Exhibit 2.1
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is entered into as of
[December 8, 1997][date of shareholders meeting] by and among ▇▇▇▇▇ ▇▇▇▇▇▇
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, the "Parties").
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 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; (xx) all cost information, sales and
pricing data, customer prospect lists, supplier records, customer lists,
customer and vender 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) 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 held or utilized immediately prior
to the Exchange Date by any member of the Construction Group, and any Assets
held by any member of the Diversified Group that is employed primarily in the
Construction Business.]
CONSTRUCTION BUSINESS: [all of the businesses and operations conducted at
any time (i) by any member of the Construction Group or (ii) by any former
Subsidiary of any member of the Construction Group (provided, however, that
[▇▇▇▇▇ ▇▇▇▇▇▇ Sons' Co., Kiewit Coal Properties Inc., Kiewit Network
Technologies, Inc., MFS Communications Company, Inc., ▇▇▇▇▇▇ Energy Company, and
others to come] will not be considered former Subsidiaries of the Construction
Group for these purposes.].
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 Construction Business,
but solely to the extent that any Loss incurred by such Person is incurred in
that capacity.
CONSTRUCTION LIABILITIES: all of the Liabilities to which any member of
the Construction Group was subject immediately prior to the Exchange Date, 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 or debentures convertible into Class C Stock.
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DIVERSIFIED ASSETS: [all of the Assets held or utilized [immediately
prior] to the Exchange Date by any member of the Diversified Group, and any
Asset held by any member of the Construction Group that is employed primarily in
the Diversified Business.]
DIVERSIFIED BUSINESS: [except for the Construction Business all of the
businesses conducted at any time (i) by any member of the Diversified Group or
(ii) by any former Subsidiary of any member of the Diversified Group.]
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 Diversified Business,
but solely to the extent that any Loss incurred by such Person is incurred in
that capacity.
DIVERSIFIED LIABILITIES: all of the Liabilities to which any member of the
Diversified Group was subject immediately prior to the Exchange Date, 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, including the issuance of any stock option or debentures 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 on 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 and occurring after satisfaction of all of
the conditions set forth in Section 2.09.
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.
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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 ASSETS: has the meaning ascribed to that term in the PKS Certificate;
provided however, that PKSIS will not be considered to be a Non-Operating
Subsidiary within the meaning of the PKS Certificate.
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 Amended and 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 voting 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: a 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.
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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.
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.
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] [the
Transaction and the Initial PKS Certificate Amendment were] 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
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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 has determined, 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, 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 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 2.08 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) shareholder ratification of the Transaction and approval of the
Initial Certificate Amendment has been received at the Special Meeting, (b) PKS
has received either the rulings subject to the Ruling Request or the Tax
Opinion, (c) the Dividend Condition has been satisfied with respect to the Share
Exchange, (d) the Separation Transactions have been consummated, and (e) the PKS
Board has not determined to abandon the Transaction. The condition set forth in
clause (b) of the preceding sentence shall not be waived by either Party.
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.
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(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.
(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 __ 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.]
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 years 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 PKS.
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, 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 will issue, 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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
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
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"Selling Shareholder"), the date of such purchase, the number of shares of Class
C Stock so purchased and the total amount paid each such Eligible 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 on a pro
rata basis, as contemplated by the Post-Transaction Certificate Amendment.
(c) In connection with Subsequent Sales of PKS Holdings Stock to
persons who are subject to Canadian tax ("Canadian Shareholders"), PKS Holdings
may offer to loan 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. If shareholder approval of the
Initial Certificate Amendment is received, 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 as contemplated by Section 3.10(c). 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) cash in an
amount equal to one-half of the fair value of the PKS Assets as of the Exchange
Date, as determined by the PKS Board. On the Exchange Date, PKS Holdings will
distribute to PKS a number of shares of PKS Holdings Stock, evidenced by a
single certificate, 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
8
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 Section III.D.3(e) of the PKS Certificate.
(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) In connection with the delivery of share certificates to holders
of Class C Stock and Class R Stock subsequent to the Share Exchange, PKS may
request each holder of Class R Stock to execute an irrevocable proxy (the
"Proxy") granting PKS or designees of PKS an irrevocable proxy to vote all of
the holder's shares of Class R Stock on all matters other than the election of
directors. PKS, however, will not be entitled to make execution of the Proxy a
condition to the related Share Exchange or to the delivery of certificates
evidencing PKS Holdings Stock or Class R Stock.
(c) 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. So long as any shares of Class R Stock
remain outstanding, the Corporation will take all necessary action (a) 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 (b) 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.
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 [or the Continuing Agreements], (ii) the
Diversified Assets, (iii) the Diversified Business, (iv) Diversified Securities
Transactions, and (v) 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.
9
(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 or the Continuing Agreements, (ii) the
Construction Assets, (iii) the Construction Business, (iv) Construction
Securities Transactions, and (v) 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 4.02 shall not apply to any 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[, including the payment of interest thereon at the federal statutory rate
then in effect,] 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 600
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 30 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.
10
(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 Transaction.
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, 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.
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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 from 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 breach 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
5.12 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
listed at Schedule 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, capital contribution.
5.07 SEC FORM 10. (a) PKS and PKS Holdings will prepare, and PKS Holdings
will file, a Form 10 with the SEC, at least ___ calendar days before the
Exchange Date. PKS and PKS Holdings will use reasonable efforts to cause the
Form 10 to become effective as soon as possible after it is filed with the SEC.
5.08 HSR ACT. PKS Holdings will file any notification and report forms
and other material required by the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 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 on or before February 15, 1998,
and will seek early termination of the waiting period under the HSR Act.
12
5.09 KIEWIT NAME. (a) On or before 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 5.09(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 5.10(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 5.09(a), (i) the members of the
Diversified Group will have the right to use "PKS" or "Kiewit" for a period of
______ 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 5.09(i), 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 on related symbols.
5.10 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.
5.11 D&O INSURANCE. 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. PKS Holdings will obtain, effective not later than
the Exchange Date, directors and officers liability insurance for all directors
and officers of the Construction Group, on such terms and conditions and
providing such coverages as PKS Holdings deems appropriate.
5.12 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 ▇▇▇▇▇▇ 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.
5.13 TAX ALLOCATION AGREEMENT. The Parties agree to negotiate in good
faith and enter into the Tax Allocation Agreement on or before the Exchange
Date. The Parties intend that the Tax Allocation Agreement will define each
Group's rights and obligations with respect to deficiencies and refunds of
federal, state and other taxes relating to the other Group's operations for tax
years (or portions thereof) ending on or before the Exchange Date and with
respect to certain tax attributes of each Group after the Exchange Date. In
general, the Parties intend that (i) with respect to periods (or portions
thereof) ending on or before the Exchange Date, PKS Holdings will be responsible
for preparing both consolidated federal tax returns for the consolidated group,
and state tax returns for the combined and any subsidiary group; and (ii) PKS
and PKS Holdings will be responsible for paying the taxes relating to such
returns (including any subsequent adjustments resulting from the redetermination
of such tax liabilities by the applicable taxing authorities) that are allocable
to the Diversified Businesses and the Construction Businesses, respectively.
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
13
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. 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, 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 Other 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 Other
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. The following costs and expenses incurred by any
Party will be considered to be "Covered Expenses":
14
(i) fees and expenses of U.S. corporate counsel to PKS, ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, Canadian corporate counsel to PKS, Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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, ▇▇▇▇▇▇▇ ▇▇▇▇,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, Canadian tax counsel to PKS, Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
and Nebraska tax counsel to PKS, ▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇▇, 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 & ▇▇▇▇▇▇▇;
(iv) fees and expenses of Gleacher NatWest, financial advisor to PKS,
incurred pursuant to the engagement letter of Gleacher NatWest dated as of
__________, 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;
(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];
(x) a non-accountable cost allowance in an amount to be mutually
agreed upon by the Parties for all other costs incurred by the Diversified Group
in connection with the Transaction; and
(xi) (a) a non-accountable cost allowance in an amount to be
mutually agreed upon by the Parties for all other costs to be incurred by the
Construction Group in connection with the Transaction.
(b) The Covered Expenses described in items (x) through (xi) of
Section 7.02(a) will be considered to have been incurred only if the Transaction
is consummated.
(c) The Parties acknowledge that certain of the fees and
expenses of the advisors described in (i), (ii) 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), (ix) and (xi) 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
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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
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to PKS Holdings:
General Counsel
Kiewit Construction Group Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 Indemnities) 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
16
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 President 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.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇ ▇▇▇▇▇▇ SONS', INC.
By
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., President
KIEWIT DIVERSIFIED GROUP INC.
By
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
PKS HOLDINGS, INC.
By
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
KIEWIT CONSTRUCTION GROUP INC.
By
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
17