AMENDMENT TO SEPARATION AGREEMENT
This Amendment to Separation Agreement ("Amendment) is made and entered
into as of the 8th day of July, 2002, by and among XXXXX XXXXXX SONS', INC., a
Delaware corporation ("PKS"), KIEWIT MATERIALS COMPANY, a Delaware corporation
("KMC") and XXXXXX CONSTRUCTION GROUP INC., a Delaware corporation ("KCG" and
together with PKS and KMC, collectively the "Parties" or individually a
"Party").
PRELIMINARY STATEMENTS. The Parties have previously entered into a
Separation Agreement dated as of August 8, 2000 (the "Separation Agreement"),
with respect to a series of transactions (the "Transaction") intended to
separate the construction and materials segments of PKS into two separate
independent companies.
KMC has entered into discussions with Xxxxxx Materials Corporation
respect to a possible transaction ("Acquisition Transaction") which, if
consummated, would lead to a change of control of KMC. In connection with such
Acquisition Transaction, the Parties desire to amend the Separation Agreement as
provided herein.
NOW, THEREFORE, in consideration of the premises, the Parties hereby
agree as follows:
1. Capitalized Terms. Unless otherwise specified, capitalized
terms used herein shall have the meanings specified in the Separation Agreement.
2. Columbia River Property. In connection with the Transaction,
members of the Construction Group transferred and assigned certain real property
(the "Real Property"), leasehold interests and equipment located in Xxxxx
County, Washington to a member of the Materials Group (the "Columbia River
Property"). Prior to such transfer, one or more members of the Construction
Group had owned the Real Property continuously since September 11, 1984. In
contemplation of the Acquisition Transaction, the Parties desire that the
Columbia River Property be transferred and assigned from a member of the
Materials Group to a member of the Construction Group, and that such member of
the Construction Group defend and indemnify the Materials Group from and against
certain environmental liabilities relating to the Real Property (collectively,
the "Reconveyance Transaction"). The Parties agree to use their respective best
efforts to enter into definitive agreements with respect to and to close the
Reconveyance Transaction on or before the date of the closing of the Acquisition
Transaction (the "Acquisition Transaction Closing Date"), containing the terms
and conditions of the draft agreements attached hereto as Exhibit A. The Parties
agree that PKS shall not be obligated to close on the Reconveyance Transaction
unless KCG has been released from the Cement Purchase Agreement as specified in
Paragraph 3 below.
3. California Portland Cement Obligations. KCG has certain
obligations with respect to the Materials Business pursuant to the terms and
conditions of a March 7, 1994 Amended and Restated Cement Purchase Agreement
between KCG and California Portland Cement Company (the "Cement Purchase
Agreement"). Section 5.11 of the Separation Agreement provides that KMC will
indemnify and hold harmless PKS and KCG for any Losses arising from or relating
to any such obligations. In contemplation of the Acquisition Transaction, the
Parties desire to cause the Cement Purchase Agreement to be modified to release
KCG from any obligations thereunder.
The Parties agree to use their respective best efforts to amend the Cement
Purchase Agreement or obtain a separate document, in either case, to release KCG
on or before the Acquisition Transaction Closing Date, upon such terms and
conditions as are mutually acceptable to the Parties.
4. Administrative Services. In connection with the Transaction,
PKS and KMC entered into an Administrative Services Agreement dated September
30, 2000, as amended (the "Services Agreement"), pursuant to which PKS provides
certain administrative services to the Materials Group. Section 5 of the
Services Agreement provides that PKS may terminate the Services Agreement
immediately upon a "Change of Control" of KMC (as defined therein). In
contemplation of the Acquisition Transaction, PKS has agreed with Xxxxxx
Materials Corporation that it will not terminate the Services Agreement due to
the Change of Control and contemporaneously with the execution hereof, has
executed a letter agreement with Xxxxxx Materials Corporation regarding the
continuation by PKS of certain administrative services to the Materials Group.
The Parties agree that PKS shall not be obligated to provide administrative
services to the Materials Group subsequent to the Acquisition Transaction
Closing Date unless KCG has been released from its obligations under the Cement
Purchase Agreement as specified in Paragraph 3 above.
5. Use of Kiewit Name. Section 5.7 of the Separation Agreement
provides that KMC shall have a revocable non-exclusive right and license to use
the name "Kiewit" solely as part of the name "Kiewit Materials Company" and that
PKS may revoke such license at any time upon the sole determination of the PKS
Board. In contemplation of the Acquisition Transaction, the Parties desire to
provide for a transition period pursuant to which KMC may continue to utilize
the name "Kiewit" as part of the name "Kiewit Materials Company". The Parties
agree, that in consideration of the mutual covenants and agreements set forth
herein, and the payment set forth in Paragraph 7 hereof, KMC shall continue to
have the limited non-exclusive right and license to use the name "Kiewit" as
part of the name "Kiewit Materials Company" and as otherwise currently used by
Materials Group for a transition period of six months from the date of the
Acquisition Transaction Closing Date. Upon the expiration of such transition
period, the license and right to use the name "Kiewit" shall be deemed revoked
without the need of any further action on the part of PKS or the PKS Board and
KMC and its Subsidiaries and Affiliates will thereafter cease using the name
"Kiewit". The Parties agree that PKS shall not be obligated to provide KMC with
the continued limited non-exclusive right and license to use the "Kiewit" name
unless KCG has been released from its obligations under the Cement Purchase
Agreement as specified in Paragraph 3 above and unless KMC has made the payment
to PKS as specified in Paragraph 7 below.
6. Modification of Indemnification Obligations. Article IV of the
Separation Agreement sets forth certain indemnification obligations of each of
the Construction Group and the Materials Group. In contemplation of the
Acquisition Transaction and in conformance with the other agreements and
provisions contemplated herein, the Parties desire to amend certain of their
indemnification obligations. The Parties agree, that in consideration of the
mutual covenants and agreements set forth herein, and the payment set forth in
Paragraph 7 hereof, effective as of the Acquisition Transaction Closing Date and
the payment of the sum specified in Paragraph 7 below, Section 4.1 of the
Separation Agreement shall be amended in its entirety to read as follows:
"4.1 INDEMNIFICATION. (a) From and after the Effective Date,
KMC will indemnify, defend and hold harmless each Construction
Indemnitee from and against all Losses incurred or suffered by any
Construction Indemnitee arising out of
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or due to, directly or indirectly, (i) any breach by KMC of any
obligation under this Agreement, (ii) the Materials Assets, (iii) the
Materials Business, (iv) Materials Securities Transactions, and (v) the
Materials Liabilities. Notwithstanding the foregoing, no Construction
Indemnitee will be entitled to indemnification under this Section
4.1(a) in respect of any Loss arising out of or due to, directly or
indirectly, (x) any Liability for which PKS' Affiliate indemnifies
KMC's Affiliate from and against pursuant to the Indemnification
Agreement attached hereto as part of Exhibit A, or (y) any securities
transactions described in Section 4.1(b)(ii) below.
(b) From and after the Effective Date, PKS and
KCG will: (i) indemnify, defend and hold harmless each Materials
Indemnitee from and against all Losses incurred or suffered by any
Materials Indemnitee arising out of or due to, directly or indirectly,
(A) any breach by PKS or KCG of any obligation under this Agreement,
(B) the Construction Assets, (C) the Construction Business, (D)
Construction Securities Transactions, and (E) the Construction
Liabilities; and (ii) with respect to any claims made by or on behalf
of a shareholder or former shareholder of KMC relating to his or her
voluntary sale to KMC of shares of the common stock of KMC, par value
$.01 per share ("KMC Stock") on and after November 1, 2001 and prior to
the date a public announcement is made with respect to an Acquisition
of KMC (the "Relevant Period"), that the consideration which was
actually paid to such shareholder for such shares of KMC Stock sold
during the Relevant Period was less than the consideration paid in an
Acquisition of KMC or that KMC should have disclosed a possible
Acquisition of KMC or not purchased KMC Stock in light of a possible
Acquisition of KMC ("Shareholder Claims"), indemnify, defend and hold
harmless each Materials Indemnitee from and against all Losses incurred
or suffered by any Materials Indemnitee arising out of or due to,
directly or indirectly, any such Shareholder Claims. For purposes of
determining the Materials Indemnities to be indemnified pursuant to
Section 4.1(b)(ii) above, an individual shall be deemed to be a
Materials Individual if the individual was, whether before or after the
Effective Date, a director, officer or employee of any member of the
Materials Group, but solely to the extent that any Loss incurred by
such Person is incurred in that capacity.
(c) This Section 4.1 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
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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 4.1(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 4.1 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 and no
indemnification provision hereof is intended to constitute and shall
not be construed as constituting either an admission of the existence
or merit of any potential claim which could give rise to an Indemnity
Payment or an admission of fault or wrongdoing by any Party.
(g) For purposes of this Section 4.1,
"Acquisition of KMC" shall mean the occurrence of Xxxxxx Materials
Corporation or one of its Affiliates (the "Acquiror") becoming the
beneficial owner, directly or indirectly, through a purchase or other
acquisition transaction or series of transactions, of shares of KMC
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Stock entitling such Acquiror to exercise 100% of the total voting
power of all shares of capital stock of KMC entitled to vote generally
in the election of directors."
7. Payment. Contemporaneously with the closing of the Acquisition
Transaction, KMC shall pay PKS the sum of One Hundred Fifty Thousand and No/100
Dollars ($150,000.00).
8. Effective Date. PKS' and KCG's obligations set forth in
Paragraphs 2, 4, 5 and 6 of this Amendment shall only be effective upon the
closing of the Acquisition Transaction, and in the event that the Acquisition
Transaction Closing Date does not occur on or before December 31, 2002, this
Agreement shall be of no further force or effect and the Parties shall have no
rights or obligations hereunder.
9. Miscellaneous. Any other changes or modifications to the
Separation Agreement necessary to conform such agreement to this Amendment are
hereby deemed to be made. In all other respects, not inconsistent with this
Amendment, the terms of the Separation Agreement, not specifically or by
necessary implication amended or modified hereby, shall be and remain in full
force and effect as modified hereby. The parties acknowledge that the Separation
Agreement as amended hereby cannot be further amended prior to the Acquisition
Transaction Closing Date without the prior written consent of Xxxxxx Materials
Corporation, unless the agreement between Xxxxxx Materials Corporation and KMC
and/or their respective Affiliates to effect the Acquisition Transaction is
otherwise terminated pursuant to its terms.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
XXXXX XXXXXX SONS', INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
KIEWIT MATERIALS COMPANY
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Xxxxxxxxxxx X. Xxxxxx, President
KIEWIT CONSTRUCTION GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx, President
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