<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1995
REGISTRATION NO. 33-60977
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PETER KIEWIT SONS', INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 47-0210602
(State or other jurisdiction 1221, 161, 162, 4813, 4911, (I.R.S. Employer
7374
of incorporation) (Primary Standard Industrial Identification No.)
Classification Code Numbers)
</TABLE>
<TABLE>
<S> <C>
1000 KIEWIT PLAZA MATTHEW J. JOHNSON, ESQ.
OMAHA, NEBRASKA 68131 VICE PRESIDENT - LEGAL
(402) 342-2052 PETER KIEWIT SONS', INC.
(Address, including zip code, and telephone 1000 KIEWIT PLAZA
number, including area code, of registrant's OMAHA, NEBRASKA 68131
principal executive offices) (402) 342-2052
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
MFS COMMUNICATIONS COMPANY, INC.
<TABLE>
<S> <C> <C>
DELAWARE 4813 47-0714388
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction
of incorporation) Classification Code Numbers) Identification No.)
</TABLE>
--------------------------
<TABLE>
<S> <C>
3555 FARNAM STREET, SUITE 200 TERRENCE J. FERGUSON, ESQ.
OMAHA, NEBRASKA 68131 SENIOR VICE PRESIDENT, GENERAL COUNSEL
(402) 977-5300 AND SECRETARY
(Address, including zip code, and telephone MFS COMMUNICATIONS COMPANY, INC.
number, including area code, of registrant's 3555 FARNAM STREET, SUITE 200
principal executive offices) OMAHA, NEBRASKA 68131
(402) 977-5300
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
--------------------------
COPIES TO:
<TABLE>
<S> <C>
JAMES D. DARROW, ESQ. JOHN S. D'ALIMONTE, ESQ.
SUTHERLAND, ASBILL & BRENNAN STEVEN J. GARTNER, ESQ.
1275 PENNSYLVANIA AVE., N.W. WILLKIE FARR & GALLAGHER
WASHINGTON, D.C. 20004 ONE CITICORP CENTER
(202) 383-0100 153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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- --------------------------------------------------------------------------------
<PAGE>
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Peter Kiewit Sons', Inc. 60,100 $21.17(1) $1,272,500(2) $439*
Class C Construction & Mining
Group Restricted Redeemable
Convertible Exchangeable Common
Stock, $0.0625 par value
Peter Kiewit Sons', Inc. 2,152,183(3) $59.12(1) $127,227,500(2) $43,872*
Class D Diversified Group
Convertible Exchangeable Common
Stock, $0.0625 par value
MFS Communications 40,091,664(5) 29.375(4) $1,177,692,630(4) $406,101(5)
Company, Inc. Common Stock, $.01
par value
MFS Communications 15,000,000(5) $1.00(6) $15,000,000(6) $5,173(5)
Company, Inc. Series B
Convertible Preferred Stock,
$.01 par value
MFS Communications 347,822(5)(7) -- -- --
Company, Inc. Common Stock, $.01
par value
<FN>
* Previously paid.
(1) Determined pursuant to Rule 457(f)(2) based on weighted average book value
of securities to be received by Peter Kiewit Sons', Inc. in exchange offer
per share of stock to be registered.
(2) Determined pursuant to Rule 457(f)(2) based on aggregate book value of
securities to be received by Peter Kiewit Sons', Inc. in exchange offer per
share of stock to be registered.
(3) Based on an assumed exchange of all of the convertible debentures and an
aggregate of 5,000,000 shares of Class B Stock and Class C Stock of Peter
Kiewit Sons', Inc.
(4) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(f) based upon the high and low sales prices of the Common Stock
of MFS Communications Company, Inc. as reported by the National Association
of Securities Dealers, Inc.'s National Market System on June 9, 1995.
(5) In addition to the securities to be registered pursuant to this
Registration Statement, the offering contemplated by the Prospectus forming
a part of this Registration Statement also includes an aggregate of
40,439,490 shares of Common Stock, par value $.01 per share of MFS
Communications Company, Inc. and 15,000,000 shares of Series B Convertible
Preferred Stock, par value $.01 per share of MFS Communications Company,
Inc. that are covered by Registration Statement No. 33-93504. A filing fee
aggregating $411,274 was previously paid with the earlier registration
statement relating to such 40,439,490 shares of Common Stock par value $.01
per share and 15,000,000 shares of Series B Convertible Preferred Stock par
value $.01 per share.
(6) Estimated based upon the book value per share of $1.00 pursuant to Rule
457(f).
(7) Represents shares of Common Stock of MFS Communications Company, Inc.
issuable upon conversion of the Series B Convertible Preferred Stock.
Pursuant to the provisions of Rule 457(i) a separate registration fee is
not payable.
</TABLE>
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
STATEMENT PURSUANT TO RULE 429(B)
THE PROSPECTUS CONTAINED IN THIS REGISTRATION STATEMENT IS A COMBINED
PROSPECTUS WHICH ALSO COVERS SHARES OF COMMON STOCK AND PREFERRED STOCK OF MFS
COMMUNICATIONS COMPANY, INC. COVERED BY REGISTRATION STATEMENT NO. 33-93504.
THIS REGISTRATION STATEMENT ALSO CONSTITUTES PRE-EFFECTIVE AMENDMENT NO. 2 WITH
RESPECT TO REGISTRATION STATEMENT NO. 33-93504.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final disposition of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that the director or officer undertake to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. A corporation may indemnify such
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudicated to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses (including attorneys' fees) which he
or she actually and reasonably incurred in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's by-law,
agreement, vote or otherwise.
Section 145 of the DGCL empowers a Delaware corporation to purchase and
maintain insurance on behalf of its officers and directors against any liability
asserted against them incurred while acting in such capacities or arising out of
their status as such.
In accordance with Section 145 of the DGCL, Article SIXTH of the Restated
Certificate of Incorporation of PKS (the "PKS Certificate") and the By-laws of
PKS (the "PKS By-laws") provide that PKS shall indemnify each person who is or
was a director, officer or employee of PKS (including the heirs, executors,
administrators or estate of such person) or is or was serving at the request of
PKS as a director, officer or employee of another corporation, partnership,
joint venture, trust or other enterprise, to the fullest extent permitted under
subsections 145(a), (b) and (c) of the DGCL or any successor statute. The
indemnification provided by the PKS Certificate and the PKS By-laws shall not be
deemed exclusive of any other rights to which any of those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. Article
SEVENTH of the PKS Certificate provides that a director of PKS shall not be
personally liable to PKS or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to PKS or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. If
the DGCL is amended further eliminating or limiting the personal liability of
directors, then the liability of a director of PKS shall be eliminated or
limited to the fullest extent permitted by the DGCL as so amended.
II-1
<PAGE>
In accordance with Section 145 of the DGCL, Article 7 of MFS' Restated
Certificate of Incorporation (the "MFS Restated Certificate") and MFS' By-Laws
(the "MFS By-Laws") provide that MFS shall indemnify each person who is or was a
director, officer or employee of MFS (including the heirs, executors,
administrators or estate of such person) or is or was serving at the request of
MFS as director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, to the fullest extent permitted under
subsections 145(a), (b), and (c) of the DGCL or any successor statute. The
indemnification provided by the MFS Restated Certificate and the MFS By-Laws
shall not be deemed exclusive of any other rights to which any of those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. Expenses (including
attorneys' fees) incurred in defending a civil, criminal, administrative or
investigative action, suit or proceeding upon receipt of an undertaking by or on
behalf of the indemnified person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by MFS. Article 8
of the MFS Restated Certificate provides that a director of MFS shall not be
personally liable to MFS or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to MFS or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. If
the DGCL is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of MFS shall be eliminated or limited to the fullest extent permitted by the
DGCL as so amended.
Section 8.7 of the MFS By-Laws provides that MFS may purchase and maintain
insurance on behalf of its directors, officers, employees and agents against any
liabilities asserted against such persons arising out of such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS
Exhibit No. Description
----------- -----------
2.1 Form of Securities Purchase Agreement between KDG and
MFS
2.2 Form of Distribution Agreement by and among PKS, KDG,
KCG and MFS
4.1 Form of Certificate of Designations of the Series B
Convertible Preferred Stock of MFS*
4.2 Form of Stock Certificate for the Series B Convertible
Preferred Stock*
5.1 Opinion of Sutherland, Asbill & Brennan relating to
legality of the Class C Stock and the Class D Stock of
PKS***
5.2 Opinion of Willkie Farr & Gallagher relating to
legality of the Common Stock of MFS and the Series B
Convertible Preferred Stock of MFS*
8 Ruling Letter from the Internal Revenue Service**
15 Letter of Coopers & Lybrand, L.L.P. relating to
unaudited financial information
23.1 Consent of Coopers & Lybrand, L.L.P. relating to PKS
financial statements*
23.2 Consent of Coopers & Lybrand, L.L.P. relating to MFS
financial statements*
23.3 Consent of Peat Marwick LLP*
23.4 Consent of Leon Constantin & Co.*
23.5 Consent of Sutherland, Asbill & Brennan (included in
its opinion filed as Exhibit 5.1)***
23.6 Consent of Willkie Farr & Gallagher (included in its
opinion filed as Exhibit 5.2)*
II-2
<PAGE>
23.7 Consent of CS First Boston Corporation
23.8 Consent of Lehman Brothers Inc.
24 Powers of Attorney (included on signature pages)*
99.1 Form of Letter of Transmittal sent to holders of Class
B Stock of PKS
99.2 Form of Letter of Transmittal sent to holders of Class
C Stock of PKS
99.3 Form of Letter of Transmittal sent to holders of
Convertible Debentures of PKS
99.4 Consent of Person Named as Director*
99.5 Opinion of CS First Boston Corporation
99.6 Opinion of Lehman Brothers Inc.
____________
* Previously filed.
** Filed under an Application for Confidential Treatment pursuant to Rule 406.
*** To be filed by Amendment.
ITEM 22. UNDERTAKINGS
(1) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
such registrant's annual report pursuant to section 13(a) or section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of each of
the registrants pursuant to the foregoing provisions, or otherwise, each of the
registrants has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each of the registrants of
expenses incurred or paid by a director, officer or controlling person of such
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(3) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the joint
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(4) Each of the undersigned registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) Each of the undersigned registrants hereby undertakes that:
(a) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by MFS pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the Registration Statement as of
the time it was declared effective.
II-3
<PAGE>
(b) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
Registrants has duly caused this Amendment No. 1 to be signed on its behalf by
the undersigned, thereunto duly authorized, in Omaha, Nebraska on July 25,
1995.
Peter Kiewit Sons', Inc. MFS Communications Company, Inc.
By: /s/ Walter Scott, Jr. By: /s/ James Q. Crowe
------------------------------ --------------------------
Walter Scott, Jr. James Q. Crowe
President Chief Executive Officer
PKS DIRECTORS AND OFFICERS
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Walter Scott, Jr. Chairman of the Board July 25, 1995
- ----------------------------------- and President (Principal
Walter Scott, Jr. Executive Officer)
* Vice Chairman and July 25, 1995
- ---------------------------------- Director
William L. Grewcock
* Executive Vice President July 25, 1995
- ---------------------------------- - Chief Financial
Robert E. Julian Officer (Principal
Financial Officer) and
Director
* Executive Vice President July 25, 1995
- ----------------------------------- and Director
Kenneth E. Stinson
* Controller (Principal July 25, 1995
- ----------------------------------- Accounting Officer)
Eric J. Mortensen
Director July __, 1995
- -----------------------------------
Richard Geary
* Director July 25, 1995
- -----------------------------------
Leonard W. Kearney
* Director July 25, 1995
- -----------------------------------
Richard R. Jaros
* Director July 25, 1995
- -----------------------------------
George B. Toll, Jr.
Director July __, 1995
- -----------------------------------
Richard W. Colf
II-5
<PAGE>
Director July 25, 1995
*
- -----------------------------------
Bruce E. Grewcock
* Director July 25, 1995
- -----------------------------------
Tait P. Johnson
* Director July 25, 1995
- -----------------------------------
James Q. Crowe
Director July __, 1995
- -----------------------------------
Robert B. Daugherty
Director July __, 1995
- -----------------------------------
Charles M. Harper
Director July __, 1995
- -----------------------------------
Peter Kiewit, Jr.
* /s/ Walter Scott, Jr.
- -----------------------------------
Walter Scott, Jr.
Attorney-In-Fact
II-6
<PAGE>
MFS DIRECTORS AND OFFICERS
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 as been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ James Q. Crowe Chairman of the Board July 25, 1995
- ----------------------------------- and Chief Executive
James Q. Crowe Office (Principal
Executive Officer)
* Senior Vice President, July 25, 1995
- ----------------------------------- Chief Financial Officer
R. Douglas Bradbury (Principal Financial
Officer) and Director
* Vice President and July 25, 1995
- ----------------------------------- Controller (Principal
Robert J. Ludvik Accounting Officer)
Director July __, 1995
- -----------------------------------
Howard Gimbel
* Director July 25, 1995
- -----------------------------------
Royce J. Holland
* July 25, 1995
- ----------------------------------- Director
Richard R. Jaros
* Director July 25, 1995
- -----------------------------------
Robert E. Julian
Director July __, 1995
- -----------------------------------
David C. McCourt
Director July __, 1995
- -----------------------------------
Ronald W. Roskens
* Director July 25, 1995
- -----------------------------------
Walter Scott, Jr.
* Director July 25, 1995
- -----------------------------------
Kenneth E. Stinson
Director July __, 1995
- -----------------------------------
Michael B. Yanney
* /s/ James Q. Crowe
- -----------------------------------
James Q. Crowe
Attorney-In-Fact
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL PAGE NO.
------- -------------------
2.1 Form of Securities Purchase Agreement between KDG and MFS
2.2 Form of Distribution Agreement by and among PKS, KDG, KCG
and MFS
4.1 Form of Certificate of Designations of the Series B
Convertible Preferred Stock of MFS*
4.2 Form of Stock Certificate for the Series B Convertible
Preferred Stock*
5.1 Opinion of Sutherland, Asbill & Brennan relating to
legality of the Class C Stock and the Class D Stock of
PKS***
5.2 Opinion of Willkie Farr & Gallagher relating to legality of
the Common Stock of MFS and the Series B Convertible
Preferred Stock of MFS*
8 Ruling Letter from the Internal Revenue Service**
15 Letter of Coopers & Lybrand, L.L.P. relating to unaudited
financial information
23.1 Consent of Coopers & Lybrand, L.L.P. relating to PKS
financial statements*
23.2 Consent of Coopers & Lybrand, L.L.P. relating to MFS
financial statements*
23.3 Consent of Peat Marwick LLP*
23.4 Consent of Leon Constantin & Co.*
23.5 Consent of Sutherland, Asbill & Brennan (included in its
opinion filed as Exhibit 5.1)***
23.6 Consent of Willkie Farr & Gallagher (included in its
opinion filed as Exhibit 5.2)*
23.7 Consent of CS First Boston Corporation
23.8 Consent of Lehman Brothers Inc.
24 Powers of Attorney (included on signature pages)*
99.1 Form of Letter of Transmittal sent to holders of Class B
Stock of PKS
99.2 Form of Letter of Transmittal sent to holders of Class C
Stock of PKS
99.3 Form of Letter of Transmittal sent to holders of
Convertible Debentures of PKS
99.4 Consent of Person Named as Director*
99.5 Opinion of CS First Boston Corporation
99.6 Opinion of Lehman Brothers Inc.
____________
* Previously filed.
** Filed under an Application for Confidential Treatment pursuant to Rule 406.
*** To be filed by Amendment.
<PAGE>
WF&G Draft
7/19/95
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
between
KIEWIT DIVERSIFIED GROUP INC.
and
MFS COMMUNICATIONS COMPANY, INC.
______________________
As of July 17, 1995
______________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MFS COMMUNICATIONS COMPANY, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of July 17, 1995
Kiewit Diversified Group Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131
Dear Sirs:
MFS Communications Company, Inc., a Delaware corporation (the
"COMPANY"), hereby agrees with Kiewit Diversified Group Inc., a Delaware
corporation (the "PURCHASER") as follows:
SECTION 1. AUTHORIZATION OF PREFERRED STOCK
Subject to the terms and conditions set forth in this Agreement, the
Company will authorize and create a series of its Preferred Stock consisting of
15,000,000 shares, $0.01 par value per share, designated as its "Series B
Convertible Preferred Stock" (the "SERIES B PREFERRED STOCK"). The terms,
limitations and relative rights and preferences of the Series B Preferred Stock
are set forth in the Certificate of Designations, Number, Voting Powers,
Preferences and Rights of Series B Convertible Preferred Stock of the Company, a
copy of which is attached hereto as Exhibit A (the "CERTIFICATE OF
DESIGNATION").
SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. INITIAL ISSUANCE OF PREFERRED STOCK
(a) Subject to the terms and conditions set forth in this Agreement
and in reliance upon the Purchaser's representations set forth below, on the
Closing Date (as defined below) the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company, 15,000,000 shares
of Series B Preferred Stock (the "SHARES") by surrendering to the Company 2.9
million shares of common stock, par value $.01 per share, of the Company (the
"COMMON STOCK") currently owned by the Purchaser (the "KDG SHARES"). Such sale
and purchase shall be effected on the Closing Date by the Company executing and
delivering to the Purchaser, duly registered in its name, a duly executed stock
certificate evidencing the Shares, against delivery by the Purchaser to the
Company of certificates representing the KDG Shares, free and clear of any lien,
claim, security interest or encumbrance and accompanied by appropriate
instruments of transfer.
-1-
<PAGE>
(b) On the calendar day following the acquisition of the Shares
pursuant to Section 2(a), the Purchaser shall distribute to its sole
stockholder, Peter Kiewit Sons', Inc. ("PKS"), all of the Shares and all of the
remaining shares of Common Stock then owned, directly or directly, by the
Purchaser (collectively, the "KDG SPIN SHARES"). PKS shall immediately
thereafter assign and transfer (the "DISTRIBUTION") all of the KDG Spin Shares
to the holders of its Class D Diversified Group Convertible Exchangeable Common
Stock, par value $.0625 per share (the "CLASS D HOLDERS").
(c) Unless this Agreement is terminated in accordance with its terms,
the closing of such sale and purchase (the "CLOSING") shall take place at 10:00
A.M., New York City time, on any business day following the satisfaction or
waiver of all conditions set forth in Article VI and Article VII designated by
the Purchaser (the "CLOSING DATE"), at the offices of the Company, or such other
location as the Purchaser and the Company shall mutually select.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that:
3.1. CORPORATE ORGANIZATION; VALIDITY OF SHARES
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
corporate power and authority to execute and deliver this Agreement and, subject
to the receipt of the approvals specified in Section 7.4 of this Agreement, to
consummate the transactions contemplated by this Agreement.
(b) Upon issuance, sale and delivery as contemplated by this
Agreement, the Shares will be duly authorized, validly issued, fully paid and
non-assessable shares of the Company, free of all preemptive or similar rights,
and entitled to the rights therein described. Upon their issuance in accordance
with the terms of the Series B Preferred Stock, the shares of Common Stock
issuable upon conversion of the Shares will be duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock of the Company, free of all
preemptive or similar rights.
3.2. CORPORATE PROCEEDINGS, ETC.
The Company has duly executed and delivered this Agreement, and
subject to the receipt of the approvals specified in Section 7.4 of this
Agreement, duly authorized the performance
-2-
<PAGE>
of this Agreement and the transaction and agreements contemplated hereby.
Except as set forth in Section 7.4 of this Agreement, no other corporate action
(including stockholder approval) is necessary to authorize such execution,
delivery and performance, and upon receipt of the approvals specified in Section
7.4 of this Agreement, upon execution and delivery by the Purchaser, this
Agreement shall constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and general principles of equity.
3.3. CONSENTS AND APPROVALS
The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transaction contemplated hereby do not require the Company to
obtain any consent, approval or action of, or make any filing with or give any
notice to, any corporation, person or firm or any public, governmental or
judicial authority, which has not been obtained or will not be obtained before
Closing.
3.4. PRIVATE OFFERING
Neither the Company nor anyone acting on its behalf has sold or has
offered any of the Shares for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Purchaser. Neither the Company nor anyone acting on
its behalf shall offer the Shares for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and sale of
such Shares or shares of Common Stock issuable upon conversion of the Shares, or
any part thereof, within the provisions of Section 5 of the Securities Act.
3.5. BROKERAGE
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company and the
Company agrees to indemnify and hold the Purchaser harmless against any costs or
damages incurred as a result of any such claim.
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<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1. INVESTMENT INTENT, ETC.
(a) The Purchaser acknowledges that the Shares are being sold to it
by the Company pursuant to an exemption from the registration requirements of
the Securities Act. The Purchaser will transfer the Shares only in connection
with the Distribution.
(b) The Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. The
Purchaser has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this Agreement and the purchase of the Shares contemplated hereby.
4.2. CORPORATE ORGANIZATION
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
4.3. CORPORATE PROCEEDINGS, ETC.
The Purchaser has authorized the execution, delivery and performance
of this Agreement and the transaction and agreements contemplated hereby. No
other corporate action (including stockholder approval) is necessary to
authorize such execution, delivery and performance, and, upon execution and
delivery by the Company, this Agreement shall constitute the valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general principles of equity.
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<PAGE>
4.4. CONSENTS AND APPROVALS
The execution and delivery by the Purchaser of this Agreement, the
performance by the Purchaser of its obligations hereunder and the consummation
by the Purchaser of the transaction contemplated hereby do not require the
Purchaser to obtain any consent, approval or action of, or make any filing with
or give any notice to, any corporation, person or firm or any public,
governmental or judicial authority, which consent or approval has not been
obtained, or will not be obtained before Closing, and which filing or notice has
not been timely filed or will not be timely filed before Closing.
4.5. TITLE TO KDG SHARES
The Purchaser now has, and on the Closing Date will have, valid and
marketable title to the KDG Shares to be surrendered by the Purchaser, free and
clear of any lien, claim, security interest or other encumbrance, including,
without limitation, any restriction on transfer; and upon issuance and delivery
of the Shares to the Purchaser by the Company, the Company will acquire good and
marketable title to the KDG Shares, free and clear of any lien, claim, security
interest or other encumbrance.
4.6. BROKERAGE
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Purchaser and the
Purchaser agrees to indemnify and hold the Company harmless against any costs or
damages incurred as a result of any such claim.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1. AUTHORIZATION OF ISSUANCE OF SHARES
Subject to the receipt of the approvals set forth in Section 7.4 of
this Agreement, the Company shall authorize the issuance and delivery of the
Shares in accordance with the terms of this Agreement and, subject to the
issuance and delivery of the Shares, the Company shall reserve for issuance
shares of Common Stock initially issuable upon conversion of the Shares.
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5.2. VOTING BY THE PURCHASER
(a) At the 1995 annual meeting of the stockholders of the Company
(the "Annual Meeting"), which will consider an amendment to the Amended and
Restated Certificate of Incorporation of the Company (the "Restated
Certificate"), which amendment would increase the authorized number of shares of
preferred stock that the Company has the authority to issue from one million to
twenty five million shares (the "AMENDMENT PROPOSAL"), the Purchaser shall cast
all votes that the Purchaser is entitled to cast as a stockholder of the Company
or otherwise in favor of such proposal.
(b) At the Annual Meeting, which will consider the approval of the
issuance of the Shares to the Purchaser (the "DISTRIBUTION PROPOSAL"), the
Purchaser shall cast all votes that the Purchaser is entitled to cast as a
stockholder of the Company or otherwise in the same manner as a majority of the
votes cast on the Distribution Proposal (excluding abstentions and broker
non-votes) by holders of Common Stock other than the Purchaser.
(c) At the Annual Meeting, which will consider amendments to the
Restated Certificate to create a classified board of directors, prohibit
stockholder action by written consent, require that special meetings of
stockholders be called only by the Board of Directors of the Company or the
Chairman of the Board, and require the affirmative vote of at least 66-2/3% of
the outstanding shares of stock of the Company entitled to vote thereon to
adopt, repeal, alter, amend or rescind the Restated By-laws of the Company, the
Purchaser shall cast all votes that the Purchaser is entitled to cast as a
stockholder of the Company or otherwise in favor of all such amendments, unless
the Distribution Proposal has not been approved by the holders of Common Stock
as provided in Section 5.2, in which case the Purchaser shall have no obligation
with respect to such amendments.
5.3. RESALE OF SECURITIES
(a) The Purchaser covenants that it will not sell or otherwise
transfer the Shares (or any shares of Common Stock acquired upon conversion of
the Shares) except in connection with the Distribution.
(b) The certificates evidencing the Shares issued to the Class D
Holders will bear the following legend:
"The securities evidenced hereby are subject to (i) transfer
restrictions set forth in the Securities Purchase Agreement (the
"Agreement"), dated as of July 17, 1995 between Kiewit
Diversified Group Inc. and the Corporation and in
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<PAGE>
the Certificate of Designations, Number, Voting Powers, Preferences
and Rights of Series B Convertible Preferred Stock of MFS
Communications Company, Inc. and (ii) an irrevocable proxy as to all
matters other than the election of directors and matters as to which
holders of the Series B Convertible Preferred Stock of MFS
Communications Company, Inc. vote as a separate class given by Kiewit
Diversified Group Inc. pursuant to the terms of the Agreement. A copy
of the Agreement is available upon request of the Secretary of the
Corporation."
5.4. VOTING AND IRREVOCABLE PROXY
(a) At any annual or special meeting of stockholders of the Company,
the Purchaser shall vote or cause to be voted the shares of Series B Preferred
Stock beneficially owned by it on each matter other than (i) the election of
directors and (ii) matters as to which holders of Series B Preferred Stock vote
as a separate class, in proportion to the vote of all holders of Common Stock
voting on such matter. For purposes of this Section 5.4(a), abstentions, broker
non-votes and other failures to vote shall not be considered shares "voting on
such matter."
(b) In order to ensure that the shares of Series B Preferred Stock
are voted in accordance with the provisions of Section 5.4(a), on the Closing
Date the Purchaser shall deliver to the Company an irrevocable proxy coupled
with an interest, substantially in the form of Exhibit B hereto (the
"Irrevocable Proxy"). The Purchaser acknowledges that the Board of Directors of
MFS and the stockholders of MFS will be relying on the provisions of this
Section 5.4 in approving the Distribution Proposal, and that the Irrevocable
Proxy shall be deemed to be "coupled with an interest sufficient in law to
support an irrevocable power" for purposes of Section 212(e) of the Delaware
General Corporation Law.
(c) It is the intent of the Company and the Purchaser that the
Irrevocable Proxy shall be binding upon all successors and assigns of the
Purchaser, including without limitation, PKS, all Class D Holders who receive
any shares of Series D Preferred Stock in connection with the Distribution and
any permitted transferee of such Class D Holder.
5.5. FURTHER ASSURANCE
Each of the parties shall execute such documents and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby. Each such
party shall use its
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<PAGE>
reasonable efforts to fulfill or obtain the fulfillment of the conditions to the
Closing as promptly as practicable.
SECTION 6. THE PURCHASER'S CLOSING CONDITIONS
The obligation of the Purchaser to purchase and pay for the Shares on
the Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Company of its agreements theretofore to be performed
hereunder and to the satisfaction or waiver, prior thereto or concurrently
therewith, of the following further conditions:
6.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in this
Agreement shall be true on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
6.2. COMPLIANCE WITH AGREEMENT
The Company shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement that are required to be
performed or complied with by the Company prior to or on the Closing Date.
6.3. OFFICER'S CERTIFICATE
The Purchaser shall have received a certificate, dated the Closing
Date, signed by an executive officer of the Company, certifying that the
conditions specified in the foregoing Sections 6.1 and 6.2 hereof have been
fulfilled.
6.4. INJUNCTION
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.
6.5. REVENUE RULING
The ruling received by PKS from the Internal Revenue Service to the
effect that the Distribution shall be a tax-free
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<PAGE>
distribution within the meaning of Section 355 of the Internal Revenue Code of
1986, as amended (the "CODE") shall remain in full force and effect.
6.6. CORPORATE APPROVALS
The Board of Directors of the Purchaser shall have approved the
authorization, execution, delivery and performance of this Agreement and the
transaction contemplated by this Agreement. The Board of Directors of PKS shall
have approved the Distribution; provided, that in the event the Board of
Directors of PKS shall have approved the Distribution at any time prior to the
Closing Date, it shall be entitled to abandon the Distribution at any time prior
to the Closing Date for any reason. In the event of any such abandonment, this
Agreement shall be terminated without any liability on the part of either party
hereto.
SECTION 7. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Shares on the
Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Purchaser of its agreements theretofore to be performed
hereunder and to the satisfaction or waiver, prior thereto or concurrently
therewith, of the following further conditions:
7.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Purchaser contained in this
Agreement shall be true on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
7.2. COMPLIANCE WITH AGREEMENT
The Purchaser shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement that are required to be
performed or complied with by it prior to or on the Closing Date.
7.3. THE PURCHASER'S CERTIFICATE
The Company shall have received a certificate from the Purchaser,
dated the Closing Date, signed by an executive officer
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<PAGE>
of the Purchaser, certifying that the conditions specified in the foregoing
Sections 7.1 and 7.2 hereof have been fulfilled.
7.4. CORPORATE APPROVALS
(a) The stockholders of the Company shall have approved the Amendment
Proposal.
(b) A majority of the holders of Common Stock other than the
Purchaser present in person or by proxy at a stockholders' meeting voting on the
Distribution Proposal (excluding abstentions and broker non-votes) shall have
approved the Distribution Proposal, and the Purchaser shall have voted all
shares of Common Stock beneficially owned by it in accordance with the vote of
such majority to approve such issuance.
7.5. INJUNCTION
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.
7.6. DISTRIBUTION
The Company shall have received notice from the Purchaser and PKS to
the effect that the Purchaser and PKS have declared the dividends associated
with the Distribution, and that there are no conditions to the consummation of
either of the foregoing.
SECTION 8. INTERPRETATION OF THIS AGREEMENT
8.1. TERMS DEFINED
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
AMENDMENT PROPOSAL: shall have the meaning set forth in Section
5.2(a).
BUSINESS DAY: shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
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<PAGE>
CERTIFICATE OF DESIGNATION: shall have the meaning set forth in
Section 1.
CLASS D HOLDERS: shall have the meaning set forth in Section 2.1(b).
CLOSING: shall have the meaning set forth in Section 2.1(b).
CLOSING DATE: shall have the meaning set forth in Section 2.1(b).
CODE: shall have the meaning set forth in Section 6.5.
COMMON STOCK: shall have the meaning set forth in Section 2.1(a).
DISTRIBUTION: shall have the meaning set forth in Section 2.1(b).
DISTRIBUTION PROPOSAL: shall have the meaning set forth in Section
5.2(b).
KDG SHARES: shall have the meaning set forth in Section 2.1(a).
KDG SPIN SHARES: shall have the meaning set forth in Section 2.1(b).
PERSON: shall mean an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
PKS: shall have the meaning set forth in Section 2.1(b).
SECURITIES ACT: shall mean the Securities Act of 1933, as amended.
SERIES B PREFERRED STOCK: shall have the meaning set forth in Section
1.
SHARES: shall have the meaning set forth in Section 2.1(a).
8.2. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State.
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<PAGE>
8.3. SECTION HEADINGS
The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.
SECTION 9. MISCELLANEOUS
9.1. NOTICES
(a) All communications under this Agreement shall be in writing and
shall be delivered by hand or mailed by overnight courier or by registered mail
or certified mail, postage prepaid:
(1) if to the Purchaser, at 1000 Kiewit Plaza, Omaha, Nebraska,
68131, marked for attention of Matthew Johnson, Esq., or at such other
address as the Purchaser may have furnished to the Company in writing
pursuant to the terms of this Section 9, or
(2) If to the Company, 3555 Farnam Street, Suite 200, Omaha,
Nebraska, 68131, marked for the attention of Terrence J. Ferguson,
Esq., or at such other address as the Company may have furnished to
the Purchaser in writing pursuant to the terms of this Section 9.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first Business Day following the date of such mailing; and if mailed by
registered or certified mail, on the third Business Day after the date of such
mailing.
9.2. EXPENSES AND TAXES
The parties to this Agreement agree that whether or not the
transaction contemplated by this Agreement is consummated, all costs and
expenses incurred in connection with this Agreement and the transaction
contemplated by this Agreement shall be paid by the party incurring such
expenses.
9.3. TERMINATION AND SURVIVAL
Unless the Closing has occurred prior thereto, this Agreement and,
except as herein provided, all the rights of the parties hereto, shall terminate
on March 31, 1996 (unless such date is extended by mutual written consent). All
warranties, representations, and covenants made by the Purchaser and the Company
herein or in any certificate or other instrument
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<PAGE>
delivered by the Purchaser or the Company under this Agreement shall be
considered to have been relied upon by the Company or the Purchaser, as the case
may be, and shall survive the delivery to the Purchaser of the Shares, or
payment to the Company for such Shares, regardless of any investigation made by
the Company or the Purchaser, as the case may be, or on the Company's or the
Purchaser's behalf. All statements in any such certificate or other instrument
shall constitute warranties and representations by the Company or the Purchaser,
as the case may be, hereunder.
9.4. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
This Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any other person any rights or remedies
hereunder and shall be binding upon and inure to the benefit solely of each
party hereto, and their respective successors and assigns; and shall not be
assigned by operation of law or otherwise. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned by any party hereto without
the prior written consent of the other party hereto.
9.5. ENTIRE AGREEMENT; AMENDMENT AND WAIVER.
This Agreement together with the Schedules hereto constitute the
entire understandings of the parties hereto and supersede all prior agreements
or understandings with respect to the subject matter hereof among such parties.
This Agreement may be amended, modified, superseded, cancelled, renewed or
extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance.
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9.6. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
Very truly yours,
MFS COMMUNICATIONS COMPANY, INC.
By:
------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written.
KIEWIT DIVERSIFIED GROUP INC.
By:
---------------------------
Name:
Title:
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EXHIBIT B
---------
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a stockholder of
MFS Communications Company, Inc., a Delaware corporation, ("MFS"), holding
15,000,000 shares of Series B Convertible Preferred Stock of MFS, $0.01 par
value per share (herein called the "Stock"), does hereby make, constitute and
appoint the Secretary or any Assistant Secretary of MFS from time to time, the
true and lawful attorneys-in-fact and proxies of the undersigned for and in its
name, place and stead to attend all meetings of the stockholders of MFS, to
receive notices thereof and to vote any and all shares of the Stock at all times
standing in the name of the undersigned at all meetings of the stockholders or
any adjournment or adjournments thereof on any matter other than the election of
directors, and to exercise all consensual or other voting rights with respect to
such shares of Stock on any matter other than the election of directors and
matters as to which holders of the Stock vote as a separate class, in each case
in the manner provided in Section 5.4(a) of the Securities Purchase Agreement
dated as of July 17, 1995 between the undersigned and the Company. This proxy
is given to secure the obligations set forth therein and is coupled with an
interest and is irrevocable, for the period from the date hereof until the date
on which all shares of Stock shall have been redeemed by MFS. The undersigned
hereby ratifies and confirms all that the said proxies may lawfully do or cause
to be done by virtue hereof. This proxy shall be binding on any and all
successors or transferees of the undersigned.
GIVEN AT Omaha, Nebraska this day of 1995.
---- ----
KIEWIT DIVERSIFIED GROUP INC.
By:
------------------------------------
Name:
Title:
<PAGE>
DISTRIBUTION AGREEMENT
This Distribution Agreement is entered into as of July 17, 1995 by and
among Peter Kiewit Sons', Inc., a Delaware corporation ("PKS"), Kiewit
Diversified Group Inc., a Delaware corporation ("KDG"), and MFS Communications
Company, Inc., a Delaware corporation ("MFS", and together with PKS and KDG, the
"Parties").
PRELIMINARY STATEMENT
WHEREAS, the Board of Directors of KDG has preliminarily authorized the
transfer and assignment by KDG, as a dividend, to PKS of all of the capital
stock of MFS held by KDG (the "KDG Dividend");
WHEREAS, the Board of Directors of PKS has preliminarily authorized the
transfer and assignment by PKS, as a dividend, to the holders of the Class D
Stock of PKS of all of the capital stock of MFS held by PKS after the KDG
Dividend (the "Distribution");
WHEREAS, PKS has submitted a request for a ruling (as amended and
supplemented to date, the "Ruling Request") from the Internal Revenue Service
(the "Service") to the effect that each of the KDG Dividend and the Distribution
will be a tax-free distribution within the meaning of Section 355 of the
Internal Revenue Code (the "Code");
WHEREAS, MFS has received a copy of the Ruling Request and is aware of all
information disclosed and representations made therein;
WHEREAS, PKS has received the rulings requested in the Ruling Request; and
WHEREAS, the Parties have determined that it is desirable to set forth
certain transactions required to make the KDG Dividend and the Distribution and
certain agreements that will govern their relationships following the
Distribution.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 GENERAL. Terms used but not elsewhere defined in this Agreement shall
have the following meanings:
BOARD: the board of directors of PKS.
<PAGE>
CLASS D STOCK: the Class D Diversified Group Convertible Exchangeable
Common Stock of PKS, par value $.0625 per share.
CONTINUING AGREEMENTS: any agreement in effect as of the date hereof
between or among one or more members of the PKS Group, on one hand, and one or
more members of the MFS Group, on the other hand, other than the Agreements set
forth at Schedule I.
DISTRIBUTION DATE: the date, to be determined by the Board (or, if so
authorized, the Executive Committee), as of which the dividend with respect to
the Distribution shall be paid, through the transfer and assignment by PKS of
the MFS Common Stock and the MFS Preferred Stock held by PKS to the holders of
Class D Stock.
EXECUTIVE COMMITTEE: the Executive Committee of the Board.
GROUP: either the MFS Group or the PKS Group.
INFORMATION: all records, books, contracts, instruments, computer data and
other data and information.
INSURANCE ADMINISTRATION: with respect to each PKS Policy, (i) the
processing of claims made under the PKS Policy, including the reporting of
claims to the insurance carrier, management and defense of claims and providing
for appropriate releases upon settlement of claims, (ii) the accounting for
premiums (including retrospectively-rated premiums), defense costs, indemnity
payments, deductibles and retentions as appropriate under the terms and
conditions of each of the PKS Policies, (iii) the reporting to excess insurance
carriers of any losses or claims which may cause the per-occurrence or aggregate
limits of any PKS Policy to be exceeded and (iv) the distribution of Insurance
Proceeds as contemplated by this Agreement.
INSURANCE PROCEEDS: those monies received by an insured from an insurance
carrier or paid by an insurance carrier on behalf of the insured, in either case
net of any applicable premium adjustment, retrospectively-rated premium,
deductible, retention, cost or reserve paid or held by or for the benefit of
such insured.
MFS CLAIM: any claim by or against any MFS Individual or any member of the
MFS Group with respect to any injury, loss, liability, damage or expense that
arose or may have arisen out of one or more occurrences or events that are or
may be insured or insurable under one or more of the PKS Policies; provided,
however, that any claim subject to the Indemnification Agreement dated as of May
26, 1993 by and between KDG and MFS shall not be considered an MFS Claim.
MFS COMMON STOCK: the common stock of MFS, $.01 par value.
<PAGE>
MFS GROUP: MFS and all of the Subsidiaries of MFS.
MFS INDIVIDUAL: any individual who is, or at any time was, a director,
officer or employee of any member of the MFS Group, but in each case only in
such individual's capacity as a director, officer or employee of a member of the
MFS Group, and not in any other capacity of such individual.
MFS PLAN OF REORGANIZATION: a Plan of Reorganization to be adopted by MFS
in order to implement certain corporate reorganizations of its subsidiaries
described in the Ruling Request, in form and substance mutually satisfactory to
MFS and PKS.
MFS PREFERRED STOCK: the Series B Convertible Preferred Stock of MFS, $.01
par value, to be issued to KDG pursuant to the Securities Purchase Agreement.
PERSON: an individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization or a government or any department or
agency thereof.
PKS GROUP: PKS and its Subsidiaries other than the members of the MFS
Group.
PKS PLAN OF REORGANIZATION: a Plan of Reorganization to be adopted by PKS
to implement certain reorganizations of its subsidiaries described in the Ruling
Request.
PKS POLICIES: all insurance policies and insurance contracts of any kind,
current and past, that are owned or maintained by the PKS Group, and under which
any member of the MFS Group is a named insured.
RECORD DATE: the date to be determined by the Board (or, if so authorized,
the Executive Committee) as the record date for determining holders of Class D
Stock entitled to receive the Distribution.
REGISTRATION RIGHTS AGREEMENT: the Registration Rights Agreement by and
between MFS and KDG dated as of May 26, 1993.
REPRESENTATIVE: with respect to any Person, any of such Person's
affiliates, directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
SECURITIES PURCHASE AGREEMENT: the Securities Purchase Agreement dated as
of the date hereof by and between MFS and KDG.
3
<PAGE>
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.
ARTICLE II
CERTAIN TRANSACTIONS BEFORE
THE DISTRIBUTION
2.01 MFS PLAN OF REORGANIZATION. Promptly after receipt of the notice
contemplated by Section 3.01, MFS shall adopt the MFS Plan of Reorganization.
Not later than the calendar day before the Distribution Date, MFS shall
consummate the transactions contemplated by the MFS Plan of Reorganization.
2.02 PKS PLAN OF REORGANIZATION. Promptly after delivery of the notice
contemplated by Section 3.01, PKS shall adopt the PKS Plan of Reorganization.
Not later than the calendar day before the Distribution Date, PKS shall
consummate the transactions contemplated by the PKS Plan of Reorganization.
2.03 PURCHASE OF MFS PREFERRED STOCK. Subject to the satisfaction of the
conditions set forth in the Securities Purchase Agreement, KDG shall purchase
the MFS Preferred Stock from MFS, and MFS shall sell the MFS Preferred Stock to
PKS, not later than the calendar day before the Distribution Date.
2.04 KDG DIVIDEND. On the Distribution Date, but before the (i) the
purchase of MFS Common Stock contemplated by Section 2.05 and (ii) the
Distribution, KDG shall make the KDG Dividend.
2.05 PURCHASE OF MFS COMMON STOCK. On the Distribution Date, after the KDG
Dividend but before the Distribution, PKS will contribute $ 1 million in cash to
MFS in exchange for 28,986 shares of MFS Common Stock.
ARTICLE III
THE DISTRIBUTION
3.01 RECORD DATE AND DISTRIBUTION DATE. The Board (or, if so authorized,
the Executive Committee), in its sole discretion, may establish the Record Date,
the Distribution Date and any appropriate procedures in connection with the
Distribution. PKS will provide MFS notice of the proposed Record Date and the
proposed Distribution Date promptly after they are established.
4
<PAGE>
3.02 DISTRIBUTION. PKS shall transfer and assign, as of the Distribution
Date, the MFS Common Stock and MFS Preferred Stock held by PKS (after
consummation of the transactions contemplated by Sections 2.04 and 2.05) to the
holders of the Class D Stock as of the Record Date.
3.03 SHARE CERTIFICATES. On or before the Distribution Date, (i) KDG
shall deliver to MFS share certificates representing all of the shares of MFS
Common Stock and MFS Preferred Stock held by KDG, together with a duly executed
blanket stock power or other appropriate instrument of transfer to effect the
transfer of all such shares to PKS, and (ii) PKS shall deliver to MFS a blanket
stock power or other appropriate instrument of transfer to effect a transfer of
the MFS Common Stock and the MFS Preferred Stock to the holders of Class D
Stock. In connection therewith, PKS also shall deliver to MFS a list of (i) all
transferrees in connection with the Distribution, (ii) the number of share
certificates of MFS Common Stock and MFS Preferred Stock to be issued to each
transferee and (iii) the number of shares of MFS Common Stock and MFS Preferred
Stock to be allocated to each such certificate. As soon as practicable after
the Distribution Date, MFS shall provide to PKS all such certificates for shares
of MFS Common Stock and MFS Preferred Stock, and any other information
reasonably requested by PKS to effect the Distribution.
3.04 RECORDATION OF TRANSFER. MFS shall cause the transfers of MFS Common
Stock and MFS Preferred Stock from KDG to PKS and from PKS to the holders of
Class D Stock as described in Sections 2.04 and 3.02 to be recorded on MFS's
stock transfer books as of the Distribution Date.
3.05 RIGHT TO ABANDON DISTRIBUTION. Notwithstanding any provision hereof,
this Agreement may be terminated and the Distribution may be abandoned at any
time prior to the Distribution Date by and in the sole discretion of PKS without
the approval of any other Party. In the event of such a termination, the
Securities Purchase Agreement shall terminate and no Party shall have any
liability to any Person by reason of this Agreement or the Securities Purchase
Agreement.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
AND REPRESENTATIONS
4.01 FURTHER ASSURANCES. In addition to the actions specifically provided
for elsewhere in this Agreement, MFS shall use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably requested by PKS to consummate and make effective the Distribution.
5
<PAGE>
4.02 MFS CAPITAL STOCK. (a) Exhibit A sets forth, as of May 31, 1995, (i)
the total number of shares of MFS Common Stock outstanding, (ii) the total
number of shares of MFS Common Stock issuable upon exercise of all outstanding
options, rights and warrants for the purchase of MFS Common Stock (calculated
without regard to vesting or other similar requirements), (iii) the total number
of shares of MFS Common Stock issuable upon conversion of all outstanding MFS
Series A Convertible Preferred Stock (assuming for this purpose that the
Distribution is effected prior to January 1, 1997) and (iv) the total number of
shares of MFS Series A Convertible Preferred Stock outstanding. Except as set
forth in Exhibit A and except for this Agreement and the Securities Purchase
Agreement, there are no agreements or commitments on the part of MFS to issue
any MFS Common Stock or any other class of capital stock having the right to
vote in the election of directors or any options, rights or warrants for the
purchase of or securities convertible into MFS Common Stock or such other
capital stock of MFS.
(b) MFS has not issued, and will not issue prior to the Distribution Date,
MFS Common Stock, options, warrants, rights or other securities exercisable for
or convertible into MFS Common Stock, or any other capital stock, if either (i)
the sum of the number of the outstanding shares of MFS Common Stock and the
number of shares of MFS Common Stock issuable upon the exercise or conversion of
such options, warrants, rights or other securities (assuming for this purpose
that the Distribution is effected prior to January 1, 1997 and calculated
without regard to vesting or other similar requirements), would exceed
82,250,000, or (ii) any such issuance would result, in the reasonable judgment
of PKS, in PKS holding, immediately prior to the Distribution, less than 80%
control of MFS (as determined under Sections 355 and 368(c) of the Code).
4.03 TERMINATED AGREEMENTS. As of the Distribution Date, all of the
agreements listed at Schedule I shall terminate and have no further force or
effect.
4.04 CONTINUING AGREEMENTS. Neither this Agreement nor the Distribution
shall modify, amend or otherwise affect the Continuing Agreements. If there is
a conflict between this Agreement and a Continuing Agreement, the Continuing
Agreement shall control.
4.05 REGISTRATION RIGHTS AGREEMENT. MFS agrees to register under the
Securities Act of 1933, as amended, the MFS Common Stock and the MFS Preferred
Stock to be distributed in connection with the Distribution on the terms and
subject to the conditions set forth in the Registration Rights Agreement.
4.06 AFFILIATE REGISTRATION RIGHTS. MFS agrees to enter into a
registration rights agreement with Walter Scott, Jr. and William Grewcock, in
form and substance mutually acceptable to MFS and PKS, not later than the date
of the Distribution.
6
<PAGE>
4.07 REPRESENTATION. PKS hereby represents to MFS that PKS has no present
intention to engage, directly or indirectly, in the provision of
telecommunications services to businesses or government users, except as
presently permitted under the Noncompetition Agreement dated as of May 26, 1993
by and between PKS and MFS.
4.08 FORM 8-A FILING. Promptly after the Distribution, MFS will register
the MFS Preferred Stock on Form 8-A pursuant to Section 12(g) of the Securities
Exchange Act.
ARTICLE V
ACCESS TO INFORMATION
5.01 ACCESS TO INFORMATION. After the Distribution Date, each of PKS and
MFS shall afford to the other and to the other's Representatives reasonable
access and duplicating rights during normal business hours to all Information
within such Party's possession relating to such other Party's businesses,
insofar as such access is reasonably requested by such other Party. 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.
5.02 PRODUCTION OF WITNESSES. After the Distribution Date, each of PKS and
MFS shall use reasonable efforts to make available to the other 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.
5.03 RETENTION OF RECORDS. Except as otherwise required by law or agreed
in writing, or as otherwise provided in the Continuing Agreements, each of PKS
and MFS shall retain, for a period of at least five years following the
Distribution Date, all significant Information in such Party's possession or
under its control relating to the business of the other Party and, after the
expiration of such five year period, prior to destroying or disposing of any
such Information, (a) the Party proposing to dispose of or destroy any such
Information shall provide no less than 30 days' prior written notice to the
other Party, 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 Party requests in writing that any of the Information proposed to be
destroyed or disposed of be delivered to such other Party, the Party 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 Party.
5.04 CONFIDENTIALITY. From and after the Distribution Date, each of PKS
and MFS shall hold, and shall use its reasonable best efforts to cause its
Representatives to hold, in strict confidence all Information concerning the
other party obtained by it prior to the
7
<PAGE>
Distribution Date or furnished to it by such other party pursuant to this
Agreement or the Other Agreements, and shall not release or disclose such
Information to any other Person, except its Representatives, who shall be bound
by the provisions of this Section; provided, however, that PKS and MFS may
disclose such Information to the extent that (a) disclosure in the opinion of
such Party's counsel, is required or advisable under applicable law (including
the federal securities laws), or (b) such Party can show that such Information
was (i) available to such Party on a nonconfidential basis prior to its
disclosure by the other Party, (ii) in the public domain through no fault of
such Party 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 of PKS and MFS shall 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 VI
INSURANCE
6.01 INSURANCE POLICIES. Notwithstanding any other provision hereof, MFS
shall retain any and all rights of an insured party under each of the PKS
Policies, including rights of indemnity and the right to be defended by or at
the expense of the insurer, with respect to all MFS Claims. PKS, however, shall
have no duty to maintain any PKS Policy in force.
6.02 ADMINISTRATION AND RESERVES. Notwithstanding any other provision
hereof, from and after the Distribution Date, (i) MFS shall be responsible for
Insurance Administration with respect to any MFS Claims, and (ii) MFS shall be
entitled to the benefit of any reserves held by any insurance carrier with
respect to any MFS Claims.
6.03 INSURANCE PREMIUMS. MFS shall pay its allocable share of premiums
under the PKS Policies, including any retrospectively-rated premiums arising out
of the MFS Claims. PKS shall have the right but not the obligation to pay
premiums (retrospectively-rated or otherwise) under the PKS Policies with
respect to MFS Claims to the extent that MFS does not pay such premiums,
whereupon MFS shall forthwith reimburse PKS for any premiums paid by PKS with
respect to MFS Claims.
6.04 ALLOCATION OF INSURANCE PROCEEDS. MFS shall be entitled to the
benefit of all Insurance Proceeds received under the PKS Policies with respect
to the MFS Claims.
6.05 REIMBURSEMENT OF EXPENSES. MFS shall, upon request of PKS, reimburse
PKS for the reasonable costs incurred by PKS, if any, in connection with
administration of MFS Claims. MFS shall upon the request of PKS, reimburse the
relevant insurer or the relevant third-party administrator, to the extent
required under any Insurance Policy or third-party
8
<PAGE>
administration contract with respect to any and all MFS Claims which are paid,
settled, adjusted, defended and/or otherwise handled by such insurer or third-
party administrator pursuant to the terms and conditions of such Insurance
Policy or third-party administration contract.
6.06 ASSISTANCE, WAIVER OF CONFLICT AND SHARED DEFENSE. MFS agrees to
provide reasonable assistance to PKS as regards any dispute with any third party
(including insurers or third-party administrators) as to any matter related to
the PKS Policies or third party administration contract.
6.07 EXCEPTION. Nothing in this Article VII shall be deemed to constitute
(or to reflect) the assignment of any of the PKS Policies to MFS.
ARTICLE VII
MISCELLANEOUS
7.01 COMPLETE AGREEMENT. This Agreement, the Exhibits and Schedule hereto
and the agreements and other documents referred to herein shall constitute the
entire agreement between the Parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.
7.02 EXPENSES. Except as otherwise provided in this Agreement or the
Registration Rights Agreement, all costs and expenses of any Party hereto in
connection with the preparation, execution, delivery and implementation of this
Agreement and with the consummation of the transactions contemplated by this
Agreement shall be paid by the Party incurring such costs and expenses, with any
costs and expenses that cannot be allocated on the foregoing basis to be divided
equally among the Parties.
7.03 SURVIVAL OF AGREEMENTS. All covenants and agreements of the Parties
contained in this Agreement shall survive the Distribution.
7.04 GOVERNING LAW. This Agreement shall 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.
7.05 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:
9
<PAGE>
If to PKS or KDG:
Vice President - Legal
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, NE 68131
If to MFS:
General Counsel
MFS Communications Company, Inc.
Suite 200
3555 Farnam Street
Omaha, NE 68131
7.06 AMENDMENT AND MODIFICATIONS. This Agreement may be amended, modified
or supplemented only by a written agreement signed by all of the Parties.
7.07 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the Parties hereto and their successors and permitted assigns, but neither
this Agreement nor any of the rights,interest and obligations hereunder shall 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 their Subsidiaries and is not intended
to confer upon any other Persons any rights or remedies hereunder.
7.08 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.09 LEGAL ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, 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 shall 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
shall be specifically enforceable.
10
<PAGE>
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:
----------------------------------------------
Title:
-------------------------------------------
KIEWIT DIVERSIFIED GROUP INC.
By:
----------------------------------------------
Title:
-------------------------------------------
MFS COMMUNICATIONS COMPANY, INC.
By:
----------------------------------------------
Title:
-------------------------------------------
11
<PAGE>
EXHIBIT A TO
DISTRIBUTION AGREEMENT
As of May 31, 1995
(i) MFS Common Stock:
(ii) MFS Common Stock issuable upon exercise
of options, rights, and warrants:
(iii)MFS Common Stock issuable upon conversion
of Series A Convertible Preferred Stock:
(iv) Series A Convertible Preferred Stock:
<PAGE>
SCHEDULE I TO
DISTRIBUTION AGREEMENT
1. Administrative Services Agreement dated as of September 30, 1992 by
and between PKS and MFS.
2. Noncompetition Agreement dated as of May 26, 1993 by and between PKS
and MFS.
<PAGE>
CONSENT OF CS FIRST BOSTON CORPORATION
We hereby consent to the inclusion, as an Exhibit to the Registration
Statement (the "Registration Statement") on Form S-4 of Peter Kiewit Sons', Inc.
and MFS Communications Company, Inc., of our fairness opinion to the Board of
Directors of PKS dated July 21, 1995, and to the description thereof set forth
in the Registration Statement under "Overview -- Background and Purpose of the
Spin-off; Purpose of the Exchange Offer, Board Proceedings -- Opinions of
Financial Advisors". In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
CS FIRST BOSTON CORPORATION
July 21, 1995
<PAGE>
LEHMAN BROTHERS
July 17, 1995
We consent to the inclusion as an Annex to the Registration Statement
(the "Registration Statement") on Form S-4 of Peter Kiewit Sons', Inc. ("PKS")
and MFS Communications Company, Inc. of our fairness opinion to the Board of
Directors of PKS dated July 17, 1995, and to the description thereof set forth
in the Registration Statement under "Overview -- Background and Purpose of Spin-
off; Purpose of the Exchange Offer; Board Proceedings -- Opinions of Financial
Advisors". In giving such consent, we do not admit that we come within the
category of persons whose consent is required under section 7 of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act"), and we do not thereby admit that we are experts with
respect to any part of the Registration Statement within the meaning of the term
"expert' as used in the Securities Act.
Sincerely,
LEHMAN BROTHERS
- --------------------
By: Adam Parten
Vice President
<PAGE>
, 1995
PETER KIEWIT SONS', INC.
INSTRUCTIONS FOR LETTER OF TRANSMITTAL
TO TENDER SHARES OF
CLASS B STOCK
FOR SHARES OF
CLASS D STOCK
PURSUANT TO THE EXCHANGE OFFER DESCRIBED BELOW
_________________
Peter Kiewit Sons', Inc. ("PKS" or the "Company") has provided you with a
Joint Prospectus dated , 1995 (the "Prospectus") that describes your
right to exchange the shares of Class B Stock held by you for shares of the
Company's Class D Stock, on the terms and subject to the conditions set forth in
the Prospectus and in the Letter of Transmittal attached to these Instructions.
As described in the Prospectus, the Exchange Offer is being made in connection
with the Spin-off. THE EXCHANGE OFFER, THE CLASS D STOCK AND THE SPIN-OFF ARE
MORE FULLY DESCRIBED IN THE PROSPECTUS, AND YOU SHOULD CAREFULLY REVIEW THE
PROSPECTUS, INCLUDING THE DESCRIPTIONS THEREIN OF THE CONDITIONS TO THE EXCHANGE
OFFER AND THE SPIN-OFF AND OF PKS'S RIGHT TO ABANDON THE EXCHANGE OFFER OR THE
SPIN-OFF OR BOTH, PRIOR TO MAKING A DECISION REGARDING WHETHER TO EXCHANGE
SHARES OF CLASS B STOCK FOR SHARES OF CLASS D STOCK. Terms used in these
Instructions and the Letter of Transmittal have the meanings ascribed to them in
the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., OMAHA, NEBRASKA TIME, ON
, 1995, UNLESS EXTENDED AS DESCRIBED IN THE PROSPECTUS.
EXCHANGING SHARES OF CLASS B STOCK FOR SHARES OF CLASS D STOCK IS STRICTLY
VOLUNTARY. IF YOU DO NOT WISH TO EXCHANGE ANY SHARES OF CLASS B STOCK FOR
SHARES OF CLASS D STOCK, DO NOT FILL OUT THE ATTACHED LETTER OF TRANSMITTAL.
SHARES OF CLASS B STOCK TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER ONLY IN THE MANNER DESCRIBED
IN THE PROSPECTUS; OTHERWISE, SUCH TENDERS ARE IRREVOCABLE BY THE TENDERING
STOCKHOLDERS.
PLEASE READ THE FOLLOWING GENERAL INSTRUCTIONS CAREFULLY BEFORE COMPLETING
THE LETTER OF TRANSMITTAL. FOR FURTHER INFORMATION OR ASSISTANCE CONCERNING THE
LETTER OF TRANSMITTAL, CONTACT MICHAEL A. KELLEY, STOCK REGISTRAR, PETER
KIEWIT SONS', INC., 1000 KIEWIT PLAZA, OMAHA, NEBRASKA 68131, TELEPHONE
(402) 271-2870; TELECOPY (402) 271-2965.
GENERAL INSTRUCTIONS
1. GENERAL
The Letter of Transmittal or a photocopy of it should be properly filled
in, dated and signed, and should be delivered to Michael A. Kelley, Stock
Registrar (the "Stock Registrar"), at the address set forth below:
Michael A. Kelley
Stock Registrar
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131
YOUR LETTER OF TRANSMITTAL MUST BE ACCOMPANIED BY YOUR STOCK CERTIFICATES
FOR THE CLASS B STOCK BEING TENDERED. DO NOT SIGN OR OTHERWISE ENDORSE ANY
STOCK CERTIFICATES TENDERED PURSUANT TO THE EXCHANGE OFFER. EXECUTION OF THE
LETTER OF TRANSMITTAL WILL ASSIGN YOUR STOCK TO PKS, SUBJECT TO CONSUMMATION OF
THE EXCHANGE OFFER.
TO BE EFFECTIVE, DELIVERY OF THIS LETTER OF TRANSMITTAL AND THE
CERTIFICATES REPRESENTING SHARES OF CLASS B STOCK YOU WISH TO EXCHANGE MUST
- i -
<PAGE>
BE MADE PRIOR TO 5:00 P.M., OMAHA, NEBRASKA TIME, ON THE EXPIRATION DATE,
WHICH WILL BE , 1995, UNLESS EXTENDED AS DESCRIBED IN THE
PROSPECTUS. THE METHOD OF DELIVERY OF ALL DOCUMENTS TO THE STOCK REGISTRAR IS
AT YOUR OPTION AND RISK. IF YOU CHOOSE TO SEND BY MAIL, IT IS RECOMMENDED THAT
YOU SEND BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED.
IF THE EXCHANGE OFFER IS NOT COMPLETED FOR ANY REASON, YOUR CLASS B STOCK
CERTIFICATES WILL BE RETURNED TO YOU (OR TO YOUR LENDER, IF YOUR CERTIFICATES
ARE PLEDGED TO A LENDER).
2. SIGNATURES
The signature on the Letter of Transmittal must correspond exactly to the
name as written on the face of the share certificate(s) sent to the Stock
Registrar. If there is insufficient space to list all of your share
certificates being submitted to the Stock Registrar or to respond to any other
information, please attach a separate sheet.
3. LOST CERTIFICATES
If one or more of your share certificates have been lost or destroyed, you
should contact the Stock Registrar for instructions regarding the relevant
documentation and what supporting evidence to supply.
4. VALIDITY OF SURRENDER
A surrender of certificate(s) will not be deemed to have been made until
all irregularities and defects have been cured or waived. The Company reserves
full discretion to determine whether the documentation with respect to tendered
Class B Stock is complete and generally to resolve all questions relating to
tenders, including the date and hour of receipt of a tender, the propriety of
execution of any document and all other questions regarding the validity or
acceptability of any tender. The Company reserves the right to reject any
tender not in proper form or to waive any irregularities or conditions. The
Company's interpretation of the terms and conditions of the Exchange Offer, the
Letter of Transmittal and these Instructions will be final. All improperly
tendered certificates representing Class B Stock will be returned, unless
irregularities are waived, without cost to the tendering holder thereof.
5. PARTIAL TENDERS
If less than all of the shares of Class B Stock which are evidenced by any
share certificate are to be tendered, fill in the number of shares you actually
wish to tender on the line(s) entitled "No. of Shares Tendered" in Box B and the
balance of the shares on the adjacent line(s) entitled "No. of Shares to be
Reissued." A new certificate(s) for the remainder of the shares of Class B
Stock which were evidenced by your old certificate(s) will be sent to you (or
the applicable lender) as soon as practicable after the consummation of the
Exchange Offer. All shares evidenced by certificate(s) listed will be deemed to
have been tendered unless otherwise indicated.
Additional copies of the Letter of Transmittal may be obtained from the
Stock Registrar.
- ii -
<PAGE>
LETTER OF TRANSMITTAL
To accompany certificates representing shares of Class C Stock of Peter
Kiewit Sons', Inc., a Delaware corporation ("PKS"), or to authorize the
delivery of pledged Class B Stock to PKS by FirsTier Bank, N.A., when submitted
in connection with the offer by PKS to issue shares of Class D Stock in exchange
for issued and outstanding shares of Class C Stock as described in the Joint
Prospectus dated , 1995 (the "Prospectus").
Michael A. Kelley, Stock Registrar:
I hereby tender the certificates listed in Box B below representing shares
of Class B Stock of PKS for exchange for shares of Class D Stock on the terms
and subject to the conditions set forth in the Memorandum and this Letter of
Transmittal.
BOX A: NAME AND ADDRESS OF
REGISTERED HOLDER
- --------------------------------------------------
- --------------------------------------------------
PLEASE TYPE OR PRINT THE NAME OF THE REGISTERED
HOLDER OF THE SHARES OF CLASS C STOCK LISTED IN
BOX C EXACTLY AS SUCH NAME APPEARS ON THE
SURRENDERED SHARE CERTIFICATE(S), ALONG WITH THE
ADDRESS OF THE REGISTERED HOLDER.
Name and Address of Registered Holder (type or
print)
Name:
-----------------------------------------
Address:
-----------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Zip Code)
Telephone Number:
---------------------------------
- --------------------------------------------------
- --------------------------------------------------
Upon request, I agree to execute and deliver any additional documents
deemed necessary or desirable by the Stock Registrar to complete the exchange of
the certificates.
The undersigned requests that the stock certificates for any shares of
Class D Stock to which the undersigned is entitled be registered in the name of,
and be delivered to, the registered holder set forth in Box A above at the
address set forth in Box A above.
- 1 -
<PAGE>
BOX B: CERTIFICATES TENDERED: Please list in this Box B (and an
attached sheet, if necessary) ALL the certificates representing Class
B Stock you are submitting with this Letter of Transmittal.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Certificate Enclosed Certificate No. No. of Shares No. of Shares Tendered No. of Shares to be
Reissued
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The undersigned represents and warrants that the undersigned has full power
and authority to assign and transfer the certificates tendered and has good
title to such certificates, free and clear of all liens, restrictions, charges,
encumbrances, pledges, security interests or other obligations affecting the
assignment or transfer of the certificates, and such certificates are not
subject to any adverse claim (except to the extent so pledged). All authority
conferred or agreed to be conferred in this Letter of Transmittal shall not be
affected by, and shall survive, the death or incapacity of the undersigned, and
any obligation of the undersigned under this Letter of Transmittal shall be
binding upon successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned.
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS RECEIVED
AND READ THE PROSPECTUS DATED , 1995, OF PETER KIEWIT
SONS', INC. AND MFS RELATING TO THE EXCHANGE OFFER AND SPIN-OFF.
Signed By:_________________________________
(Signature)
Date: ___________________ ___________________________________________
Name (Print)
- 2 -
<PAGE>
, 1995
PETER KIEWIT SONS', INC.
INSTRUCTIONS FOR LETTER OF TRANSMITTAL
TO TENDER SHARES OF
CLASS C STOCK
FOR SHARES OF
CLASS D STOCK
PURSUANT TO THE EXCHANGE OFFER DESCRIBED BELOW
_________________
Peter Kiewit Sons', Inc. ("PKS" or the "Company") has provided you with a
Joint Prospectus dated , 1995 (the "Prospectus") that describes your
right to exchange the shares of Class C Stock held by you for shares of the
Company's Class D Stock, on the terms and subject to the conditions set forth in
the Prospectus and in the Letter of Transmittal attached to these Instructions.
As described in the Prospectus, the Exchange Offer is being made in connection
with the Spin-off. THE EXCHANGE OFFER, THE CLASS D STOCK AND THE SPIN-OFF ARE
MORE FULLY DESCRIBED IN THE PROSPECTUS, AND YOU SHOULD CAREFULLY REVIEW THE
PROSPECTUS, INCLUDING THE DESCRIPTIONS THEREIN OF THE CONDITIONS TO THE EXCHANGE
OFFER AND THE SPIN-OFF AND OF PKS'S RIGHT TO ABANDON THE EXCHANGE OFFER OR THE
SPIN-OFF OR BOTH, PRIOR TO MAKING A DECISION REGARDING WHETHER TO EXCHANGE
SHARES OF CLASS C STOCK FOR SHARES OF CLASS D STOCK. Terms used in these
Instructions and the Letter of Transmittal have the meanings ascribed to them in
the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., OMAHA, NEBRASKA TIME, ON
, 1995, UNLESS EXTENDED AS DESCRIBED IN THE PROSPECTUS.
EXCHANGING SHARES OF CLASS C STOCK FOR SHARES OF CLASS D STOCK IS STRICTLY
VOLUNTARY. IF YOU DO NOT WISH TO EXCHANGE ANY SHARES OF CLASS C STOCK FOR
SHARES OF CLASS D STOCK, DO NOT FILL OUT THE ATTACHED LETTER OF TRANSMITTAL.
SHARES OF CLASS C STOCK TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER ONLY IN THE MANNER DESCRIBED
IN THE PROSPECTUS; OTHERWISE, SUCH TENDERS ARE IRREVOCABLE BY THE TENDERING
STOCKHOLDERS.
PLEASE READ THE FOLLOWING GENERAL INSTRUCTIONS CAREFULLY BEFORE COMPLETING
THE LETTER OF TRANSMITTAL. FOR FURTHER INFORMATION OR ASSISTANCE CONCERNING THE
LETTER OF TRANSMITTAL, CONTACT MICHAEL A. KELLEY, STOCK REGISTRAR, PETER
KIEWIT SONS', INC., 1000 KIEWIT PLAZA, OMAHA, NEBRASKA 68131, TELEPHONE
(402) 271-2870; TELECOPY (402) 271-2965.
GENERAL INSTRUCTIONS
1. GENERAL
The Letter of Transmittal or a photocopy of it should be properly filled
in, dated and signed, and should be delivered to Michael A. Kelley, Stock
Registrar (the "Stock Registrar"), at the address set forth below:
Michael A. Kelley
Stock Registrar
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131
UNLESS YOU ARE DIRECTING FIRSTIER BANK, N.A. TO DELIVER PLEDGED
CERTIFICATES DIRECTLY TO THE STOCK REGISTRAR AS DESCRIBED BELOW, YOUR LETTER OF
TRANSMITTAL MUST BE ACCOMPANIED BY YOUR STOCK CERTIFICATES FOR THE CLASS C STOCK
BEING TENDERED. DO NOT SIGN OR OTHERWISE ENDORSE ANY STOCK CERTIFICATES
TENDERED PURSUANT TO THE EXCHANGE OFFER. EXECUTION OF THE
- i -
<PAGE>
LETTER OF TRANSMITTAL WILL ASSIGN YOUR STOCK TO PKS, SUBJECT TO CONSUMMATION OF
THE EXCHANGE OFFER. If any certificates for your Class C Stock being tendered
have been pledged to FirsTier Bank, N.A., you must so indicate in Box C, and
upon delivery by you to PKS of an executed Letter of Transmittal, PKS and
FirsTier Bank, N.A. will be authorized to arrange for (i) the delivery of
pledged Class C Stock to PKS, and (ii) the delivery to FirsTier Bank, N.A. of
certificates representing the shares of Class D Stock to which you are entitled
upon exchange of your Class C Stock.
If any of your Class C Stock has been pledged to a lending institution
OTHER THAN FIRSTIER, you must complete Box B and arrange with such lending
institution for delivery to PKS of the certificates for the pledged Class C
Stock, together with the Letter of Transmittal. EVEN IF YOU DO NOT DESIGNATE A
LENDING INSTITUTION IN BOX B OR BOX C, PKS MAY DELIVER CERTIFICATES DIRECTLY TO
A LENDING INSTITUTION IF PKS BELIEVES IN GOOD FAITH THAT SUCH LENDING
INSTITUTION IS ENTITLED TO RECEIVE SUCH CERTIFICATES UNDER A BORROWING
ARRANGEMENT WITH YOU.
TO BE EFFECTIVE, DELIVERY OF THIS LETTER OF TRANSMITTAL AND THE
CERTIFICATES REPRESENTING SHARES OF CLASS C STOCK YOU WISH TO EXCHANGE MUST
BE MADE PRIOR TO 5:00 P.M., OMAHA, NEBRASKA TIME, ON THE EXPIRATION DATE,
WHICH WILL BE , 1995, UNLESS EXTENDED AS DESCRIBED IN THE
PROSPECTUS. THE METHOD OF DELIVERY OF ALL DOCUMENTS TO THE STOCK REGISTRAR IS
AT YOUR OPTION AND RISK. IF YOU CHOOSE TO SEND BY MAIL, IT IS RECOMMENDED THAT
YOU SEND BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED.
IF THE EXCHANGE OFFER IS NOT COMPLETED FOR ANY REASON, YOUR CLASS C STOCK
CERTIFICATES WILL BE RETURNED TO YOU (OR TO YOUR LENDER, IF YOUR CERTIFICATES
ARE PLEDGED TO A LENDER).
2. SIGNATURES
The signature on the Letter of Transmittal must correspond exactly to the
name as written on the face of the share certificate(s) sent to the Stock
Registrar. If there is insufficient space to list all of your share
certificates being submitted to the Stock Registrar or to respond to any other
information, please attach a separate sheet.
3. LOST CERTIFICATES
If one or more of your share certificates have been lost or destroyed, you
should contact the Stock Registrar for instructions regarding the relevant
documentation and what supporting evidence to supply.
4. VALIDITY OF SURRENDER
A surrender of certificate(s) will not be deemed to have been made until
all irregularities and defects have been cured or waived. The Company reserves
full discretion to determine whether the documentation with respect to tendered
Class C Stock is complete and generally to resolve all questions relating to
tenders, including the date and hour of receipt of a tender, the propriety of
execution of any document and all other questions regarding the validity or
acceptability of any tender. The Company reserves the right to reject any
tender not in proper form or to waive any irregularities or conditions. The
Company's interpretation of the terms and conditions of the Exchange Offer, the
Letter of Transmittal and these Instructions will be final. All improperly
tendered certificates representing Class C Stock will be returned, unless
irregularities are waived, without cost to the tendering holder thereof.
5. PARTIAL TENDERS
If less than all of the shares of Class C Stock which are evidenced by any
share certificate are to be tendered, fill in the number of shares you actually
wish to tender on the line(s) entitled "No. of Shares Tendered" in Box C and the
balance of the shares on the adjacent line(s) entitled "No. of Shares to be
Reissued." A new certificate(s) for the remainder of the shares of Class C
Stock which were evidenced by your old certificate(s) will be sent to you (or
the applicable lender) as soon as practicable after the consummation of the
Exchange Offer. All shares evidenced by certificate(s) listed will be deemed to
have been tendered unless otherwise indicated.
Additional copies of the Letter of Transmittal may be obtained from the
Stock Registrar.
- ii -
<PAGE>
LETTER OF TRANSMITTAL
To accompany certificates representing shares of Class C Stock of Peter
Kiewit Sons', Inc., a Delaware corporation ("PKS"), or to authorize the
delivery of pledged Class C Stock to PKS by FirsTier Bank, N.A., when submitted
in connection with the offer by PKS to issue shares of Class D Stock in exchange
for issued and outstanding shares of Class C Stock as described in the Joint
Prospectus dated , 1995 (the "Prospectus").
Michael A. Kelley, Stock Registrar:
I hereby tender the certificates listed in Box C below representing shares
of Class C Stock of PKS for exchange for shares of Class D Stock on the terms
and subject to the conditions set forth in the Memorandum and this Letter of
Transmittal.
BOX A: NAME AND ADDRESS OF BOX B: SPECIAL DELIVERY
REGISTERED HOLDER INSTRUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT THE NAME OF THE FILL IN ONLY IF YOUR CERTIFICATES ARE
REGISTERED HOLDER OF THE SHARES OF TO BE SENT TO A LENDING INSTITUTION,
CLASS C STOCK LISTED IN BOX C EXACTLY OTHER THAN FIRSTIER, TO WHICH YOUR
AS SUCH NAME APPEARS ON THE CLASS C STOCK IS PLEDGED.
SURRENDERED SHARE CERTIFICATE(S),
ALONG WITH THE ADDRESS OF THE
REGISTERED HOLDER. These Special Delivery Instructions
Cover Class D Stock Issuable in
Respect of the Following Number of
Name and Address of Registered Holder Shares of Class C Stock:
(type or print)
------------------------
Name:
------------------------------ Mail or deliver to:
Address: Name
------------------------------ ---------------------------------
(Please Print)
- -------------------------------------- Address
------------------------------
- --------------------------------------
--------------------------------------
(Zip Code)
Telephone Number: --------------------------------------
-------------------- (Zip Code)
Lender
Contact person:
---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Upon request, I agree to execute and deliver any additional documents
deemed necessary or desirable by the Stock Registrar to complete the exchange of
the certificates.
Except as otherwise indicated in Box B above or Box C below, the
undersigned requests that the stock certificates for any shares of Class D Stock
to which the undersigned is entitled be registered in the name of, and be
delivered to, the registered holder set forth in Box A above at the address set
forth in Box A above, subject to the right of PKS to deliver such certificates
directly to a lending institution (whether or not such lending institution is
set forth in Box B or Box C) if PKS believes in good faith that such lending
institution is entitled to receive such certificates under a borrowing
arrangement with the undersigned.
- 1 -
<PAGE>
BOX C: CERTIFICATES TENDERED: Please list in this Box C (and an
attached sheet, if necessary) ALL the certificates representing Class
C Stock you are submitting with this Letter of Transmittal or, if such
certificates are pledged to FirsTier, the certificates you are
authorizing to be surrendered to PKS by FirsTier. PKS will send to
FirsTier certificates for Class D Stock issuable in exchange for Class
C Stock pledged to FirsTier as indicated in this Box C.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Check the appropriate box: Certificate No. No. of Shares No. of Shares No. of Shares to be
- ----------------------------------------------- Tendered Reissued
Certificate Certificate Held By
Enclosed FirsTier Bank, N.A.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total:
</TABLE>
The undersigned represents and warrants that the undersigned has full power
and authority to assign and transfer the certificates tendered and has good
title to such certificates, free and clear (except to the extent pledged to
FirsTier or to a lending institution named in Box B above) of all liens,
restrictions, charges, encumbrances, pledges, security interests or other
obligations affecting the assignment or transfer of the certificates, and such
certificates are not subject to any adverse claim (except to the extent so
pledged). All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned under this Letter of
Transmittal shall be binding upon successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned.
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS RECEIVED
AND READ THE PROSPECTUS DATED , 1995, OF PETER KIEWIT
SONS', INC. AND MFS RELATING TO THE EXCHANGE OFFER AND SPIN-OFF.
Signed By:_________________________________
(Signature)
Date: ___________________ ___________________________________________
Name (Print)
- 2 -
<PAGE>
, 1995
PETER KIEWIT SONS', INC.
INSTRUCTIONS FOR LETTER OF TRANSMITTAL
TO TENDER
1990 SERIES CONVERTIBLE DEBENTURES
DUE OCTOBER 31, 2000
1991 SERIES CONVERTIBLE DEBENTURES
DUE OCTOBER 31, 2001
AND/OR
1993 SERIES CLASS D CONVERTIBLE
DEBENTURES DUE OCTOBER 31, 2003 (TOGETHER, "DEBENTURES")
FOR SHARES OF
CLASS C STOCK AND /OR CLASS D STOCK
PURSUANT TO THE EXCHANGE OFFER DESCRIBED BELOW
_________________
Peter Kiewit Sons', Inc. ("PKS" or the "Company") has provided you with an
Joint Prospectus dated , 1995 (the "Prospectus") that describes your
right to exchange the Debentures owned by you for shares of the Company's Class
C Stock and/or Class D Stock, on the terms and subject to the conditions set
forth in the Prospectus and in the Letter of Transmittal attached to these
Instructions. As described in the Prospectus, the Exchange Offer is being made
in connection with the Spin-off. THE EXCHANGE OFFER, THE CLASS C STOCK, THE
CLASS D STOCK AND THE SPIN-OFF ARE MORE FULLY DESCRIBED IN THE PROSPECTUS, AND
YOU SHOULD CAREFULLY REVIEW THE PROSPECTUS, INCLUDING THE DESCRIPTIONS THEREIN
OF THE CONDITIONS TO THE EXCHANGE OFFER AND THE SPIN-OFF AND OF PKS'S RIGHT TO
ABANDON THE EXCHANGE OFFER OR THE SPIN-OFF OR BOTH, PRIOR TO MAKING A DECISION
REGARDING WHETHER TO EXCHANGE DEBENTURES FOR SHARES OF CLASS D STOCK. Terms
used in these Instructions and the Letter of Transmittal have the meanings
ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., OMAHA, NEBRASKA TIME, ON
, 1995, UNLESS EXTENDED AS DESCRIBED IN THE PROSPECTUS.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT HOLDERS OF DEBENTURES
PARTICIPATE IN THE EXCHANGE OFFER, FOR THE REASONS DESCRIBED IN THE PROSPECTUS
AT "RISK FACTORS -- CERTAIN CONSEQUENCES OF DECISION NOT TO EXCHANGE".
PLEASE READ THE FOLLOWING GENERAL INSTRUCTIONS CAREFULLY BEFORE COMPLETING
THE LETTER OF TRANSMITTAL. FOR FURTHER INFORMATION OR ASSISTANCE CONCERNING
THE LETTER OF TRANSMITTAL, CONTACT MICHAEL A. KELLEY, STOCK REGISTRAR,
PETER KIEWIT SONS', INC., 1000 KIEWIT PLAZA, OMAHA, NEBRASKA 68131,
TELEPHONE (402) 271-2870; TELECOPY (402) 271-2965.
GENERAL INSTRUCTIONS
1. GENERAL
The Letter of Transmittal or a photocopy of it should be properly filled
in, dated and signed, and should be delivered to Michael A. Kelley, Stock
Registrar (the "Stock Registrar"), at the address set forth below:
- i -
<PAGE>
Michael A. Kelley
Stock Registrar
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131
If your Debentures have been pledged to FirsTier Bank, N.A. ("FirsTier") or
any other lending institution, you must complete Box B, and upon delivery by you
to PKS of an executed Letter of Transmittal, PKS and the lending institution
will be authorized to arrange for (i) the delivery of pledged Debentures to PKS,
and (ii) the delivery to the lending institution of certificates representing
the shares of Class C Stock and/or Class D Stock to which you are entitled upon
exchange of your Debentures. If your Debentures are not pledged to a lending
institution, your Letter of Transmittal must be accompanied by your certificates
for the Debentures being tendered.
TO BE EFFECTIVE, DELIVERY OF THIS LETTER OF TRANSMITTAL AND THE
CERTIFICATES REPRESENTING DEBENTURES YOU WISH TO EXCHANGE MUST BE MADE
PRIOR TO 5:00 P.M., OMAHA, NEBRASKA TIME, ON THE EXPIRATION DATE, WHICH
WILL BE , 1995, UNLESS EXTENDED AS DESCRIBED IN THE PROSPECTUS.
THE METHOD OF DELIVERY OF ALL DOCUMENTS TO THE STOCK REGISTRAR IS AT YOUR
OPTION AND RISK. IF YOU CHOOSE TO SEND BY MAIL, IT IS RECOMMENDED THAT YOU SEND
BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED.
IF THE EXCHANGE OFFER IS NOT COMPLETED FOR ANY REASON, YOUR DEBENTURE
CERTIFICATES WILL BE RETURNED TO YOU (OR YOUR LENDER, IF THE DEBENTURE
CERTIFICATES ARE PLEDGED TO A LENDER).
2. SIGNATURES
The signature on the Letter of Transmittal must correspond exactly to the
name as written on the face of the Debenture certificate(s) sent to the Stock
Registrar.
3. LOST CERTIFICATES
If one or more of your Debenture certificates have been lost or destroyed,
you should contact the Stock Registrar for instructions regarding the relevant
documentation and what supporting evidence to supply.
4. VALIDITY OF SURRENDER
A surrender of certificate(s) will not be deemed to have been made until
all irregularities and defects have been cured or waived. The Company reserves
full discretion to determine whether the documentation with respect to tendered
Debentures is complete and generally to resolve all questions relating to
tenders, including the date and hour of receipt of a tender, the propriety of
execution of any document and all other questions regarding the validity or
acceptability of any tender. The Company reserves the right to reject any
tender not in proper form or to waive any irregularities or conditions. The
Company's interpretation of the terms and conditions of the Exchange Offer, the
Letter of Transmittal and these Instructions will be final. All improperly
tendered certificates representing Debentures will be returned, unless
irregularities are waived, without cost to the tendering holder thereof.
5. NO PARTIAL TENDERS
A holder of a Debentures may not tender fewer than all Debentures held or
less than the full principal amount of each Debenture in the Exchange Offer.
Additional copies of the Letter of Transmittal may be obtained from the
Stock Registrar.
- ii -
<PAGE>
LETTER OF TRANSMITTAL
To accompany certificates representing 1990 Series Convertible Debentures
due October 31, 2000, 1991 Series Convertible Debentures due October 31, 2001
and/or 1993 Series Class D Convertible Debenture due October 31, 2003
("Debenture"), of Peter Kiewit Sons', Inc., a Delaware corporation ("PKS"), or
to authorize the delivery of a Debenture certificates to PKS by a lending
institution to which the Debenture(s) has been pledged, when surrendered in
connection with the offer by PKS to issue shares of Class C Stock and/or Class D
Stock in exchange for issued and outstanding Debentures as described in the
Joint Prospectus dated , 1995 (the "Prospectus").
Michael A. Kelley, Stock Registrar:
I hereby tender for exchange my Debenture(s) of PKS for shares of Class C
Stock and Class D Stock on the terms and subject to the conditions set forth in
the Prospectus and this Letter of Transmittal.
BOX A: NAME AND ADDRESS OF BOX B: SPECIAL DELIVERY
REGISTERED HOLDER INSTRUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT THE NAME OF THE FILL IN ONLY IF YOUR DEBENTURE(S) ARE
REGISTERED HOLDER OF THE DEBENTURE(S) PLEDGED TO A LENDING INSTITUTION (IN
EXACTLY AS SUCH NAME APPEARS ON THE WHICH CASE YOUR STOCK CERTIFICATES
SURRENDERED DEBENTURE CERTIFICATE, WILL BE SENT TO SUCH LENDING
ALONG WITH THE ADDRESS OF THE INSTITUTION).
REGISTERED HOLDER.
Check the following box if your
Debenture(s) are pledged to FirsTier:
Name and Address of Registered Holder / /
(type or print)
- OR -
Name: Provide the following information for
------------------------------ any lending institution other than
FirsTier:
Address:
------------------------------ Name
---------------------------------
(Please Print)
- --------------------------------------
Address
------------------------------
- --------------------------------------
(Zip Code) --------------------------------------
Telephone Number:
--------------------------------------
- ---------------------- (Zip Code)
Lender
Contact person:
---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Upon request, I agree to execute and deliver any additional documents
deemed necessary or desirable by the Stock Registrar to complete the exchange of
the certificates.
Except as otherwise indicated in Box B above, the undersigned requests that
the certificates for any shares Class C Stock and/or of Class D Stock to which
the undersigned is entitled be registered in the name of, and be delivered to,
the registered holder set forth in Box A above at the address set forth in Box A
above.
- 1 -
<PAGE>
The undersigned represents and warrants that the undersigned has full power
and authority to assign and transfer the certificates tendered and has good
title to such certificates, free and clear (except to the extent pledged to a
lending institution named in Box B above) of all liens, restrictions, charges,
encumbrances, pledges, security interests or other obligations affecting the
assignment or transfer of the certificates, and such certificates are not
subject to any adverse claim (except to the extent so pledged). All authority
conferred or agreed to be conferred in this Letter of Transmittal shall not be
affected by, and shall survive, the death or incapacity of the undersigned, and
any obligation of the undersigned under this Letter of Transmittal shall be
binding upon successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned.
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS RECEIVED
AND READ THE JOINT PROSPECTUS DATED , 1995, OF PETER KIEWIT
SONS', INC. AND MFS RELATING TO THE EXCHANGE OFFER AND SPIN-OFF.
Signed By:______________________________
(signature)
Date: ___________________ ________________________________________
Name (Print)
- 2 -
<PAGE>
CS FIRST BOSTON
July 21, 1995
Board of Directors
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, NE 68131
Dear Sirs:
You have advised us that Peter Kiewit Sons', Inc. ("PKS" or the
"Company") proposes to cause its wholly owned subsidiary, Kiewit Diversified
Group Inc. ("KDG" and, collectively with the Company and the Company's wholly
owned subsidiary Kiewit Construction Group Inc., the "Companies"), to distribute
to PKS (the "Distribution") all the shares of common stock, par value $.01 per
share (the "MFS Common Stock"), of MFS Communications Company, Inc. ("MFS") and
all the shares of a newly issued Series B convertible preferred stock, par value
$.01 per share (the "MFS Preferred Stock"), of MFS held by KDG. You have also
advised us that, immediately following the Distribution, PKS will distribute all
the MFS Common Stock and the MFS Preferred Stock then held by it (the
"Spin-Off") on a pro rata basis to the holders (the "Class D Stockholders") of
the Class D Diversified Group Convertible Exchangeable Common Stock, par value
$.0625 per share (the "Class D Common Stock"), of the Company.
You have advised us that the Spin-Off will be consummated only if it
can be effected on a tax-free basis, which is possible only if, prior to the
Spin-Off, KDG holds at least 80% of the total voting power for the election of
directors of MFS. Accordingly, in order to facilitate the Spin-Off, KDG
proposes to exchange 2.9 million shares of MFS Common Stock currently held by it
for 15 million shares of MFS Preferred Stock (the "MFS Exchange") prior to the
Distribution. You have advised us that the Company has determined the MFS
Exchange to be the most feasible method of facilitating the Spin-Off on a
tax-free basis, and that the Spin-Off will qualify as a tax-free spin-off under
Section 355 of the Internal Revenue Code of 1986, as amended. In addition, you
have advised us that the Company and MFS will take all action necessary to
ensure that the MFS Common Stock and the MFS Preferred Stock to be received by
the Class D Stockholders in the Spin-Off will not be "restricted securities"
within the meaning of Rule 144(a)(3) promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and will not be subject to restrictions
on transfer under the Securities Act (other than restrictions imposed as a
result of
<PAGE>
the holder being an "affiliate" (within the meaning of Rule 144(a)(1) under the
Securities Act) of MFS).
You have also advised us that, prior to the consummation of the
Spin-Off, the holders (the "Class B Stockholders") of the Company's Class B
Construction and Mining Group Nonvoting Restricted Redeemable Convertible
Exchangeable Common Stock, par value $.0625 (the "Class B Common Stock"), and
the holders (the "Class C Stockholders" and, collectively with the Class B
Stockholders and the Class D Stockholders, the "Company Stockholders") of the
Company's Class C Construction and Mining Group Nonvoting Redeemable Convertible
Exchangeable Common Stock, par value $.0625 (the "Class C Common Stock"), will
be given the opportunity to exchange their shares for shares of Class D Common
Stock at an exchange ratio of .416598 shares of Class D Common Stock for each
share of Class B Common Stock or Class C Common Stock (the "Common Stock
Exchanges"). You have advised us that Class B Stockholders and Class C
Stockholders who elect to exchange their shares will be required to do so during
a period (the "Special Window Period") of at least 20 business days. You have
advised us that you estimate that an aggregate of approximately three million
shares of Class B Common Stock and Class C Common Stock will be exchanged for
Class D Common Stock, and we have assumed, in any event, that less than an
aggregate of six million shares of Class B Common Stock and Class C Common Stock
will be exchanged for Class D Common Stock. We understand that, while the
Company does not currently anticipate that it will be necessary to impose a
limit on the amount of Class B Common Stock and Class C Common Stock that will
be exchanged for Class D Common Stock, the Board of Directors of the Company has
reserved the right to impose such a limit if it determines that the acceptance
of all shares tendered for exchange would not be in the best interests of the
Company or its stockholders. You have advised us that any such limit would be
imposed on a pro rata basis.
In addition, you have advised us that, during the Special Window
Period, (a) the holders of the Company's 1990 Series Convertible Debentures due
October 31, 2000 (the "1990 Series Debentures") will be given the opportunity to
exchange such 1990 Series Debentures for approximately 24.8 shares of Class C
Common Stock and approximately 24.8 shares of Class D Common Stock for each
$1,000 principal amount of 1990 Series Debentures, (b) the holders of the
Company's 1991 Series Convertible Debentures due October 31, 2001 (the "1991
Series Debentures") will be given the opportunity to exchange such 1991 Series
Debentures for approximately 23 shares of Class C Common Stock and approximately
23 shares of Class D Common Stock for each $1,000 principal amount of 1991
Series Debentures, and (c) the holders of the Company's 1993 Series Class D
Convertible Debentures due October 31, 2003 (the "1993 Series Debentures" and,
collectively with the 1990 Series Debentures and the 1991 Series Debentures, the
"Debentures"; the holders of the Debentures being collectively referred to as
the
<PAGE>
"Debentureholders") will be given the opportunity to exchange such 1993 Series
Debentures for approximately 19.96 shares of Class D Common Stock for each
$1,000 principal amount of 1993 Series Debentures (collectively, the "Debenture
Exchanges").
The Distribution, the Spin-Off, the MFS Exchange, the Common Stock
Exchanges and the Debenture Exchanges will be described in the Company's joint
prospectus with MFS to be distributed to the Company's Class B, Class C and
Class D Stockholders and to the Debentureholders (the "Prospectus"). The
Distribution, the Spin-Off, the MFS Exchange, the Common Stock Exchanges and the
Debenture Exchanges, upon the terms, and subject to the conditions, set forth in
the draft Prospectus referred to below are collectively referred to herein as
the "Transactions".
You have asked us to advise you with respect to the fairness, from a
financial point of view, of the Transactions to the Company Stockholders.
In arriving at our opinion, we have reviewed certain publicly
available business and financial information relating to the Companies and MFS.
We have also reviewed a draft dated July 11, 1995 of the Prospectus, a draft
dated June 2, 1995 of the Certificate of Designation for the MFS Preferred Stock
and certain other information, including financial forecasts and pro forma
financials, provided to us by the Companies and MFS, and have met with the
managements of the Companies and MFS to discuss the businesses and prospects of
the Companies and MFS, as well as the terms of the Transactions. We have also
considered certain financial and stock market data of MFS, and we have compared
that data with similar data for other publicly held companies in businesses
similar to those of MFS. In addition, we have compared the financial terms of
the MFS Preferred Stock with the financial terms of other securities and have
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria that we deemed
relevant. We have also analyzed the financial benefits that will be afforded
the Class D Stockholders as a result of the Spin-Off and we have considered the
fact that the Class B Stockholders and Class C Stockholders will be given the
opportunity, as a result of the Common Stock Exchanges, to exchange their shares
of Class B Common Stock and Class C Common Stock for shares of Class D Common
Stock prior to the Distribution and thereby to participate in the financial
benefits of the SpinOff.
In connection with our review, we have not assumed any responsibility
for independent verification of any of the foregoing information (including the
information contained in the draft Prospectus) and have relied on its being
complete and accurate in all material respects. With respect to the financial
forecasts, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of each of the
<PAGE>
Companies and MFS as to the future financial performance of each of the
Companies and MFS, respectively. In addition, we have not made an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of any of the Companies or MFS, nor have we been furnished with any such
evaluations or appraisals. We have assumed that the Company will complete the
Spin-Off as described in the draft Prospectus and that the consummation of the
Transactions will not result in any default or similar event under any loan
agreement, instrument of indebtedness or other contract of the Companies or MFS
which will not be waived.
We did not participate in the determination by the Company and MFS of
the terms of any of the Transactions or the MFS Preferred Stock and have not
been asked to consider alternative means of effecting a distribution of the MFS
Common Stock or the MFS Preferred Stock to the Class D Stockholders. In
addition, our opinion does not in any manner address or constitute a
recommendation regarding the business decisions of the Company or MFS to effect
the MFS Exchange or the Spin-Off or to offer the Special Window Period for the
Common Stock Exchanges or the determination by the Company of the exchange ratio
and other terms and conditions applicable to the Common Stock Exchanges.
Furthermore, our opinion does not in any manner address or constitute a
recommendation regarding the business decision of the Company to offer the
Special Window Period for the Debenture Exchanges or the determination by the
Company of the terms and conditions of the Debenture Exchanges. Although we
understand that the Company intends to effect certain other transactions in
connection with the Transactions, our opinion does not in any manner address or
constitute a recommendation regarding the business decisions of the Company to
effect, or the financial impact on the Company or any of its stockholders of,
such other transactions. In addition, our opinion does not in any manner
address or constitute a recommendation regarding whether Class B Stockholders or
Class C Stockholders should elect to exchange their shares of Class B Common
Stock and Class C Common Stock for shares of Class D Common Stock during the
Special Window Period or whether Debentureholders should elect to exchange their
Debentures for Class C Common Stock or Class D Common Stock, as the case may be,
during the Special Window Period. Moreover, we express no opinion as to the
market value of the MFS Preferred Stock upon receipt by KDG pursuant to the MFS
Exchange or the prices at which the MFS Common Stock or the MFS Preferred Stock
will trade subsequent to the MFS Exchange or the Spin-Off. The actual market
value of the MFS Common Stock and the MFS Preferred Stock may vary depending
upon changes in interest rates, dividend rates, market conditions, general
economic conditions and other factors which generally influence the price of
securities. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof.
<PAGE>
We have acted as the financial advisor to a special committee (the
"Special Committee") of the Board of Directors of the Company constituted to
review certain aspects of the Transactions and will receive a fee that is
contingent upon our rendering a fairness opinion. In the past, CS First Boston
performed certain investment banking services for the Company and received
customary fees for such services. In the ordinary course of our business, CS
First Boston and its affiliates may actively trade the debt and equity
securities of MFS for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Transactions are fair from a financial point of view to the
Company Stockholders.
Very truly yours,
CS FIRST BOSTON CORPORATION
By:
---------------------------------------
James B. Hoesley
Managing Director
<PAGE>
LEHMAN BROTHERS
Confidential
July 11, 1995
Board of Directors
Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, NE 68131
Members of the Board:
We understand that Peter Kiewit Sons', Inc. (the "Company") intends to
effect a tax-free distribution to the holders (the "Class D Stockholders") of
its Class D Diversified Group Convertible Exchangeable Common Stock (the "Class
D Common Stock") of all of the shares of Common Stock ("MFS Common Stock") and
Preferred Stock ("MFS Preferred Stock") of MFS Communications Company, Inc.
("MFS"), an indirect subsidiary of the Company, held by the Company at the time
of the distribution (the "Distribution"). Kiewit Diversified Group, Inc.
("Diversified"), a wholly owned subsidiary of the Company, currently owns the
shares of MFS Common Stock. We understand that immediately prior to the
Distribution, Diversified will exchange a portion of its MFS Common Stock (2.9
million shares) for $15 million face value of MFS Preferred Stock to be issued
by MFS (the "MFS Exchange"). The MFS Preferred Stock will have five votes per
share and, together with the remaining MFS Common Stock owned by Diversified,
will provide Diversified with in excess of 80% of the voting interest in MFS
with respect to the election of directors. Diversified will then dividend to
the Company all of the MFS Common Stock and MFS Preferred Stock held by
Diversified, and the Company will distribute such stock, together with $1
million of MFS Common Stock acquired by the Company from MFS, to the Class D
Stockholders.
We further understand that prior to the Distribution, the Company will
provide the holders (the "Class B Stockholders") of its Class B Construction and
Mining Group Nonvoting Restricted Redeemable Convertible Exchangeable Common
Stock (the "Class B Common Stock") and the holders (the "Class C Stockholders")
of its Class C Construction and Mining Group Voting Restricted Redeemable
Convertible Exchangeable Common Stock (the "Class C Common Stock") with an
opportunity to exchange shares of Class B Common Stock and Class C Common Stock
for shares of Class D Common Stock (the "B, C-D Exchange"). The B, C-D Exchange
will be based solely on the book-value based formula established in the
Certificate of Incorporation of the Company applicable to conversions of Class B
Common Stock and Class C Common Stock into Class D Common Stock as of January 1,
1995, adjusted for dividends paid through the date of the exchange (the
"Exchange Formula"), but holders of Class B Common Stock and Class C Common
Stock will be granted an opportunity to exchange
<PAGE>
Board of Directors
Peter Kiewit Sons', Inc.
Page 2
during a specified window period prior to the Distribution which otherwise would
not have been available to them under the Certificate of Incorporation, and
thereby will have an opportunity to participate in the Distribution on the same
terms as the Class D Stockholders. However, in arriving at our opinion as
described below, we have assumed, based upon the Company's estimate of the
likely levels of exchanges pursuant to the Exchange Offer and with the Company's
consent, that no more than 6 million shares of Class B Common Stock and Class C
Common Stock will be exchanged for shares of Class D Common Stock. The Class B
Stockholders, the Class C Stockholders and the Class D Stockholders are
collectively referred to herein as the "Company Stockholders" and the
Distribution, the MFS Exchange and the B, C-D Exchange are collectively referred
to herein as the "Proposed Transactions." The terms and conditions of the
Distribution, MFS Exchange and the B, C-D Exchange are set forth in more detail
in the most recent draft of the Joint Prospectus related to the Proposed
Transactions (the "Prospectus").
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of view,
to the Company Stockholders of the Proposed Transactions, taken as a whole. We
have not been requested to opine as to, and our opinion does not in any manner
address, the Company's underlying business decision to proceed with or effect
all or any portion of the Proposed Transactions or any alternative means of
effecting a distribution of the Company's equity interests in MFS to the Class D
Stockholders.
In arriving at our opinion, we reviewed and analyzed: (1) the
Prospectus, (2) such publicly available information concerning MFS which we
believe to be relevant to our inquiry, including the Form 10-K for the fiscal
year ended December 31, 1994 and its annual report, (3) financial and operating
information with respect to the business, operations, and prospects of MFS and
the Company furnished to us by the Company, (4) a comparison of the historical
financial results and present financial condition of MFS and the Company with
those of other companies which we deemed relevant, (5) a trading history of
MFS's common stock from May 1993 to the present and a comparison of that trading
history with those of other companies which we deemed relevant, (6) a comparison
of the financial terms of the MFS Exchange and the MFS Preferred Stock with the
terms of certain other transactions and securities which we deemed relevant and
(7) Diversified's tax bases of its equity interests in MFS and, based upon the
advice of the Company and its tax advisors, the likely tax impact of various
disposition strategies with respect to the equity interests in MFS or its
underlying assets and the proposed tax and financial reporting treatment of the
Distribution. In addition, we have had discussions with the managements of MFS
and the Company concerning their respective businesses, operations, assets,
financial condition and prospects and undertook such other studies, analyses and
investigations as we deemed appropriate.
<PAGE>
Board of Directors
Peter Kiewit Sons', Inc.
Page 3
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of the managements of
MFS and the Company that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the financial forecasts
of the Company and MFS, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
managements of the Company and MFS as to the future financial performance of the
Company and MFS, respectively. In addition, we have not made an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company or MFS, nor have we been furnished with any such evaluations or
appraisals. We have assumed that the consummation of the Proposed Transactions
will not result in any default or similar event under any loan agreement,
instrument of indebtedness or other contract of the Company or MFS which will
not be waived. Our opinion is necessarily based upon financial, market,
economic and other conditions, and upon tax laws, accounting standards and legal
and regulatory requirements, as they exist on, and can be evaluated as of, the
date of this letter, and, with your consent, we have not considered possible
changes in such applicable tax laws, accounting standards or regulatory and
legal requirements.
In arriving at our opinion, we have relied upon the advice of the
Company and its tax advisors that the Proposed Transactions, and in particular
the MFS Exchange, are the most feasible methods of ensuring that the
Distribution will qualify as a tax-free spin-off under Section 355 of the
Internal Revenue Code of 1986, as amended. In addition, we have further relied
upon the advice of the Company and its legal advisors that the shares of MFS
Common Stock to be received by the Class D Stockholders in the Distribution
(other than shares received by persons who are "affiliates" of MFS under the
federal securities laws) will be freely tradeable securities.
We also have not been requested to opine as to, and our opinion does
not in any manner address, the fairness, from a financial point of view, of the
Exchange Formula, which as described above is based on the book value formula
set forth in the Certificate of Incorporation of the Company.
In addition, we have not been requested to opine as to, and our
opinion does not in any manner address, the price at which shares of MFS Common
Stock and MFS Preferred Stock will actually trade following consummation of the
Distribution. In addition, trading in shares of MFS Common Stock and MFS
Preferred Stock may be characterized by a period of redistribution among the
Class D Stockholders who receive such shares in the Distribution which may
temporarily depress the trading prices of such shares during such period. The
market prices of shares of MFS Common Stock and MFS Preferred Stock also will
fluctuate with changes in prevailing interest rates,
<PAGE>
Board of Directors
Peter Kiewit Sons', Inc.
Page 4
economic and financial market conditions, the financial condition and prospects
of MFS, and other factors which generally influence the prices of securities.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that, from a financial point of view, the Proposed Transactions,
taken as a whole, are fair to the Company Stockholders.
We have acted as financial advisor to the Company in connection with
the Proposed Transactions and will receive an additional fee from the Company
upon delivery of this opinion. In addition, the Company has agreed to indemnify
us against certain liabilities which might arise out of our acting as financial
advisor and the rendering of this opinion. We also have performed various
investment banking services for the Company in the past and have received
customary fees for such services. In the ordinary course of our business, we
actively trade in the debt and equity securities of MFS for our own account and
for the accounts of our customers and, accordingly, may at any time hold a long
or short position in such securities.
This opinion is solely for the use and benefit of the Board of
Directors of the Company and shall not be disclosed publicly or made available
to, or relied upon by, any third party without our prior written approval. This
opinion is not intended to be and does not constitute a recommendation to any
Class B Stockholder or Class C Stockholder as to whether to exchange their
shares of Class B Common Stock or Class C Common Stock for shares of Class D
Common Stock in the B, C-D Exchange.
Very truly yours,
LEHMAN BROTHERS
By:
---------------------------------------
Jeffrey R. Sechrest
Managing Director
