Document:

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                                                               EXECUTION VERSION

                                  $700,000,000

                       MIDAMERICAN ENERGY HOLDINGS COMPANY

                     4.625% SENIOR NOTES DUE OCTOBER 1, 2007
                     5.875% SENIOR NOTES DUE OCTOBER 1, 2012

                          REGISTRATION RIGHTS AGREEMENT

                                                                 October 1, 2002

Credit Suisse First Boston Corporation
The other Initial Purchasers Listed on Schedule A hereto
c/o Credit Suisse First Boston Corporation
    Eleven Madison Avenue
    New York, New York 10010-3629

Dear Sirs:

         MidAmerican Energy Holdings Company, an Iowa corporation (the
"COMPANY"), proposes to issue and sell to Credit Suisse First Boston Corporation
and the other Initial Purchasers listed on Schedule A hereto (collectively, the
"INITIAL PURCHASERS"), upon the terms set forth in a purchase agreement of even
date herewith (the "PURCHASE AGREEMENT"), $200,000,000 aggregate principal
amount of its 4.625% Senior Notes due October 1, 2007 and $500,000,000 aggregate
principal amount of its 5.875% Senior Notes due October 1, 2012 (collectively,
the "INITIAL SECURITIES"). The Initial Securities will be issued pursuant to an
Indenture, to be dated on or about October 4, 2002, as supplemented by a first
supplemental indenture to be entered into thereunder, to be dated on or about
October 4, 2002 (together, the "INDENTURE"), between the Company and The Bank of
New York, as trustee (the "TRUSTEE"). As an inducement to the Initial Purchasers
to enter into the Purchase Agreement, the Company agrees with the Initial
Purchasers, for the benefit of the Initial Purchasers and the holders of the
Securities (as defined below) (collectively the "HOLDERS"), as follows:

         1. Registered Exchange Offer. Unless not permitted by applicable law
(after the Company has complied with the ultimate paragraph of this Section 1),
the Company shall prepare and file with the Securities and Exchange Commission
(the "COMMISSION") a registration statement (the "EXCHANGE OFFER REGISTRATION
STATEMENT") on an appropriate form under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), with respect to a proposed offer (the "REGISTERED
EXCHANGE OFFER") to the Holders of Transfer Restricted Securities (as defined in
Section 6 hereof), who are not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer, to issue and deliver to
such Holders, in exchange for the Initial Securities, a like aggregate principal
amount of debt securities of the Company issued under the Indenture,
substantially identical in all material respects to the Initial Securities and
registered under the Securities Act (the "EXCHANGE SECURITIES" and, together
with the Initial Securities, the "SECURITIES"). The Company shall use its
reasonable best efforts to cause the Exchange Offer Registration Statement to
become effective under the Securities Act within 270 days (such 270th day being
an "EFFECTIVENESS DEADLINE") after the date on which the Initial Purchasers
purchase the Initial Securities pursuant to the Purchase Agreement (the "CLOSING
DATE") and will keep the Exchange Offer Registration

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Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Registered Exchange Offer is mailed
to the Holders (such period being called the "EXCHANGE OFFER REGISTRATION
PERIOD").

         If the Company commences the Registered Exchange Offer, the Company
will be entitled to consummate the Registered Exchange Offer 30 days after such
commencement (provided that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer).

         Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of the Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements or understanding with any person to participate in the distribution
of the Exchange Securities and is not prohibited by any law or policy of the
Commission from participating in the Registered Exchange Offer) to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act.

         The Company acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell
Securities (as defined below) acquired in exchange for Initial Securities
constituting any portion of an unsold allotment, is required to deliver a
prospectus containing the information required by Items 507 or 508, as
applicable, of Regulation S-K under the Securities Act in connection with such
sale.

         The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by an Exchanging Dealer or an Initial Purchaser, such period
shall be the lesser of 120 days and the date on which all Exchanging Dealers and
the Initial Purchasers have sold all Exchange Securities held by them (unless
such period is extended pursuant to Section 3(j) below) and (ii) the Company
shall make such prospectus and any amendment or supplement thereto available to
any broker-dealer for use in connection with any resale of any Exchange
Securities for a period of not less than 120 days after the consummation of the
Registered Exchange Offer.

         If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and substantially identical in all material respects
to the Initial Securities (the "PRIVATE EXCHANGE SECURITIES"). The Initial
Securities, the Exchange Securities and the Private Exchange Securities are
herein collectively called the "SECURITIES".

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         In connection with the Registered Exchange Offer, the Company shall:

              (a) mail to each Holder a copy of the prospectus forming part of
         the Exchange Offer Registration Statement, together with an
         appropriate letter of transmittal and related documents;

              (b) keep the Registered Exchange Offer open for not less than 30
         days (or longer, if required by applicable law) after the date notice
         thereof is mailed to the Holders;

              (c) utilize the services of a depositary for the Registered
         Exchange Offer with an address in the Borough of Manhattan, The City
         of New York, which may be the Trustee or an affiliate of the Trustee;

              (d) permit Holders to withdraw tendered Securities at any time
         prior to the close of business, New York time, on the last business
         day on which the Registered Exchange Offer shall remain open; and

              (e) otherwise comply with all applicable laws.

         As soon as practicable after the close of the Registered Exchange Offer
or the Private Exchange, as the case may be, the Company shall:

              (x) accept for exchange all the Initial Securities validly
         tendered and not withdrawn pursuant to the Registered Exchange Offer
         and the Private Exchange;

              (y) deliver to the Trustee for cancellation all the Initial
         Securities so accepted for exchange; and

              (z) cause the Trustee to authenticate and deliver promptly to
         each Holder of the Initial Securities, the Exchange Securities or the
         Private Exchange Securities, as the case may be, equal in principal
         amount to the Initial Securities of such Holder so accepted for
         exchange.

         The Indenture will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.

         Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.

         Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of its business, (ii) at the time of
commencement of the Registered Exchange Offer, such Holder had no arrangements
or understanding with any person to participate in the distribution of the
Securities or the Exchange Securities within the meaning of the Securities Act,
(iii) such Holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or if it is an affiliate, such Holder will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is
not engaged in, and does not intend to engage in, the distribution of the
Exchange Securities and (v) if such Holder is a broker-dealer, that it will
receive Exchange Securities for its own account in exchange for Initial
Securities that were acquired as a result of market-making activities or other
trading activities and

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that it will be required to acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities.

         Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

         If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will seek a no-action letter or other favorable decision from the Commission
allowing the Company to consummate the Registered Exchange Offer. The Company
will pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company will take all such other actions as
may be requested by the Commission or otherwise reasonably required in
connection with the issuance of such decision, including without limitation (i)
participating in telephonic conferences with the Commission, (ii) delivering to
the Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that the
Registered Exchange Offer should be permitted and (iii) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.

         2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
date that is 40 days after the date on which the Exchange Offer Registration
Statement is declared effective (such 40th day being the "CONSUMMATION
DEADLINE"), (iii) any Initial Purchaser so requests with respect to the Initial
Securities (or the Private Exchange Securities) not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
consummation of the Registered Exchange Offer or (iv) any Holder (other than an
Exchanging Dealer) is not eligible to participate in the Registered Exchange
Offer or, in the case of any Holder (other than an Exchanging Dealer) that
participates in the Registered Exchange Offer, such Holder does not receive
freely tradeable Exchange Securities on the date of the exchange and any such
Holder so requests for any reason other than the failure by such Holder to make
a timely and valid tender in accordance with the Registered Exchange Offer, the
Company shall take the following actions (the date on which any of the
conditions described in the foregoing clauses (i) through (iv) occur, including
in the case of clauses (iii) or (iv) the receipt of the required notice, being a
"TRIGGER DATE"):

              (a) The Company shall as promptly as practicable prepare and file
         with the Commission and thereafter use its reasonable best efforts to
         cause to be declared effective not later than the latter to occur of
         the date that is (i) 150 days after the Trigger Date and (ii) 270 days
         after the Closing Date (such 150th or 270th day, as the case may be,
         being an "EFFECTIVENESS DEADLINE"), a registration statement (the
         "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
         Registration Statement, a "REGISTRATION STATEMENT") on an appropriate
         form under the Securities Act relating to the offer and sale of the
         Transfer Restricted Securities by the Holders thereof from time to
         time in accordance with the methods of distribution set forth in the
         Shelf Registration Statement and Rule 415 under the Securities Act
         (hereinafter, the "SHELF REGISTRATION"); provided, however, that no
         Holder (other than an Initial Purchaser) shall be entitled to have the
         Securities

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          held by it covered by the Shelf Registration Statement unless such
          Holder agrees in writing to be bound by all the provisions of this
          Agreement applicable to such Holder.

               (b) The Company shall use its reasonable best efforts to keep the
          Shelf Registration Statement continuously effective in order to permit
          the prospectus included therein to be lawfully delivered by the
          Holders of the relevant Securities, for a period of two years (or for
          such longer period if extended pursuant to Section 3(j) below) from
          the Closing Date or such shorter period that will terminate when all
          the Securities covered by the Shelf Registration Statement (i) have
          been sold pursuant thereto or (ii) are no longer restricted securities
          (as defined in Rule 144 under the Securities Act, or any successor
          rule thereof) (such applicable period being called the "SHELF
          REGISTRATION PERIOD").

               (c) Notwithstanding any other provisions of this Agreement to the
          contrary, the Company shall cause the Shelf Registration Statement and
          the related prospectus and any amendment or supplement thereto, as of
          the effective date of the Shelf Registration Statement, amendment or
          supplement, (i) to comply in all material respects with the applicable
          requirements of the Securities Act and the rules and regulations of
          the Commission promulgated thereunder and (ii) not to contain any
          untrue statement of a material fact or omit to state a material fact
          required to be stated therein or necessary in order to make the
          statements therein, in light of the circumstances under which they
          were made, not misleading.

          3. Registration Procedures. In connection with any Shelf Registration
Statement contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:

               (a) The Company shall (i) furnish to each Initial Purchaser,
          prior to the filing thereof with the Commission, a copy of the
          Registration Statement and each amendment thereof and each supplement,
          if any, to the prospectus included therein and, in the event that an
          Initial Purchaser (with respect to any portion of an unsold allotment
          from the original offering of the Initial Securities) is participating
          in the Registered Exchange Offer or the Shelf Registration Statement,
          the Company shall use its best efforts to reflect in each such
          document, when so filed with the Commission, such comments as such
          Initial Purchaser reasonably may propose not later than five business
          days after delivery of such documents to such Initial Purchaser; (ii)
          include the information set forth in Annex A hereto on the cover, in
          Annex B hereto in the "Exchange Offer Procedures" section and the
          "Purpose of the Exchange Offer" section and in Annex C hereto in the
          "Plan of Distribution" section of the prospectus forming a part of the
          Exchange Offer Registration Statement and include the information set
          forth in Annex D hereto in the letter of transmittal delivered
          pursuant to the Registered Exchange Offer; (iii) if requested by an
          Initial Purchaser, include the information required by Items 507 or
          508, as applicable, of Regulation S-K under the Securities Act in the
          prospectus forming a part of the Exchange Offer Registration
          Statement; (iv) include within the prospectus contained in the
          Exchange Offer Registration Statement a section entitled "Plan of
          Distribution," reasonably acceptable to the Initial Purchasers, which
          shall contain a summary statement of the positions taken or policies
          made by the staff of the Commission with respect to the potential
          "underwriter" status of any broker-dealer that is the beneficial owner
          (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
          as amended (the "EXCHANGE ACT")) of Exchange Securities received by
          such broker-dealer in the Registered Exchange Offer (a "PARTICIPATING
          BROKER-DEALER"), whether such positions or policies have been publicly
          disseminated by the staff of the Commission or such positions or
          policies, in the reasonable judgment of the Initial Purchasers based
          upon advice of counsel (which may be in-house counsel), represent the
          prevailing views of the staff of the Commission; and (v) in the case
          of a Shelf Registration Statement, include the names of the Holders
          who propose to sell Securities pursuant to the Shelf Registration
          Statement as selling securityholders.

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               (b) The Company shall give written notice to the Initial
          Purchasers, the Holders of the Securities and any Participating
          Broker-Dealer from whom the Company has received prior written notice
          that it will be a Participating Broker-Dealer in the Registered
          Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall
          be accompanied by an instruction to suspend the use of the prospectus
          until the requisite changes have been made):

                    (i) when the Registration Statement or any amendment thereto
               has been filed with the Commission and when the Registration
               Statement or any post-effective amendment thereto has become
               effective;

                    (ii) of any request by the Commission for amendments or
               supplements to the Registration Statement or the prospectus
               included therein or for additional information;

                    (iii) of the issuance by the Commission of any stop order
               suspending the effectiveness of the Registration Statement or the
               initiation of any proceedings for that purpose;

                    (iv) of the receipt by the Company or its legal counsel of
               any notification with respect to the suspension of the
               qualification of the Securities for sale in any jurisdiction or
               the initiation or threatening of any proceeding for such purpose
               of which the Company has knowledge; and

                    (v) of the happening of any event that requires the Company
               to make changes in the Registration Statement or the prospectus
               in order that the Registration Statement or the prospectus do not
               contain an untrue statement of a material fact nor omit to state
               a material fact required to be stated therein or necessary to
               make the statements therein (in the case of the prospectus, in
               light of the circumstances under which they were made) not
               misleading.

               (c) The Company shall make every reasonable effort to obtain the
          withdrawal, at the earliest possible time, of any order suspending the
          effectiveness of the Registration Statement.

               (d) The Company shall furnish to each Holder of Securities
          included within the coverage of the Shelf Registration, without
          charge, at least one copy of the Shelf Registration Statement and any
          post-effective amendment thereto, including financial statements and
          schedules, and, if the Holder so requests in writing, all exhibits
          thereto (including those, if any, incorporated by reference).

               (e) The Company shall deliver to each Exchanging Dealer and each
          Initial Purchaser, and to any other Holder who so requests, without
          charge, at least one copy of the Exchange Offer Registration Statement
          and any post-effective amendment thereto, including financial
          statements and schedules, and, if any Initial Purchaser or any such
          Holder requests, all exhibits thereto (including those incorporated by
          reference).

               (f) The Company shall, during the Shelf Registration Period,
          deliver to each Holder of Securities included within the coverage of
          the Shelf Registration, without charge, as many copies of the
          prospectus (including each preliminary prospectus) included in the
          Shelf Registration Statement and any amendment or supplement thereto
          as such person may reasonably request. The Company consents, subject
          to the provisions of this Agreement, to the use in accordance with
          applicable law of the prospectus or any amendment or supplement
          thereto by each of the selling Holders of the Securities in connection
          with the offering and sale of the Securities covered by the
          prospectus, or any amendment or supplement thereto, included in the
          Shelf Registration Statement.

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               (g) The Company shall deliver to each Initial Purchaser, any
          Exchanging Dealer, any Participating Broker-Dealer and such other
          persons required to deliver a prospectus following the Registered
          Exchange Offer, without charge, as many copies of the final prospectus
          included in the Exchange Offer Registration Statement and any
          amendment or supplement thereto as such persons may reasonably
          request. The Company consents, subject to the provisions of this
          Agreement, to the use in accordance with applicable law of the
          prospectus or any amendment or supplement thereto by any Initial
          Purchaser, if necessary, any Participating Broker-Dealer and such
          other persons required to deliver a prospectus following the
          Registered Exchange Offer in connection with the offering and sale of
          the Exchange Securities covered by the prospectus, or any amendment or
          supplement thereto, included in such Exchange Offer Registration
          Statement.

               (h) Prior to any public offering of the Securities pursuant to
          any Registration Statement, the Company shall cooperate with the
          Holders of the Securities included therein and their Special Counsel
          (as defined in paragraph (p) below) in connection with the
          registration or qualification of the Securities for offer and sale
          under the securities or "blue sky" laws of such states of the United
          States as any Holder of the Securities reasonably requests in writing
          and do any and all other acts or things reasonably necessary or
          advisable to enable the offer and sale in such jurisdictions of the
          Securities covered by such Registration Statement; provided, however,
          that the Company shall not be required to (i) qualify generally to do
          business in any jurisdiction where it is not then so qualified or (ii)
          take any action which would subject it to general service of process
          or to taxation in any jurisdiction where it is not then so subject.

               (i) The Company shall cooperate with the Holders of the
          Securities to facilitate the timely preparation and delivery of
          certificates representing the Securities to be sold pursuant to any
          Registration Statement free of any restrictive legends and in such
          denominations and registered in such names as the Holders may request
          a reasonable period of time prior to sales of the Securities pursuant
          to such Registration Statement.

               (j) Upon the occurrence of any event contemplated by paragraphs
          (ii) through (v) of Section 3(b) above during the period for which the
          Company is required to maintain an effective Registration Statement,
          the Company shall promptly prepare and file a post-effective amendment
          to the Registration Statement or a supplement to the related
          prospectus and any other required document so that, as thereafter
          delivered to Holders of the Securities or purchasers of Securities,
          the prospectus will not contain an untrue statement of a material fact
          or omit to state any material fact required to be stated therein or
          necessary to make the statements therein, in light of the
          circumstances under which they were made, not misleading. If the
          Company notifies the Initial Purchasers, the Holders of the Securities
          and any known Participating Broker-Dealer in accordance with
          paragraphs (ii) through (v) of Section 3(b) above to suspend the use
          of the prospectus until the requisite changes to the prospectus have
          been made, then the Initial Purchasers, the Holders of the Securities
          and any such Participating Broker-Dealers shall suspend use of such
          prospectus, and the period of effectiveness of the Shelf Registration
          Statement provided for in Section 2(b) above and the Exchange Offer
          Registration Statement provided for in Section 1 above shall each be
          extended by the number of days from and including the date of the
          giving of such notice to and including the date when the Initial
          Purchasers, the Holders of the Securities and any known Participating
          Broker-Dealer shall have received such amended or supplemented
          prospectus pursuant to this Section 3(j).

               (k) Not later than the effective date of the applicable
          Registration Statement, the Company will provide a CUSIP number for
          the Initial Securities, the Exchange Securities or the Private
          Exchange Securities, as the case may be, and provide the applicable
          trustee with printed certificates for the Initial Securities, the
          Exchange Securities or the Private Exchange Securities, as the case
          may be, in a form eligible for deposit with The Depository Trust
          Company.

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               (l) The Company will use its reasonable best efforts to comply
          with all rules and regulations of the Commission to the extent and so
          long as they are applicable to the Registered Exchange Offer or the
          Shelf Registration and will make generally available to its security
          holders (or otherwise provide in accordance with Section 11(a) of the
          Securities Act) an earnings statement satisfying the provisions of
          Section 11(a) of the Securities Act, no later than 45 days after the
          end of a 12-month period (or 90 days, if such period is a fiscal year)
          beginning with the first month of the Company's first fiscal quarter
          commencing after the effective date of the Registration Statement,
          which statement shall cover such 12-month period.

               (m) The Company shall use its reasonable best efforts to cause
          the Indenture to be qualified under the Trust Indenture Act of 1939,
          as amended, in a timely manner and, in connection therewith, cooperate
          with the Trustee under the Indenture and the Holders of Securities to
          effect such changes to the Indenture as may be required for such
          qualification. In the event that such qualification would require the
          appointment of a new trustee under the Indenture, the Company shall
          appoint a new trustee thereunder pursuant to the applicable provisions
          of the Indenture.

               (n) The Company may require each Holder of Securities to be sold
          pursuant to the Shelf Registration Statement to furnish to the Company
          such information regarding the Holder and the distribution of the
          Securities as the Company may from time to time reasonably require for
          inclusion in the Shelf Registration Statement, and the Company may
          exclude from such registration the Securities of any Holder that fails
          to furnish such information within a reasonable time after receiving
          such request.

               (o) The Company shall enter into such customary agreements
          (including, if requested, an underwriting agreement in customary form)
          and take all such other action, if any, as any Holder of the
          Securities shall reasonably request in order to facilitate the
          disposition of the Securities pursuant to any Shelf Registration.

               (p) In the case of any Shelf Registration, the Company shall (i)
          make available at reasonable times and upon reasonable notice for
          inspection by a representative of the Holders of a majority in
          aggregate principal amount of the Securities being sold, any
          underwriter participating in any disposition pursuant to the Shelf
          Registration Statement and any attorney, accountant or other agent
          retained by the Holders of the Securities or any such underwriter all
          relevant financial and other records, pertinent corporate documents
          and properties of the Company and (ii) cause the Company's officers,
          directors, employees, accountants and auditors to supply all relevant
          information reasonably requested by the Holders of the Securities or
          any such underwriter, attorney, accountant or agent in connection with
          the Shelf Registration Statement, in each case, as shall be reasonably
          necessary to enable such persons to conduct a reasonable investigation
          within the meaning of Section 11 of the Securities Act; provided,
          however, that the foregoing inspection and information gathering shall
          be coordinated on behalf of the Initial Purchasers by you and on
          behalf of the other parties, by one counsel designated by and on
          behalf of such other parties as described herein (which counsel shall
          be Latham & Watkins or another law firm reasonably acceptable to the
          Company, such counsel being referred to herein as the "SPECIAL
          COUNSEL"); provided, further, however, that, as a condition to
          supplying such information, the Company shall receive an agreement in
          writing from such Special Counsel agreeing that any information that
          is designated in writing by the Company, in good faith, as
          confidential at the time of delivery of such information shall be kept
          confidential by such Special Counsel and any other person entitled to
          receive such information pursuant to this paragraph (p) unless (w)
          disclosure of such information is required pursuant to applicable law
          or by court or administrative order, (x) disclosure of such
          information is, in the reasonable opinion of counsel to the Company,
          necessary to avoid or correct a misstatement or omission of a material
          fact in any Registration Statement, prospectus or any

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          supplement or post-effective amendment thereto or disclosure is
          otherwise required by law, (y) such information becomes generally
          available to the public other than as a result of a disclosure by such
          counsel or any other person entitled to receive such information
          pursuant to this paragraph (p) in violation of this proviso or (z)
          such information is approved for release by the Company in writing.

               (q) In the case of any Shelf Registration, the Company, if
          requested by any Holder of Securities covered thereby, shall cause (i)
          its counsel to deliver an opinion and updates thereof relating to the
          Securities in customary form addressed to such Holders and the
          managing underwriters, if any, thereof and dated, in the case of the
          initial opinion, the effective date of such Shelf Registration
          Statement (it being agreed that the matters to be covered by such
          opinion shall include, without limitation, the due incorporation and
          good standing of the Company and its "significant subsidiaries" (as
          defined in Rule 1-02(w) of Regulation S-X); the qualification of the
          Company and its significant subsidiaries to transact business as
          foreign corporations; the due authorization, execution and delivery of
          the relevant agreement of the type referred to in Section 3(o) hereof;
          the due authorization, execution, authentication and issuance, and the
          validity and enforceability, of the applicable Securities; the absence
          of material legal or governmental proceedings involving the Company
          and its significant subsidiaries; the absence of governmental
          approvals required to be obtained in connection with the Shelf
          Registration Statement, the offering and sale of the applicable
          Securities, or any agreement of the type referred to in Section 3(o)
          hereof; the compliance as to form of such Shelf Registration Statement
          and any documents incorporated by reference therein and of the
          Indenture with the requirements of the Securities Act and the Trust
          Indenture Act, respectively; and, as of the date of the opinion and as
          of the effective date of the Shelf Registration Statement or most
          recent post-effective amendment thereto, as the case may be, the
          absence from such Shelf Registration Statement and the prospectus
          included therein, as then amended or supplemented, and from any
          documents incorporated by reference therein, if applicable, of an
          untrue statement of a material fact or the omission to state therein a
          material fact required to be stated therein or necessary to make the
          statements therein not misleading (in the case of any such documents,
          in the light of the circumstances existing at the time that such
          documents were filed with the Commission under the Exchange Act); (ii)
          its officers to execute and deliver all customary documents and
          certificates and updates thereof requested by any underwriters of the
          applicable Securities; and (iii) its independent public accountants
          and the independent public accountants with respect to any other
          entity, if any, for which financial information is provided in the
          Shelf Registration Statement to provide to the selling Holders of the
          applicable Securities and any underwriter therefor a comfort letter in
          customary form and covering matters of the type customarily covered in
          comfort letters in connection with underwritten offerings, subject to
          receipt of appropriate documentation as contemplated, and only if
          permitted, by Statement of Auditing Standards No. 72.

               (r) In the case of the Registered Exchange Offer, if requested by
          any Initial Purchaser or any known Participating Broker-Dealer, the
          Company shall cause (i) its counsel to deliver to such Initial
          Purchaser or such Participating Broker-Dealer a signed opinion in the
          form set forth in Section 6(c)-(e) of the Purchase Agreement with such
          changes as are customary in connection with the preparation of a
          Registration Statement and (ii) its independent public accountants and
          the independent public accountants with respect to any other entity,
          if any, for which financial information is provided in the
          Registration Statement to deliver to such Initial Purchaser or such
          Participating Broker-Dealer a comfort letter, in customary form,
          meeting the requirements as to the substance thereof as set forth in
          Section 6(a) of the Purchase Agreement, with appropriate date changes.

               (s) If a Registered Exchange Offer or a Private Exchange is to be
          consummated, upon delivery of the Initial Securities by Holders to the
          Company (or to such other Person as directed by the Company) in
          exchange for the Exchange Securities or the Private Exchange
          Securities, as the

                                       9
<PAGE>

          case may be, the Company shall mark, or caused to be marked, on the
          Initial Securities so exchanged that such Initial Securities are being
          canceled in exchange for the Exchange Securities or the Private
          Exchange Securities, as the case may be; in no event shall the Initial
          Securities be marked as paid or otherwise satisfied.

               (t) The Company will use its reasonable best efforts to cause the
          Securities covered by any Registration Statement to continue to be
          rated by the rating agencies that initially rated the Securities
          during the period that any such Registration Statement is required
          hereunder to remain effective (it being acknowledged, however, that
          the foregoing shall not be deemed to require the Company to maintain
          the rating of such Securities at the rating initially given to the
          Securities).

               (u) In the event that any broker-dealer registered under the
          Exchange Act shall underwrite any Securities or participate as a
          member of an underwriting syndicate or selling group or "assist in the
          distribution" (within the meaning of the Conduct Rules (the "RULES")
          of the National Association of Securities Dealers, Inc. ("NASD"))
          thereof, whether as a Holder of such Securities or as an underwriter,
          a placement or sales agent or a broker or dealer in respect thereof,
          or otherwise, the Company will assist such broker-dealer in complying
          with the requirements of such Rules, including, without limitation, by
          (i) if such Rules, including Rule 2720, shall so require, engaging a
          "qualified independent underwriter" (as defined in Rule 2720) to
          participate in the preparation of the Registration Statement relating
          to such Securities, to exercise usual standards of due diligence in
          respect thereto and, if any portion of the offering contemplated by
          such Registration Statement is an underwritten offering or is made
          through a placement or sales agent, to recommend the yield of such
          Securities, (ii) indemnifying any such qualified independent
          underwriter to the extent of the indemnification of underwriters
          provided in Section 5 hereof and (iii) providing such information to
          such broker-dealer as may be required in order for such broker-dealer
          to comply with the requirements of the Rules.

               (v) The Company shall use its reasonable best efforts to take all
          other steps necessary to effect the registration of the Securities
          covered by a Registration Statement contemplated hereby.

               (w) Notwithstanding any other provision hereof, the Company may
          postpone or suspend the filing or the effectiveness of a Registration
          Statement (or any amendments or supplements thereto) if (i) such
          action is required by applicable law or (ii) such action is taken by
          the Company in good faith and for valid business reasons (not
          including the avoidance of the Company's obligations hereunder),
          including the acquisition or divestiture of assets, other pending
          corporate developments, public filings with the Commission or other
          similar events, so long as the Company promptly thereafter complies
          with the requirements of Section 3(j) hereof, if applicable.
          Notwithstanding the occurrence of any event referred to in the
          immediately preceding sentence (each such occurrence, a "SUSPENSION"),
          no such Suspension shall suspend, postpone or in any other manner
          affect the running of the time period after which a Registration
          Default shall be deemed to occur and, if the filing or effectiveness
          of any such Registration Statement is postponed or suspended as a
          result of a Suspension, a Registration Default shall nonetheless exist
          if all other requirements required for the occurrence of a
          Registration Default shall then be satisfied, and the provisions of
          Section 6 hereof requiring the accrual and payment of Additional
          Interest, as set forth in such Section, on the Securities shall be
          payable.

          4. Registration Expenses.

               (a) All expenses incident to the Company's performance of and
          compliance with this Agreement will be borne by the Company,
          regardless of whether a Registration Statement is ever filed or
          becomes effective, including without limitation;

                    (i) all registration and filing fees and expenses;

                                       10
<PAGE>

                    (ii) all fees and expenses of compliance with federal
               securities and state "blue sky" or securities laws;

                    (iii) all expenses of printing (including printing
               certificates for the Securities to be issued in the Registered
               Exchange Offer and the Private Exchange and printing of
               Prospectuses), messenger and delivery services and telephone;

                    (iv) all fees and disbursements of counsel for the Company;
               and

                    (v) all fees and disbursements of independent certified
               public accountants of the Company (including the expenses of any
               special audit and comfort letters required by or incident to such
               performance).

          The Company will bear its internal expenses (including, without
          limitation, all salaries and expenses of its officers and employees
          performing legal or accounting duties), the expenses of any annual
          audit and the fees and expenses of any person, including special
          experts, retained by the Company.

               (b) In connection with any Registration Statement required by
          this Agreement, the Company will reimburse the Initial Purchasers and
          the Holders of Transfer Restricted Securities who are tendering
          Initial Securities in the Registered Exchange Offer and/or selling or
          reselling Securities pursuant to the "Plan of Distribution" contained
          in the Exchange Offer Registration Statement or the Shelf Registration
          Statement, as applicable, for the reasonable fees and disbursements of
          the Special Counsel.

          5. Indemnification.

               (a) The Company agrees to indemnify and hold harmless each Holder
          of the Securities, any Participating Broker-Dealer and each person, if
          any, who controls such Holder or such Participating Broker-Dealer
          within the meaning of the Securities Act or the Exchange Act (each
          Holder, any Participating Broker-Dealer and such controlling persons
          are referred to collectively as the "INDEMNIFIED PARTIES") from and
          against any losses, claims, damages or liabilities, joint or several,
          or any actions in respect thereof (including, but not limited to, any
          losses, claims, damages, liabilities or actions relating to purchases
          and sales of the Securities) to which each Indemnified Party may
          become subject under the Securities Act, the Exchange Act or
          otherwise, insofar as such losses, claims, damages, liabilities or
          actions arise out of or are based upon any untrue statement or alleged
          untrue statement of a material fact contained in a Registration
          Statement or prospectus or in any amendment or supplement thereto or
          in any preliminary prospectus relating to a Shelf Registration, or
          arise out of, or are based upon, the omission or alleged omission to
          state therein a material fact required to be stated therein or
          necessary to make the statements therein not misleading, and shall
          reimburse, as incurred, the Indemnified Parties for any legal or other
          expenses reasonably incurred by them in connection with investigating
          or defending any such loss, claim, damage, liability or action in
          respect thereof; provided, however, that (i) the Company shall not be
          liable in any such case to the extent that such loss, claim, damage or
          liability arises out of or is based upon any untrue statement or
          alleged untrue statement or omission or alleged omission made in a
          Registration Statement or prospectus or in any amendment or supplement
          thereto or in any preliminary prospectus relating to a Shelf
          Registration in reliance upon and in conformity with written
          information pertaining to such Holder and furnished to the Company by
          or on behalf of such Holder specifically for inclusion therein and
          (ii) with respect to any untrue statement or omission or alleged
          untrue statement or omission made in any preliminary prospectus
          relating to a Shelf Registration Statement, the indemnity agreement
          contained in this subsection (a) shall not inure to the benefit of any
          Holder or Participating Broker-Dealer from

                                       11
<PAGE>

          whom the person asserting any such losses, claims, damages or
          liabilities purchased the Securities concerned, to the extent that a
          prospectus relating to such Securities was required to be delivered by
          such Holder or Participating Broker-Dealer under the Securities Act in
          connection with such purchase and any such loss, claim, damage or
          liability of such Holder or Participating Broker-Dealer results from
          the fact that there was not sent or given to such person, at or prior
          to the written confirmation of the sale of such Securities to such
          person, a copy of the final prospectus if the Company had previously
          furnished copies thereof to such Holder or Participating
          Broker-Dealer; provided further, however, that this indemnity
          agreement will be in addition to any liability which the Company may
          otherwise have to such Indemnified Party. The Company shall also
          indemnify underwriters, their officers and directors and each person
          who controls such underwriters within the meaning of the Securities
          Act or the Exchange Act to the same extent as provided above with
          respect to the indemnification of the Holders of the Securities if
          requested by such Holders.

               (b) Each Holder of the Securities, severally and not jointly,
          will indemnify and hold harmless the Company and each person, if any,
          who controls the Company within the meaning of the Securities Act or
          the Exchange Act from and against any losses, claims, damages or
          liabilities or any actions in respect thereof, to which the Company or
          any such controlling person may become subject under the Securities
          Act, the Exchange Act or otherwise, insofar as such losses, claims,
          damages, liabilities or actions arise out of or are based upon any
          untrue statement or alleged untrue statement of a material fact
          contained in a Registration Statement or prospectus or in any
          amendment or supplement thereto or in any preliminary prospectus
          relating to a Shelf Registration, or arise out of or are based upon
          the omission or alleged omission to state therein a material fact
          necessary to make the statements therein not misleading, but in each
          case only to the extent that the untrue statement or omission or
          alleged untrue statement or omission was made in reliance upon and in
          conformity with written information pertaining to such Holder and
          furnished to the Company by or on behalf of such Holder specifically
          for inclusion therein; and, subject to the limitation set forth
          immediately preceding this clause, shall reimburse, as incurred, the
          Company for any legal or other expenses reasonably incurred by the
          Company or any such controlling person in connection with
          investigating or defending any loss, claim, damage, liability or
          action in respect thereof. This indemnity agreement will be in
          addition to any liability which such Holder may otherwise have to the
          Company or any of its controlling persons.

               (c) Promptly after receipt by an indemnified party under this
          Section 5 of notice of the commencement of any action or proceeding
          (including a governmental investigation), such indemnified party will,
          if a claim in respect thereof is to be made against the indemnifying
          party under this Section 5, notify the indemnifying party of the
          commencement thereof; provided, however, that the omission so to
          notify the indemnifying party (i) shall not relieve the indemnifying
          party from any obligations to any indemnified party other than the
          indemnification obligation provided in paragraph (a) or (b) above. In
          case any such action is brought against any indemnified party, and it
          notifies the indemnifying party of the commencement thereof, the
          indemnifying party will be entitled to participate therein and, to the
          extent that it may wish, jointly with any other indemnifying party
          similarly notified, to assume the defense thereof, with counsel
          reasonably satisfactory to such indemnified party (who shall not,
          except with the consent of the indemnified party, be counsel to the
          indemnifying party), and after notice from the indemnifying party to
          such indemnified party of its election so to assume the defense
          thereof the indemnifying party will not be liable to such indemnified
          party under this Section 5 for any legal or other expenses, other than
          reasonable costs of investigation, subsequently incurred by such
          indemnified party in connection with the defense thereof; provided,
          however, that the indemnified party shall have the right to employ
          counsel to represent the indemnified party and their respective
          controlling persons who may be subject to liability arising out of any
          claim in respect of which indemnity may be sought by the indemnified
          party against the indemnifying party under this Section 5 if the
          employment of such counsel shall have been authorized in writing by
          the indemnifying party in

                                       12
<PAGE>

          connection with the defense of such action, if in the written opinion
          of counsel to either the indemnifying party or the indemnified party,
          representation of both parties by the same counsel would be
          inappropriate due to actual or likely conflicts of interest between
          them or the indemnifying party shall have failed to employ counsel
          within a reasonable period of time, and in that event the fees and
          expenses of one firm of separate counsel (in addition to the fees and
          expenses of one firm of local counsel in each applicable jurisdiction)
          shall be paid by the indemnifying party. No indemnifying party shall,
          without the prior written consent of the indemnified party, effect any
          settlement of any pending or threatened action in respect of which any
          indemnified party is or could have been a party and indemnity could
          have been sought hereunder by such indemnified party unless such
          settlement (i) includes an unconditional release of such indemnified
          party from all liability on any claims that are the subject matter of
          such action, and (ii) does not include a statement as to or an
          admission of fault, culpability or a failure to act by or on behalf of
          any indemnified party.

               (d) If the indemnification provided for in this Section 5 is
          unavailable or insufficient to hold harmless an indemnified party
          under subsections (a) or (b) above, then each indemnifying party shall
          contribute to the amount paid or payable by such indemnified party as
          a result of the losses, claims, damages or liabilities (or actions in
          respect thereof) referred to in subsection (a) or (b) above in such
          proportion as is appropriate to reflect the relative fault of the
          indemnifying party or parties on the one hand and the indemnified
          party on the other in connection with the statements or omissions that
          resulted in such losses, claims, damages or liabilities (or actions in
          respect thereof) as well as any other relevant equitable
          considerations. The relative fault of the parties shall be determined
          by reference to, among other things, whether the untrue or alleged
          untrue statement of a material fact or the omission or alleged
          omission to state a material fact relates to information supplied by
          the Company on the one hand or such Holder or such other indemnified
          party, as the case may be, on the other, and the parties' relative
          intent, knowledge, access to information and opportunity to correct or
          prevent such statement or omission. The amount paid by an indemnified
          party as a result of the losses, claims, damages or liabilities
          referred to in the first sentence of this subsection (d) shall be
          deemed to include any legal or other expenses reasonably incurred by
          such indemnified party in connection with investigating or defending
          any action or claim which is the subject of this subsection (d).
          Notwithstanding any other provision of this Section 5(d), the Holders
          of the Securities shall not be required to contribute any amount in
          excess of the amount by which the net proceeds received by such
          Holders from the sale of the Securities pursuant to a Registration
          Statement exceeds the amount of damages which such Holders have
          otherwise been required to pay by reason of such untrue or alleged
          untrue statement or omission or alleged omission. No person guilty of
          fraudulent misrepresentation (within the meaning of Section 11(f) of
          the Securities Act) shall be entitled to contribution from any person
          who was not guilty of such fraudulent misrepresentation. For purposes
          of this paragraph (d), each person, if any, who controls such
          indemnified party within the meaning of the Securities Act or the
          Exchange Act shall have the same rights to contribution as such
          indemnified party and each person, if any, who controls the Company
          within the meaning of the Securities Act or the Exchange Act shall
          have the same rights to contribution as the Company.

               (e) The agreements contained in this Section 5 shall survive the
          sale of the Securities pursuant to a Registration Statement and shall
          remain in full force and effect, regardless of any termination or
          cancellation of this Agreement or any investigation made by or on
          behalf of any indemnified party.

          6. Additional Interest Under Certain Circumstances.

               (a) Additional interest (the "ADDITIONAL INTEREST") with respect
          to each Transfer Restricted Security shall be assessed as follows if
          either of the following events occur (each such event in clauses (i)
          and (ii) below being herein called an "REGISTRATION DEFAULT"):

                                       13
<PAGE>

                    (i) any Registration Statement required by this Agreement is
               not declared effective by the Commission on or prior to the
               applicable Effectiveness Deadline; or

                    (ii) on and after the applicable Effectiveness Deadline
               (plus an additional 30 days in respect of the Exchange Offer
               Registration Statement), any Registration Statement required by
               this Agreement has been declared effective by the Commission but
               (A) such Registration Statement thereafter ceases to be effective
               or (B) such Registration Statement or the related prospectus
               ceases to be usable in connection with resales of Transfer
               Restricted Securities during the periods specified herein because
               (1) any event occurs as a result of which the related prospectus
               forming part of such Registration Statement would include any
               untrue statement of a material fact or omit to state any material
               fact necessary to make the statements therein in the light of the
               circumstances under which they were made not misleading, (2) it
               shall be necessary to amend such Registration Statement or
               supplement the related prospectus to comply with the Securities
               Act or the Exchange Act or the respective rules thereunder or (3)
               of a Suspension by the Company in accordance with Section 3(w)
               hereof.

          Each of the foregoing will constitute a Registration Default whatever
          the reason for any such event and whether it is voluntary or
          involuntary or is beyond the control of the Company or pursuant to
          operation of law or as a result of any action or inaction by the
          Commission.

          Additional Interest shall accrue on each Transfer Restricted Security
          over and above the interest set forth in the title of such Transfer
          Restricted Security from and including the date on which any such
          Registration Default shall occur to but excluding the date on which
          all such Registration Defaults have ceased to be continuing, at a rate
          of 0.50% per annum (the "ADDITIONAL INTEREST RATE").

               (b) A Registration Default referred to in Section 6(a)(ii) hereof
          shall be deemed not to have occurred and be continuing in relation to
          a Shelf Registration Statement or the related prospectus if (i) such
          Registration Default has occurred solely as a result of (x) the filing
          of a post-effective amendment to such Shelf Registration Statement to
          incorporate annual audited financial information with respect to the
          Company where such post-effective amendment is not yet effective and
          needs to be declared effective to permit Holders to use the related
          prospectus or (y) other material events with respect to the Company
          that would need to be described in such Shelf Registration Statement
          or the related prospectus and (ii) in the case of clause (y), the
          Company is proceeding promptly and in good faith to amend or
          supplement such Shelf Registration Statement and related prospectus to
          describe such events; provided, however, that in any case if such
          Registration Default occurs for a continuous period in excess of 30
          days, Additional Interest shall be payable in accordance with the
          above paragraph from the date of such Registration Default until such
          Registration Default ceases.

               (c) Notwithstanding the foregoing, the Company shall not be
          required to pay the Additional Interest required pursuant to paragraph
          (a) above to a Holder of Transfer Restricted Securities if the
          applicable Registration Default arises by reason of the failure of
          such Holder to provide such information as (i) the Company may
          reasonably request, with reasonable prior written notice, for use in
          the Shelf Registration Statement or any prospectus included therein to
          the extent the Company reasonably determines that such information is
          required to be included therein by applicable law, (ii) the NASD or
          the Commission may request in connection with such Shelf Registration
          Statement or (iii) is required to comply with the agreements of such
          Holder contained in Section 3(a) to the extent compliance thereof is
          necessary for the Shelf Registration Statement to be declared
          effective.

                                       14
<PAGE>

              (d) Any amounts of Additional Interest due pursuant to Section
         6(a) will be payable in cash on the regular interest payment dates
         with respect to the Securities. The amount of Additional Interest will
         be determined by multiplying the applicable Additional Interest Rate
         by the principal amount of the Securities and further multiplied by a
         fraction, the numerator of which is the number of days such Additional
         Interest Rate was applicable during such period (determined on the
         basis of a 360-day year comprised of twelve 30-day months), and the
         denominator of which is 360.

              (e) "TRANSFER RESTRICTED SECURITIES" means each Security until
         (i) the date on which such Security has been exchanged by a person
         other than a broker-dealer for a freely transferable Exchange Security
         in the Registered Exchange Offer, (ii) following the exchange by a
         broker-dealer in the Registered Exchange Offer of an Initial Security
         for an Exchange Security, the date on which such Exchange Security is
         sold to a purchaser who receives from such broker-dealer on or prior
         to the date of such sale a copy of the prospectus contained in the
         Exchange Offer Registration Statement, (iii) the date on which such
         Security has been effectively registered under the Securities Act and
         disposed of in accordance with the Shelf Registration Statement or
         (iv) the date on which such Security is distributed to the public
         pursuant to Rule 144 under the Securities Act or is saleable pursuant
         to Rule 144(k) under the Securities Act.

         7. Rules 144 and 144A. The Company agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding and during any period
in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange
Act, to make available, upon request of any Holder, to such Holder or beneficial
owner of Transfer Restricted Securities in connection with any sale thereof and
any prospective purchaser of such Transfer Restricted Securities designated by
such Holder or beneficial owner, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.

         8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, subject to the proviso in Section 3(o) hereof, the investment banker
or investment bankers and manager or managers that will administer the offering
("MANAGING UNDERWRITERS") will be selected by the Holders of a majority in
aggregate principal amount of such Transfer Restricted Securities to be included
in such offering and will be reasonably acceptable to the Company.

         No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

         9.  Miscellaneous.

              (a) Remedies. The Company acknowledges and agrees that any
         failure by the Company to comply with its obligations under Section 1
         and 2 hereof may result in material irreparable injury to the Initial
         Purchasers or the Holders for which there is no adequate remedy at
         law, that it will not be possible to measure damages for such injuries
         precisely and that, in the event of any such failure, the Initial
         Purchasers or any Holder may obtain such relief as may be required to
         specifically enforce the Company's obligations under Sections 1 and 2
         hereof. The Company further agrees to waive the defense in any action
         for specific performance that a remedy at law would be adequate.

                                       15

<PAGE>

               (b) No Inconsistent Agreements. The Company will not on or after
          the date of this Agreement enter into any agreement with respect to
          its securities that is inconsistent with the rights granted to the
          Holders in this Agreement or otherwise conflicts with the provisions
          hereof. The Company hereby represents that the rights granted to the
          Holders hereunder do not conflict with and are not inconsistent with
          the rights granted to the holders of the Company's securities under
          any agreement in effect on the date hereof.

               (c) Amendments and Waivers. The provisions of this Agreement may
          not be amended, modified or supplemented, and waivers or consents to
          departures from the provisions hereof may not be given, except by the
          Company and the written consent of the Holders of a majority in
          principal amount of the Securities affected by such amendment,
          modification, supplement, waiver or consents; provided, however, that,
          with respect to any matter that directly or indirectly adversely
          affects the rights of any Holder of Transfer Restricted Securities
          occurring within the period in which any Registration Statement is
          effective for such Holder, the Company shall obtain the written
          consent of each such Holder against which such amendment,
          modification, supplement, waiver, consent or departure is to be
          effective. Notwithstanding the foregoing (except of the foregoing
          proviso), a waiver or consent to departure from the provisions hereof
          with respect to a matter that relates exclusively to the rights of any
          Holder of Securities whose Securities are being sold or exchanged
          pursuant to a Registration Statement and that does not directly or
          indirectly adversely affect the rights of any other Holder of
          Securities may be given by Holders of at least a majority in aggregate
          principal amount of the Securities being sold or exchanged by such
          holders pursuant to such Registration Statement; provided, however,
          that the provisions of this sentence may not be amended, modified or
          supplemented except in accordance with the provisions of the
          immediately preceding sentence. Without the consent of the Holder of
          each Security, however, no modification may change the provisions
          relating to the payment of Additional Interest.

               (d) Notices. All notices and other communications provided for or
          permitted hereunder shall be made in writing by hand delivery,
          first-class mail, facsimile transmission, or air courier which
          guarantees overnight delivery:

                    (1) if to a Holder of the Securities, at the most current
               address given by such Holder to the Company.

                    (2) if to the Initial Purchasers;

                    Credit Suisse First Boston Corporation
                    Eleven Madison Avenue
                    New York, NY 10010-3629
                    Fax No.:  (212) 325-8278
                    Attention:  Transactions Advisory Group

               with a copy to:

                    Latham & Watkins
                    885 Third Avenue, Suite 1000
                    New York, NY 10022-4802
                    Fax No.: (212) 751-4864
                    Attention: Jonathan R. Rod

                    (3) if to the Company, at its address as follows:

                                       16
<PAGE>

                    MidAmerican Energy Holdings Company
                    666 Grand Avenue
                    Des Moines, IA 50303
                    Fax No.: 402-345-9318
                    Attention: General Counsel

               with a copy to:

                    Willkie Farr & Gallagher
                    787 Seventh Avenue
                    New York, NY 10019
                    Fax No.: 212-728-8111
                    Attention: Peter J. Hanlon

               All such notices and communications shall be deemed to have been
          duly given: at the time delivered by hand, if personally delivered;
          three business days after being deposited in the mail, postage
          prepaid, if mailed; when receipt is acknowledged by recipient's
          facsimile machine operator, if sent by facsimile transmission; and on
          the day delivered, if sent by overnight air courier guaranteeing next
          day delivery.

               (e) Third Party Beneficiaries. The Holders shall be third party
          beneficiaries to the agreements made hereunder between the Company, on
          the one hand, and the Initial Purchasers, on the other, and shall have
          the right to enforce such agreements directly to the extent they may
          deem such enforcement necessary or advisable to protect their rights
          or the rights of Holders hereunder.

               (f) Successors and Assigns. This Agreement shall be binding upon
          the Company and its successors and assigns.

               (g) Counterparts. This Agreement may be executed in any number of
          counterparts and by the parties hereto in separate counterparts, each
          of which when so executed shall be deemed to be an original and all of
          which taken together shall constitute one and the same agreement.

               (h) Headings. The headings in this Agreement are for convenience
          of reference only and shall not limit or otherwise affect the meaning
          hereof.

               (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
          CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
          WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

               (j) Severability. If any one or more of the provisions contained
          herein, or the application thereof in any circumstance, is held
          invalid, illegal or unenforceable, the validity, legality and
          enforceability of any such provision in every other respect and of the
          remaining provisions contained herein shall not be affected or
          impaired thereby.

               (k) Securities Held by the Company. Whenever the consent or
          approval of Holders of a specified percentage of principal amount of
          Securities is required hereunder, Securities held by the Company or
          its affiliates (other than subsequent Holders of Securities if such
          subsequent Holders are deemed to be affiliates solely by reason of
          their holdings of such Securities) shall not be counted in determining
          whether such consent or approval was given by the Holders of such
          required percentage.

                                       17
<PAGE>

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.

                                 Very truly yours,

                                 MIDAMERICAN ENERGY HOLDINGS COMPANY

                                     by  /s/ Douglas L. Anderson
                                         ----------------------------------
                                         Name:  Douglas L. Anderson
                                         Title: Senior Vice President,
                                                General Counsel and Secretary

The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.

CREDIT SUISSE FIRST BOSTON CORPORATION
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
J.P. MORGAN SECURITIES INC.
BNP PARIBAS SECURITIES CORP.
COMMERZ BANK CAPITAL MARKETS CORP.
ING FINANCIAL MARKETS LLC
MIZUHO INTERNATIONAL PLC
TD SECURITIES (USA) INC.
THE ROYAL BANK OF SCOTLAND PLC
U.S. BANCORP PIPER JAFFRAY INC.

By: CREDIT SUISSE FIRST BOSTON CORPORATION

by  /s/ Jonathan Bram
    ------------------------------------
    Name:  Jonathan Bram
    Title: Managing Director

                        (Registration Rights Agreement)

<PAGE>

                                                                         ANNEX A

       Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 120 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."

                                       19
<PAGE>

                                                                         ANNEX B

       Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                       20
<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

       Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 120 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until            , 200 ,
all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.(1)

       The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

       For a period of 120 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

----------
(1)  In addition, the legend required by Item 502(e) of Regulation S-K will
     appear on the inside front cover page of the Exchange Offer prospectus
     below the Table of Contents.

                                       21
<PAGE>

                                                                         ANNEX D

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

           Name:
                   -------------------------------------------
           Address:
                   -------------------------------------------

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

                                       22
<PAGE>

                                                                      SCHEDULE A

Additional Initial Purchasers:

        Banc One Capital Markets, Inc.

        BNY Capital Markets, Inc.

        J.P. Morgan Securities Inc.

        BNP Paribas Securities Corp.

        Commerzebank Capital Markets Corp.

        ING Financial Markets LLC

        Mizuho International plc

        TD Securities (USA) Inc.

        The Royal Bank of Scotland plc

        U.S. Bancorp Piper Jaffray Inc.

                                       23<PAGE>

                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                          MIDAMERICAN CAPITAL TRUST III

                                 AUGUST 16, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  PAGE
                                                                                                  ----
<S>                                                                                               <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

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............................................................................25
   Section 5.10. Delegation of Power................................................................25

<PAGE>

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....................................................................28
   Section 9.1. Transfer of Trust Securities........................................................28
   Section 9.2. Transfer of Certificates............................................................28
   Section 9.3. Deemed Trust Security Holders.......................................................28
   Section 9.4. Mutilated, Destroyed, Lost or Stolen Certificates...................................29

ARTICLE X. LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS...............29
   Section 10.1. Liability..........................................................................29
   Section 10.2. Exculpation........................................................................30
   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............................................................................33
   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.................................37

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
   Section 14.7. Counterparts.......................................................................40
</TABLE>

                                      -ii-
<PAGE>

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 III (the "TRUST") dated as of August 16, 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, Patrick J. Goodman, an individual whose address is c/o
MidAmerican Energy Holdings Company, 666 Grand Avenue, Des Moines, Iowa 50309
and Douglas L. Anderson, 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 August 1, 2002, (the "ORIGINAL DECLARATION") and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on August 1, 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 August 16, 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 August 16, 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 8 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 August 16, 2002 in respect of
the Subordinated 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 August 16, 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 August 16, 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 $979,381,450.00
aggregate principal amount of 11% Junior Subordinated Deferrable Interest
Debentures, Series A, 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 dated August 16, 2002 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 Sponsor'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 a Responsible Officer of the Property Trustee in
good faith determines 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 III", 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. Except as expressly
provided in this Declaration to the contrary, any action to be taken by the
Regular Trustees under this

                                      -10-
<PAGE>

Declaration may be taken by a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.

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);

                                      -11-
<PAGE>

         (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;

         (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.

                                      -12-
<PAGE>

         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.

         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

                                      -13-
<PAGE>

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.

         (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

                                      -14-
<PAGE>

                  (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 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

                                      -15-
<PAGE>

                  (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 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

                                      -16-
<PAGE>

Declaration, nor shall the Property Trustee be liable for the default or
misconduct of the Regular Trustees or the Sponsor.

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,

                                      -17-
<PAGE>

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 fit at the
sole cost of the Sponsor 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

                                      -18-
<PAGE>

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.

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 September 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;

                                      -19-
<PAGE>

                  (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 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.

                                      -20-
<PAGE>

                                   ARTICLE V.

                                    TRUSTEES

SECTION 5.1. NUMBER OF TRUSTEES

         The number of Trustees shall initially be five (5), 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

Patrick J. Goodman
c/o MidAmerican Energy Holdings Company
666 Grand Avenue
Des Moines, Iowa 50309

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

                                      -22-
<PAGE>

The initial Delaware Trustee shall be:

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

The initial Property Trustee shall be:

The Bank of New York
101 Barclay Street
Corporate Trust Administration
Floor 8 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

                                      -23-
<PAGE>

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:

                  (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

                                      -24-
<PAGE>

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 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

                                      -25-
<PAGE>

"DISTRIBUTION") of the Payment Amount to Holders of the series of Trust
Securities issued to purchase such Debenture Series.

                                  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.

                                      -26-
<PAGE>

(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.

                                 ARTICLE VIII.

                           DISSOLUTION AND TERMINATION

SECTION 8.1. DISSOLUTION AND TERMINATION OF TRUST

         (a) The Trust shall dissolve on the earlier of September 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.

                                      -27-
<PAGE>

                                  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.

         (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

                                      -28-
<PAGE>

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 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.

                                      -29-
<PAGE>

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.

         (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.

                                      -30-
<PAGE>

         (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.

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

                                      -31-
<PAGE>

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.

                                   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.

                                      -32-
<PAGE>

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.

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 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:

                                      -33-
<PAGE>

                  (A) an Officer's Certificate from 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:

                  (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

                                      -34-
<PAGE>

                  (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:

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

                                      -35-
<PAGE>

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

                  (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.

                                      -36-
<PAGE>

         (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:

         (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 III
                  c/o MidAmerican Energy Holdings Company
                  666 Grand Avenue
                  Des Moines, Iowa 50309

                                      -37-
<PAGE>

         (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 8 West
                  New York, New York  10286
                  Attention: Corporate Trust Administration
                  Telecopy number:  (212) 815-5707

         (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

                                      -38-
<PAGE>

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, 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.

                                      -39-
<PAGE>

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.

                                      -40-
<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,                         THE BANK OF NEW YORK (DELAWARE),
     as Regular Trustee                        as Delaware Trustee

/s/ Gregory E. Abel                      By:   /s/ William T. Lewis
------------------------------                 --------------------------------
                                               Name:  William T. Lewis, SVP
                                               Title:

PATRICK J. GOODMAN,                      MIDAMERICAN ENERGY HOLDINGS
                                            COMPANY, as Sponsor
     as Regular Trustee

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

DOUGLAS L. ANDERSON,                     THE BANK OF NEW YORK,
     as Regular Trustee                        as Property Trustee

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

                                      -41-
<PAGE>

                             CERTIFICATE OF TRUST OF
                          MIDAMERICAN CAPITAL TRUST III

THIS Certificate of Trust of MIDAMERICAN CAPITAL TRUST III (the "TRUST") is
being duly executed and filed by The Bank of New York (Delaware), as Delaware
Trustee, and Gregory E. Abel, Patrick J. Goodman and Douglas L. Anderson, 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 III.

         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.

GREGORY E. ABEL,                            THE BANK OF NEW YORK (DELAWARE),
     as Regular Trustee                           as Delaware Trustee

                                            By:
------------------------------                 --------------------------------
                                               Name:
                                               Title:
PATRICK J. GOODMAN,
     as Regular Trustee

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

DOUGLAS L. ANDERSON,
     as Regular Trustee

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

<PAGE>

                                 TRUST AGREEMENT

This TRUST AGREEMENT, dated as of August 1, 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,
Patrick J. Goodman and Douglas L. Anderson, 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 III" 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 four (4) 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:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       THE BANK OF NEW YORK (DELAWARE),
                                       as Trustee

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       GREGORY E. ABEL,
                                       as Regular Trustee

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

                                       PATRICK J. GOODMAN,
                                       as Regular Trustee

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

                                       DOUGLAS L. ANDERSON,
                                       as Regular Trustee

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

                                      -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 August 16, 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 38,000,000 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 Nine Hundred Fifty Million Dollars
($950,000,000) 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 11,175,258 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 Twenty Nine Million Three Hundred Eighty One
Thousand Four Hundred Fifty Dollars ($29,381,450) 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

<PAGE>

period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a 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 February 28 and August 31 of each year, commencing
on the first such date following the date one month 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

                                      A-2
<PAGE>

provisions to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of 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 (other than Berkshire Hathaway Inc. or any other Permitted Holder) 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,

                                      A-6
<PAGE>

provided, however, that, where a consent or action under the Indenture would
require the consent 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

                                      A-7
<PAGE>

Declaration or otherwise, or (ii) the involuntary or voluntary liquidation,
dissolution, winding-up 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 III

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

         MIDAMERICAN CAPITAL TRUST III, 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 August 16, 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 _____ ____.

_____________________,
as Trustee

_____________________________________________________

_____________________,
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 III

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

         MIDAMERICAN CAPITAL TRUST III, 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 August 16,
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 _____ ____.

_____________________,
as Trustee

___________________________________________

_____________________,
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 III

                           DATED AS OF AUGUST 16, 2002

<PAGE>

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (this "GUARANTEE AGREEMENT"), dated as of August 16,
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 III, a Delaware statutory business trust
(the "TRUST").

                                    RECITALS

         WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"DECLARATION"), dated as of August 16, 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 $950,000,000 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 (other than Berkshire Hathaway Inc.
or any other Permitted Holder).

         "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 August 16, 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

                                      B-3
<PAGE>

association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.

         "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 $979,381,450.00 aggregate
principal amount of the Guarantor's 11% Junior Subordinated Deferrable Interest
Debentures, Series A, 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

                                      B-4
<PAGE>

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 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

                                      B-5
<PAGE>

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 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.

                                      B-6
<PAGE>

         (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:

                  (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:

                                      B-7
<PAGE>

                  (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.

                  (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,

                                      B-8
<PAGE>

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 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

                                      B-9
<PAGE>

($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then, for the
purposes of this Section 4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.

         (b) If at any time the 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.

                                      B-10
<PAGE>

                                    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.

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

                                      B-11
<PAGE>

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

         (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

                                      B-12
<PAGE>

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.

                                   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 Guarantor (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 Guarantor 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

                                      B-13
<PAGE>

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.

                                  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

                                      B-14
<PAGE>

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).

                                   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 8 West
                  New York, New York  10286
                  Attention:  Corporate Trustee Department
                  Telecopy Number:  (212) 815-5707

         (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):

                                      B-15
<PAGE>

                  MidAmerican Energy Holdings Company
                  302 South 36th Street,
                  Suite 400
                  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:
                                           -----------------------------------
                                           Name:
                                           Title:

                                       THE BANK OF NEW YORK,
                                       as Preferred Guarantee Trustee

                                       By:
                                           -----------------------------------
                                           Name:
                                           Title:

                                      B-17
<PAGE>

                                    EXHIBIT C

                      COMMON SECURITIES GUARANTEE AGREEMENT

                          MIDAMERICAN CAPITAL TRUST III

                           DATED AS OF AUGUST 16, 2002

<PAGE>

                      COMMON SECURITIES GUARANTEE AGREEMENT

         This GUARANTEE AGREEMENT (this "GUARANTEE AGREEMENT"), dated as of
August 16, 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 III, a Delaware
business trust (the "ISSUER").

         WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"DECLARATION"), dated as of August 16, 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 $29,381,450 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.

                                      C-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

                                      C-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

                                      C-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 Guarantor
(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 Guarantor 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.

                                      C-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 III
                  c/o MidAmerican Energy Holdings Company
                  666 Grand Avenue
                  Des Moines, Iowa 50309

         (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.

                                      C-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.

                                      C-7
<PAGE>

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

MIDAMERICAN ENERGY HOLDINGS COMPANY

By:
    ------------------------------------------
    Name:
    Title:

                                      C-8

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