Document/Exhibit Description Pages Size
1: 10-K/A Amendment to Annual Report 88± 344K
2: EX-3 Articles of Incorporation/Organization or By-Laws 20± 79K
3: EX-10 Material Contract 32± 124K
4: EX-10 Material Contract 3± 14K
5: EX-21 Subsidiaries of the Registrant 3± 12K
6: EX-23 Consent of Experts or Counsel 1 8K
7: EX-27 Financial Data Schedule (Pre-XBRL) 2± 10K
8: EX-27 Financial Data Schedule (Pre-XBRL) 2± 17K
9: EX-99 Miscellaneous Exhibit 32± 123K
10: EX-99 Miscellaneous Exhibit 68± 256K
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is entered into as
of December 8, 1997 by and among Peter Kiewit Sons', Inc., a
Delaware corporation ("PKS"), Kiewit Diversified Group Inc., a
Delaware corporation ("KDG"), PKS Holdings, Inc., a Delaware
corporation ("PKS Holdings"), and Kiewit Construction Group Inc.,
a Delaware corporation ("KCG", and together with PKS, KDG, and
PKS Holdings, collectively the "Parties" or individually a
"Party").
Recitals
The Board of Directors of PKS has approved, by a unanimous vote
of the Board, a series of transactions intended to separate the
construction businesses of PKS and the diversified businesses of
PKS into two separate and independent companies, and the
stockholders of PKS have ratified the action of the PKS Board.
PKS, KDG (the subsidiary of PKS that holds, directly or
indirectly, all of the diversified businesses of PKS), KCG (the
subsidiary of PKS that holds, directly or indirectly, all of the
construction businesses of PKS) and PKS Holdings (a subsidiary of
PKS formed to acquire from PKS all of the capital stock of KCG in
connection with the separation) want to provide for the principal
corporate transactions necessary to consummate the separation,
the relationships among the Parties after the separation, the
allocation of risks and responsibilities among the Parties after
the separation and certain other matters.
The Parties hereby agree as follows:
Agreement
ARTICLE I
DEFINITIONS
1.01 General. Terms used but not elsewhere defined in
this Agreement have the following meanings:
Affiliate: with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
specified Person; provided, however, that for purposes of this
Agreement, no member of either Group will be deemed to be an
Affiliate of any member of the other Group.
Asset: any and all assets and properties, whether real,
personal or mixed, tangible or intangible, wherever located, and
whether or not recorded or reflected or required to be recorded
on the books and records or financial statements of any Person,
including, without limitation, the following: (i) cash, cash
equivalents, bank accounts, lock boxes and other deposit
arrangements, notes, deposits, letters of credit, performance and
surety bonds, trade accounts and other accounts and notes
receivable (whether current or non-current); (ii) certificates of
deposit, banker's acceptances, stock, debentures, evidences of
indebtedness, certificates of interest or participation in profit-
sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, capital
contributions, joint venture and partnership interests,
transferable shares, investment contracts, voting-trust
certificates, fractional undivided interests in oil, gas or other
mineral rights, puts, calls, straddles, options and other
securities or equity interests of any kind or in any Person;
(iii) trade secrets, confidential information, registered and
unregistered trademarks, service marks, service names, trade
styles and trade names and associated goodwill; statutory, common
law and registered copyrights; domestic and foreign patents,
applications for any of the foregoing, rights to use the
foregoing and other rights in, to and under the foregoing; (iv)
rights under leases, contracts, licenses, permits, distribution
arrangements, sales and purchase agreements, other agreements and
business arrangements; (v) real estate, all interests in real
estate of whatever nature and buildings and other improvements
thereon; (vi) leasehold improvements, fixtures, trade fixtures,
machinery, equipment (including transportation and office
equipment), tools, dies and furniture; (vii) office supplies,
production supplies, spare parts, other miscellaneous supplies
and other tangible property of any kind; (viii) raw materials,
work-in-process, finished goods, consigned goods and other
inventories; (ix) prepayments or prepaid expenses; (x) claims,
causes of action, choses in action, rights of recovery and rights
of set-off of any kind; (xi) the right to receive mail, payments
on accounts receivable and other communications; (xii) lists of
advertisers, records pertaining to advertisers and accounts,
personnel records, lists and records pertaining to suppliers and
agents, and books, ledgers, files and business records of every
kind, whether in paper, microfilm, microfiche, computer tape or
disk, magnetic tape or any other form; (xiii) advertising
materials and other printed or written materials; (xiv) goodwill
as a going concern and other intangible properties; (xv) employee
contracts, including any rights thereunder to restrict an
employee from competing in certain respects; (xvi) licenses and
authorizations issued by any governmental authority; (xvii) all
apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft, rolling stock, vessels,
motor vehicles and other transportation equipment, special and
general tools, test devices, prototypes and models and other
tangible personal property; (xviii) all written technical
information, data, specifications, research and development
information, engineering drawings, operating and maintenance
manuals, and materials and analyses prepared by consultants and
other third parties; (xix) all computer applications, programs
and other software, including operating software, network
software, firmware, middleware, design software, design tools,
systems documentation and instructions (excluding, for purposes
of the definition of Construction Assets, any property of PKSIS);
(xx) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer lists, customer and
vendor data, correspondence and lists, product literature,
artwork, design, development and manufacturing files, vendor and
customer drawings, (xxi) formulations and specifications, quality
records and reports and other books, records, studies, surveys,
reports, plans and documents; and (xxii) except as otherwise
expressly provided herein, all rights under insurance policies
and all rights in the nature of insurance, indemnification or
contribution.
Certificate Amendments: the Initial Certificate Amendment
and the Post-Transaction Certificate Amendment.
Class C Stock: the Class C Construction & Mining Group
Restricted Redeemable Convertible Exchangeable Common Stock of
PKS, par value $.0625 per share.
Class D Stock: the Class D Diversified Group Convertible
Exchangeable Common Stock of PKS, par value $.0625 per share.
Class R Stock: the Class R Convertible Common Stock of PKS,
par value $.01 per share, proposed to be authorized pursuant to
the Initial Certificate Amendment and issued pursuant to the
Class R Distribution.
Class R Distribution: the distribution, as a dividend, by
PKS of the Class R Stock pursuant to Section 3.06.
Class R Distribution Record Date: January 2, 1998, or such
other date occurring after the Debenture Conversion Date but
before the Excess Purchase Date, which is selected by the PKS
Board as the record date for determining holders of record of
Class C Stock entitled to receive the Class R Distribution.
Code: the Internal Revenue Code of 1986, as amended, or any
successor legislation, together with the rules and regulations
promulgated thereunder.
Construction Assets: all of the Assets utilized immediately
prior to the Exchange Date by any member of the Construction
Group in connection with the Construction Business.
Construction Business: all of the businesses and operations
conducted at, or at any time before, the Exchange Date by PKS or
any Subsidiary of PKS, the principal focus of which are or were
construction or construction management activities.'
Construction Group: PKS Holdings, KCG and the Subsidiaries
of KCG as of the Exchange Date.
Construction Indemnitees: any member of the Construction
Group, any Construction Individual and any Affiliate of any
member of the Construction Group.
Construction Individual: any individual who at any time
prior to the Exchange Date was a director, officer or employee of
any member of the Construction Group, but solely to the extent
that any Loss incurred by such Person is incurred in that
capacity.
Construction Liabilities: all of the Liabilities arising
out of or resulting from the Construction Business, and any
Liability which any member of the Construction Group is obligated
to assume pursuant to Section 5.02.
Construction Securities Transactions: the offer to sell or
the sale of Class C Stock, PKS Holdings Stock or debentures
convertible into Class C Stock or PKS Holdings Stock.
Diversified Assets: all of the Assets utilized immediately
prior to the Exchange Date by any member of the Diversified Group
in connection with the Diversified Business.
Diversified Business: all of the businesses and operations
conducted at, or at any time before, the Exchange Date, by PKS,
other than the Construction Business.
Diversified Group: PKS, KDG and all of the Subsidiaries of
KDG as of the Exchange Date.
Diversified Indemnitees: any member of the Diversified
Group, any Diversified Individual and any Affiliate of any member
of the Diversified Group.
Diversified Individual: any individual who at any time
prior to the Exchange Date was a director, officer or employee of
any member of the Diversified Group, but solely to the extent
that any Loss incurred by such Person is incurred in that
capacity.
Diversified Liabilities: all of the Liabilities arising out
of or resulting from the Diversified Business, and any Liability
which any member of the Diversified Group is obligated to assume
pursuant to Section 5.02.
Diversified Securities Transaction: the offer to sell or
the sale of Class D Stock, Class R Stock or debentures
convertible into Class D Stock, including the issuance of any
stock option convertible into Class D Stock.
Dividend Condition: with respect to the distribution in
connection with the Class R Distribution and the distribution in
connection with the Share Exchange, a determination by the PKS
Board that such distribution by PKS will (a) comply with the PKS
Certificate, as then amended and/or restated, (b) will be made
out of surplus, within the meaning of Section 170 of the Delaware
General Corporation Law and (c) will not result in the insolvency
of PKS under applicable fraudulent conveyance or fraudulent
transfer statutes.
Exchange Act: the Securities Exchange Act of 1934, together
with the rules and regulations promulgated thereunder.
Exchange Date: the date on which the Share Exchange is
made, which will be a date determined by the PKS Board that
occurs after satisfaction of all of the conditions set forth in
Section 2.08.
Exchange Record Date: the date selected by the PKS Board
for determining holders of record of Class C Stock entitled to
receive PKS Holdings Stock in the Share Exchange.
Group: either of the Construction Group or the Diversified
Group.
Indemnifying Party: a Person who or which is obligated
under Article IV to provide indemnification.
Indemnitee: a Person entitled to indemnification under
Article IV.
Indemnity Payment: an amount that an Indemnifying Party is
required to pay to an Indemnitee pursuant to Article IV.
Information: all information whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies,
reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer
names, communications by or to attorneys (including attorney-
client privileged communications), memos and other materials
prepared by attorneys or under their direction (including
attorney work product), computer data and other technical,
financial, employee or business information.
Initial PKS Certificate Amendment: an amendment to the PKS
Certificate in the form of Appendix E-I to the Joint
Prospectus/Proxy Statement.
Joint Prospectus/Proxy Statement: the joint
prospectus/proxy statement included in the Registration Statement
and mailed to the holders of Class C Stock and Class D Stock in
connection with the Transaction.
Liabilities: all debts, liabilities and obligations,
whether absolute or contingent, matured or unmatured, liquidated
or unliquidated, accrued or unaccrued, known or unknown, whenever
or however arising, and whether or not the same would properly be
reflected on a balance sheet, including all related costs and
expenses.
Losses: all losses, Liabilities, damages, actions, claims,
suits, demands, proceedings, inquiries, investigations, judgments
or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated,
including all related costs and expenses (legal, accounting or
otherwise as such costs are incurred) suffered by an Indemnitee.
PKS Board: the board of directors of PKS (or the executive
committee of the board of directors of PKS, if the executive
committee of the board of directors of PKS has the authority to
take the action required under this Agreement).
PKS Certificate: the Restated Certificate of Incorporation
of PKS, as in effect on the date of this Agreement.
PKS Holdings Certificate Amendment: an amendment to and
restatement of the Certificate of Incorporation of PKS Holdings
in the form of Appendix D to the Joint Prospectus/Proxy
Statement.
PKS Holdings Stock: the common stock of PKS Holdings, $.01
par value.
PKS Stockholders: the holders of Class C Stock, the holders
of Class D Stock and, if applicable, the holders of Class R
Stock, taken together.
PKSIS: PKS Information Services, Inc., a Delaware
corporation, and a Subsidiary of KDG.
Person: an individual, a partnership, a limited
partnership, a joint venture, a limited liability company, a
corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof.
Post-Transaction PKS Certificate Amendment: an amendment to
and restatement of the PKS Certificate, as amended by the Initial
Certificate Amendment, in the form of Appendix E-II to the Joint
Prospectus/Proxy Statement.
Registration Statement: the registration statement filed by
PKS and PKS Holdings on Form S-4 (Registration No. 333-34627)
pursuant to the Securities Act, as amended from time to time.
Representative: with respect to any Person, any of such
Person's affiliates, directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and
representatives.
SEC: the Securities and Exchange Commission.
Secretary of State: the Secretary of State of the State of
Delaware.
Securities Act: the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
Service: the United States Internal Revenue Service.
Separation Transactions: the transactions described in
Section 3.01 through 3.08 of this Agreement.
Share Exchange: the exchange of PKS Holdings Stock for
Class C Stock in accordance with the Exchange Provision (as
defined in Section 3.09).
Special Meeting: the special meeting of stockholders of PKS
held on December 8, 1997 to consider the matters described in
Section 2.02.
Stock Option Plan Amendment: an amendment to and
restatement of the 1995 Class D Stock Plan of PKS in the form
approved by the PKS Board on October 22, 1997, as amended by the
Executive Committee of the PKS Board on November 10, 1997.
Subsidiary: with respect to any specified Person, any
corporation or other legal entity of which such Person or any of
its Subsidiaries controls or owns, directly or indirectly, more
than 50% of the stock or other equity interest entitled to vote
on the election of members to the board or similar governing
body.
Tax: as defined in the Tax Allocation Agreement.
Tax Allocation Agreement: a tax allocation agreement
between the Diversified Group and the Construction Group to be
entered into as of the Exchange Date, in form and substance
mutually satisfactory to all of the Parties.
Termination Date: the date upon which the Transaction will
be abandoned if not consummated, which will be October 15, 1998,
unless that date is extended by a duly adopted resolution of the
PKS Board.
Third-Party Claim: any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or
commission or any arbitration tribunal asserted by a Person who
is not a member of a Group.
Transaction: all of the transactions contemplated by this
Agreement, taken together.
ARTICLE II
CONDITIONS TO TRANSACTION; ABANDONMENT
2.01 Registration Statement/Joint Prospectus/Proxy
Statement. PKS and PKS Holdings have prepared and filed the
Registration Statement with the SEC, the SEC has declared the
Registration Statement effective, and PKS and PKS Holdings have
mailed the Joint Prospectus/Proxy Statement to all PKS
Stockholders.
2.02. Special Meeting. At the Special Meeting, PKS
submitted (i) the Transaction, (ii) the Initial PKS Certificate
Amendment, (iii) the Post-Transaction PKS Certificate Amendment
and (iv) the Stock Option Plan Amendment to votes of the PKS
Stockholders, and each matter was ratified or approved by the
requisite vote of the PKS Stockholders.
2.03 Ruling Request. PKS has submitted to the Service a
request for certain rulings in connection with the Transaction
(as amended from time to time by PKS, the "Ruling Request"). The
PKS Board may determine, at any time after the date of this
Agreement, to request an opinion of federal income tax counsel to
PKS, confirming any or all of the matters subject to the Ruling
Request, as the PKS Board deems appropriate (the "Tax Opinion").
If (a) either the Service denies the Ruling Request or the
Service does not grant the Ruling Request before the Termination
Date, and (b) the PKS Board has not requested and received the
Tax Opinion on or before the Termination Date, the Parties will
abandon the Transaction.
2.04 Nebraska Ruling Request. PKS is preparing for
submission to the State of Nebraska Department of Revenue a
request for certain rulings in connection with the Transaction
(as amended from time to time by PKS, the "Nebraska Ruling
Request"). The PKS Board may determine, at any time after the
date of this Agreement, to request an opinion of Nebraska tax
counsel to PKS, confirming any or all of the matters subject to
the Nebraska Ruling Request, as the PKS Board deems appropriate
(the "Nebraska Tax Opinion"). If (a) either the Nebraska Ruling
Request is denied or is not granted before the Termination Date,
and (b) the Nebraska Tax Opinion is not requested and received on
or before the Termination Date, the PKS Board will review the
benefits of the Transaction in light of the failure of the
Nebraska Department of Revenue to approve the Nebraska Ruling
Request or the failure of the PKS Board to request and receive
the Tax Opinion, and will abandon the Transaction if the PKS
Board determines, by a duly adopted resolution, that consummation
of the Transaction is no longer in the best interest of all PKS
Stockholders.
2.05 Termination Date. The Parties will abandon the
Transaction if the Share Exchange is not consummated on or before
the Termination Date.
2.06 PKS Board Right to Defer, Modify or Abandon
Transaction. Notwithstanding any other provision of this
Agreement, (a) prior to consummation of the Transaction, the
Parties will defer or modify the Transaction or this Agreement in
any respect deemed appropriate by the PKS Board, and (b) the
Parties will abandon the Transaction at any time if the PKS
Board, by a duly adopted resolution, determines that consummation
of the Transaction is no longer in the best interest of all PKS
Stockholders. Nothing herein shall limit or otherwise affect the
PKS Board's ability to proceed with the Transaction at a later
date.
2.07 Consequences of Abandonment. If the Parties
abandon the Transaction (whether pursuant to Section 2.03, 2.04,
2.05 or 2.06), Articles III, IV, V and VI of this Agreement will
terminate and have no further force or effect, the Parties will
not be obligated to consummate any of the Separation Transactions
that have not then been consummated, and only this Section 2.07
and Articles I, VII and VIII of this Agreement will remain
binding on the Parties and have any further force or effect.
2.08 Conditions to Share Exchange. The Share Exchange
will be consummated only if (a) PKS has received either the
rulings subject to the Ruling Request and/or the Tax Opinion, (b)
the Dividend Condition has been satisfied with respect to the
Share Exchange, (c) the Separation Transactions have been
consummated, and (d) the PKS Board has not determined to abandon
the Transaction. The condition set forth in clause (a) of the
preceding sentence shall not be waived.
ARTICLE III
THE SEPARATION TRANSACTIONS;
THE SHARE EXCHANGE
3.01 1997 Class C Stock Conversions. (a) Under Section
VI.D.(10) of the PKS Certificate, holders of Class C Stock may
convert any or all of their Class C Stock into Class D Stock by
tendering a written conversion notice to PKS between October 15,
1997 and December 15, 1997 (the "1997 Conversion Period"). Under
Section VI.D.(10)(f) of the PKS Certificate, PKS may elect, in
lieu of effecting the conversion, to purchase any shares of Class
C Stock so tendered by providing written notice to the tendering
stockholders of such election. If PKS makes such an election,
the tendering stockholder may withdraw the tender of the Class C
Stock if he is then eligible under Section VI.D.(1) of the PKS
Certificate to own Class C Stock (an "Eligible Class C
Stockholder").
(b) PKS intends to permit conversion of no more
than 3,000,000 shares of Class C Stock (the "Conversion Cap")
tendered during the 1997 Conversion Period and to repurchase (on
a pro rata basis among tendering holders of Class C Stock) shares
of Class C Stock tendered in excess of the Conversion Cap
("Excess Class C Stock"). PKS will notify holders of Excess
Class C Stock of their pro rata share of Excess Class C Stock
promptly after the end of the 1997 Conversion Period, and will
permit holders of Excess Class C Stock who have indicated to PKS
that they intend to remain Eligible Shareholders through April 1,
1998 to withdraw Excess Class C Stock in accordance with Section
VI.D.(10)(f) of the Certificate by providing written notice of
withdrawal on or before the fifteenth calendar day after the date
of such notice.
(c) PKS will purchase any Excess Class C Stock
not withdrawn pursuant to Section 3.01(b), and will permit
holders of any such Excess Class C Stock to elect either (i) to
receive cash in exchange for Excess Class C Stock so purchased in
accordance with Section VI.D.(10)(f) of the PKS Certificate, or
(ii) to receive unsecured promissory notes of PKS, maturing on
January 15, 1999 and bearing interest, payable at maturity, at a
rate of no less than 6% per annum ("Short Term Notes"), in
exchange for Excess Class C Stock. Each Short Term Note will
provide that the obligations under the Short Term Note will be
assumed by PKS Holdings if the Share Exchange is consummated.
PKS will not consummate the purchase of any Excess Class C Stock
until after the Class R Distribution Record Date, and all holders
of such Excess Class C Stock will be entitled to receive the
Class R Distribution with respect to such Excess Class C Stock.
(d) If PKS purchases Excess Class C Stock and the
Transaction is abandoned, PKS will file, within 90 calendar days
after the date upon which the Transaction is abandoned, a Form S-
8 registration statement under the Securities Act for an offering
of Class D Stock to holders of purchased Excess Class C Stock.
Upon filing of that registration statement, PKS will offer to
each such holder the opportunity to elect, within 30 calendar
days of the filing, to purchase, at the Class D Per Share Price
(as defined in the PKS Certificate) as of January 1, 1998, a
number of shares of Class D Stock equal to the number of shares
of Class D Stock into which his purchased Excess Class C Stock
could have been converted on the Conversion Date but for the
application of the Conversion Cap. The PKS Board may permit
holders to offset the purchase price for such shares of Class D
Stock against the outstanding principal amount and accrued
interest payable pursuant to a Short Term Note.
(e) On the date of consummation of the purchase of
all Excess Class C Stock (the "Excess Purchase Date"), KCG will
distribute to PKS cash in an amount equal to all cash payments
for Excess Class C Stock pursuant to Sections 3.01(b)(i).
(f) On the Exchange Date, PKS Holdings will assume
all of the obligations of PKS under each Short Term Note, if any.
(g) Within 30 calendar days after the expiration
of the 1997 Conversion Period, KCG will distribute to PKS, and
PKS will contribute to KDG, cash in an amount equal to the
aggregate Class C Per Share Price (as defined in the PKS
Certificate) of the Class C Stock converted into Class D Stock
during the 1997 Conversion Period (subject to adjustment
following delivery of audited financial statements for PKS for
1997, in a manner consistent with past practice).
3.02 Accelerated Conversion of Debentures. (a) PKS has
outstanding Series 1993 through Series 1996 Class C Convertible
Debentures (the "Debentures"). The Debentures are convertible
into Class C Stock, during a one month period in the fifth year
of their terms, at a rate specified in the Debentures. PKS will
accelerate the conversion period for the Debentures to permit
holders of the Debentures ("Converting Debenture Holders") to
tender for conversion, during a ten day period beginning on
December 16, 1997 and ending on December 25, 1997 (the "Debenture
Conversion Period"), any or all Debentures into Class C Stock at
the otherwise applicable conversion rate. PKS will issue all
Class C Stock with respect to all Debentures so elected to be
converted on December 26, 1997 (the "Debenture Conversion Date").
All Converting Debenture Holders will be entitled to receive the
Class R Distribution with respect to Class C Stock issued upon
conversion of the Debentures. Any Debentures not tendered for
conversion during the Debenture Conversion Period will remain
outstanding and governed by the original terms of the Debentures,
and holders of any such Debentures will not be entitled to
receive the Class R Distribution with respect to the Debentures
or the related Class C Stock. If the Transaction is consummated,
PKS and PKS Holdings will use their best efforts to agree upon an
arrangement whereby the financial benefits and burdens associated
with any Debentures remaining outstanding will be borne by PKS
Holdings.
(b) KCG or one of its Subsidiaries will make
available to each Converting Debenture Holder on the Debenture
Conversion Date, a loan in an amount equal to the principal
amount of each Debenture (a "Debenture Loan"). Each Debenture
Loan will be evidenced by a non-interest bearing promissory note
and secured pursuant to a pledge agreement in such forms as
determined by KCG. The entire principal balance of each
Debenture Loan will be due and payable on the earlier of the last
day of the conversion period of the related Debenture, as
originally issued and before any modification pursuant to Section
3.02(a), on the date of the sale or other disposition by the
Converting Debenture Holder of the related Class C Stock to PKS
(other than pursuant to the Share Exchange), or (if the Share
Exchange is consummated) the related PKS Holdings Stock to PKS
Holdings, or the termination of employment of the holder.
3.03 1997 Debentures. PKS issued, on or about November
1, 1997, its Series 1997 Class C Convertible Debentures (the
"1997 Debentures"). Each 1997 Debenture will provide that if the
Share Exchange is consummated, the 1997 Debentures automatically
will become, without any action by PKS, PKS Holdings or the
holder thereof, a debenture of PKS Holdings (the "Replacement
Debentures") convertible into the number of shares of PKS
Holdings Stock as it was previously convertible into Class C
Stock, and that PKS will no longer have any obligation or
liability under the 1997 Debentures. On or before the Exchange
Date, PKS and PKS Holdings will agree to a mutually acceptable
arrangement pursuant to which PKS Holdings will assume, or
otherwise become liable for, the obligations of PKS under the
related Indenture.
3.04 Sales of Class C Stock by Eligible Class C
Stockholders. (a) Under Section VI.D.3(a) of the PKS
Certificate, PKS is obligated to purchase, at the Class C Per
Share Price, any Class C Stock tendered for purchase during the
first fifteen calendar days of each month. On the Exchange Date,
PKS will deliver to PKS Holdings a schedule that sets forth the
name of each Eligible Class C Stockholder (determined as of the
Exchange Date) from whom PKS has purchased Class C Stock
("Purchased Class C Stock") between the Class R Distribution Date
and the Exchange Date (a "Selling Shareholder"), the date of such
purchase, the number of shares of Class C Stock so purchased and
the total amount paid to each such Eligible Class C Shareholder
for all shares of Class C Stock so purchased.
(b) PKS Holdings will promptly notify PKS if PKS
Holdings sells PKS Holdings Stock to any Selling Shareholder at
any time between the Exchange Date and the first anniversary of
the Exchange Date (a "Subsequent Sale"). PKS Holdings will take
any action reasonably requested by PKS to ensure that any Class R
Stock distributed to the Selling Shareholder with respect to
Purchased Class C Stock becomes attached to such shares of PKS
Holdings Stock purchased in a Subsequent Sale on a pro rata
basis, as contemplated by the Certificate Amendments.
(c) In connection with Subsequent Sales of PKS
Holdings Stock to Canadians ("Canadian Shareholders"), PKS
Holdings or a Subsidiary thereof may offer to provide loans to
such Canadian Shareholders, on terms acceptable to all Parties.
Within 30 calendar days after the date of each such loan, PKS
Holdings will provide PKS with a schedule that sets forth, in
detail reasonably acceptable to PKS, the terms and conditions of
any and all such loans.
3.05 Initial Certificate Amendment. PKS will file the
Initial Certificate Amendment with the Secretary of State as
promptly as practicable after the Special Meeting.
3.06 Class R Distribution. (a) Subject to the
satisfaction of the Dividend Condition with respect to the Class
R Distribution, PKS will declare a dividend, payable to holders
of Class C Stock as of the Class R Distribution Record Date, of
.8 of one share of Class R Stock for each share of Class C Stock
held as of the Class R Distribution Record Date.
(b) PKS will record the Class R Distribution,
and register all persons entitled to the Class R Distribution as
holders of Class R Stock, on the books and records maintained by
or on behalf of PKS for the registration of ownership of the
capital stock of PKS, effective as of the Class R Distribution
Record Date. PKS will not issue certificates or other
instruments to evidence Class R Stock unless and until the Share
Exchange is consummated. If the Share Exchange is consummated,
PKS will issue and distribute certificates evidencing the Class R
Stock. If the Class R Distribution is consummated, but the
Transaction is later abandoned, PKS will exercise its rights to
repurchase all of the Class R Stock under Section IX.M of the
Initial Certificate Amendment as promptly as practicable after
abandonment of the Transaction.
3.07 PKSIS Reorganization. On or before the Exchange
Date, KDG will cause PKSIS to undertake such corporate
reorganization as is then described in or contemplated by the
Ruling Request.
3.08 PKS Holdings Transactions. (a) From the date of
this Agreement to the Exchange Date, KCG will make such
distributions to PKS as are necessary to permit PKS to make such
capital contributions and provide such other funds to PKS
Holdings as may be necessary or desirable to permit PKS Holdings
to perform and discharge its obligations under this Agreement.
(b) On or before the Exchange Date, PKS, in its
capacity as the sole shareholder of PKS Holdings, (i) will adopt
the PKS Holdings Certificate Amendment, and (ii) will elect to
the board of directors of PKS Holdings those persons designated
as directors of PKS Holdings in the Joint Prospectus/Proxy
Statement, with such substitutions or additions as may be
approved by the PKS Board after the date of this Agreement.
(c) On the Exchange Date, PKS Holdings will file
the PKS Holdings Certificate Amendment with the Secretary of
State.
(d) On the Exchange Date, PKS will make a
capital contribution to PKS Holdings of (i) all of the capital
stock of KCG held by PKS, and (ii) such other assets as agreed to
by the Parties and described on a Schedule to be attached to the
Agreement on or before the Exchange Date. On the Exchange Date,
PKS Holdings will distribute to PKS a sufficient number of shares
of PKS Holdings Stock, evidenced by a single certificate, so
that, together with such shares previously issued to PKS, PKS
will hold shares of PKS Holdings Stock equal to the number of
shares of Class C Stock outstanding on the Exchange Record Date.
3.09 Share Exchange. (a) Not more than 60 calendar
days, but not less than 30 calendar days, prior to the Exchange
Date, PKS shall give each holder of Class C Stock the notice
contemplated by Section III.D.(3)(a) of the PKS Certificate (the
"Exchange Provision"). Each notice will set forth the Exchange
Record Date and the information required by the Exchange
Provision, and will establish such procedures for the Share
Exchange as are permitted by the Exchange Provision and otherwise
deemed appropriate by PKS.
(b) On the Exchange Date, PKS will exchange,
pursuant to the Exchange Provision, one share of the PKS Holdings
Common Stock received pursuant to Section 3.11(a) for each share
of Class C Common Stock outstanding as of the Exchange Date. On
and after the Exchange Date, all rights of holders of Class C
Stock will be governed by the Exchange Provisions.
(c) The Share Exchange will be consummated only
after consummation of all of the Separation Transactions intended
to be consummated on the Exchange Date.
3.10 Post-Transaction Certificate Amendment. If the
Share Exchange is consummated, PKS will file the Post-Transaction
Certificate Amendment with the Secretary of State on the Exchange
Date.
3.11 Certificate Surrender and Distribution. (a) As
promptly as practicable after the Exchange Date, PKS Holdings
will deliver to PKS, in exchange for the PKS Holdings Stock
certificate described in Section 3.08(d), certificates for PKS
Holdings Stock in names and denominations sufficient to permit
PKS to distribute certificates for PKS Holdings Stock to each
holder of Class C Stock in the same denominations as the Class C
Stock then held by such holder, subject, in each case, to
surrender by such holder in accordance with the Exchange
Provision of the certificates evidencing the related shares of
Class C Stock.
(b) PKS will coordinate delivery of share
certificates with any lending institution to which shares of
Class C Stock have been pledged. PKS will arrange for delivery of
the shares of Class C Stock to be exchanged and will, if directed
in writing by the holder of such shares of Class C Stock, deliver
shares of PKS Holdings Stock and Class R Stock directly to such
lending institution.
3.12 Class R Stock Provisions. (a) So long as any
shares of Class R Stock remain outstanding, PKS will take all
necessary action (i) to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and
authorities and to make filings under federal and state
securities acts and laws, which may be or become requisite in
connection with the issuance, sale, transfer and delivery of the
shares of Class D Stock issued upon conversion of shares of Class
R Stock, and (ii) if the Class D Stock is Publicly Traded (as
defined in the PKS Certificate), to have the shares of Class D
Stock, immediately upon their issuance upon conversion of the
shares of Class R Stock, listed on each national securities
exchange, the NASDAQ National Market or the NASDAQ Small Cap
Market on which the Class D Stock is then listed or traded. So
long as any shares of Class R Stock remain outstanding and if
required in order to comply with the Securities Act or state
securities laws, PKS will file such post-effective amendments to
the Registration Statement as may be necessary to permit the
Corporation to deliver to each person converting shares of Class
R Stock a prospectus meeting the requirements of Section 10(a)(3)
of the Securities Act and otherwise complying therewith, and, if
required in order to comply with the Securities Act or state
securities laws, will deliver such a prospectus to each such
person.
(b) PKS will not, by amendment of the PKS
Certificate, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities
or any voluntary action, seek to avoid the observance or
performance of any of its obligations with respect to the Class R
Stock.
(c) After the date upon which the Class R Stock
becomes convertible into Class D Stock, and in order to provide
holders of Class R Stock a means to determine the Conversion
Ratio when the Class D Stock is Publicly Traded (as both such
terms are defined in the PKS Certificate), PKS shall establish
reasonable measures intended to enable holders of Class R Stock
to obtain information at any time during normal business hours.
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification. (a) From and after the Exchange
Date, PKS and KDG will indemnify, defend and hold harmless each
Construction Indemnitee from and against all Losses incurred or
suffered by any Construction Indemnitee arising out of or due to,
directly or indirectly, (i) any breach by PKS or KDG of any
obligation under this Agreement, (ii) the Diversified Assets,
(iii) the Diversified Business, (iv) Diversified Securities
Transactions, (v) Diversified Liabilities, (vi) the Covent
Liabilities (as defined in Section 5.10(f)) and (vii) such other
matters as are specifically agreed by the Parties and described
on a Schedule attached to the Agreement on or before the Exchange
Date.
(b) From and after the Exchange Date, PKS
Holdings and KCG will indemnify, defend and hold harmless each
Diversified Indemnitee from and against all Losses incurred or
suffered by any Diversified Indemnitee arising out of or due to,
directly or indirectly, (i) any breach by PKS Holdings or KCG of
any obligation under this Agreement, (ii) the Construction
Assets, (iii) the Construction Business, (iv) Construction
Securities Transactions, (v) Construction Liabilities, and (vi)
such other matters as are specifically agreed by the Parties and
described on a Schedule attached to the Agreement on or before
the Exchange Date.
(c) This Section 4.01 shall not apply to any
matter or item specifically covered by indemnification or risk
allocation provisions of the Continuing Agreements.
(d) If an Indemnitee realizes a Tax benefit or
detriment by reason of having incurred a Loss for which such
Indemnitee receives an Indemnity Payment from an Indemnifying
Party or by reason of receiving an Indemnity Payment, such
Indemnitee shall pay to such Indemnifying Party an amount equal
to the Tax benefit, or such Indemnifying Party shall pay to such
Indemnitee an additional amount equal to the Tax detriment
(taking into account any Tax detriment resulting from the receipt
of such additional amounts), as the case may be. If, in the
opinion of counsel to an Indemnifying Party reasonably
satisfactory in form and substance to the affected Indemnitee,
there is a substantial likelihood that the Indemnitee will be
entitled to a Tax benefit by reason of an Indemnifiable Loss, the
Indemnifying Party promptly shall notify the Indemnitee and the
Indemnitee promptly shall take any steps (including the filing of
such returns, amended returns or claims for refunds consistent
with the claiming of such Tax benefit) that, in the reasonable
judgment of the Indemnifying Party, are necessary and appropriate
to obtain any such Tax benefit. If, in the opinion of counsel to
an Indemnitee reasonably satisfactory in form and substance to
the affected Indemnifying Party, there is a substantial
likelihood that the Indemnitee will be subjected to a Tax
detriment by reason of an Indemnification Payment, the Indemnitee
promptly shall notify the Indemnifying Party and the Indemnitee
promptly shall take any steps (including the filing of such
returns or amended returns or the payment of Tax underpayments
consistent with the settlement of any Liability for Taxes arising
from such Tax detriment) that, in the reasonable judgment of the
Indemnitee, are necessary and appropriate to settle any
Liabilities for Taxes arising from such Tax detriment. If,
following a payment by an Indemnitee or an Indemnifying Party
pursuant to this Section 4.01(d) in respect of a Tax benefit or
detriment, there is an adjustment to the amount of such Tax
benefit or detriment, then each of the Indemnifying Party and the
Indemnitees shall make appropriate payments to the other to
reflect such adjustments.
(e) The amount which an Indemnifying Party is
required to pay to any Indemnitee pursuant to this Section 4.01
will be reduced (including retroactively) by any insurance
proceeds and other amounts actually recovered by such Indemnitee
in reduction of the related Loss, it being understood and agreed
that the members of each Group will use their commercially
reasonable efforts to collect any such proceeds or other amounts
to which they are entitled, without regard to whether it is the
Indemnifying Party hereunder. If an Indemnitee receives an
Indemnity Payment in respect of an Indemnifiable Loss and
subsequently receives insurance proceeds or other amounts in
respect of such Indemnifiable Loss, then such Indemnitee shall
pay to such Indemnifying Party an amount equal to the difference
between (i) the sum of the amount of such Indemnity Payment and
the amount of such insurance proceeds or other amounts actually
received and (ii) the amount of such Loss, adjusted (at such time
as appropriate adjustment can be determined) in each case to
reflect any premium adjustment attributable to such claim.
(f) No person other than an Indemnitee is
intended to be a beneficiary of the indemnification provisions
set forth above, and no insurer will be relieved thereby of any
obligation to pay any claims to which it is obligated or be
entitled to any right of subrogation with respect to any amount
paid hereunder.
4.02 Procedure for Indemnification. (a) If any
Indemnitee determines that it is or may be entitled to
indemnification by any Indemnifying Party (other than in
connection with any Third Party Claim), the Indemnitee will
deliver to the Indemnifying Party a written notice specifying, to
the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnitee
reasonably believes it is entitled to be indemnified. Within 60
calendar days after receipt of such notice, the Indemnifying
Party will pay the Indemnitee such amount in cash or other
immediately available funds unless the Indemnifying Party objects
to the claim for indemnification or the amount by written notice
setting forth the grounds therefor within such 60 calendar day
period. If the Indemnifying Party does not give the Indemnified
Party written notice objecting to such indemnity claim and
setting forth the grounds therefor within 60 calendar days after
receipt of such notice, the Indemnifying Party will be deemed to
have acknowledged its liability for such claim and the Indemnitee
may exercise any and all of its rights under applicable law to
collect such amount.
(b) If any Indemnitee receives notice of the
assertion of any Third-Party Claim with respect to which an
Indemnifying Party is obligated under this Agreement to provide
indemnification, such Indemnitee will give such Indemnifying
Party notice thereof promptly after becoming aware of such Third-
Party Claim; provided, however, that the failure of any
Indemnitee to give such notice will not relieve any Indemnifying
Party of its obligations under this Article IV, except to the
extent that such Indemnifying Party is actually prejudiced by
such failure to give notice. Such notice will describe such
Third-Party Claim in reasonable detail and, if practicable, will
indicate the estimated amount of the Indemnifiable Loss that has
been or may be sustained by such Indemnitee.
(c) An Indemnifying Party, at such Indemnifying
Party's own expense and through counsel chosen by such
Indemnifying Party (which counsel shall be reasonably
satisfactory to the Indemnitee), may elect to defend any Third-
Party Claim. If an Indemnifying Party elects to defend a Third-
Party Claim, then, within fifteen calendar days after receiving
notice of such Third-Party Claim (or sooner, if the nature of
such Third-Party Claim so requires), such Indemnifying Party will
notify the Indemnitee of its intent to do so, and such Indemnitee
shall cooperate in the defense of such Third-Party Claim. Such
Indemnifying Party will pay such Indemnitee's reasonable out-of-
pocket expenses incurred in connection with such cooperation.
After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-Party Claim, such
Indemnifying Party will not be liable to such Indemnitee under
this Article IV for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense
thereof; provided, however, that such Indemnitee will have the
right to employ one law firm as counsel to represent such
Indemnitee (which firm shall be reasonably acceptable to the
Indemnifying Party) if, in such Indemnitee's reasonable judgment,
either a conflict of interest between such Indemnitee and such
Indemnifying Party exists in respect of such claim or there may
be defenses available to such Indemnitee which are different from
or in addition to those available to such Indemnifying Party, and
in that event (i) the reasonable fees and expenses of such
separate counsel shall be paid by such Indemnitee and (ii) each
of such Indemnifying Party and such Indemnitee shall have the
right to run its own defense in respect of such claim. If an
Indemnifying Party elects not to defend against a Third-Party
Claim, or fails to notify an Indemnitee of its election as
provided in this Section 4.02 within the period of fifteen
calendar days described above, such Indemnitee may defend,
compromise and settle such Third-Party Claim; provided, however,
that no such Indemnitee may compromise or settle any such Third-
Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be withheld unreasonably.
Notwithstanding the foregoing, the Indemnifying Party shall not,
without the prior written consent of the Indemnitee, (i) settle
or compromise any Third-Party Claim or consent to the entry of
any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of
such Third-Party Claim or (ii) settle or compromise any Third-
Party Claim in any manner that in the reasonable judgment of the
Indemnifying Party, is likely to adversely affect the Indemnitee.
(d) If for any reason the indemnification
provided by this Agreement is unenforceable, the Indemnifying
Party will contribute to the amount payable by the Indemnitee as
a result of the related losses an amount appropriate to reflect
equitable considerations.
4.03 Remedies Cumulative. The remedies provided in this
Article IV will be cumulative and will not preclude assertion by
any Indemnitee of any other rights or the seeking of any other
remedies against any Indemnifying Party.
ARTICLE V
ADDITIONAL COVENANTS
5.01 Further Assurances. Each of the Parties will use
its best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the Transactions.
Each Party will cooperate with the other Parties, and execute and
deliver, or use its best efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance,
assumption, assignment and transfer, and to make all filings
with, and to obtain all consents, approvals or authorizations of,
any governmental or regulatory authority or any other Person
under any permit, license, agreement, indenture or other
instrument, and take all such other actions as such Party may
reasonably be requested to take by any other Party, consistent
with the terms of this Agreement, in order to effectuate the
provisions and purposes of this Agreement.
5.02 Transfer of Assets; Assumption of Liabilities. (a)
The Parties intend that, upon consummation of the Share Exchange,
(i) one or more members of the Construction Group, and not any
member of the Diversified Group, will hold all right, title and
interest in and to all Construction Assets, and that one or more
members of the Construction Group, and not any member of the
Diversified Group, will have the sole liability for Construction
Group Liabilities; and (ii) one or more members of the
Diversified Group, and not any member of the Construction Group,
will hold all right, title and interest in and to all Diversified
Assets, and one or more members of the Diversified Group, and not
any member of the Construction Group, will have the sole
liability for all Diversified Group Liabilities.
(b) Prior to the Exchange Date, each Party will
take any action, and will cause their Subsidiaries to take any
action, requested by any member of the other Group entitled under
Section 5.02(a) to obtain an Asset or to be relieved of a
Liability, reasonably necessary to transfer any such Asset or to
assume any such Liability. If any such transfer or assumption of
Assets or Liabilities is not consummated on or before the
Exchange Date, the Party retaining such Asset or Liability will
hold such Asset in trust for the use and benefit of the Party
entitled thereto (at the expense of the Party entitled thereto),
or will retain such Liability for the account of the Party by
whom such Liability is to be assumed pursuant hereto, as the case
may be, and will take such other action as may be reasonably
requested by the Party to whom such Asset is to be transferred
(including licensing, contracting and leasing arrangements), or
by whom such Liability is to be assumed, in order to place such
Party, insofar as reasonably possible, in the same position as if
such Asset or Liability had been transferred as contemplated
hereby. If and when any such Asset or Liability becomes
transferable, such transfer will be effected as promptly as
possible.
(c) Notwithstanding any other provision of this
Agreement, this Agreement will not constitute an agreement to
transfer any Asset or assume any Liability if an assignment of
the Asset or the assumption of the Liability violates any law,
rule or regulation or constitutes a breach of any agreement
relating to such Asset or Liability.
5.03 No Representations or Warranties. Each Group
understands and agrees that no member of the other Group is, in
this Agreement, representing or warranting in any way as to the
Assets, the Business or the Liabilities of the Group or as to any
consents or approvals required in connection with the
consummation of the transactions contemplated by this Agreement,
it being agreed and understood that each Group is taking all of
its Assets "as is, where is" and that each Group will bear the
economic and legal risk that the title of any member of the Group
to any Assets shall be other than good and marketable and free
from encumbrances.
5.04 Terminated Agreements. On or before the Exchange
Date, the Parties will agree to a schedule of agreements,
contracts and arrangements that will terminate and have no
further force or effect as of the Exchange Date. Each Party
shall, at the reasonable request of another Party, take or cause
to be taken, such other actions as may be necessary to effect the
termination of such agreements.
5.05 Continuing Agreements. Neither this Agreement nor
the Share Exchange shall modify, amend or otherwise affect any
agreements contemplated by Section 5.11 or Section 5.12 or any
other agreement between a member or members of the Construction
Group, on one hand, and a member or members of the Diversified
Group, on the other hand (together, the "Continuing Agreements"),
except for those agreements terminated pursuant to the provisions
of Section 5.04. If there is a conflict between this Agreement
and a Continuing Agreement, the Continuing Agreement shall
control.
5.06 Intercompany Accounts. Effective as of the close
of business on the day prior to the Exchange Date, all
intercompany receivables or payables and loans then existing
between any member of one Group and any member of the other Group
will be settled by way of payment, cancellation or capital
contribution.
5.07 HSR Act. PKS Holdings will file any notification
and report forms and other material required by the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") with respect to the shares of PKS Holdings Stock to be
distributed in the Share Exchange prior to the Exchange Date, and
will seek early termination of the waiting period under the HSR
Act.
5.08 Kiewit Name. (a) Not later than the first business
day after the Exchange Date (i) PKS will change its corporate
name to another name not including "PKS" or "Kiewit" as part of
the name, and, (ii) except as provided in Section 5.08(b), will
cause all of its Subsidiaries to change their corporate names if
necessary to corporate names not including "PKS" or "Kiewit" as
part of the name. As soon as reasonably practicable after the
Exchange Date, and except as provided in Section 5.08(b), PKS
will use its best efforts to, and will cause its Subsidiaries to
use their best efforts to, cease using "PKS" or "Kiewit" in
connection with the business activities of the Diversified Group.
(b) Notwithstanding Section 5.08(a), (i) the
members of the Diversified Group will have the right to use "PKS"
or "Kiewit" for a period of one year from the Exchange Date to
the extent reasonably necessary in accordance with its past
practice in connection with legal, regulatory or contract matters
relating to Diversified Group business activities in existence on
the Exchange Date, and (ii) PKSIS and its current information
services Subsidiaries will not be required to comply with Section
5.08(a), and will have the right to continue to use "PKS" in
accordance with its past practice in connection with its
businesses until the second anniversary of the Exchange Date.
(c) As of the Exchange Date, PKS assigns, and
will cause each of its Subsidiaries to execute any agreement or
instrument reasonably requested by PKS Holdings to assign, any
and all of its right, title and interest in and to any corporate
name, trademark or tradename using "PKS" or "Kiewit," and any and
other proprietary rights to those names or related symbols.
5.09 Sales of Class C Stock. Except as contemplated by
Section 3.02, PKS will not offer to sell, sell or issue any Class
C Stock between the date of this Agreement and the Class R Record
Date.
5.10 Insurance. (a) As of the Exchange Date, directors
and officers of the members of the Construction Group will no
longer be covered by the directors and officers liability
insurance maintained by PKS for directors and officers of PKS and
its subsidiaries (the "PKS D&O Policy") for acts occurring on and
after the Exchange Date. PKS Holdings will obtain, effective not
later than the Exchange Date, directors and officers liability
insurance for all directors and officers of the members of the
Construction Group, on such terms and conditions and providing
such coverages as PKS Holdings deems appropriate. PKS shall
obtain a separate directors and officers liability insurance
policy ("Tail Policy") for all present and past directors and
officers of the Construction Group in effect for a minimum of 5
years from the Exchange Date. The cost of the premiums payable
with respect to the Tail Policy shall be allocated 82.5% to the
Diversified Group and 17.5% to the Construction Group.
(b) No Party shall, without the consent of the other
Parties, provide any insurance carrier with a release, or amend,
modify or waive any rights under any such policy or agreement, if
such release, amendment, modification or waiver would adversely
affect any rights or potential rights of another Group; provided,
however, that the foregoing shall not preclude a Party either
from presenting any claim or from exhausting any policy limit.
(c) This Agreement shall not be considered as an
attempted assignment of any policy of insurance or as a contract
of insurance and shall not be construed to waive any right or
remedy of the Parties in respect of any insurance policy or any
other contract or policy of insurance.
(d) From and after the Exchange Date, PKS Holdings shall
be entitled to the benefit of any reserves held by any insurance
carrier with respect to the Construction Liabilities, and PKS
shall be entitled to the benefit of any reserves held by any
insurance carrier with respect to the Diversified Liabilities.
(e) On or before the Exchange Date, the Parties will
agree upon the insurance policies in which PKS is the lead named
insured which will be amended to substitute PKS Holdings as the
lead named insured effective as of the Exchange Date. Each Party
shall, at the reasonable request of another Party, take or cause
to be taken, such other actions as may be necessary to effectuate
such change.
(f) By agreement dated November 30, 1992 (the "Transfer
Agreement"), Covent Vermont Insurance Company ("Covent"), then a
subsidiary of KDG, transferred to Global Surety and Insurance Co.
("Global"), a subsidiary of KCG, all reinsurance business
liabilities held by Covent ("Covent Liabilities"), in exchange
for certain cash payments and other consideration. It is the
intent of the Parties to reverse the transfer of the Covent
Liabilities, thereby returning to KDG all responsibility
originally held by Covent for the Covent Liabilities, and
releasing Global of any and all further liability and
responsibility for the Covent Liabilities. In this regard, the
Parties agree to work together to effect such reversal, effective
as soon as possible.
(g) Notwithstanding any other provision hereof, each
Group shall retain all rights of any insured party under each
insurance policy and insurance contract owned or maintained by
PKS under which any member of such Group is a named insured,
including any right of indemnity and the right to be defended by
or at the expense of the insurer. Each Party shall pay its
allocable share of any retrospectively-rated premiums arising out
of any claims made by such Party under such insurance policies.
(h) The Parties agree to cooperate and provide
reasonable assistance to each other with regard to any dispute
with any third party (including insurers or third-party
administrators) regarding any matter related to any of the above
insurance policies.
5.11 Unresolved Matters. The Parties agree to negotiate
in good faith and enter into on or before the Exchange Date,
mutually acceptable agreements or arrangements with respect to
certain unresolved matters, including the matters described below
(the "Unresolved Matters"), and will amend and restate this
Agreement to the extent necessary or desirable to conform with
those agreements or arrangements. The unresolved matters
include: (i) the lease by KDG of office space from KCG in the KCG
headquarters building at Kiewit Plaza, Omaha, Nebraska; (ii) the
provision by KCG of aircraft flight and maintenance services to
KDG; (iii) the provision by KCG of interim stock registrar and
transfer agent services to PKS; (iv) the treatment of employees
of KDG who are participants prior to the Exchange Date in the
401(k) and profit sharing plans maintained by KCG; (v) the
administration of the Kiewit Royalty Trust; (vi) the ownership of
Kiewit Investment Management Corp. (vii) modifications to the
mine management agreement dated January 8, 1992 by and between
Kiewit Coal Properties Inc. and Kiewit Mining Group Inc.; and
(viii) administration of insurance claims with respect to
policies maintained for the benefit of both Business Groups prior
to the Exchange Date.
5.12 Tax Allocation Agreement. The Parties agree to
negotiate in good faith and enter into the Tax Allocation
Agreement on or before the Exchange Date.
ARTICLE VI
INFORMATION
6.01 Access to Information. (a) As soon as practicable
following the Exchange Date, and to the extent requested, each
Group shall provide to the other Group any documents, contracts,
books, records and data (including but not limited to minute
books, stock registers, stock certificates and documents of
title) in its possession relating to such other Group or such
other Group's business and affairs; provided that if any such
documents, contracts, books, records or data relate to both
Groups or the business and operations of both Groups, each such
Group shall provide to the other Group true and complete copies
of such documents, contracts, books, records or data.
(b) After the Exchange Date, each Group will
afford to the other Group and to the other Group's
Representatives reasonable access and duplicating rights during
normal business hours to all Information within such Group's
possession relating to such other Group's businesses, insofar as
such access is reasonably required by such other Group. In
addition, PKS Holdings shall have access during such time to
Information of historical significance that relates to the
Construction Business. Without limiting the foregoing,
Information may be requested under this Section for audit,
accounting, claims, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations.
6.02 Production of Witnesses. After the Exchange Date,
each Group will use reasonable efforts to make available to the
other Group its Representatives as witnesses to the extent that
any such Person may reasonably be required in connection with any
legal, administrative or other proceedings in which the
requesting Party may from time to time be involved and will
otherwise cooperate with the other Group, to the extent
reasonably required in connection with any such proceeding.
6.03 Retention of Records. Except as otherwise required
by law or agreed in writing, or as otherwise provided in the
Continuing Agreements, each Group will retain, for a period of at
least ten years following the Distribution Date, all significant
Information in such Group's possession or under its control
relating to the business of the other Group and, after the
expiration of such ten year period, prior to destroying or
disposing of any such Information, (a) the Group proposing to
dispose of or destroy any such Information shall provide no less
than 90 calendar days' prior written notice to the other Group,
specifying the Information proposed to be destroyed or disposed
of, and (b) if, prior to the scheduled date for such destruction
or disposal, the other Group requests in writing that any of the
Information proposed to be destroyed or disposed of be delivered
to such other Group, the Group proposing to dispose of or destroy
such Information promptly shall arrange for the delivery of the
requested Information to a location specified by, and at the
expense of, the requesting Group.
6.04 Reimbursement. Each Group providing information or
witnesses to the other Group, or otherwise incurring any expense
under Section 6.01, 6.02 or 6.03, including costs and expenses
paid to third parties for storage of Information on behalf of the
other Group, will be entitled to receive from the other Group,
upon the presentation of invoices therefor, payment for all out-
of-pocket costs and expenses as may be reasonably incurred in
providing such information, witnesses or cooperation.
6.05 Confidentiality. From and after the Exchange Date,
each Group will hold, and shall use its reasonable best efforts
to cause its Representatives to hold, in confidence all
Information concerning the other Party obtained by it prior to
the Exchange Date or furnished to it by such other Party pursuant
to this Agreement or the Continuing Agreements, and will not
release or disclose such Information to any other Person, except
its Representatives, who will be bound by the provisions of this
Section; provided, however, that each Group may disclose such
Information to the extent that (a) disclosure in the opinion of
such Group's counsel, is required or advisable under applicable
law (including the federal securities laws), or (b) such Group
can show that such Information was (i) available to such Group on
a nonconfidential basis prior to its disclosure by the other
Group, (ii) in the public domain through no fault of such Group
or (iii) lawfully acquired by such Party from other sources after
the time that it was furnished to such Party pursuant to this
Agreement or the Continuing Agreements. Notwithstanding the
foregoing, each Group will be deemed to have satisfied its
obligations under this Section with respect to any Information if
it exercises the same care with regard to such Information as it
takes to preserve confidentiality for its own similar
Information.
ARTICLE VII
EXPENSES
7.01 General. The Parties have agreed to allocate the
financial burden of Covered Expenses 82.5% to the Diversified
Group and 17.5% to the Construction Group (the "Expense Sharing
Ratio"), whether the Transaction is consummated or abandoned.
All other costs or expenses incurred by any Party in connection
with the Transaction will be borne by the Party incurring the
cost or expense.
7.02 Covered Expenses. (a) The following costs and
expenses incurred by any Party will be considered to be "Covered
Expenses":
(i) fees and expenses of U.S. corporate
counsel to PKS, Willkie Farr & Gallagher, Canadian corporate
counsel to PKS, Blake, Cassels & Graydon, and Delaware counsel to
PKS, Morris, Nichols, Arsht & Tunnel, in each case to the extent
allocated to the Transaction in accordance with Section 7.02(c);
(ii) fees and expenses of U.S. tax counsel to
PKS, Skadden Arps, Slate, Meagher & Flom, Canadian tax counsel to
PKS, Blake, Cassels & Graydon, and Nebraska tax counsel to PKS,
McGrath, North, Mullin & Kratz, P.C., in each case to the extent
allocated to the Transaction in accordance with Section 7.02(c);
(iii) fees and expenses of the certified
public accountants for PKS, Coopers & Lybrand, to the extent
allocated to the Transaction in accordance with Section 7.02(c);
(iv) fees and expenses of Gleacher NatWest,
financial advisor to PKS, incurred pursuant to the engagement
letter of Gleacher NatWest dated as of June 1, 1997, to the
extent allocated to the Transaction in accordance with Section
7.02(c);
(v) all registration fees or other similar
expenses payable to the SEC, any state securities commission, or
the Service, and all fees and expenses in connection with any
filing under the HSR Act;
(vi) all costs and expenses incurred in
connection with the printing and distribution of the Joint
Prospectus/Proxy Statement;
(vii) all costs and expenses of the proxy
solicitation and the Special Meeting;
(viii) a non-accountable cost allowance in an
amount to be mutually agreed upon by the Parties for costs and
expenses incurred by PKS Holdings in connection with the
Debenture Loans; and
(ix) a non-accountable cost allowance in an
amount to be mutually agreed upon by the Parties for costs and
expenses incurred by PKS Holdings in connection with certain
loans to its Canadian shareholders.
(b) The Parties acknowledge that certain of the
fees and expenses of the advisors described in (i), (ii), (iii)
and (iv) of Section 7.02(a) are to be incurred solely for the
account of certain of the Parties, and will not be considered to
be Covered Expenses. Each such Advisor will allocate its fees
and expenses between Covered Expenses and costs and expenses
incurred solely for the account of one of the Parties, and such
allocation will be binding on each of the Parties.
7.03 Actual Payment of Covered Expenses. KCG will make
actual payment of the Covered Expenses described in items (viii)
and (ix) of Section 7.02(a). KDG will make actual payment of all
other Covered Expenses ("Other Covered Expenses").
7.04 Covered Expense True-Up. KDG will prepare and
submit to KCG, within 120 calendar days after the date of
abandonment of the Transaction or the Exchange Date, as the case
may be, a schedule of the Other Covered Expenses, together with
such supporting documentation with respect to the Other Covered
Expenses as KCG reasonably requests. Within five calendar days
after the submission of that schedule, KDG will pay KCG in cash
an amount sufficient to ensure that the financial burden of the
Covered Expenses has been allocated between KCG and KDG in
proportion to the Expense Sharing Ratio.
ARTICLE VIII
MISCELLANEOUS
8.01 Complete Agreement. This Agreement, the Exhibits
and Schedules hereto and the agreements and other documents
referred to herein will constitute the entire agreement between
the Parties with respect to the subject matter hereof and will
supersede all previous negotiations, commitments and writings
with respect to such subject matter.
8.02 Survival of Agreements. All covenants and
agreements of the Parties contained in this Agreement will
survive the Share Exchange.
8.03 Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of
Nebraska (other than the laws regarding choice of laws and
conflicts of laws) as to all matters, including matters of
validity, construction, effect, performance and remedies.
8.04 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by cable telegram, telex or other
standard form of telecommunications, or by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to PKS or KDG:
Vice President - Legal
Kiewit Diversified Group Inc.
Suite 200
3555 Farnam Street
Omaha, NE 68131
with a copy to:
President
Kiewit Diversified Group Inc.
Suite 200
3555 Farnam Street
Omaha, NE 68131
If to PKS Holdings:
General Counsel
Kiewit Construction Group Inc.
1000 Kiewit Plaza
Omaha, NE 68131
with a copy to:
President
Kiewit Construction Group Inc.
1000 Kiewit Plaza
Omaha, NE 68131
8.05 Amendment and Modifications. This Agreement may be
amended, modified or supplemented, and any provision of this
Agreement may be waived, only by a written agreement signed by
all of the Parties.
8.06 Successors and Assigns; No Third-Party
Beneficiaries. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the Parties,
their successors and permitted assigns, but neither this
Agreement nor any of the rights, interest and obligations
hereunder may be assigned by any Party without the prior written
consent of each of the other Parties (which consent shall not be
unreasonably withheld). This Agreement is solely for the benefit
of the Parties (and Indemnitees) and is not intended to confer
any rights or remedies upon any other Persons.
8.07 Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the
same instrument.
8.08 Interpretation. (a) The Article and Section
headings contained in this Agreement are solely for the purpose
of reference, are not part of the agreement of the Parties and
shall not in any way affect the meaning or interpretation of this
Agreement.
(b) The Parties intend that the Share Exchange
will be a distribution pursuant to Section 355(a) and Section
368(a)(1)(D) of the Code, and all provisions of this Agreement
will be so interpreted.
8.09 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction will not
invalidate or render unenforceable such provision in any other
jurisdiction. Each Party acknowledges that money damages would
be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Parties under
this Agreement will be specifically enforceable.
8.10 Dispute Resolution. Except to the extent that a
Party seeks injunctive relief to enforce any particular provision
of this Agreement, if, in the event of any dispute or controversy
arising out of this Agreement, its performance, or breach, the
Parties are unable to settle the dispute themselves, within
thirty (30) calendar days after the dispute arises, then the
dispute shall be referred for resolution by agreement between the
Chief Executive Officer of PKS Holdings and the President of PKS.
In the event that the foregoing officers are unable to resolve
such dispute within thirty (30) calendar days, then the Parties
shall be free to pursue any other rights or remedies to which
they may be entitled.
8.11 Schedules. All schedules referred to herein are a
part of this Agreement as if fully set forth herein.
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be duly executed as of the date first above written.
PETER KIEWIT SONS', INC.
By /s/ Walter Scott, Jr.
Walter Scott, Jr., President
KIEWIT DIVERSIFIED GROUP INC.
By /s/ James Q. Crowe
James Q. Crowe, President
PKS HOLDINGS, INC.
By /s/ Kenneth E. Stinson
Kenneth E. Stinson, President
KIEWIT CONSTRUCTION GROUP INC.
By /s/ Kenneth E. Stinson
Kenneth E. Stinson, President
SEPARATION AGREEMENT SCHEDULES
The schedules listed below, dated March 31, 1998
("Schedules"), are attached to the Separation
Agreement by and among Peter Kiewit Sons', Inc., Kiewit
Diversified Group Inc., PKS Holdings, Inc. and Kiewit
Construction Group Inc. dated as of December 8, 1997,
as amended pursuant to a March 18, 1998 Amendment to
Separation Agreement (as amended, the "Separation
Agreement"). Subsequent to the execution of the
Separation Agreement, KDG changed its name to Level 3
Communications, Inc. and merged into Peter Kiewit
Sons', Inc., and Peter Kiewit Sons', Inc. changed its
name to Level 3 Communications, Inc. In addition, PKS
Holdings, Inc. changed its name to Peter Kiewit Sons',
Inc. For purposes of these Schedules, the Parties
identities prior to such transactions shall be
preserved. Capitalized terms used in the Schedules
shall have the meanings specified in the Separation
Agreement.
1. Schedule 3.08(d) - Capital Contributions
2. Schedule 4.01(a) -Diversified Group Indemnification Obligations
3. Schedule 4.01(b) - Construction Group Indemnification Obligations
4. Schedule 5.04 - Terminated Agreements
Schedule 3.08(d)
Capital Contributions
Except as otherwise provided in the Separation
Agreement, and the Continuing Agreements, the
unconsolidated (determined without regard to the
merger of KDG with and into PKS), Assets and
Liabilities of PKS as of March 31, 1998 shall be
allocated as provided in this Schedule.
1. PKS's remaining 10% interest in the Falcon 900
shall be contributed to PKS Holdings prior to
the Exchange Date.
2. PKS's interest in the Falcon 20 shall be
retained by PKS and allocated to KDG.
3. PKS's interest in the Leasehold Improvements
on the 15th Floor of the Kiewit Plaza
Building shall be contributed to PKS Holdings
prior to the Exchange Date.
4. PKS's obligations for Stockholder Notes shall
be assumed by PKS Holdings.
5. PKS's obligation for the Series 1997
Convertible Debentures shall be assumed by PKS
Holdings, as provided in the Separation
Agreement.
6. PKS's obligation for Deferred Compensation
shall be assumed by KDG.
7. All LB 775 Refunds and any other tax items
shall be allocated to PKS Holdings and KDG as
provided in the Tax Sharing Agreement.
8. The proceeds from the sale of a 40% interest
in the Falcon 900 to Bitterroot, Inc. shall be
contributed to KDG prior to the Exchange Date.
Effective immediately prior to the Exchange Date,
PKS Holdings shall distribute to PKS, or PKS shall
contribute to PKS Holdings, an amount mutually agreed
upon by the parties to equitably reflect the value of
Assets and Liabilities remaining after the foregoing
allocations of Assets and Liabilities.
Schedule 4.01(a)
Diversified Group Indemnification Obligations
Notwithstanding anything in the Separation
Agreement to the contrary, PKS and KDG will be liable
for, and shall indemnify and hold each Construction
Indemnitee harmless from and against: (a) all Losses
incurred or suffered by any Construction Indemnitee
arising out of or due to, directly or indirectly, the
Series 1993 Class D Convertible Debentures of PKS and
(b) 50% of the Losses incurred or suffered by any
Construction Indemnitee arising out of or due to,
directly or indirectly, the offer to sell or the sale
of any security of PKS prior to January 1, 1992.
The Parties further agree that any and all Losses
arising out of or due to, directly or indirectly,
Kiewit Investment Management Corp., the March 31, 1998
Stock Redemption Agreement between Level 3 Holdings
Inc. and Kiewit Investment Management Corp. or the
mine management agreement dated January 8, 1992 by and
between Kiewit Coal Properties Inc. and Kiewit Mining
Group Inc. shall not be covered by the indemnification
provisions of the Separation Agreement.
Schedule 4.01(b)
Construction Group Indemnification Obligations
Notwithstanding anything in the Separation
Agreement to the contrary, PKS Holdings and KCG will
be liable for, and shall indemnify and hold each
Diversified Indemnitee harmless from and against: (a)
all Losses incurred or suffered by any Diversified
Indemnitee arising out of or due to, directly or
indirectly, any Series of Class C Convertible
Debentures of PKS and (b) 50% of the Losses incurred
or suffered by any Diversified Indemnitee arising out
of or due to, directly or indirectly, the offer to
sell or the sale of any security of PKS prior to
January 1, 1992.
For purposes of this Schedule 4.01(b) and Section
4.01(b) of the Separation Agreement, "Losses" shall
not include any losses, Liabilities, damages, actions,
claims, suits, demands, proceedings, inquiries,
investigations, judgments or settlements, costs or
expenses which arise from or as a result of any
registration, sale, attempted sale, or other issuance
of any securities of PKS, any future Affiliate or
Subsidiary of PKS or any member of the Diversified
Group, or any inability to or delay in the
registration, sale or issuance of such securities, in
each case, occurring after the Exchange Date.
The Parties further agree that any and all Losses
arising out of or due to, directly or indirectly,
Kiewit Investment Management Corp., the March 31, 1998
Stock Redemption Agreement between Level 3 Holdings
Inc. and Kiewit Investment Management Corp. or the
mine management agreement dated January 8, 1992 by and
between Kiewit Coal Properties Inc. and Kiewit Mining
Group Inc. shall not be covered by the indemnification
provisions of the Separation Agreement.
Schedule 5.04
Terminated Agreements
Any Administrative Services Agreement between any
member of the Construction Group and any member of the
Diversified Group.
Dates Referenced Herein and Documents Incorporated by Reference
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