terms of the Trust Securities in any way whatsoever;

          (vi) issue any securities or other evidences of beneficial ownership
     of, or beneficial interest in, the Trust other than the Trust Securities;
     or

          (vii) other than as provided in this Declaration or as set forth in
     Exhibit A hereto, (A) direct the time, method and place of exercising any
     trust or power conferred upon the Indenture Trustee with respect to the
     Subordinated Debentures, (B) waive any past default that is waivable under
     Section 4.13 of the Indenture, (C) exercise any right to rescind or annul
     any declaration that the principal of all the Subordinated Debentures shall
     be due and payable or (D) consent to any amendment, modification, waiver or
     termination of the Indenture or the Subordinated Debentures where such
     consent shall be required unless the Trust shall have received an opinion
     of counsel to the effect that such modification will not cause more than an
     insubstantial risk that for United States federal income tax purposes the
     Trust will not be classified as a grantor trust.

SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE

     (a) The legal title to the Subordinated Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Trust Securities. The right, title and interest of the
Property Trustee to the Subordinated Debentures shall vest automatically in each
Person who may hereafter be appointed as Property Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Subordinated Debentures have been
executed and delivered.


                                      -13-
<PAGE>

     (b) The Property Trustee shall not transfer its right, title and interest
in the Subordinated Debentures to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).

     (c) The Property Trustee shall:

          (i) establish and maintain a segregated non-interest bearing trust
     account (the "PROPERTY TRUSTEE ACCOUNT") in the name of and under the
     exclusive control of the Property Trustee on behalf of the Holders of the
     Trust Securities and, upon the receipt of payments of funds made in respect
     of the Subordinated Debentures held by the Property Trustee, deposit such
     funds into the Property Trustee Account and make Distributions to the
     Holders of the Trust Securities from the Property Trustee Account in
     accordance with Section 6.1. Funds in the Property Trustee Account shall be
     held uninvested until disbursed in accordance with this Declaration. The
     Property Trustee Account shall be an account that is maintained with the
     Property Trustee or with a banking institution the rating on whose long
     term unsecured indebtedness is at least equal to the rating assigned to the
     Preferred Securities by a "nationally recognized statistical rating
     organization", as that term is defined for purposes of Rule 436(g)(2) under
     the Securities Act;

          (ii) engage in such ministerial activities as shall be necessary or
     appropriate to effect the redemption of the Trust Securities to the extent
     the Subordinated Debentures are redeemed or mature; and

          (iii) upon receipt of notice of distribution issued by the Regular
     Trustees in accordance with the terms of the Trust Securities, engage in
     such ministerial activities as shall be necessary or appropriate to effect
     the distribution of the Subordinated Debentures to Holders of Trust
     Securities upon the occurrence of certain special events (as may be defined
     in the terms of the Trust Securities) arising from a change in law or a
     change in legal interpretation or other specified circumstances pursuant to
     the terms of the Trust Securities.

     (d) The Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the terms of
the Trust Securities.

     (e) The Property Trustee shall take any Legal Action that arises out of or
in connection with an Event of Default or the Property Trustee's duties and
obligations under this Declaration or the Trust Indenture Act.

     (f) The Property Trustee shall not resign as a trustee unless either:

          (i) the Trust has been completely liquidated and the proceeds of such
     liquidation have been distributed to the Holders of Trust Securities
     pursuant to the terms of the Trust Securities; or

          (ii) a successor Property Trustee has been appointed and has accepted
     that appointment in accordance with Section 5.6.

     (g) The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Subordinated Debentures under the
Indenture and, if an


                                      -14-
<PAGE>

Event of Default occurs and is continuing, the Property Trustee shall, for the
benefit of Holders of the Trust Securities, enforce its rights as holder of the
Subordinated Debentures subject to the rights of the Holders pursuant to the
terms of such Trust Securities.

     (h) The Property Trustee may authorize one or more Persons (each, a "Paying
Agent") to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Trust Securities and any such Paying
Agent shall comply with Section 317(b) of the Trust Indenture Act. The Property
Trustee may remove any Paying Agent at any time and a successor Paying Agent or
additional Paying Agents may be appointed at any time by the Property Trustee.
The Property Trustee will be the initial Paying Agent.

     (i) Subject to this Section 3.8, the Property Trustee shall have none of
the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.

     The Property Trustee must exercise the powers set forth in this Section 3.8
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3 and the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in Section
3.3.

SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE

     (a) The Property Trustee, before 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
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6), the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

     (b) No provision of this Declaration shall be construed to relieve the
Property 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 an 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 Property Trustee shall be
          determined solely by the express provisions of this Declaration, and
          the Property Trustee shall not be liable except for the performance of
          such duties and obligations as are specifically set forth in this
          Declaration, and no implied covenants or obligations shall be read
          into this Declaration against the Property Trustee; and

               (B) in the absence of bad faith on the part of the Property
          Trustee, the Property 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 Property
          Trustee and conforming to the requirements of this Declaration; but in


                                      -15-
<PAGE>

          the case of any such certificates or opinions that by any provision
          hereof are specifically required to be furnished to the Property
          Trustee, the Property Trustee shall be under a duty to examine the
          same to determine whether or not they substantially conform to the
          requirements of this Declaration (but need not confirm or investigate
          the accuracy of any mathematical calculations or other facts stated
          therein);

          (ii) the Property Trustee shall not be liable for any error of
     judgment made in good faith by a Responsible Officer of the Property
     Trustee, unless it shall be proved that the Property Trustee was negligent
     in ascertaining the pertinent facts;

          (iii) the Property 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 liquidation
     amount of the Trust Securities at the time outstanding relating to the
     time, method and place of conducting any proceeding for any remedy
     available to the Property Trustee, or exercising any trust or power
     conferred upon the Property Trustee under this Declaration;

          (iv) no provision of this Declaration 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 it 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 Declaration or adequate
     indemnity against such risk or liability is not reasonably assured to it;

          (v) the Property Trustee's sole duty with respect to the custody,
     safekeeping and physical preservation of the Subordinated Debentures and
     the Property Trustee Account 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 Declaration and the Trust
     Indenture Act;

          (vi) the Property Trustee shall have no duty or liability for or with
     respect to the value, genuineness, existence or sufficiency of the
     Subordinated Debentures or the payment of any taxes or assessments levied
     thereon or in connection therewith;

          (vii) the Property Trustee shall not be liable for any interest on any
     money received by it except as it may otherwise agree with the Sponsor.
     Money held by the Property Trustee need not be segregated from other funds
     held by it except in relation to the Property Trustee Account maintained by
     the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
     otherwise required by law; and

          (viii) the Property Trustee shall not be responsible for monitoring
     the compliance by the Regular Trustees or the Sponsor with their respective
     duties under this Declaration, nor shall the Property Trustee be liable for
     the default or misconduct of the Regular Trustees or the Sponsor.


                                      -16-
<PAGE>

SECTION 3.10. CERTAIN RIGHTS OF PROPERTY TRUSTEE

     (a) Subject to the provisions of Section 3.9:

          (i) the Property Trustee may conclusively 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 believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties;

          (ii) any direction or act of the Sponsor or the Regular Trustees
     contemplated by this Declaration shall be sufficiently evidenced by a
     Direction or an Officer's Certificate;

          (iii) whenever in the administration of this Declaration, the Property
     Trustee shall deem it desirable that a matter be proved or established
     before taking, suffering or omitting any action hereunder, the Property
     Trustee (unless other evidence is herein specifically prescribed) shall be
     entitled, in the absence of bad faith on its part, to request and
     conclusively rely upon an Officer's Certificate which, upon receipt of such
     request, shall be promptly delivered by the Sponsor or the Regular
     Trustees;

          (iv) 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 filing under tax or securities laws) (or any
     re-recording, refiling or registration thereof);

          (v) the Property Trustee may consult with counsel of its selection or
     other experts and the advice or opinion of such counsel and experts with
     respect to legal matters or advice within the scope of such experts' area
     of expertise 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 Sponsor or any of its Affiliates, and may include any of its
     employees. The Property Trustee shall have the right at any time to seek
     instructions concerning the administration of this Declaration from any
     court of competent jurisdiction;

          (vi) the Property Trustee shall be under no obligation to exercise any
     of the rights or powers vested in it by this Declaration at the request or
     direction of any Holder, unless such Holder shall have provided to the
     Property Trustee security and indemnity, acceptable to the Property
     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 Property Trustee provided that, nothing contained in this
     Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon
     the occurrence of an Event of Default, of its obligation to exercise the
     rights and powers vested in it by this Declaration;

          (vii) the Property Trustee shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, Officer's Certificate, statement, instrument, opinion, Opinion
     of Counsel, report, notice, request, direction, consent, order, bond,
     debenture, note, other evidence of indebtedness or other paper or document,
     but the Property Trustee, in its discretion, may make such further inquiry
     or investigation into such facts or matters as it may see



                                      -17-
<PAGE>

     fit at the sole cost of the Company and shall incur no liability or
     additional liability of any kind by reason of such inquiry or
     investigation;

          (viii) the Property 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 Property 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;

          (ix) any action taken by the Property Trustee or its agents hereunder
     shall bind the Trust and the Holders of the Trust Securities, and the
     signature of the Property Trustee or its agents alone shall be sufficient
     and effective to perform any such action and no third party shall be
     required to inquire as to the authority of the Property Trustee to so act
     or as to its compliance with any of the terms and provisions of this
     Declaration, both of which shall be conclusively evidenced by the Property
     Trustee's or its agent's taking such action;

          (x) whenever in the administration of this Declaration the Property
     Trustee shall deem it desirable to receive instructions with respect to
     enforcing 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 in liquidation amount of the Trust Securities as would be
     entitled to direct the Property Trustee under the terms of the Trust
     Securities in respect of such remedy, right or action, (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; and

          (xi) except as otherwise expressly provided by this Declaration, the
     Property Trustee shall not be under any obligation to take any action that
     is discretionary under the provisions of this Declaration.

     No provision of this Declaration 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. No
permissive power or, authority available to the Property Trustee shall be
construed to be a duty.

SECTION 3.11. DELAWARE TRUSTEE

     Notwithstanding any other provision of this Declaration other than Section
5.2, 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 Regular
Trustees or the Property Trustee described in this Declaration. Except as set
forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Business
Trust Act. The Delaware Trustee shall be entitled to the benefit of all of the
immunities and indemnities that the Property Trustee is entitled to under this
Declaration.


                                      -18-
<PAGE>

SECTION 3.12. EXECUTION OF DOCUMENTS

     Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, both of the Regular Trustees are authorized to execute on behalf of
the Trust any documents that the Regular Trustees have the power and authority
to execute pursuant to Section 3.6.

SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF TRUST SECURITIES

     The recitals contained in this Declaration and the Trust Securities shall
be taken as the statements of the Sponsor 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. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.

SECTION 3.14. DURATION OF TRUST

     The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall exist until April 1, 2032.

SECTION 3.15. MERGERS

     (a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).

     (b) The Trust may, with the consent of a majority of the Regular Trustees
and without the consent of the Holders of the Trust Securities, the Delaware
Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or
be replaced by a trust organized as such under the laws of any State; provided
that:

          (i) such successor entity (the "SUCCESSOR ENTITY") either:

               (A) expressly assumes all of the obligations of the Trust under
          the Trust Securities; or

               (B) substitutes for the Preferred Securities other securities
          having substantially the same terms as the Preferred Securities (the
          "SUCCESSOR SECURITIES") so long as the Successor Securities rank the
          same as the Preferred Securities rank with respect to Distributions
          and payments upon liquidation, redemption and maturity;

          (ii) the Sponsor expressly acknowledges a trustee of the Successor
     Entity that possesses the same powers and duties as the Property Trustee as
     the Holder of the Subordinated Debentures;

          (iii) the Preferred Securities or any Successor Securities are listed,
     or any Successor Securities will be listed upon notification of issuance,
     on any national securities



                                      -19-
<PAGE>

     exchange, the Nasdaq Stock Market's National Market or other organization
     on which the Preferred Securities are then listed;

          (iv) such merger, consolidation, amalgamation or replacement does not
     cause the Preferred Securities (including any Successor Securities) to be
     downgraded by any nationally recognized statistical rating organization;

          (v) such merger, consolidation, amalgamation or replacement does not
     adversely affect the rights, preferences and privileges of the Holders of
     the Trust Securities (including any Successor Securities) in any material
     respect;

          (vi) such Successor Entity has a purpose identical to that of the
     Trust;

          (vii) prior to such merger, consolidation, amalgamation or
     replacement, the Sponsor has received an opinion of a nationally recognized
     independent counsel to the Trust experienced in such matters to the effect
     that:

               (A) such merger, consolidation, amalgamation or replacement does
          not adversely affect the rights, preferences and privileges of the
          Holders of the Trust Securities (including any Successor Securities)
          in any material respect; and

               (B) following such merger, consolidation, amalgamation or
          replacement, neither the Trust nor the Successor Entity will be
          required to register as an Investment Company; and

          (viii) the Sponsor guarantees the obligations of such Successor Entity
     under the Successor Securities at least to the extent provided by the
     Preferred Securities Guarantee.

     (c) Notwithstanding Section 3.15(b), the Trust shall, except with the
consent of Holders of 100% in liquidation amount of the Trust Securities, not
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity not to be classified for United States
federal income tax purposes as a grantor trust.

                                   ARTICLE IV

                                     SPONSOR

SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES

     On each Closing Date, the Sponsor will purchase all the Common Securities
issued by the Trust on such Closing Date. The aggregate amount of Common
Securities held by the Sponsor hereunder shall at all times equal 3% of the
capital of the Trust.

SECTION 4.2. INTENTIONALLY LEFT BLANK


                                      -20-
<PAGE>

                                   ARTICLE V

                                    TRUSTEES

SECTION 5.1. NUMBER OF TRUSTEES

     The number of Trustees shall initially be four (4), and:

     (a) at any time before the issuance of any Trust Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and

     (b) after the issuance of any Trust Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities, provided that in any case, the number of Trustees shall
be at least four (4) unless the Trustee that acts as the Property Trustee also
acts as the Delaware Trustee pursuant to Section 5.2, in which case the number
of Trustees shall be at least three (3).

SECTION 5.2. DELAWARE TRUSTEE;  ELIGIBILITY

     If required by the Business Trust Act, one Trustee shall be:

     (a) a natural person who is at least 21 years of age and a resident of the
State of Delaware; or

     (b) 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 law, provided that, if the Property Trustee has its principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application. Except as otherwise provided, the
Delaware Trustee's sole duty shall be to, upon the request of the other Trustees
or the Sponsor, execute any documents and maintain custody of any records
required to form, maintain the existence of, or dissolve, the Trust under the
Business Trust Act.

SECTION 5.3. PROPERTY TRUSTEE;  ELIGIBILITY

     (a) There shall at all times be one Trustee which shall act as Property
Trustee which shall:

          (i) not be an Affiliate of the Sponsor;

          (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
     Commission to act as an institutional trustee under the Trust Indenture
     Act, authorized under such laws to exercise 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




                                      -21-
<PAGE>

     requirements of the supervising or examining authority referred to above,
     then for the purposes of this Section 5.3(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 Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately resign in the
manner and with the effect set forth in Section 5.6(c).

     (c) If the Property Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Property
Trustee and the Holder of the Common Securities (as if it were the obligor
referred to in Section 310(b) of the Trust Indenture Act) shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.

     (d) The Preferred Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.

SECTION 5.4. QUALIFICATIONS OF REGULAR TRUSTEES GENERALLY

     Each Regular Trustee shall be a natural person who is at least 21 years of
age and shall be an employee or officer of the Sponsor or otherwise be
affiliated with the Sponsor.

SECTION 5.5. INITIAL TRUSTEES

The initial Regular Trustees shall be:

Gregory E. Abel
c/o MidAmerican Energy Holdings Company
666 Grand Avenue
Des Moines, Iowa 50309

David L. Sokol
c/o MidAmerican Energy Holdings Company
302 South 36th Street, Suite 400
Omaha, Nebraska 68131

The initial Delaware Trustee shall be:

The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711


                                      -22-
<PAGE>

The initial Property Trustee shall be:

The Bank of New York
101 Barclay Street
Corporate Trust Administration
Floor 21 West
New York, New York  10286

SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES

     (a) Subject to Section 5.6(b), Trustees may be appointed or removed without
cause at any time:

          (i) until the issuance of any securities, by written instrument
     executed by the Sponsor;

          (ii) after the issuance of any Trust Securities, except as provided in
     clause (iii) hereof, by vote of the Holders of a Majority in liquidation
     amount of the Common Securities voting as a class at a meeting of the
     Holders of the Common Securities; and

          (iii) after the issuance of any Trust Securities, if an Event of
     Default has occurred and is continuing, with respect only to the Property
     Trustee or the Delaware Trustee, by vote of the Holders of a Majority in
     liquidation amount of the Preferred Securities voting as a class at a
     meeting of the Holders of the Preferred Securities.

     (b) (i)The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Property Trustee possessing the
qualifications to act as Property Trustee under Section 5.3 has been appointed
and has accepted such appointment by written instrument executed by such
successor Property Trustee and delivered to the Regular Trustees and the
Sponsor; and

          (ii) the Trustee that acts as Delaware Trustee shall not be removed in
     accordance with Section 5.6(a) until a successor Trustee possessing the
     qualifications to act as Delaware Trustee under Section 5.2 has been
     appointed and has accepted such appointment by written instrument executed
     by such successor Delaware Trustee and delivered to the Regular Trustees
     and the Sponsor.

     (c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by any instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:

          (i) No such resignation of the Trustee that acts as the Property
     Trustee shall be effective:


                                      -23-
<PAGE>

               (A) until a successor Property Trustee has been appointed and has
          accepted such appointment by instrument executed by such successor
          Property Trustee and delivered to the Trust, the Sponsor and the
          resigning Property Trustee; or

               (B) until the assets of the Trust have been completely liquidated
          and the proceeds thereof distributed to the Holders of the Trust
          Securities; and

          (ii) no such resignation of the Trustee that acts as the Delaware
     Trustee shall be effective until a successor Delaware Trustee has been
     appointed and has accepted such appointment by instrument executed by such
     successor Delaware Trustee and delivered to the Trust, the Sponsor and the
     resigning Delaware Trustee.

     (d) The Holders of the Common Securities shall use their best efforts to
promptly appoint a successor Delaware Trustee or successor Property Trustee, as
the case may be, as the Property Trustee or the Delaware Trustee if the
resigning Property Trustee or Delaware Trustee delivers an instrument of
resignation in accordance with this Section 5.6.

     (e) If no successor Property Trustee or successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 5.6
within 60 days after delivery to the Sponsor and the Trust of an instrument of
resignation, the resigning Property Trustee or Delaware Trustee, as applicable,
may petition any court of competent jurisdiction for appointment of a successor
Property Trustee or successor Delaware Trustee at the expense of the Sponsor.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a successor Property Trustee or successor Delaware Trustee, as
the case may be.

SECTION 5.7. VACANCIES AMONG TRUSTEES

     If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy and copies of any
such resolution shall be distributed promptly to the remaining Trustees. The
vacancy shall be filled with a Trustee appointed in accordance with Section 5.6.

SECTION 5.8. EFFECT OF VACANCIES

     The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.

SECTION 5.9. MEETINGS

     Meetings of the Regular Trustees shall be held from time to time upon the
call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed



                                      -24-
<PAGE>

by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees.

SECTION 5.10. DELEGATION OF POWER

     (a) Any Regular 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
3.6, including any governmental filing; and

     (b) the Regular Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular 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.

                                   ARTICLE VI

                                  DISTRIBUTIONS

SECTION 6.1. DISTRIBUTIONS

     Distributions shall be made and Holders shall receive Distributions in
accordance with the applicable terms of Exhibit A hereto and the applicable
terms of the relevant Holder's Trust Securities. Distributions shall be made on
the Preferred Securities and the Common Securities in accordance with the
preferences set forth in their respective terms. If and to the extent that the
Sponsor makes a payment of interest (including Deferred Interest (as defined in
the Indenture)), or principal on a series of Subordinated Debentures (a
"DEBENTURE SERIES") held by the Property Trustee (the amount of any such payment
being a "PAYMENT AMOUNT"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"DISTRIBUTION") of the Payment Amount to Holders of the series of Trust
Securities issued to purchase such Debenture Series.


                                      -25-
<PAGE>

                                  ARTICLE VII

                          ISSUANCE OF TRUST SECURITIES

SECTION 7.1. GENERAL PROVISIONS REGARDING TRUST SECURITIES

     (a) The Regular Trustees shall on behalf of the Trust issue one or more
series of preferred securities of a single class representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Exhibit A and incorporated herein by reference (the "PREFERRED
SECURITIES") and one or more series of common securities of a single class
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Exhibit A and incorporated herein by reference
(the "COMMON SECURITIES"). The Trust shall have no securities or other interests
in the assets of the Trust other than the Preferred Securities and the Common
Securities.

     (b) The Regular Trustees (or if there are more than two Regular Trustees by
any two of the Regular Trustees) shall sign the Certificates on behalf of the
Trust. Such signatures may be the manual or facsimile signatures of the present
or any future Regular Trustee. Typographical and other minor errors or defects
in any such reproduction of any such signature shall not affect the validity of
any Certificate. In case any Regular Trustee of the Trust who shall have signed
any of the Trust Securities shall cease to be such Regular Trustee before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Trust Security, shall be the Regular Trustees of the Trust, although at the date
of the execution and delivery of this Declaration any such person was not such a
Regular Trustee. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof, and may have such letters,
numbers or other marks or identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be required
to comply with any law or with any rule or regulation usage.

     (c) The consideration shall be received by the Property Trustee for the
issuance of the Trust Securities, which consideration shall constitute a
contribution to the capital of the Trust and shall not constitute a loan to the
Trust.

     (d) The Holders shall not have any right or title in the assets of the
Trust other than an undivided beneficial interest in such assets conferred by
their Trust Securities, and they shall have no right to call for any partition
or division of any property, profits or rights of the Trust except as otherwise
provided herein. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Declaration. The Trust
Securities, when issued and delivered against payment of purchase price
therefor, shall be deemed to be validly issued, fully paid and non-assessable by
the Trust.

     (e) Every Person, by virtue of having become a Holder in accordance with
the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.


                                      -26-
<PAGE>

                                  ARTICLE VIII

                           DISSOLUTION AND TERMINATION

SECTION 8.1. DISSOLUTION AND TERMINATION OF TRUST

     (a) The Trust shall dissolve on the earlier of April 1, 2032 or:

          (i) upon (x) the filing of a bankruptcy petition pursuant to 11 U.S.C.
     Sections 101 ET. SEQ. or similar petition arising under the laws of any
     other jurisdiction by the Holder of the Common Securities or the Sponsor or
     (y) the insolvency of the Holder of the Common Securities or the Sponsor;

          (ii) upon the filing of a certificate of dissolution or its equivalent
     with respect to the Holder of the Common Securities or the Sponsor; the
     revocation of the Holder of the Common Securities or the Sponsor's charter
     and the expiration of 90 days after the date of revocation without a
     reinstatement thereof;

          (iii) upon the entry of a decree of judicial dissolution of the Holder
     of the Common Securities or the Sponsor or the Trust;

          (iv) when all of the Trust Securities shall have been called for
     redemption and the amounts necessary for redemption thereof shall have been
     paid to the Holders in accordance with the terms of the Trust Securities;
     and

          (v) upon delivery of written direction to the Property Trustee by the
     Sponsor at any time (which direction is wholly optional and within the
     discretion of the Sponsor) to dissolve the Trust and distribute the
     Subordinated Debentures to the Holders of the Trust Securities in
     accordance with Section 3 of Exhibit A.

     (b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1(a) and the winding up and liquidation of the Trust, the Regular
Trustees shall file a certificate of cancellation with the Secretary of State of
the State of Delaware.

     (c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.

                                   ARTICLE IX

                              TRANSFER OF INTEREST

SECTION 9.1. TRANSFER OF TRUST SECURITIES

     (a) Trust Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Trust Securities. Any transfer or purported transfer of any
Trust Security not made in accordance with this Declaration shall be null and
void.


                                      -27-
<PAGE>

     (b) Subject to this Article IX, Preferred Securities shall be transferable
only to Permitted Holders.

     (c) Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the Sponsor;
provided that, any such transfer is subject to the conditions precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:

          (i) the Trust would not be classified for United States federal income
     tax purposes as a grantor trust; and

          (ii) the Trust would be an Investment Company or the transferee would
     become an Investment Company.

SECTION 9.2. TRANSFER OF CERTIFICATES

     The Regular Trustees shall provide for the registration of transfers of
Certificates, which will be effected without charge, but only upon payment (with
such indemnity as the Regular Trustees may require) in respect of any tax or
other governmental charges that may be imposed in relation to it. Upon surrender
for registration of transfer of any Certificate, the Regular Trustees shall
cause one or more new Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing and accompanied by an Officer's
Certificate executed by an executive officer of the transferor certifying that
the transferee is a Permitted Holder. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular Trustees. A transferee
of a Certificate shall be entitled to the rights and subject to the obligations
of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to
be bound by this Declaration and the documents incorporated by reference herein.

SECTION 9.3. DEEMED TRUST SECURITY HOLDERS

     The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

SECTION 9.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES

     If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall have received evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b) there
shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless, then in the absence of



                                      -28-
<PAGE>

notice that such Certificate shall have been acquired by a bona fide purchaser,
any two Regular Trustees on behalf of the Trust shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 9.4, the Regular Trustees 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 Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Trust Certificates, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

                                   ARTICLE X

                       LIMITATION OF LIABILITY OF HOLDERS
                     OF TRUST SECURITIES, TRUSTEES OR OTHERS

SECTION 10.1. LIABILITY

     (a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee, the Common Securities Guarantee and the terms of the Trust
Securities, the Sponsor shall not be:

          (i) personally liable for the return of any portion of the capital
     contributions (or any return thereon) of the Holders of the Trust
     Securities which shall be made solely from assets of the Trust; and

          (ii) required to pay to the Trust or to any Holder of Trust Securities
     any deficit upon dissolution of the Trust or otherwise.

     (b) Pursuant to Section 3803(a) of the Business Trust Act:

          (i) the Holder of the Common Securities shall be liable for all of the
     debts and obligations of the Trust (other than with respect to the Trust
     Securities) to the extent not satisfied out of the Trust's assets; and

          (ii) the Holders of the Preferred Securities shall 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.

SECTION 10.2. EXCULPATION

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions.


                                      -29-
<PAGE>

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such information, opinions, reports or
statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Trust Securities might properly be paid.

SECTION 10.3. 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
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, 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, if any),
are agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.

     (b) Unless otherwise expressly provided herein:

          (i) whenever a conflict of interest exists or arises between an
     Indemnified Person and any Covered Person; or

          (ii) whenever this Declaration 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 this
     Indemnified Person shall not constitute a breach of this Declaration or any
     other agreement contemplated herein or of any duty or obligation of the
     Indemnified Person at law or in equity or otherwise.

     (c) Whenever in this Declaration 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 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 Declaration or
     by applicable law.


                                      -30-
<PAGE>

SECTION 10.4. INDEMNIFICATION

     (a) To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Declaration, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions.

     (b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Sponsor
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Sponsor of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized in Section 10.4(a). The
indemnification shall survive the termination of this Declaration or the earlier
removal or resignation of any of the Trustees or the Property Trustee.

SECTION 10.5. OUTSIDE BUSINESSES

     Any Covered Person, the Sponsor, the Delaware Trustee and the Property
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 Declaration 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. No Covered Person, the Sponsor, the Delaware Trustee or
the Property 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 any Covered Person,
the Sponsor, the Delaware Trustee and the Property 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
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.


                                      -31-
<PAGE>

                                   ARTICLE XI

                                   ACCOUNTING

SECTION 11.1. FISCAL YEAR

     The fiscal year ("FISCAL YEAR") of the Trust shall be the calendar year, or
such other year as is required by the Code.

SECTION 11.2. CERTAIN ACCOUNTING MATTERS

     (a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail, each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year by a firm of independent certified public accountants selected by the
Regular Trustees.

     (b) The Regular Trustees shall cause to be prepared and delivered to each
of the Holders of Trust Securities, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.

     (c) The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Trust Securities any United States federal income tax
information statement required by the Code, containing such information with
regard to the Trust Securities held by each Holder as is required by the Code
and the Treasury Regulations, and any comparable statements required to be
provided under the law of any other taxing jurisdiction. Notwithstanding any
right under the Code or other law to deliver any such statement at a later date,
the Regular Trustees shall endeavor to deliver all such statements within 30
days after the end of each Fiscal Year of the Trust.

     (d) The Regular Trustees shall cause to be duly prepared and filed with the
appropriate taxing authority an annual United States federal income tax return
Form 1041 (or any successor form) or such other form required by United States
federal income tax law, and any other tax returns or reports required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.

SECTION 11.3. BANKING

     The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Subordinated Debentures held by the Property Trustee shall be
made directly to the Property Trustee Account and no other funds of the Trust
shall be deposited in the Property Trustee Account. The sole signatories for
such accounts shall be designated by the Regular Trustees; provided, however,
that the Property Trustee shall designate the sole signatories for the Property
Trustee Account.


                                      -32-
<PAGE>


SECTION 11.4. WITHHOLDING

     The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made to any Holder, the Trust may reduce subsequent
Distributions to such Holder by the amount of such withholding.

                                  ARTICLE XII

                             AMENDMENTS AND MEETINGS

SECTION 12.1. AMENDMENTS

     (a) Except as otherwise provided in this Declaration or by any applicable
terms of the Trust Securities, this Declaration may only be amended by a written
instrument approved and executed by the Regular Trustees (or, if there are more
than two Regular Trustees a majority of the Regular Trustees); provided,
however, that:

          (i) in the case of any proposed amendment, the Property Trustee shall
     have first received an Officer's Certificate from each of the Regular
     Trustees on behalf of the Trust and the Sponsor that such amendment is
     permitted by, and conforms to, the terms of this Declaration (including the
     terms of the Trust Securities);

          (ii) in the case of any proposed amendment which affects the rights,
     powers, duties, obligations or immunities of the Property Trustee, the
     Property Trustee shall have first received:

               (A) an Officer's Certificate from each of the Regular Trustees on
          behalf of the Trust and the Sponsor that such amendment is permitted
          by, and conforms to, the terms of this Declaration (including the
          terms of the Trust Securities); and

               (B) an opinion of counsel (who may be counsel to the Sponsor or
          the Trust) that such amendment is permitted by, and conforms to, the
          terms of this Declaration (including the terms of the Trust
          Securities);

          (iii) no amendment shall be made, and any such purported amendment
     shall be void and ineffective, to the extent the result of such amendment
     would be to:


                                      -33-
<PAGE>

               (A) cause the Trust to fail to continue to be classified for
          purposes of United States federal income taxation as a grantor trust
          and each Holder of the Trust Securities not to be treated as owning an
          undivided beneficial interest in the Subordinated Debentures, as
          evidenced by an Opinion of Counsel to the effect that such amendment
          shall not result in the foregoing;

               (B) reduce or otherwise adversely affect the powers of the
          Property Trustee in contravention of the Trust Indenture Act; or

               (C) cause the Trust to be deemed to be an Investment Company
          required to be registered under the Investment Company Act;

          (iv) at such time after the Trust has issued any Trust Securities that
     remain outstanding, any amendment that would adversely affect the rights,
     privileges or preferences of any Holder of the Trust Securities may be
     effected only with such additional requirements as may be set forth in the
     terms of such Trust Securities;

          (v) Section 9.1(c) and this Section 12.1 shall not be amended without
     the consent of all of the Holders of the Trust Securities;

          (vi) Article IV shall not be amended without the consent of the
     Holders of a Majority in liquidation amount of the Common Securities; and

          (vii) the rights of the holders of the Common Securities under Article
     V to increase or decrease the number of, and appoint and remove Trustees
     shall not be amended without the consent of the Holders of a Majority in
     liquidation amount of the Common Securities.

     (b) Notwithstanding Section 12.1(a)(iii), this Declaration may be amended
without the consent of the Holders of the Trust Securities to:

          (i) cure any ambiguity;

          (ii) correct or supplement any provision in this Declaration that may
     be defective or inconsistent with any other provision of this Declaration;

          (iii) add to the covenants, restrictions or obligations of the
     Sponsor; and


          (iv) conform to any change in Rule 3a-5 or other exemption from the
     requirement to register as an Investment Company under the Investment
     Company Act or written change in the interpretation or application thereof
     by any legislative body, court, government agency or regulatory authority
     which amendment does not have a material adverse effect on the rights,
     preferences or privileges of the Holders.

     (c) Notwithstanding any other provision of this Declaration, neither the
Property Trustee nor the Delaware Trustee shall be required to enter into any
amendment to this Declaration which affects its own rights, duties or immunities
under this Declaration:


                                      -34-
<PAGE>

SECTION 12.2. MEETINGS OF THE HOLDERS OF TRUST SECURITIES; ACTION BY WRITTEN
CONSENT

     (a) Meetings of the Holders of any class of Trust Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the Trust
Securities) to consider and act on any matter on which Holders of such class of
Trust Securities are entitled to act under the terms of this Declaration or the
terms of the Trust Securities. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Trust Securities. Such direction shall be
given by delivering to the Regular Trustees one or more calls in a writing
stating that the signing Holders of Trust Securities wish to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Trust Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Trust Securities exercising the
right to call a meeting and only those Trust Securities specified shall be
counted for purposes of determining whether the required percentage set forth in
the second sentence of this paragraph has been met.

     (b) Except to the extent otherwise provided in the terms of the Trust
Securities, the following provisions shall apply to meetings of Holders of Trust
Securities:

          (i) notice of any such meeting shall be given to all the Holders of
     Trust Securities having a right to vote thereat at least 7 days and not
     more than 60 days before the date of such meeting. Whenever a vote, consent
     or approval of the Holders of Trust Securities is permitted or required
     under this Declaration such vote, consent or approval may be given at a
     meeting of the Holders of Trust Securities. Any action that may be taken at
     a meeting of the Holders of Trust Securities may be taken without a meeting
     if a consent in writing setting forth the action so taken is signed by the
     Holders of Trust Securities owning not less than the minimum amount of
     Trust Securities in liquidation amount that would be necessary to authorize
     or take such action at a meeting at which all Holders of Trust Securities
     having a right to vote thereon were present and voting. Prompt notice of
     the taking of action without a meeting shall be given to the Holders of
     Trust Securities entitled to vote who have not consented in writing. The
     Regular Trustees may specify that any written ballot submitted to a Holder
     for the purpose of taking any action without a meeting shall be returned to
     the Trust within the time specified by the Regular Trustees;

          (ii) each Holder of a Trust Security may authorize any Person to act
     for it by proxy on all matters in which a Holder of Trust Securities is
     entitled to participate, including waiving notice of any meeting, or voting
     or participating at a meeting. No proxy shall be valid after the expiration
     of 11 months from the date thereof unless otherwise provided in the proxy.
     Every proxy shall be revocable at the pleasure of the Holder of Trust
     Securities executing it. Except as otherwise provided herein, all matters
     relating to the giving, voting or validity of proxies shall be governed by
     the General Corporation Law of the State of Delaware relating to proxies,
     and judicial interpretations thereunder, as if the Trust were a Delaware
     corporation and the Holders of the Trust Securities were stockholders of a
     Delaware corporation;

          (iii) each meeting of the Holders of the Trust Securities shall be
     conducted by the Regular Trustees or by such other Person that the Regular
     Trustees may designate; and


                                      -35-
<PAGE>

          (iv) unless the Business Trust Act, this Declaration, the terms of the
     Trust Securities, or the Trust Indenture Act otherwise provides, the
     Regular Trustees, in their sole discretion, shall establish all other
     provisions relating to meetings of Holders of Trust Securities, including
     notice of the time, place or purpose of any meeting at which any matter is
     to be voted on by any Holders of Trust Securities, waiver of any such
     notice, action by consent without a meeting, the establishment of a record
     date, quorum requirements, voting in person or by proxy or any other matter
     with respect to the exercise of any such right to vote.

                                  ARTICLE XIII

                        REPRESENTATIONS AND WARRANTIES OF
                      PROPERTY TRUSTEE AND DELAWARE TRUSTEE

SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE

     The Property Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time of its
acceptance of its appointment as Property Trustee that:

     (a) The Property Trustee is a banking corporation with trust powers, duly
organized, validly existing and in good standing under the laws of the State of
New York, with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and with
its principal place of business in New York, New York.

     (b) The execution, delivery and performance by the Property Trustee of this
Declaration have been duly authorized by all necessary corporate action on the
part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee, and, assuming due authorization, execution
and delivery hereof by the other parties hereto, it constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(whether considered in a proceeding in equity or at law).

     (c) The execution, delivery and performance of this Declaration by the
Property Trustee do not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee.

     (d) The Property Trustee, pursuant to this Declaration, shall hold legal
title and a valid ownership interest in the Subordinated Debentures in
accordance with the provisions hereof.

SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE

     The Delaware Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each successor Delaware Trustee
represents and warrants to the Trust and to the Sponsor at the time of its
acceptance of its appointment as Delaware Trustee that:


                                      -36-
<PAGE>

     (a) The Delaware Trustee is either a natural person who is at least 21
years of age and 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.

     (b) The execution, delivery and performance by the Delaware Trustee of this
Declaration and the Certificate of Trust have been duly authorized by all
necessary corporate action on the part of the Delaware Trustee. This Declaration
has been duly executed and delivered by the Delaware Trustee and, under Delaware
law assuming due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (whether considered in a proceeding in
equity or at law).

     (c) The execution, delivery and performance of this Declaration and the
Certificate of Trust by the Delaware Trustee do not conflict with or constitute
a breach of the charter or by-laws of the Delaware Trustee.

                                  ARTICLE XIV

                                  MISCELLANEOUS

SECTION 14.1. NOTICES

     All notices, instructions, requests and demands provided for in this
Declaration shall be in writing, duly signed by the party giving same, and shall
be delivered, telecopied or mailed by registered or certified mail, as follows:

     (a) if given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Trust Securities):

                  MidAmerican Capital Trust II
                  c/o MidAmerican Energy Holdings Company
                  302 South 36th Street
                  Suite 400
                  Omaha, Nebraska 68131

     (b) if given to the Property Trustee, at the mailing address set forth
below (or such other address as the Property Trustee may give notice of to the
Holders of the Trust Securities):

                  The Bank of New York
                  101 Barclay Street, Floor 21 West
                  New York, New York  10286
                  Attention: Corporate Trust Administration
                  Telecopy number:  (212) 815-5915


                                      -37-
<PAGE>

     (c) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to the
Holders of the Trust Securities):

                  The Bank of New York (Delaware)
                  23 White Clay Center
                  Route 273
                  Newark, Delaware 19711
                  Attention: Corporate Trust Department

     (d) if given to the Holder of the Common Securities, at the mailing address
of the Sponsor set forth below (or such other address as the Holder of the
Common Securities may give notice to the Trust):

                  MidAmerican Energy Holdings Company
                  302 South 36th Street
                  Suite 400
                  Omaha, Nebraska 68131
                  Attention: General Counsel

     (e) if given to any other Holder, at the address set forth on the books and
records of the Trust.

All such notices 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 14.2. GOVERNING LAW

     THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND ALL
RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION THAT
WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION OTHER THAN
THE STATE OF DELAWARE; PROVIDED HOWEVER, THAT THERE SHALL NOT BE APPLICABLE TO
THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE LAWS (STATUTORY
OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR
REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE FILING WITH ANY
COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE
FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES,
OFFICERS, AGENTS OR EMPLOYEES OF THE TRUST, (C) THE NECESSITY FOR OBTAINING
COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR
DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO
TRUSTEES,


                                      -38-
<PAGE>

OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND
EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE
PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS
RELATING TO TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST
ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF
RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE
INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES OR AUTHORITIES AND POWERS OF
THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION
3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST.

SECTION 14.3. INTENTION OF THE PARTIES

     It is the intention of the parties hereto that the Trust not be
characterized for United States federal income tax purposes as an association
taxable as a corporation or a partnership but rather that the Trust be
characterized as a grantor trust or otherwise in a manner such that each Holder
of Trust Securities will be treated as owning an undivided beneficial interest
in the Subordinated Debentures. The provisions of this Declaration shall be
interpreted to further this intention of the parties.

SECTION 14.4. HEADINGS

     Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

SECTION 14.5. SUCCESSORS AND ASSIGNS

     Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.

SECTION 14.6. PARTIAL ENFORCEABILITY

     If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.

SECTION 14.7. COUNTERPARTS

     This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees and the Property Trustee to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.


                                      -39-
<PAGE>



     IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.

                                   GREGORY E. ABEL,
                                   as Regular Trustee

                                   /s/ Gregory E. Abel
                                   --------------------------------------------


                                   DAVID L. SOKOL,
                                   as Regular Trustee


                                   /s/ David L. Sokol
                                   --------------------------------------------


                                   THE BANK OF NEW YORK (DELAWARE),
                                   as Delaware Trustee


                                   By:      /s/ Patrick Burns
                                            -----------------------------------
                                            Name:  Patrick Burns
                                            Title: Senior Vice President


                                   MIDAMERICAN ENERGY HOLDINGS COMPANY,
                                   as Sponsor


                                   By:      /s/ Douglas L. Anderson
                                            -----------------------------------
                                            Name:  Douglas L. Anderson
                                            Title: Senior Vice President


                                   THE BANK OF NEW YORK,
                                   as Property Trustee


                                   By:      /s/ Robert A. Massimillo
                                            -----------------------------------
                                            Name:  Robert A. Massimillo
                                            Title: Vice President



                                      -40-
<PAGE>






                             CERTIFICATE OF TRUST OF
                          MIDAMERICAN CAPITAL TRUST II

THIS Certificate of Trust of MIDAMERICAN CAPITAL TRUST II (the "TRUST") is being
duly executed and filed by The Bank of New York (Delaware), as Delaware Trustee,
and Gregory E. Abel and David L. Sokol, as Regular Trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. C. (ss. ss.) 3801, et
seq.).

     1. NAME. The name of the business trust formed hereby is MidAmerican
Capital Trust II.

     2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is The Bank of New York (Delaware), 23 White Clay
Center, Route 273, Newark, Delaware 19711.

     3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing
with the Secretary of State.

     4. This Certificate of Trust may be executed in one or more counterparts.

     IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have executed this Certificate of Trust.

                                   THE BANK OF NEW YORK (DELAWARE),
                                   as Delaware Trustee


                                   By:      /s/ Patrick Burns
                                            -----------------------------------
                                            Name:  Patrick Burns
                                            Title: Senior Vice President


                                   GREGORY E. ABEL,
                                   as Regular Trustee


                                   /s/ Gregory E. Abel
                                   -----------------------------------


                                   DAVID L. SOKOL,
                                   as Regular Trustee


                                   /s/ David L. Sokol
                                   -----------------------------------



<PAGE>


                                 TRUST AGREEMENT

This TRUST AGREEMENT, dated as of March 4, 2002 (this "TRUST AGREEMENT"),
between (i) MidAmerican Energy Holdings Company, an Iowa corporation, as Sponsor
(the "SPONSOR"), and (ii) The Bank Of New York (Delaware), a Delaware banking
corporation, as Delaware Trustee (the "DELAWARE TRUSTEE"), and Gregory E. Abel
and David L. Sokol, as Regular Trustees, (the "REGULAR TRUSTEES" and,
collectively with the Delaware Trustee, the "TRUSTEES"). The Sponsor and the
Trustees hereby agree as follows:

     1. The trust created hereby (the "TRUST") shall be known as "MidAmerican
Capital Trust II" in which name the Trustees, or the Sponsor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.

     2. The Sponsor hereby assigns, transfers conveys and sets over to the Trust
the sum of $10. The Trustees hereby acknowledge receipt of such amount from the
Sponsor, which amount shall constitute the initial trust estate. The Trustees
hereby declare that they will hold the trust estate for the Sponsor. 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.
Section 3801, ET SEQ. (the "BUSINESS TRUST ACT"), and that this document
constitute 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. The Trust is hereby established by the Sponsor and the Trustees for
the purposes of (i) issuing preferred securities ("PREFERRED SECURITIES")
representing undivided beneficial interests in the assets of the Trust in
exchange for cash and investing the proceeds thereof in debt securities of the
Sponsor, (ii) issuing and selling common securities ("COMMON SECURITIES" and,
together with the Preferred Securities, "TRUST SECURITIES") representing
undivided beneficial interests in the assets of the Trust to the Sponsor in
exchange for cash and investing the proceeds thereof in additional debt
securities of the Sponsor and (iii) engaging in such other activities as are
necessary, convenient or incidental thereto.

     3. Concurrently with the first issuance of any Trust Securities by the
Trust, the Sponsor and the Trustees will enter into an amended and restated
Trust Agreement, satisfactory to each such party, 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 of any licenses,
consents or approvals required by applicable law or otherwise.

     4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as
sponsor of the Trust, as applicable, (a) to negotiate the terms of, and execute
on behalf of the Trust, such subscription or purchase agreements with one or
more subscribers or purchasers relating to the Trust Securities as the Sponsor,
on behalf of the Trust, may deem necessary or desirable and (b) to execute on
behalf of the Trust any and all documents, papers and instruments as may be
desirable in connection with any of the foregoing.

     5. This Trust Agreement may be executed in one or more counterparts.

<PAGE>

     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 Sponsor 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
Sponsor is entitled to appoint or remove without cause any Trustee at any time.
The Trustees may resign upon thirty (30) days' prior notice to the Sponsor.

     7. 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 of
principles).

                            [SIGNATURE PAGE FOLLOWS]


                                      -2-
<PAGE>


     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 HOLDINGS
                                   COMPANY, as Sponsor


                                   By:      /s/ Douglas L. Anderson
                                            -----------------------------------
                                            Name:  Douglas L. Anderson
                                            Title: Senior Vice President


                                   THE BANK OF NEW YORK (DELAWARE),
                                   as Trustee


                                   By:      /s/ Patrick Burns
                                            -----------------------------------
                                            Name:  Patrick Burns
                                            Title: Senior Vice President


                                   GREGORY E. ABEL,
                                   as Regular Trustee


                                   /s/ Gregory E. Abel
                                   -----------------------------------


                                   DAVID L. SOKOL,
                                   as Regular Trustee


                                   /s/ David L. Sokol
                                   -----------------------------------




                                      -3-
<PAGE>


                                    EXHIBIT A

                                    TERMS OF
                      11% TRUST ISSUED PREFERRED SECURITIES
                       11% TRUST ISSUED COMMON SECURITIES

Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated
as of March 12, 2002 (as amended from time to time, the "DECLARATION"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration). The Trust may issue one or more series of Preferred
Securities and one or more series of Common Securities, provided, however, that
the original principal amount of each series (other than the final series) of
Preferred Securities must be at least $50,000,000.

1.   DESIGNATION AND NUMBER.

     (a) PREFERRED SECURITIES. Up to 12,920,000 Preferred Securities of the
Trust, in one or more series, with an aggregate liquidation amount with respect
to the assets of the Trust of up to Three Hundred Twenty Three Million Dollars
($323,000,000) and a liquidation amount with respect to the assets of the Trust
of $25 per Preferred Security, are hereby designated for the purposes of
identification only as "11% Trust Issued Preferred Securities" (the "PREFERRED
SECURITIES"). The Certificates evidencing the Preferred Securities shall be
substantially in the form attached hereto as Annex I, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.

     (b) COMMON SECURITIES. Up to 399,588 Common Securities of the Trust, in one
or more series, with an aggregate liquidation amount with respect to the assets
of the Trust of up to Nine Million Nine Hundred Eighty Nine Thousand Seven
Hundred Dollars ($9,989,700) and a liquidation amount with respect to the assets
of the Trust of $25 per Common Security, are hereby designated for the purposes
of identification only as "11% Trust Issued Common Securities" (the "COMMON
SECURITIES"). The Certificates evidencing the Common Securities shall be
substantially in the form attached hereto as Annex II, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.

2.   DISTRIBUTIONS.

     (a) Distributions payable on each Trust Security will be fixed at a rate
per annum of 11% (the "COUPON RATE") of the stated liquidation amount of $25 per
Trust Security, such rate being the rate of interest payable on the Subordinated
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded semi-annually
at the Coupon Rate (to the extent permitted by applicable law). The term
"DISTRIBUTIONS" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Subordinated Debentures held by
the Property Trustee. The amount of Distributions payable for any period will be
computed for any full semi-annual Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a




<PAGE>

full semi-annual Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 30-day month.

     (b) Distributions on each series of Trust Securities will be cumulative,
will accumulate from the date of original issuance of the Trust Securities of
such series (the "SERIES ISSUE DATE"), and will be payable semi-annually in
arrears, on June 15 and December 15 of each year, commencing on the first such
date following the Series Issue Date, except as otherwise described below. The
Sponsor has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time and for varying lengths
of time on the Subordinated Debentures for a period not exceeding 10 consecutive
semi-annual periods (each, an "EXTENSION PERIOD") and during such Extension
Period, Distributions will also be deferred. Despite such deferral, semi-annual
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law) at an annual rate of thirteen percent (13%) per
annum compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Sponsor may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 10 consecutive
semi-annual periods. Payments of accumulated Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Sponsor may
commence a new Extension Period, subject to the above requirements.

     (c) Distributions on the Trust Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. Distributions payable on any Trust Securities that are not
punctually paid on any Distribution payment date, as a result of the Sponsor
having failed to make a payment under the Subordinated Debentures, will cease to
be payable to the Person in whose name such Trust Securities are registered on
the relevant record date, and such Distribution will instead be payable to the
Person in whose name such Trust Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Trust Securities is not a
Business Day, then payment of the Distribution payable on such date will be made
on the next succeeding day that 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 date.

     (d) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Trust
Securities.

3.   LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

     In the event of any voluntary or involuntary dissolution of the Trust, the
Holders of the Trust Securities on the date of the dissolution will be entitled
to receive out of the assets of the Trust available for distribution to Holders
of Trust Securities after satisfaction of liabilities to creditors of the Trust,
if any (including, without limitation, by paying or making reasonable provisions
to pay all claims and obligations of the Trust in accordance with Section
3808(e) of




                                      A-2
<PAGE>

the Business Trust Act), an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accumulated and unpaid
Distributions thereon (including interest thereon) to the date of payment (such
amount being the "LIQUIDATION DISTRIBUTION"), unless, in connection with such
dissolution, after satisfaction of liabilities to creditors of the Trust
(including, without limitation, by paying or making reasonable provision to pay
all claims and obligations of the Trust in accordance with Section 3808(e) of
the Business Trust Act) Subordinated Debentures in an aggregate principal amount
equal to the aggregate stated liquidation amount of such Trust Securities and of
like tenor shall be distributed on a Pro Rata basis to the Holders of the Trust
Securities in exchange for such Trust Securities.

     If, upon any such dissolution, 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 the amounts payable directly by the
Trust on the Trust Securities shall be paid on a Pro Rata basis. The holders of
the Common Securities will be entitled to receive distributions upon any such
dissolution Pro Rata with the holders of the Preferred Securities, except that
if an Event of Default has occurred and is continuing, the Preferred Securities
shall have a preference over the Common Securities with regard to such
distributions.

     On and from the date fixed by the Regular Trustees for any distribution of
Subordinated Debentures: (i) the Trust Securities will no longer be deemed to be
outstanding, (ii) the Depositary, as the Holder of the Preferred Securities,
will receive a registered global certificate representing the Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing Trust Securities not held by the Depositary or its nominee (or any
successor depositary or its nominee), will be deemed to represent beneficial
interests in the Subordinated Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal to
accumulated and unpaid Distributions on, such Trust Securities until such
certificates are presented to the Sponsor or its agent for transfer or reissue.

4.   REDEMPTION; REDEMPTION/DISTRIBUTION PROCEDURES.

     (a) Upon the repayment of a series of Subordinated Debentures (a "DEBENTURE
SERIES"), whether at the Maturity Date or upon redemption thereof, in whole or
in part, the proceeds from such repayment or redemption shall be simultaneously
applied to redeem the series of Trust Securities used to purchase such Debenture
Series, having an aggregate liquidation amount equal to the aggregate principal
amount of the Subordinated Debentures so repaid or redeemed at a redemption
price of $25 per Trust Security plus an amount equal to accumulated and unpaid
Distributions thereon at the date of the redemption, payable in cash (the
"REDEMPTION PRICE"). Applicable Holders will be given not less than 30 nor more
than 60 days notice of such redemption.

     (b) If fewer than all the outstanding Trust Securities in a series are to
be so redeemed, the applicable Preferred Securities and the applicable Common
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be as described in Section 4(d)(ii) below.



                                      A-3
<PAGE>

     (c) The Trust may not redeem fewer than all the outstanding Trust
Securities unless all accumulated and unpaid Distributions have been paid on all
Trust Securities for all semi-annual Distribution periods terminating on or
before the date of redemption.

     (d) (i) Notice of any redemption of a series of Trust Securities, or notice
of distribution of Subordinated Debentures in exchange for the Trust Securities
(a "REDEMPTION/DISTRIBUTION NOTICE"), will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Trust Securities to be redeemed or
exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Subordinated Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this Section 4(d)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Trust Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Trust
Securities at the address of each such Holder appearing in the books and records
of the Trust. No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.

          (ii) In the event that fewer than all the outstanding Trust Securities
     are to be redeemed, the Trust Securities to be redeemed shall be redeemed
     Pro Rata.

          (iii) If Trust Securities are to be redeemed and the Regular Trustees
     on behalf of the Trust give a Redemption/Distribution Notice, which notice
     may only be issued if the Subordinated Debentures are redeemed as set out
     in this Section 4 (which notice will be irrevocable), then with respect to
     Preferred Securities and Common Securities, provided that the Sponsor has
     paid the Property Trustee a sufficient amount of cash in connection with
     the related redemption or maturity of the Subordinated Debentures, then the
     Property Trustee will pay the relevant Redemption Price to the Holders of
     such Trust Securities by check mailed to the address of the relevant Holder
     appearing on the books and records of the Trust on the redemption date upon
     surrender of their Certificates evidencing such Preferred Securities and
     such Common Securities. If a Redemption/Distribution Notice shall have been
     given and funds deposited as required, then immediately prior to the close
     of business on the date of such deposit, or on the redemption date, as
     applicable, Distributions will cease to accumulate on the Trust Securities
     so called for redemption and all rights of Holders of such Trust Securities
     so called for redemption will cease, except the right of the Holders of
     such Trust Securities to receive the Redemption Price, but without interest
     on such Redemption Price. Neither the Regular Trustees nor the Trust shall
     be required to register or cause to be registered the transfer of any Trust
     Securities that have been so called for redemption. If any date fixed for
     redemption of Trust Securities is not a Business Day, then payment of the
     Redemption Price payable on such date will be made on the next succeeding
     day that is a Business Day (and without any interest or other payment in
     respect of any such delay) except that, if such Business Day falls in the
     next calendar year, such payment will be made on the immediately preceding
     Business Day, in each case with the same force and effect as if made on
     such date fixed for redemption. If payment of the Redemption Price in
     respect of any Trust Securities is improperly withheld or refused and not
     paid either by the Property Trustee or by the Sponsor as guarantor pursuant
     to the Preferred Securities Guarantee or the Common Securities Guarantee,
     as the case may be, Distributions on such Trust Securities



                                      A-4
<PAGE>

     will continue to accumulate from the original redemption date to the actual
     date of payment, in which case the actual payment date will be considered
     the date fixed for redemption for purpose of calculating the Redemption
     Price.

          (iv) Redemption/Distribution Notices shall be sent by the Regular
     Trustees on behalf of the Trust to the Holder.

          (v) Subject to the foregoing and applicable law (including, without
     limitation, United States federal securities laws), provided the acquirer
     is not the Holder of the Common Securities or the obligor under the
     Indenture, the Sponsor or any of 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.

5.   VOTING RIGHTS - PREFERRED SECURITIES.

     (a) Except as provided under Sections 5(b) and 6 and as otherwise required
by law, the Preferred Securities Guarantee and the Declaration, the Holders of
the Preferred Securities will have no voting rights.

     (b) Subject to the requirements set forth in this paragraph, the Holders of
a Majority in liquidation amount of the Preferred Securities, voting as a class
may direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or the exercise of any trust or power
conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee with respect to the Subordinated Debentures, (ii)
waiving any past default and its consequences that is waivable under Section
4.13 of the Indenture, or (iii) exercising any right to rescind or annul a
declaration that the principal of all the Subordinated Debentures shall be due
and payable, provided, however, that, where a consent under the Indenture would
require the consent or act of all of the holders of Subordinated Debentures
affected thereby, the Property Trustee may only give such consent or take such
action at the direction of all of the Holders of the Preferred Securities. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Property Trustee or the Indenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Preferred Securities under this paragraph unless the Property
Trustee has obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters to the effect that for the purposes of
United States federal income tax the Trust will not fail to be classified as a
grantor trust on account of such action. If the Property Trustee fails to
enforce its rights under the Declaration or the Subordinated Debentures, any
Holder of Preferred Securities may institute a legal proceeding directly against
any Person to enforce the Property Trustee's rights under the Declaration or the
Subordinated Debentures without first instituting a legal proceeding against the
Property Trustee or any other Person. Notwithstanding the foregoing, if an Event
of Default has occurred and is continuing and such event is attributable to the
failure of the Sponsor to pay interest or principal on the Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly



                                      A-5
<PAGE>

institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Subordinated Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder on or after the respective due dates specified in the Subordinated
Debentures. In connection with such direct action, the Sponsor will be
subrogated to the rights of such Holder of Preferred Securities under the
Declaration to the extent of any payment made by the Sponsor to such Holder of
Preferred Securities in connection with such direct action. Any approval or
direction of Holders of Preferred Securities may be given at a separate meeting
of Holders of Preferred Securities convened for such purpose, at a meeting of
all the Holders of Trust Securities in the Trust or pursuant to written consent.
The Regular Trustees will cause a notice of any meeting at which Holders of
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 mailed to each Holder of
record of Preferred Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
the written consent is sought and (iii) instructions for the delivery of proxies
or consents.

No vote or consent of the Holders of the Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or to distribute the
Subordinated Debentures in accordance with the Declaration and the terms of the
Trust Securities.

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 the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.

6.   VOTING RIGHTS - COMMON SECURITIES.

     (a) Except as provided under Sections 6(b) and 6(c), and as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.

     (b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.

     (c) Subject to Section 2.6 of the Declaration, only after an Event of
Default with respect to the Preferred Securities has been cured, waived or
otherwise eliminated and subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Common
Securities, voting separately as a class, may direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or the exercise of any trust or power conferred upon the Property Trustee under
the Declaration, including (i) directing the time, method, place of conducting
any proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waiving any past default and its consequences that
is waivable under Section 4.13 of the Indenture, or (iii) exercising any right
to rescind or annul a declaration that the principal of all the Subordinated
Debentures shall be due and payable, provided, however, that, where a consent or
action under the Indenture would require the consent



                                      A-6
<PAGE>

or act of all of the holders of the Subordinated Debentures, the Property
Trustee may only give such consent or take such action at the direction of all
of the Holders of the Common Securities. Pursuant to this Section 6(c), the
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Common Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Property Trustee or the Indenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has obtained, at the expense of the Holders of the Common Securities, a
written opinion of a nationally recognized independent tax counsel experienced
in such matters to the effect that for the purposes of United States federal
income tax the Trust will not fail to be classified as a grantor trust on
account of such action. If the Property Trustee fails to enforce its rights
under the Declaration and the Subordinated Debentures, any Holder of Common
Securities may after written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against any Person to enforce the
Property Trustee's rights under the Declaration and the Subordinated Debentures,
without first instituting a legal proceeding against the Property Trustee or any
other person. Notwithstanding the foregoing, if an Event of Default has occurred
and is continuing and such event is attributable to the failure of the Sponsor
to pay interest or principal on the Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Common Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Subordinated Debentures having a principal amount equal to the
aggregate liquidation amount of the Common Securities of such holder on or after
the respective due dates specified in the Subordinated Debentures. In connection
with such direct action, the Sponsor will be subrogated to the rights of such
Holder of Common Securities under the Declaration to the extent of any payment
made by the Sponsor to such Holder of Common Securities in connection with such
direct action.

     Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Trust Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the Holders of the Common
Securities will be required for the Trust to redeem and cancel Common Securities
or to distribute the Subordinated Debentures in accordance with the Declaration
and the terms of the Trust Securities.

7.   AMENDMENTS TO DECLARATION AND INDENTURE.

     (a) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect (i) any action that would adversely
affect the powers, preferences or special rights of the Trust Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
involuntary or voluntary liquidation, dissolution, winding-up



                                      A-7
<PAGE>

or termination of the Trust, other than as described in Section 8.1 of the
Declaration, then the Holders of outstanding Trust Securities as a class, will
be entitled to vote on such amendment or proposal (but not on any other
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 Trust Securities, voting together as a single class; provided that
a reduction of the aggregate liquidation amount or the Distribution rate, a
change in the payment dates or maturities of the Preferred Securities or a
reduction in the percentage in liquidation amount of outstanding Preferred
Securities, the consent of the Holders of which is required for an amendment to
the Declaration shall not be permitted without the consent of each Holder of the
Preferred Securities. In the event any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or only
the Common Securities, then only the affected 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 66-2/3% in liquidation amount of such class of Trust
Securities.

     (b) In the event the consent of the Property Trustee, as the holder of the
Subordinated Debentures, the Preferred Securities Guarantee and the Common
Securities Guarantee is required under the Indenture with respect to any
amendment, modification, waiver or termination of the Indenture, the
Subordinated Debentures, the Preferred Securities Guarantee or the Common
Securities Guarantee, the Property Trustee shall request the direction of the
Holders of the Trust Securities with respect to such amendment, modification,
waiver or termination and shall vote with respect to such amendment,
modification, waiver or termination as directed by a Majority in liquidation
amount of the Trust Securities voting together as a single class; provided,
however, that where a consent under the Indenture would require the consent of
all of the holders of the Subordinated Debentures, the Property Trustee may only
give such consent at the direction of all of the Holders of the Trust
Securities; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Trust Securities
under this Section 6(b) unless the Property Trustee has obtained, at the expense
of the Holders of the Trust Securities, a written opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action.

8.   PRO RATA.

     A reference to any payment, distribution or treatment as being "Pro Rata"
shall mean pro rata to each Holder of applicable Trust Securities according to
the aggregate liquidation amount of such Trust Securities held by the relevant
Holder in relation to the aggregate liquidation amount of all applicable Trust
Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
applicable Preferred Securities pro rata according to the aggregate liquidation
amount of Preferred Securities held by the relevant Holder relative to the
aggregate liquidation amount of all applicable Preferred Securities outstanding,
and only after satisfaction of all amounts owed to the applicable Holders of the
Preferred Securities, to each applicable Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all applicable
Common Securities outstanding.


                                      A-8
<PAGE>

9.   RANKING.

     The Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Subordinated
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.

10.  ACCEPTANCE OF TRUST SECURITIES GUARANTEE AND INDENTURE.

     Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.

11.  NO PREEMPTIVE RIGHTS.

     The Holders of the Trust Securities shall have no preemptive rights to
subscribe for any additional securities.

12.  MISCELLANEOUS.

     These terms constitute a part of the Declaration.

     The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or and the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request to
the Trust at its principal place of business.




                                      A-9
<PAGE>

ANNEX I

Certificate Number                                Number of Preferred Securities



                   Certificate Evidencing Preferred Securities
                                       of

                          MIDAMERICAN CAPITAL TRUST II

                         Series __ Preferred Securities
                 (liquidation amount $25 per Preferred Security)

     MIDAMERICAN CAPITAL TRUST II, a statutory business trust formed 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 undivided beneficial interests in the
assets of the Trust designated the 11% Trust Issued Preferred Securities Series
__ (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. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of March 12, 2002, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Exhibit A to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.

     Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

     The Preferred Securities are transferable only to Permitted Holders (as
such term is defined in the Declaration).

     By acceptance, the Holder agrees to treat for United States federal income
tax purposes, the Subordinated Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Subordinated
Debentures.


                                      A-10
<PAGE>


     IN WITNESS WHEREOF, the Trust has executed this certificate this __ day of
_____ ____.

Gregory E. Abel,
as Trustee



----------------------------------------------


David L. Sokol,
as Trustee



----------------------------------------------







                                      A-11
<PAGE>

                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:--------------------------------------

Signature:---------------------------------

(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)



                                      A-12
<PAGE>


ANNEX II

Certificate Number                                   Number of Common Securities



                    Certificate Evidencing Common Securities
                                       of

                          MIDAMERICAN CAPITAL TRUST II

                           Series __ Common Securities
                  (liquidation amount $25 per Common Security)

     MIDAMERICAN CAPITAL TRUST II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
___________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the 11% Trust Common Securities, Series __ (liquidation amount
$25 per Common Security) (the "Common Securities"). Subject to the limitations
set forth in Article 9 of the Declaration, the Common 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. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of March 12,
2002, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Exhibit A to the Declaration. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration.

     The Holder is entitled to the benefits of the Common Securities Guarantee
to the extent provided therein. The Trust will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture to the Holder
without charge upon written request to the Trust at its principal place of
business.

     Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat for United States federal income
tax purposes the Subordinated Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated
Debentures.



                                      A-13
<PAGE>


     IN WITNESS WHEREOF, the Trust has executed this certificate this __ day of
_____ ____.


Gregory E. Abel,
as Trustee



----------------------------------------------


David L. Sokol,
as Trustee



----------------------------------------------




                                      A-14
<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)



--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints)


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:---------------------------------

Signature:----------------------------

(Sign exactly as your name appears on the other side of this Common Security
Certificate)



                                      A-15
<PAGE>



                                    EXHIBIT B

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                          MIDAMERICAN CAPITAL TRUST II

                           DATED AS OF MARCH 12, 2002



<PAGE>


                    PREFERRED SECURITIES GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (this "GUARANTEE AGREEMENT"), dated as of March 12,
2002, is executed and delivered by MidAmerican Energy Holdings Company, an Iowa
corporation (the "GUARANTOR"), and The Bank of New York, a New York corporation,
as trustee (the "PREFERRED GUARANTEE TRUSTEE"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities (as defined
herein) of MidAmerican Capital Trust II, a Delaware statutory business trust
(the "TRUST").

                                    RECITALS

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"DECLARATION"), dated as of March 12, 2002, among the trustees of the Trust
named therein, the Guarantor as sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust will be
issuing from time to time up to $323,000,000 aggregate stated liquidation amount
of Preferred Securities designated the 11% Trust Issued Preferred Securities
(the "PREFERRED SECURITIES"); and

     WHEREAS, as incentive for the Holders (as hereinafter defined) to purchase
the Preferred Securities, the Guarantor desires irrevocably and unconditionally
to agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;

     WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "COMMON SECURITIES GUARANTEE AGREEMENT") with substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee Agreement are subordinated to the rights
of Holders of Preferred Securities to receive Guarantee Payments under this
Guarantee Agreement.

     NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.01      DEFINITIONS AND INTERPRETATION.

In this Guarantee Agreement, unless the context otherwise requires:

     (a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.01;


                                      B-1
<PAGE>

     (b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;

     (c) all references to "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; and

     (f) a reference to the singular includes the plural and vice versa.

     "AFFILIATE" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.

     "AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person and, with respect to the Guarantor, the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer,
any assistant Treasurer or any other Officer, or agent of the Guarantor duly
authorized by the board of directors of the Guarantor to act in such matters
relating to the Declaration.

     "COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.

     "DIRECTION" by a Person means a written direction signed:

     (a) if the Person is a natural person by that Person; or

     (b) in any other case, in the name of such Person by one or more Authorized
Officers of that Person.

     "EVENT OF DEFAULT" means a default by the Guarantor on any of its payment
or other material obligations under this Guarantee Agreement.

     "GUARANTEE PAYMENTS" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accumulated and unpaid Distributions (as defined in
the Declaration) that are required to be paid on such Preferred Securities to
the extent the Trust shall have funds available therefor, (ii) the redemption
price, including all accumulated and unpaid Distributions to the date of
redemption (the "REDEMPTION PRICE"), to the extent the Trust shall have funds
available therefor with respect to any Preferred Securities called for
redemption by the Trust, and (iii) upon a voluntary or involuntary dissolution
of the Trust (other than in connection with the distribution of Subordinated
Debentures to the Holders or the redemption of all the Preferred Securities upon
the redemption or Maturity Date (as defined in the Indenture) of the
Subordinated Debentures), the lesser of (a) the aggregate of the liquidation
amount and all accumulated and unpaid Distributions on the Preferred Securities
to the date of payment to the extent the Trust shall have



                                      B-2
<PAGE>

funds available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust (in either
case, the "LIQUIDATION DISTRIBUTION").

     "HOLDER" means any holder, as registered on the books and records of the
Trust of any Preferred Securities; provided, 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.

     "INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Preferred
Guarantee Trustee.

     "INDENTURE" means the Indenture dated as of March 12, 2002, among the
Guarantor and The Bank of New York, as trustee, as modified, amended or
supplemented from time to time.

     "MAJORITY IN LIQUIDATION AMOUNT OF THE TRUST SECURITIES" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.

     "OFFICER'S CERTIFICATE" means, with respect to any Person, a certificate
signed by an Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:

     (a) a statement that such officer signing the Officer's Certificate has
read the covenant or condition and the definition relating thereto;

     (b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officer's Certificate;

     (c) a statement that 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 such officer, such
condition or covenant has been complied with.

     "OPINION OF COUNSEL" or "OPINION OF COUNSEL" means a written opinion of
counsel for the Preferred Guarantee Trustee or the Guarantor, who may be an
employee of or counsel to the Preferred Guaranty Trustee or the Guarantor, and
who shall be reasonably acceptable to the Preferred Guarantee Trustee.

     "PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.


                                      B-3
<PAGE>

     "PREFERRED GUARANTEE TRUSTEE" means The Bank of New York, until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Preferred Guarantee Trustee.

     "RESPONSIBLE OFFICER" means, when used with respect to the Preferred
Guarantee Trustee, any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer or
any other officer in the Corporate Trust Office customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for administration of this Guarantee Agreement 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.

     "SUBORDINATED DEBENTURES" means up to $332,989,700.00 aggregate principal
amount of the Guarantor's 11% Junior Subordinated Deferrable Interest Debentures
held by the Property Trustee of the Trust.

     "SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.01.

     "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as the same
may be amended from time to time, or any successor legislation.

     "TRUST SECURITIES" means collectively the Common Securities and the
Preferred Securities.

                                   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, if any, that are required 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 duties imposed by the Trust
Indenture Act shall control.

SECTION 2.02 LISTS OF HOLDERS OF TRUST SECURITIES.

     (a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require, of
the names and addresses of the Holders ("LIST OF HOLDERS") as of such date, (i)
within 14 days after each record date for payment of distributions, and (ii) at
any other time within 30 days of receipt by the Guarantor of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee provided that the Guarantor
shall not be



                                      B-4
<PAGE>

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 Preferred Guarantee
Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.

     (b) The Preferred Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.03 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.

     Within 60 days after December 31 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.

SECTION 2.04 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.

     The Guarantor shall provide to the Preferred 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 Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement 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 officers of the Guarantor pursuant to Section 314(c)(1) shall be given
in the form of an Officer's 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 the Holders of all of the Preferred Securities, 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 Preferred 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 Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred 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 and/or Responsible
Officers of the Preferred Guarantee



                                      B-5
<PAGE>

Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.

     (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless a Responsible Officer of the Preferred Guarantee
Trustee shall have received written notice as provided in Section 9.03, or a
Responsible Officer shall have obtained actual notice, of such Event of Default.

SECTION 2.08 CONFLICTING INTERESTS.

     The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of the first proviso contained in Section
310(b) of the Trust Indenture Act.

                                   ARTICLE III

             POWER, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.01 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.

     (a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders, and the Preferred Guarantee Trustee
shall not transfer this Guarantee Agreement to any Person except a Holder
exercising his or her rights pursuant to Section 5.05(b) or to a Successor
Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee
Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The
right, title and interest of the Preferred Guarantee Trustee shall automatically
vest in any Successor Preferred 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
Preferred Guarantee Trustee.

     (b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.

     (c) The Preferred Guarantee Trustee, before 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 shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.06), the Preferred 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.

     (d) No provision of this Guarantee Agreement shall be construed to relieve
the Preferred Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:


                                      B-6
<PAGE>

          (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 Preferred Guarantee Trustee
          shall be determined solely by the express provisions of this Guarantee
          Agreement, and the Preferred 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 no implied
          covenants or obligations shall be read into this Guarantee Agreement
          against the Preferred Guarantee Trustee; and

               (B) in the absence of bad faith on the part of the Preferred
          Guarantee Trustee, the Preferred 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 Preferred Guarantee Trustee and conforming to the
          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 Preferred Guarantee Trustee, the
          Preferred 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 Preferred Guarantee Trustee shall not be liable for any error
     of judgment made in good faith by a Responsible Officer of the Preferred
     Guarantee Trustee, unless it shall be proved that the Preferred Guarantee
     Trustee was negligent in ascertaining the pertinent facts upon which such
     judgment was made;

          (iii) the Preferred 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 not less than 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
     Preferred Guarantee Trustee, or exercising any trust or power conferred
     upon the Preferred Guarantee Trustee under this Guarantee Agreement; and

          (iv) no provision of this Guarantee Agreement shall require the
     Preferred 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 Preferred
     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 PREFERRED GUARANTEE TRUSTEE.

     (a) Subject to the provisions of Section 3.01:

          (i) The Preferred Guarantee Trustee may rely and shall be fully
     protected in acting or refraining from acting upon any resolution,
     certificate, Officer's Certificate, statement, instrument, opinion, Opinion
     of Counsel, 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, sent or presented by
     the proper party or parties.


                                      B-7
<PAGE>

          (ii) Any direction or act of the Guarantor contemplated by this
     Guarantee Agreement shall be sufficiently evidenced by a Direction or an
     Officer's Certificate.

          (iii) Whenever, in the administration of this Guarantee Agreement, the
     Preferred Guarantee Trustee shall deem it desirable that a matter be proved
     or established before taking, suffering or omitting any action hereunder,
     the Preferred Guarantee Trustee (unless other evidence is herein
     specifically prescribed) may, in the absence of bad faith on its part,
     request and conclusively rely upon an Officer's Certificate which, upon
     receipt of such request, shall be promptly delivered by the Guarantor.

          (iv) The Preferred Guarantee Trustee shall have no duty to see to any
     recording, filing or registration of any instrument (or any re-recording,
     refiling or registration thereof).

          (v) The Preferred Guarantee Trustee may consult with counsel of its
     selection, 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 Preferred 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.

          (vi) The Preferred 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 Preferred Guarantee Trustee such security and
     indemnity acceptable to the Preferred 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 Preferred
     Guarantee Trustee; provided that, nothing contained in this Section
     3.02(a)(vi) shall be taken to relieve the Preferred 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.

          (vii) The Preferred 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, but the Preferred Guarantee
     Trustee, in its discretion may make such further inquiry or investigation
     into such facts or matters as it may see fit.

          (viii) The Preferred 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 Preferred 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.

          (ix) Any action taken by the Preferred Guarantee Trustee or its agents
     hereunder shall bind the Holders, and the signature of the Preferred
     Guarantee Trustee or its agents alone shall be sufficient and effective to
     perform any such action. No third party shall be required to inquire as to
     the authority of the Preferred Guarantee Trustee to so act or as to its


                                      B-8
<PAGE>

     compliance with any of the terms and provisions of this Guarantee
     Agreement, both of which shall be conclusively evidenced by the Preferred
     Guarantee Trustee's or its agent's taking such action.

          (x) Whenever in the administration of this Guarantee Agreement the
     Preferred Guarantee Trustee shall deem it desirable to receive instructions
     with respect to enforcing any remedy or right or taking any other action
     hereunder, the Preferred Guarantee Trustee (i) may request instructions
     from the Holders, (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.

     (b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Preferred 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 Preferred
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
Preferred Guarantee Trustee shall be construed to be a duty.

SECTION 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

     The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.01 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.

     (a) There shall at all times be a Preferred Guarantee Trustee that 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 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-9
<PAGE>

     (b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02
(c).

     (c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEES.

     (a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

     (b) The Preferred Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and the
Preferred Guarantee Trustee being removed.

     (c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.

     (d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee at the expense of the
Guarantor. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Preferred Guarantee Trustee.

                                    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 Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust 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 Trust to pay such
amounts to the Holders.


                                      B-10
<PAGE>

SECTION 5.02 SUBORDINATION.

     If an event of default under the Indenture has occurred and is continuing,
the rights of holders of the Common Securities to receive payments under the
Common Securities Guarantee Agreement are subordinated to the rights of Holders
to receive Guarantee Payments.

SECTION 5.03 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 Trust 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 5.04 OBLIGATIONS NOT AFFECTED.

     The obligations, covenants, agreements and duties of the Guarantor 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 Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;

     (b) the extension of time for the payment by the Trust 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
sums payable that results from the extension of any interest payment period on
the Subordinated Debentures or any extension of the maturity date of the
Subordinated 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 Trust 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
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

     (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


                                      B-11
<PAGE>

     (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 5.04 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 5.05 RIGHTS OF HOLDERS.

     (a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee Agreement.

     (b) Notwithstanding anything contained herein, any Holder of Preferred
Securities 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 Trust, the Preferred Guarantee Trustee or any other
Person.

SECTION 5.06 GUARANTEE OF PAYMENT.

     This Guarantee Agreement creates a guarantee of payment and not of
collection.

SECTION 5.07 SUBROGATION.

     The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to such 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 right that 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 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.

SECTION 5.08 INDEPENDENT OBLIGATIONS.

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Trust 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 5.04 hereof.


                                      B-12
<PAGE>

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.01 LIMITATION OF TRANSACTIONS.

     So long as any Preferred Securities remain outstanding, if there shall have
occurred an Event of Default or an event of default under the Declaration, then
the Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or (ii) make any payment of principal of, or interest or
premium, if any, on or repay, repurchase or redeem, or make any sinking fund
payment with respect to, any indebtedness of the Company (including other junior
subordinated debt securities) that ranks pari passu with or junior in right of
payment to the Subordinated Debentures or make any guarantee payments with
respect to the foregoing (other than (a) dividends or distributions in common
stock of the Company and (b) payments under this Guarantee Agreement.

SECTION 6.02 RANKING.

     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 (other than the Common Securities Guarantee
Agreement or any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor),
(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 the Guarantor's common
stock.

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.01 TERMINATION.

     This Guarantee Agreement shall terminate upon (i) full payment of the
Redemption Price of all Preferred Securities, (ii) the distribution of the
Subordinated Debentures to the Holders of all Preferred Securities or (iii) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Trust. 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 of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee. Notwithstanding anything contained herein to the contrary, the
obligations of the Guarantor set forth in Article VIII hereof shall survive
termination of this Guarantee Agreement or the earlier resignation or removal of
the Preferred Guarantee Trustee.


                                      B-13
<PAGE>

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.01 EXCULPATION.

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee Agreement and
in a manner that such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.

SECTION 8.02 INDEMNIFICATION.

     (a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person in connection with this
Guarantee Agreement including without limitation by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.

     (b) To the fullest extent permitted by applicable law, expenses(including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of any undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.02(a).


                                      B-14
<PAGE>

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.01 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.

SECTION 9.02 AMENDMENTS.

     Except with respect to any changes that do not 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 at least 66-2/3% in liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Preferred Securities (as defined in the
Declaration). The provisions of Section 12.2 of the Declaration with respect to
meetings or actions by written consent of Holders of the Trust Securities apply
to the giving of such approval. The Preferred Guarantee Trustee may, but shall
have no obligation to, execute and deliver any amendment to this Guarantee
Agreement which affects the Preferred Guarantee Trustee's rights, duties or
immunities hereunder or otherwise.

SECTION 9.03 NOTICES.

     All notices provided for in this Guarantee Agreement shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail as follows:

     (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee
Trustee's mailing address set forth below (or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the Preferred
Securities):

                  The Bank of New York
                  101 Barclay Street, Floor 21 West
                  New York, New York  10286
                  Attention:  Corporate Trustee Department
                  Telecopy Number:  (212) 815-5915

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Preferred Securities):

                  MidAmerican Energy Holdings Company
                  302 South 36th Street,
                  Suite 400


                                      B-15
<PAGE>

                  Omaha, Nebraska  68131
                  Attention:  General Counsel

     (c) If given to any Holder of Preferred Securities, at the address set
forth in the books and records of the Trust.

     All such notices 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 9.04 BENEFIT.

     This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.

SECTION 9.05 GOVERNING LAW.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                      B-16
<PAGE>


     IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement
to be executed by their respective officers thereunto duly authorized, as of the
day and year first above written.

                                   MIDAMERICAN ENERGY HOLDINGS COMPANY



                                   By:      /s/ Douglas L. Anderson
                                            ----------------------------------
                                            Name:  Douglas L. Anderson
                                            Title: Senior Vice President


                                   THE BANK OF NEW YORK,
                                   as Preferred Guarantee Trustee


                                   By:      /s/ Robert A. Massimillo
                                            ----------------------------------
                                            Name:  Robert A. Massimillo
                                            Title: Vice President



                                      B-17
<PAGE>



                                    EXHIBIT C

                      COMMON SECURITIES GUARANTEE AGREEMENT

                          MIDAMERICAN CAPITAL TRUST II

                           DATED AS OF MARCH 12, 2002



<PAGE>




                      COMMON SECURITIES GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (this "GUARANTEE AGREEMENT"), dated as of March
12, 2002, is executed and delivered by MidAmerican Energy Holdings Company, an
Iowa corporation (the "GUARANTOR"), for the benefit of the Holders (as defined
herein) from time to time of the Common Securities (as defined in the
Declaration referred to below) of MidAmerican Capital Trust II, a Delaware
business trust (the "ISSUER").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"DECLARATION"), dated as of March 12, 2002, among the Trustees of the Issuer
named therein, the Guarantor as sponsor and the holders from time to time of
securities representing undivided beneficial interests in the assets of the
Issuer, the Issuer will be issuing from time to time up to $9,989,700 aggregate
stated liquidation amount of the Issuer's Common Securities designated the 11%
Trust Issued Common Securities (the "COMMON SECURITIES"), representing
beneficial interests in the assets of the Issuer;

     WHEREAS, as incentive for the Holders to purchase the Common Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee Agreement, to pay to the Holders of the Common
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and

     WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement on substantially identical terms to this Guarantee Agreement for the
benefit of the holders of the Preferred Securities (the "PREFERRED SECURITIES
GUARANTEE") except that if an Event of Default (as defined in the Indenture),
has occurred and is continuing, the rights of Holders of the Common Securities
to receive Guarantee Payments under this Guarantee Agreement are subordinated to
the rights of holders of Preferred Securities to receive Guarantee Payments
under the Preferred Securities Guarantee.

     NOW, THEREFORE, in consideration of the purchase by each Holder of Common
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1 DEFINITIONS.

In this Guarantee Agreement, unless the context otherwise requires, the terms
set forth below shall have the following meanings.

     (a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;


<PAGE>

     (b) Terms defined in the Declaration as at the date of execution of this
Guarantee Agreement have the same meaning when used in this Guarantee Agreement
unless otherwise defined in this Guarantee Agreement;

     (c) A term defined anywhere in this Guarantee Agreement has the same
meaning throughout;

     (d) All references to "this Guarantee Agreement" are to this Guarantee
Agreement as modified, supplemented or amended from time to time;

     (e) All references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise specified;
and

     (f) A reference to the singular includes the plural and vice versa.

     "GUARANTEE PAYMENTS" shall mean the following payments or distributions,
without duplication, with respect to the Common Securities, to the extent not
paid or made by the Issuer: (i) any accumulated and unpaid Distributions which
are required to be paid on such Common Securities to the extent the Issuer shall
have funds available therefor, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "REDEMPTION
PRICE") to the extent the Issuer shall have funds available therefor, with
respect to any Common Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution of the Issuer (other than in
connection with the distribution of Subordinated Debentures to the Holders on
the redemption of all the Common Securities upon the redemption or Maturity Date
of the Subordinated Debentures), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid Distributions on the Common
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").

     "HOLDER" shall mean any holder, as registered on the books and records of
the Issuer, of any Common Securities.

                                   ARTICLE II

                                    GUARANTEE

SECTION 2.1 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.


                                      -2-
<PAGE>

SECTION 2.2 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
non-payment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 2.3 SUBORDINATION.

     If an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under this Guarantee Agreement are subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments under the
Preferred Securities Guarantee.

SECTION 2.4 OBLIGATIONS NOT AFFECTED.

     The obligations, covenants, agreements and duties of the Guarantor 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 Common 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 Common Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Common 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 Subordinated Debentures or any extension of the maturity date of the
Subordinated 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 Common 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
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 Common Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or


                                      -3-
<PAGE>

     (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 2.4 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 2.5 RIGHTS OF HOLDERS.

     The Guarantor expressly acknowledges that any Holder of Common Securities
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.

SECTION 2.6 GUARANTEE OF PAYMENT.

     This Guarantee Agreement creates a guarantee of payment and not of
collection.

SECTION 2.7 SUBROGATION OF PAYMENT.

     The Guarantor shall be subrogated to all (if any) rights of the Holders of
Common Securities against the Issuer in respect of any amounts paid to such
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 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.

SECTION 2.8 INDEPENDENT OBLIGATIONS.

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Common 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 2.4 hereof.

                                   ARTICLE III

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1 LIMITATION OF TRANSACTIONS.

     So long as any Common Securities remain outstanding, if (A) the Guarantor
shall be in default with respect to its Guarantee Payments or other obligations
hereunder, or (B) there shall have occurred any Event of Default, then the
Guarantor shall not (i) declare or pay any dividends



                                      -4-
<PAGE>

or distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock or (ii) make any payment of principal
of, or interest or premium, if any, on or repay, repurchase or redeem, or make
any sinking fund payment with respect to, any indebtedness of the Company
(including other junior subordinated debt securities) that ranks pari passu with
or junior in right of payment to the Subordinated Debentures or make any
guarantee payments with respect to the foregoing (other than (a) dividends or
distributions in common stock of the Company and (b) payments under this
Guarantee Agreement).

SECTION 3.2 RANKING.

     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 (other than any obligation in respect of the
Preferred Securities Guarantee or any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Affiliate
of the Guarantor), (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 the
Guarantor's common stock.

     If an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under this Guarantee Agreement are subordinated to the rights of
holders of Preferred Securities to receive Guarantee Payments.

                                   ARTICLE IV

                                   TERMINATION

SECTION 4.1 TERMINATION.

     This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all Common Securities, upon the distribution of the
Subordinated Debentures to the Holders of all of the Common Securities or upon
full payment of the amounts payable in accordance with the Declaration 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 of Common Securities must restore payment of any
sums paid under the Common Securities or under this Guarantee Agreement.

                                    ARTICLE V

                                  MISCELLANEOUS

SECTION 5.1 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 Common Securities
then outstanding.


                                      -5-
<PAGE>

SECTION 5.2 AMENDMENTS.

     Except with respect to any changes which do not 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 at least 66-2/3% in liquidation amount of all the outstanding Common
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of holders of the Trust Securities apply to the giving of such
approval.

SECTION 5.3 NOTICES.

     All notices provided for in this Guarantee Agreement shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:

     (a) if given to the Issuer, in care of the Regular Trustees at the Issuer's
mailing address set forth below (or such other address as the Issuer may give
notice of to the Holders of the Common Securities):

                  MidAmerican Capital Trust II
                  c/o MidAmerican Energy Holdings Company
                  302 South 36th Street
                  Suite 400
                  Omaha, Nebraska 68131
                  Attention: General Counsel

     (b) if given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Common Securities):

                  MidAmerican Energy Holdings Company
                  302 South 36th Street
                  Suite 400
                  Omaha, Nebraska 68131
                  Attention: General Counsel

     (c) if given to any Holder of Common Securities, at the address set forth
on the books and records of the Issuer.

     All such notices 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 5.4 BENEFICIARIES.

     This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Common Securities.


                                      -6-
<PAGE>

SECTION 5.5 GOVERNING LAW.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.



                                      -7-
<PAGE>




         THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.







MIDAMERICAN ENERGY HOLDINGS COMPANY


By:      /s/ Douglas L. Anderson
         ----------------------------------------
         Name:  Douglas L. Anderson
         Title: Senior Vice President



                                      -8-