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                                                                    EXHIBIT 10.1




                             TAX SHARING AGREEMENT


         This Tax Sharing Agreement (the "Agreement"), dated as of this 8th day
of September, 2000, by and between Peter Kiewit Sons', Inc. ("PKS"), a Delaware
corporation and Kiewit Materials Company ("KMC"), a Delaware corporation is
entered into in connection with the Split-Off (as defined below).


         WHEREAS, PKS has received an advance ruling from the Internal Revenue
Service regarding the tax-free nature of the Split-Off (as defined below); and

         WHEREAS, PKS and KMC desire to set forth their agreement on the proper
allocation among PKS and KMC (and certain of their subsidiaries and affiliates)
of federal, state, foreign, and local Taxes (as defined below) and certain
other matters;

         NOW, THEREFORE, in consideration of their mutual promises, the parties
to this Agreement agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

         As used in this Agreement, the following terms shall have the
following meanings (except as specifically provided, such meanings to be
equally applicable to both the singular and the plural forms of the terms
defined):

         "Affiliate" means corporation, partnership or other entity directly or
indirectly controlled by a Party (except that neither KMC nor its Affiliates
shall constitute an Affiliate of PKS).  Control for this purpose shall mean the
direct or indirect ownership of more than 50% of the voting equity of such
entity.  In addition, Affiliates of KMC shall include Quality Ready Mix, Inc.,
Apache Materials, L.L.C., and the KMC Nonfiling Entities. For purposes of this
Agreement, all Affiliates of KMC as of the Distribution Date shall be considered
Affiliates of KMC for all taxable periods prior to and including the
Distribution Date (including prior to the Restructuring).

         "Code" means the Internal Revenue Code of 1986 (or, if relevant, the
Internal Revenue Code of 1954), as amended, or any successor thereto, as in
effect for the taxable period in question.

         "Combined Group" means all the corporations (or entities electing to
be treated as an association taxable as a corporation) included in a particular
Combined Return.

         "Combined Jurisdiction" means, for any taxable period, any
jurisdiction in which KMC or a KMC Affiliate is included in a combined,
unitary, consolidated, or similar Tax Return with PKS or a PKS Affiliate for
State Income Tax or Other Tax purposes.



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         "Combined Return" means any combined, unitary, consolidated, or
similar Tax Return used in the determination of a State Income Tax or Other Tax
liability with respect to which KMC or a KMC Affiliate is included with PKS or
a PKS Affiliate.

         "Combined State Income Tax Liability" means the State Income Tax
liability for a Combined Return.

         "Consolidated Group" means the affiliated group of corporations
(within the meaning of Section 1504 of the Code) of which PKS or any member of
the PKS Group is or was a member and KMC or any member of the KMC Group is or
was a member.


         "Controlled Debentures" is defined in the Ruling Request.

         "Debenture Exchange" is defined in the Ruling Request.

         "Distributing Debentures" is defined in the Ruling Request.

         "Distributing Stock" is defined in the Ruling Request.


         "Distribution Date" means the date determined by the PKS Board of
Directors as of which the tax-free pro rata distribution of KMC stock
comprising a part of the Split-Off shall be effected.

         "Due Date" shall mean, with respect to any Tax Return or payment of
Taxes, the date on which such Tax Return or payment is required, under
applicable law, to be filed or remitted to the appropriate Taxing Authority,
taking into account any applicable extensions.

         "Final Determination" shall mean the final resolution of liability for
any Tax for a taxable period, by (i) IRS Form 870 or 870-AD (or any successor
forms thereto), on the date of acceptance by or on behalf of the IRS, or by a
comparable form under the laws of other jurisdictions (on the date of
acceptance by the applicable Taxing Authority); except that a Form 870 or
870-AD, successor form, or comparable form that reserves (whether by its terms
or by operation of law) the right of the taxpayer to file a claim for refund
and/or the right of the Taxing Authority to assert a further deficiency shall
not constitute a Final Determination until such rights expire; (ii) a decision,
judgment, decree, or other order by a court of competent jurisdiction, which
has become final and unappealable; (iii) a closing agreement or accepted offer
in compromise under Section 7121 or Section 7122 of the Code, or comparable
agreements under the laws of other jurisdictions; (iv) any allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the jurisdiction imposing such Tax; or (v) any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.

         "Foreign Income Taxes" means all Taxes based on income imposed by a
Taxing Authority other than the United States or, any state or local
jurisdiction within the United States.

         "Income Taxes" means all federal, state, local and foreign income
Taxes or other Taxes based on income including, without limitation, United
States federal taxes imposed under Subtitle A of the Code and any state or
local franchise Taxes based on





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income.  Income Taxes shall also include related interest, penalties, or other
additions to tax, or additional amounts imposed by any Taxing Authority.

         "Income Tax Returns" means Tax Returns relating to Income Taxes.

         "Indemnified Party" is defined in Section 7.1.

         "Indemnifying Party" is defined in Section 7.1.

         "IRS" means the Internal Revenue Service.

         "IRS Ruling" means the private letter ruling issued to PKS by the IRS,
dated May 23, 2000, with respect to certain federal Income Tax aspects of the
Split-Off.

         "KMC Affiliate" means any corporation, partnership or other entity
more than 50% of the voting equity of which is owned, directly or indirectly,
by KMC. KMC Affiliate shall also include Quality Ready Mix, Inc., Apache
Materials, L.L.C., and the KMC Nonfiling Entities.  For purposes of this
Agreement, all KMC Affiliates as of the Distribution Date shall be considered a
KMC Affiliate for all taxable periods prior to and including the Distribution
Date (including prior to the Restructuring).

         "KMC Group" means the group of corporations (or entities electing to
be treated as an association taxable as a corporation) that, after the
Distribution Date, will be members of the affiliated group of corporations of
which KMC is the common parent (within the meaning of Section 1504 of the
Code). For purposes of this Agreement, all members of the KMC Group immediately
after the Distribution Date shall be considered members of the KMC Group for
all taxable periods prior to and including the Distribution Date (including
prior to the Restructuring).

         "KMC Nonfiling Entities" means Bell Cement Tools L.L.C. and Granite
Canyon Venture, and any other entity (other than Apache Materials, L.L.C. or
Quality Ready Mix, Inc.) less than or equal to 50% of the voting equity
interests of which is owned by KMC or a KMC Affiliate as of the Distribution
Date.

         "Level 3 Group" shall have the meaning set forth in the PKS/Level 3
Tax Sharing Agreement.

         "Nebraska Tax Credit Program" means the Employment and Investment
Growth Act Project Agreements signed December 30, 1987 and March 21, 1996,
between Level 3 Communications, Inc. and the State of Nebraska, as amended in
January 1999.


         "New Distributing Debentures" is defined in the Ruling Request.


         "Other Tax" means all Taxes (including but not limited to sales and
use Taxes, payroll Taxes, and excise Taxes), other than Income Taxes and
Transfer Taxes.

         "Other Tax Returns" means Tax Returns relating to Other Taxes.





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         "Party" means PKS or KMC, as appropriate, and "Parties" means PKS and
KMC.

         "PKS Affiliate" means any corporation, partnership or other entity
more than 50% of the voting equity of which is owned directly or indirectly by
PKS, other than KMC or any KMC Affiliate.

         "PKS Group" means the group of corporations (or entities electing to
be treated as an association taxable as a corporation) that, after the
Distribution Date, will be members of the affiliated group of corporations of
which PKS is the common parent (within the meaning of Section 1504 of the
Code).

         "PKS Shareholder Tax Indemnity Payment" is defined in Section 4.2
hereof.

         "PKS/Level 3 Tax Sharing Agreement" means the Tax Sharing Agreement
entered into by Level 3 Communications, Inc. (formerly Peter Kiewit Sons',
Inc.) and PKS (formerly PKS Holdings, Inc.) dated March 26, 1998.

         "RAR" means any revenue agent's report with respect to federal Income
Taxes or similar reports relating to State Income Taxes.

         "Restructuring" means the transactions described in the Ruling Request
and any associated transactions completed as of March 1, 1999.

         "Ruling Request" means the private letter ruling request filed by PKS
with the IRS on January 10, 2000, as supplemented from time to time with
respect to certain tax aspects of the Split-Off.

         "Separate Return" means all Tax Returns used in the determination of
State Income Tax or Other Tax liability other than a Combined Return.

         "Short Taxable Year 2000" means the taxable year beginning on the day
after the Distribution Date.

         "Split-Off" is the transfer to shareholders by PKS of all the issued
and outstanding common stock and securities of KMC in a transaction intended to
qualify as a tax-free pro rata distribution and as a tax-free exchange under
Sections 355 and 368(a)(1)(D) of the Code.

         "Split-Off Taxes" means any corporate level Taxes (other than Taxes
incurred as a result of a breach of either Party's obligations or
representations under Section 4.1) incurred by or imposed on (or deemed to be
incurred by or imposed on) KMC, a KMC Affiliate, PKS, or a PKS Affiliate as a
result of the Split-Off or the Restructuring, including,





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without limitation, (i) Income Taxes attributable to the failure of the
Split-Off or the Restructuring to qualify as tax-free transactions pursuant to
the Code, or (ii) federal Income Taxes attributable to the recognition of
intercompany gains (as defined in Treasury Regulation Section 1.1502-13) or
excess loss accounts (as defined in Treasury Regulation Section 1.1502-19), or
any similar State Income Taxes.

         "State Income Taxes" means all state or local Income Taxes or other
state or local Taxes based on income including, without limitation, any state
or local franchise Taxes based on income.  State Income Taxes shall also
include related interest, penalties, or other additions to tax, or additional
amounts imposed by any Taxing Authority.

         "State Income Tax Return" means Tax Returns relating to State Income
Taxes.

         "Taxes" means all taxes imposed, whether domestic or foreign, and
whenever imposed by a national, local, municipal, governmental, state, federal,
foreign, or other body (a "Taxing Authority"), and without limiting the
generality of the foregoing, shall include any net income, alternative or
add-on minimum tax, gross income, sales, use, ad valorem, gross receipts, value
added, franchise, profits, license, transfer, recording, withholding, payroll,
disability, employment, social security, unemployment insurance, excise,
severance, stamp, occupation, premium, property, windfall profit, custom duty,
or other tax, government fee or other like assessment or charge of any kind
whatsoever, together with any related interest, penalties, or other additions
to tax, or additional amount imposed by any such Taxing Authority.

         "Tax Attributes" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
deduction, credit or attribute that could affect Taxes (including, without
limitation, deductions and credits related to alternative minimum Taxes).

         "Taxing Authority" is defined in the definition of "Taxes."

         "Tax Benefit" means a reduction in the Tax liability of a taxpayer for
any taxable period that arises, or may arise in the future, as a result of any
adjustment to, or addition or deletion of, a Tax Item in the computation of the
Tax liability of the taxpayer.

         "Tax Controversy" is defined in Section 5.1(b).

         "Tax Detriment" means an increase in the Tax liability of a taxpayer
for any taxable period that arises, or may arise in the future, as a result of
any adjustment to, or addition or deletion of, a Tax Item in the computation of
the Tax liability of the taxpayer.





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         "Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit, or any other item which increases or decreases (or may
increase or decrease) Taxes paid or payable or affects Tax Attributes.

         "Tax Return" means any return, report, information return, filing,
questionnaire or other document filed or required to be filed, including
requests for extensions of time, filings made with estimated Tax payments,
claims for refund or amended returns that may be filed, for any taxable period
with any Taxing Authority in connection with any Tax or Taxes (whether or not a
payment is required to be made with respect to such filing).

         "Taxable Year 1999" means the taxable period ending on December 25,
1999 or December 31, 1999, as applicable.

         "Taxable Year 2000" means the taxable period ending on December 30,
2000 or December 31, 2000, as applicable (other than the Short Taxable Year
2000).

         "Transfer Taxes" means any state, local or foreign Tax, other than
sales or use Tax, imposed in connection with a transfer of any type of
property.

         "Treasury Regulation" means the temporary and final Income Tax
Regulations promulgated under the Code.


                                   ARTICLE II
                     PREPARATION AND FILING OF TAX RETURNS

         Section 2.1.  Manner of Filing.  In the absence of PKS approval and/or
a controlling change in law or circumstance, all Income Tax Returns relating to
a taxable period ending on or before (or including) the Distribution Date shall
be prepared in a manner that is consistent with elections, accounting methods,
conventions and principles of taxation (collectively the "Tax Practices") used
for the most recent taxable periods for which Income Tax Returns involving
similar items have been filed.  Notwithstanding the previous sentence, such Tax
Returns shall not be required to be prepared in a manner consistent with the
Tax Practices to the extent such elections, methods, conventions, and
principles are altered by any Final Determination.  All State Income Tax
Returns or Other Tax Returns (including any amendments to any such Tax Returns
that are State Income Tax Returns or Other Tax Returns) relating to a taxable
period ending on or before or including the Distribution Date shall be filed as
a Separate Return or as a Combined Return consistent with the prior year unless
otherwise approved by PKS in its sole and absolute discretion.  PKS shall in
its sole and absolute discretion determine the members of each Combined Group.





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         Section 2.2.  Taxable Year 2000 and Prior Taxable Year Federal Income
Tax Returns.

         (a)    PKS shall prepare and file, or cause to be prepared and filed,
on a timely basis, all Tax Returns for the Consolidated Group relating to
federal Income Taxes for the Taxable Year 2000.  Such Tax Returns shall include
only Tax Items for the KMC Group for its taxable period ending on the
Distribution Date.  Except for Tax Returns described in Section 2.2(f), on or
before the date that is 90 days prior to the Due Date for such Tax Returns, KMC
shall provide PKS with its pro-forma federal Income Tax Returns and supporting
schedules for its taxable period ending on the Distribution Date.  No later
than 10 business days following a request by PKS, KMC shall provide PKS with
any other information requested by PKS relating to Tax Items for any member of
the KMC Group for use by PKS in preparing such Consolidated Group Tax Returns.
Upon KMC's written request, PKS shall deliver to KMC for its review relevant
portions of (or applicable work papers relating to) such Tax Returns no later
than the date that is 10 business days prior to the Due Date for such returns.

         (b)     KMC shall prepare and file, or cause to be prepared and filed,
on a timely basis, all Tax Returns for the KMC Group relating to federal Income
Taxes for the taxable years beginning after the Distribution Date (including
the Short Taxable Year 2000).

         (c)     KMC and the KMC Group shall fully cooperate with PKS and shall
provide PKS all information requested by PKS relating to the Tax Returns
described in Sections 2.2(a) and (e) (including, if necessary, providing
applicable signatures or powers of attorney).  Information provided by KMC to
PKS for Tax Returns described in Section 2.2(a) shall be based on a closing of
the books method unless PKS consents in writing to the election under Treasury
Regulation Section 1.1502-76(b)(2)(ii) to ratably allocate Tax Items.


         (d)     Except as provided in this Article II, KMC shall prepare and
file or cause to be prepared and filed federal Income Tax Returns for KMC
Affiliates (other than Bell Cement Tools L.L.C. and Granite Canyon Venture) for
Taxable Year 2000.  Notwithstanding anything contained in this Article II to the
contrary, PKS shall prepare and file or cause to be prepared and filed all
federal Income Tax Returns for PKS Affiliates for Taxable Year 2000.


         (e)     Subject to the PKS/Level 3 Tax Sharing Agreement, PKS shall
have the right to prepare and file, or cause to be prepared and filed, all Tax
Returns (including amended Tax Returns) for PKS, PKS Affiliates, KMC and KMC
Affiliates (other than Bell Cement Tools L.L.C., Granite Canyon Venture and
Quality Ready Mix, Inc.) relating to federal Income Taxes for taxable years
prior to Taxable Year 1999.

         (f)     PKS shall prepare and file, or cause to be prepared and filed,
all Tax Returns for the Consolidated Group relating to installments of
estimated federal





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Income Taxes for the Taxable Year 2000. KMC shall provide to PKS all
information requested by PKS that relates to KMC and is necessary for the
determination of such estimated Tax installments on or before the date that is
15 business days prior to the Due Date for such Tax Returns.

         Section 2.3.  Taxable Year 1999 & Taxable Year 2000 and Prior Taxable
Year State Income and Foreign Income Tax Returns.

         (a)     Except for Tax Returns with respect to Combined Jurisdictions
as described in Section 2.3(b), PKS shall prepare and file, or cause to be
prepared and filed, all Tax Returns relating to State Income Taxes or Foreign
Income Taxes imposed on PKS or any PKS Affiliate, for Taxable Year 1999 and
Taxable Year 2000 and all prior taxable years.  Except for Tax Returns with
respect to Combined Jurisdictions as described in Section 2.3(b), KMC shall
prepare and file, or cause to be prepared and filed, all Tax Returns relating
to State Income Taxes or Foreign Income Taxes imposed on KMC or any KMC
Affiliate for Taxable Year 1999 and Taxable Year 2000 and all prior taxable
years.

         (b)     Subject to the PKS/Level 3 Tax Sharing Agreement, for any
Combined Jurisdiction, PKS or a PKS Affiliate, as appropriate, shall prepare
and file, on a timely basis, all Combined Returns for the Taxable Year 1999 and
Taxable Year 2000 and all prior taxable years.  Upon KMC's written request, PKS
or its Affiliate shall deliver to KMC for its review relevant portions of (or
applicable work papers relating to) such Tax Returns no later than the date
that is 10 days prior to the Due Date of any such Tax Return.  Except for Tax
Returns described in Section 2.3(d), on or before the date that is 90 days
prior to the Due Date of any such Tax Return, KMC or a KMC Affiliate, as
appropriate, shall provide PKS or the appropriate PKS Affiliate with its Tax
Returns and supporting schedules requested by PKS or the PKS Affiliate for use
in preparing the Tax Return for such taxable years.  In addition, no later than
10 business days following a request by PKS, KMC or the appropriate KMC
Affiliate shall provide PKS or the appropriate PKS Affiliate all information
requested by PKS or the appropriate PKS Affiliate that is relevant to the
preparation of such Tax Returns.

         (c)     With respect to the preparation and filing of any Tax Return
described in Section 2.3(a), (b) or (d), KMC and the KMC Affiliates shall fully
cooperate with PKS and the PKS Affiliates (including, if necessary, providing
applicable signatures and powers of attorney).

         (d)     PKS shall prepare and file, or cause to be prepared and filed,
all Tax Returns for the Combined Group relating to installments of estimated
State Income Taxes for the Taxable Year 2000. KMC shall provide to PKS all
information requested by PKS that relates to KMC and is necessary for the
determination of such estimated Tax installments on or before the date that is
15 business days prior to the Due Date for such Tax Returns.





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         Section 2.4.   Federal Income, State Income and Foreign Income Tax
Returns for Taxable Periods Beginning After the Distribution Date.  PKS shall
prepare and file, or cause to be prepared and filed, all Tax Returns relating
to federal Income Taxes, State Income Taxes or Foreign Income Taxes for PKS and
for any PKS Affiliate for all taxable periods beginning after the Distribution
Date. KMC shall prepare and file, or cause to be prepared and filed, all Tax
Returns relating to federal Income Taxes, State Income Taxes or Foreign Income
Taxes for KMC and for any KMC Affiliate for all taxable periods beginning after
the Distribution Date.

         Section 2.5.  Transfer and Other Tax Returns.

         (a)     Transfer Taxes - PKS shall prepare and file, or cause to be
prepared and filed, on a timely basis, all Tax Returns related to Transfer
Taxes imposed under applicable law on PKS or any PKS Affiliate for all
transfers by such entities, whether occurring before, on or after the
Distribution Date. KMC shall prepare and file, or cause to be prepared and
filed, on a timely basis, all Tax Returns related to Transfer Taxes imposed
under applicable law on KMC or any KMC Affiliate for all transfers by such
entities, whether occurring before, on or after the Distribution Date.

         (b)     Other Taxes - PKS and KMC shall prepare and file, or cause to
be prepared and filed, on a timely basis, all Tax Returns relating to Other
Taxes imposed under applicable law on PKS (or its Affiliates) or imposed under
applicable law on KMC (or its Affiliates), respectively, whether before, on or
after the Distribution Date except for the following:

                 (i)      PKS shall prepare and file, or cause to be prepared
and filed, all Other Tax Returns relating to the Nebraska Tax Credit Program.

                 (ii)     With regards to excise or franchise Taxes computed
based on net worth, total assets or any variation thereof (other than on the
basis of income) which are included in a Combined Return, PKS or a PKS
Affiliate shall prepare and file or cause to be prepared and filed all Tax
Returns for Taxable Year 1999, Taxable Year 2000 and all prior years.

                                  ARTICLE III
PAYMENTS, DEFICIENCIES, INDEMNIFICATION, REFUNDS AND OTHER TAX ATTRIBUTES

         Section 3.1.  Allocation and Payment.  Except as expressly provided
herein, payment of Taxes to Taxing Authorities and payments between the Parties
in respect of Taxes or related matters, as the case may be, shall be made in
accordance with the allocations provided in this Agreement.





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         Section 3.2.  Federal Income Taxes.


         (a)     Except as otherwise provided herein, for each taxable period
ending on or before (or each taxable period including) the Distribution Date,
the Consolidated Group's federal Income Tax liability (including estimated Taxes
and deficiencies in such Tax liability) shall be allocated by PKS between the
PKS Group and the KMC Group as set forth in (i) through (iii) below.


                 (i)      KMC Group Tax Liability.  As reasonably determined by
PKS, the KMC Group's allocable share of the Consolidated Group federal Income
Tax liability shall equal the federal Income Tax computed by taking into
account Tax Items of the KMC Group as if the KMC Group filed a consolidated
federal Income Tax Return.


                 (ii)     PKS Group Tax Liability.  The PKS Group's allocable
share of the Consolidated Group federal Income Tax liability shall equal the
excess of the Consolidated Group federal Income Tax liability over the sum of
(A) the KMC Group allocable share of such liability, as determined under Section
3.2(a)(i) above, plus (B) any such federal Income Tax liability allocable to the
Level 3 Group or any other entity that is not a member of the PKS Group or the
KMC Group pursuant to the PKS/Level 3 Tax Sharing Agreement.



                 (iii)    Prior Allocation. If a deficiency or refund in the
Consolidated Group's federal Income Tax liability is subsequently proposed or
determined, for purposes of this Section 3.2, it shall be assumed for tax years
prior to Taxable Year 1999, that (A) any allocation of the Consolidated Group's
federal Income Tax liability made prior to the date of this Agreement between
the Parties was consistent with this Section 3.2 and (B) any obligations between
the Parties in respect of such allocation have been fully satisfied.



         (b)     Except as otherwise provided herein, for each taxable period
ending on or before (or each taxable period including) the Distribution Date,
KMC and the members of the KMC Group shall pay and be solely responsible for any
federal Income Taxes (including estimated Taxes) that are allocable under this
Agreement to KMC and the members of the KMC Group.  KMC shall indemnify PKS and
the PKS Affiliates for and hold them harmless from any such Taxes.  Except as
otherwise provided herein, for each taxable period ending on or before (or each
taxable period including) the Distribution Date, PKS






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shall pay and be solely responsible for any federal Income Taxes (including
estimated Taxes) that are allocable under this Agreement to PKS and the members
of the PKS Group. Except as otherwise provided herein, PKS and the members of
the PKS Group shall indemnify KMC and all members of the KMC Group for and hold
them harmless from any such Taxes.



         (c)     KMC shall pay, or cause to be paid, on a timely basis, and
shall indemnify PKS and its Affiliates from all federal Income Tax imposed on
Quality Ready Mix, Inc. for all taxable years.


         Section 3.3.  State Income Taxes.


         (a)     For each taxable period ending on or before (or each taxable
period including) the Distribution Date for which the liability of the members
of the PKS Group and the KMC Group (and, if applicable, the Level 3 Group) is
determined on a Combined Return, the Combined State Income Tax Liability
including estimated Taxes and deficiencies in such Taxes, shall be allocated
between the Parties as set forth below:



                 (i)      PKS Group:  The PKS Group's allocable share of the
Combined State Income Tax Liability in each Combined Jurisdiction shall be equal
to the excess of the Combined State Income Tax Liability over the sum of (A) KMC
Group Pro-Forma Liability as determined in Section 3.3 (a) (ii), plus (B) any
Combined State Income Tax Liability allocable to the Level 3 Group or any other
entity that is not a member of the PKS Group or the KMC Group pursuant to the
PKS/Level 3 Tax Sharing Agreement.



                 (ii)     KMC Group:  The KMC Group's allocable share of the
Combined State Income Tax Liability in each applicable state shall be equal to
the "KMC Group Pro-Forma Liability".  The "KMC Group Pro-Forma Liability" shall
equal the pro-forma liability of the KMC Affiliates included in the Combined
Return computed utilizing the Combined Return apportionment factor (e.g., in the
case where a member of the Level 3 Group is included in the Combined Return, the
"Combined State Income Tax Return" apportionment factor as provided in the
PKS/Level 3 Tax Sharing Agreement) and all applicable Tax Items on a pro-forma
basis (as reasonably determined by PKS); provided, however, to the extent Tax
Items included in the KMC Group Pro-Forma Liability are not utilized in the
Combined Return (or if applicable the "Combined State Income Tax Return" as
defined in the PKS/Level 3 Agreement), these Tax Items shall be excluded from
the KMC Group Pro-Forma Liability computation.  If such pro-forma computation
results in a negative KMC Group Pro-Forma Liability, PKS shall pay KMC only to
the extent PKS realizes a Tax Benefit from the Combined Jurisdiction or receives
payment from the Level 3 Group (in each case relating to the Tax Items causing
the negative KMC Group Pro-Forma Liability). If such pro-forma computation
results in a KMC Group Pro-Forma Liability greater than the Combined State
Income Tax Liability (reduced by any such liability allocable to the Level 3
Group pursuant to the PKS/Level 3 Tax Sharing Agreement), the KMC Group's
allocable share of the Combined State Income Tax Liability shall be 100% and any
excess of such KMC Group Pro-forma Liability over the Combined State Income Tax
Liability (reduced by any such liability allocable to the Level 3 Group) shall
be paid by the KMC Group to the PKS Group.






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         (b)    Except as otherwise provided herein, for each taxable period
ending on or before (or each taxable period including) the Distribution Date,
KMC and the members of the KMC Group shall be solely responsible for any State
Income Taxes that are allocable under Section 3.3(a) to KMC or any of the
members of the KMC Group.  KMC and the members of the KMC Group shall indemnify
PKS and the PKS Affiliates for and hold them harmless from any such Taxes.
Except as otherwise provided herein, for each taxable period ending on or
before (or each taxable period including) the Distribution Date, PKS and the
members of the PKS Group shall be solely responsible for any State Income Taxes
that are allocable under Section 3.3(a) to PKS or any of the members of the PKS
Group.  Except as otherwise provided herein, PKS and the members of the PKS
Group shall indemnify KMC and all members of the KMC Group for and hold them
harmless from any such Taxes.


         (c)     Except as otherwise provided herein, for each taxable period
ending on or before (or each taxable period including) the Distribution Date,
KMC and the members of the KMC Group shall be solely responsible for the
payment of all State Income Taxes imposed upon or attributable to KMC or any of
its Affiliates (other than State Income Taxes owing to Combined Jurisdictions).
KMC and the members of the KMC Group shall indemnify PKS and all PKS Affiliates
for any such Taxes.

         (d)     Except as otherwise provided herein, for each taxable period
(or portion thereof) ending on or before (or each taxable period including) the
Distribution Date, PKS shall be solely responsible for the payment of all State
Income Taxes imposed upon or attributable to PKS or any of its Affiliates
(other than State Income Taxes owing to Combined Jurisdictions).  PKS and the
members of the PKS Group shall indemnify all members of the KMC Group for any
such Taxes.


         (e)     If a deficiency or refund in a Combined State Income Tax
Liability is subsequently proposed or determined, for purposes of this Section
3.3, it shall be assumed for tax years prior to Taxable Year 1999 that (A) any
allocation of the Combined State Income Tax Liability made prior to the date of
this Agreement between the Parties was consistent with this Section 3.3 and (B)
any obligations between the Parties in respect of such allocation have been
fully satisfied.  Any increase or decrease in Combined State Income Tax
Liability, to the extent that it reflects a percentage settlement of multiple
proposed deficiencies or overpayments, shall be allocated between the groups in
proportion to the manner in which the settled deficiencies or overpayments would
have been allocated if settled for the full amount of such deficiencies or
overpayments.



         (f)     Notwithstanding anything contained in this Article III to the
contrary, in the event that a state Final Determination results in a Combined
Group where a Combined State Income Tax Return was not filed as the original Tax
Return, and if such combination of entities results in a greater State Income
Tax liability than if such entities had not been combined, then neither the PKS
Group nor the KMC Group shall be allocated any lesser amount of the Combined
State Income Tax Liability resulting from such state Final Determination than
such group's "Non-Combined Liability". Each group's "Non-Combined Liability"
shall equal the aggregate amount of State Income Tax that all members of such
group





                                       12
<PAGE>   13
would have paid to such state for such year had such members not been combined
but taking into account all other adjustments to Tax Items reflected in the
state Final Determination as if included in the original Tax Returns filed in
such state for such year.


         (g)     If a Tax Return or Final Determination consists of a member of
the Level 3 Group and a member of the KMC Group (not including members of the
PKS Group), all Taxes allocated to the "Kiewit Group" as defined in the PKS/
Level 3 Tax Sharing Agreement shall be allocated to the KMC Group pursuant to
this Agreement.


         Section 3.4.  Transfer Taxes and Other Taxes.

         (a)     Except as provided in Section 3.4(b), for each taxable period
ending on or before (or each taxable period including) the Distribution Date,
PKS and its Affiliates shall be solely responsible for the payment of (and
shall indemnify and hold KMC and its Affiliates harmless from) all Transfer
Taxes or Other Taxes imposed on PKS or any PKS Affiliate. For each taxable
period ending on or before (or each taxable period including) the Distribution
Date, KMC and its Affiliates shall be solely responsible for the payment of
(and shall indemnify and hold PKS and its Affiliates harmless from) all
Transfer Taxes or Other Taxes imposed on or incurred by KMC or any KMC
Affiliate.

         (b)     In the event that a Transfer Tax or Other Tax arises from a
transaction between PKS or any PKS Affiliate on the one hand, and KMC or any
KMC Affiliate, on the other hand, the recipient of property or service in such
transaction shall be liable for payment of (and shall indemnify and hold the
other Party and its Affiliates harmless from) all such Transfer Taxes or Other
Taxes.


         Section 3.5. Split-Off Taxes.  Notwithstanding anything contained in
this Agreement to the contrary (except as provided in Sections 4.2, 4.3, 4.4,
7.14 and 7.17), 100% of any Split-Off Taxes shall be allocated to KMC, and KMC
shall be solely responsible for, and shall indemnify and hold PKS and its
affiliates harmless from, such Split-Off Taxes.



         Section 3.6.  Payment to PKS or KMC for Taxes With Respect to
Taxable Year 1999 and Taxable Year 2000.



         (a)     Federal Income Taxes.  For the Taxable Year 1999 and Taxable
Year 2000, within 5 business days of notification by PKS or as otherwise
provided in this Section 3.6, KMC shall pay to PKS an amount equal to (i) the
allocable federal Income Tax liability of the members of the KMC Group for the
applicable year determined under this Article III, less (ii) estimated Tax
deposits or other amounts paid by the KMC Group to PKS or the PKS Group in
respect of such Tax liability for the applicable year.


         (b)     State Income Taxes.  For the Taxable Year 1999 and Taxable
Year 2000, within 10 business days of notification by PKS, KMC shall pay to PKS
an amount equal to (i) the allocable State Income Tax liability of KMC Group
for the applicable year determined under this Article III for each state, less
(ii) estimated Tax deposits or other amounts paid by the KMC Group to PKS in
respect of such Tax liability for each state for the applicable year.





                                       13
<PAGE>   14

         (c)     Estimated Federal Income Tax Payments for the Consolidated
Group.  For the Taxable Year 1999 and Taxable Year 2000, PKS shall determine and
notify KMC on or before September 30, 2000 of the amount of the estimated
federal income Tax due that is allocable to the KMC Group under this Article
III, and KMC shall, on or before September 30, 2000, pay to PKS the amount so
determined for the Taxable Year 1999 and the first, second and third quarter of
Taxable Year 2000.  On or before November 15, 2000, PKS shall redetermine the
KMC Group's allocable share of the estimated Consolidated Group's federal Income
Tax liability for the Taxable Year 2000 as provided herein and, if such share is
greater or less than the amount of payments previously paid by KMC to PKS
pursuant to this Section 3.6(c), then KMC or PKS, as the case may be, shall pay
such difference to the other within 5 business days of notification by PKS.
Prior to the Due Date for the Consolidated Group's federal Income Tax Return for
the Taxable Year 2000, PKS shall redetermine the KMC Group's allocable share of
the Consolidated Group's federal Income Tax liability for the Taxable Year 2000
under this Article III and, if such share is greater or less than the amount of
payments previously paid by KMC to PKS pursuant to this Section 3.6(c), as
previously adjusted pursuant to this Section 3.6(c), then KMC or PKS, as the
case may be, shall pay to the other the difference as soon as reasonably
practicable after PKS makes such determination and in no event later than such
Due Date.


         (d)     Estimated Federal Income Tax Payments for Quality Ready Mix,
Inc.  For the Taxable Year 2000, KMC shall cause Quality Ready Mix, Inc. to pay
its estimated federal Tax installment payments.


         (e)     Estimated State Income Tax Payments for Combined Returns.  On
or prior to the Split-Off, PKS shall determine the amount of, and KMC shall pay
to PKS, the estimated Combined State Income Tax Liability that is allocable to
the KMC Group as computed pursuant to Article III for the Taxable Year 1999 and
the Taxable Year 2000. Upon the filing of the Combined Returns for the Taxable
Year 1999 and the Taxable Year 2000, PKS shall redetermine the KMC Group's
allocable share of the Combined State Income Tax Liability for such years and,
if such share is greater or less than the amount of the payments previously paid
by KMC to PKS pursuant to this Section 3.6(e), then KMC or PKS, as the case may
be, shall pay to the other the difference within 5 business days of notification
by PKS to KMC of such difference.


         Section 3.7.  Liability for Taxes and Refunds of Taxes for Periods
Beginning After the Distribution Date.  Unless otherwise provided in this
Agreement, PKS or the appropriate PKS Affiliate shall pay to the appropriate
Taxing Authority and be responsible for all Taxes and shall be entitled to
receive and retain all refunds of Taxes with respect to taxable periods
beginning after the Distribution Date that are imposed upon or are attributable
to PKS or the PKS Affiliate.  Unless otherwise provided in this Agreement, KMC
or the appropriate KMC Affiliate shall pay to the appropriate Taxing Authority
and be responsible for all Taxes and shall be entitled to receive and retain
all refunds of Taxes with respect to taxable periods beginning after the
Distribution Date that are imposed upon or are attributable to KMC or the KMC
Affiliate.

         Section 3.8.  Tax Attributes.





                                       14
<PAGE>   15
         (a)     Tax Attributes determined on a consolidated federal Income Tax
basis for taxable periods ending on or before (or taxable periods including) the
Distribution Date shall be allocated by PKS to PKS (and its Affiliates), on the
one hand, and KMC (and its Affiliates), on the other hand, in any reasonable
manner in accordance with the Code and the Treasury Regulations promulgated
thereunder.  PKS and KMC hereby agree to compute their federal Income Tax
liabilities for taxable periods beginning after the Distribution Date consistent
with that computation and allocation. The capital loss carryforward from the
Consolidated Group 1998 federal Income Tax Return as filed, is attributable
entirely to members of the PKS Group and will be allocated entirely to the PKS
Group.

         (b)     Tax Attributes determined on a Combined Return basis for
taxable periods ending on or before (or taxable periods including) the
Distribution Date shall be allocated by PKS to PKS (and its Affiliates), on the
one hand, and KMC (and its Affiliates), on the other hand, in any reasonable
manner in accordance with applicable state or foreign law or regulation. PKS and
KMC hereby agree to compute their Tax liabilities for taxable periods beginning
after the Distribution Date consistent with that determination and allocation.


         Section 3.9.  Refunds.  With respect to any taxable period that ends on
or before (or any taxable period that includes) the Distribution Date, PKS and
the PKS Affiliates shall be entitled to retain or be paid all refunds of Tax
received whether in the form of payment, offset against other liabilities or
otherwise, from any Tax Authority to the extent the refund is attributable to
PKS or its Affiliates. With respect to any taxable period that ends on or
before (or any taxable period that includes) the Distribution Date, KMC and the
KMC Affiliates shall be entitled to retain or be paid all refunds of Tax
received whether in the form of payment, offset against other liabilities or
otherwise, from any Tax Authority to the extent the refund is attributable to
KMC or its Affiliates.  Notwithstanding anything contained in this Section 3.9,
in the case of refunds of Tax (in whatever form) in connection with a
Consolidated Group or from Combined Returns, such refunds of Tax shall be
allocated pursuant to Sections 3.2 and 3.3, as appropriate.


         Section 3.10.  PKS Carrybacks.  Notwithstanding anything contained in
Section 3.9 to the contrary, PKS shall be entitled to any refund for any Tax or
any benefit arising from a Tax Attribute obtained by the Consolidated Group (or
any member of a Combined Group in a Combined Jurisdiction) as a result of the
carryback of losses or credits of any member of the PKS Group from any taxable
period beginning after the Distribution Date to any taxable period ending on or
before (or any taxable period including) the Distribution Date.  Any such
refund received by KMC or any KMC Affiliate (by refund, offset against other
Taxes or otherwise), net of any Tax cost incurred by KMC or an KMC Affiliate
resulting from such refund, shall be paid by KMC to PKS within 10 business days
after such receipt from a Taxing Authority.  The application of any such
carrybacks by PKS and/or any PKS Affiliate shall be in accordance with the Code
and the consolidated return Treasury Regulations promulgated thereunder or
applicable state or Other Tax laws.





                                       15
<PAGE>   16

         Section 3.11.  KMC Carrybacks. Notwithstanding anything contained in
Section 3.9 to the contrary, provided PKS consents in writing (which consent
shall be in PKS' sole and absolute discretion) to the carryback, KMC shall be
entitled to any refund for any Tax or any benefit arising from a Tax Attribute
obtained by the Consolidated Group (or any member of a Combined Group in a
Combined Jurisdiction) as a result of the carryback of losses or credits of any
member of the KMC Group from any taxable period beginning after the Distribution
Date to any taxable period ending on or before (or any taxable period including)
the Distribution Date.  The application of any such carrybacks by KMC and/or any
KMC Affiliate shall be in accordance with the Code and the consolidated return
Treasury Regulations promulgated thereunder or applicable state or Other Tax
laws.  KMC shall indemnify PKS for any interest, fines and penalties resulting
from the carryback of any item under this section.


                                   ARTICLE IV
          RESTRICTIONS ON POST-SPLIT-OFF TRANSACTIONS, REPRESENTATIONS
                       AND INDEMNIFICATION OBLIGATIONS

         Section 4.1.  Restrictions on Each Party's Ability to Undertake
Certain Post-Split-Off Transactions, Representations.


         (a)     KMC agrees that it will not (and it will not permit any KMC
Affiliate to) enter into or engage in any transaction or arrangement that would
(i) result in a failure to comply with any representation set forth in Exhibit
A, or (ii) make any such representation or statement inaccurate or misleading.
All of the representations set forth in Exhibit A are complete and accurate as
of the date hereof. All facts pertaining to KMC and all facts pertaining to its
Affiliates as set forth in the Ruling Request are complete and accurate. KMC
agrees that, following the Split-Off, it will not (and it will not permit any
KMC Affiliate to) enter into or engage in any transaction or arrangement that
would cause all or part of the Restructuring or Split-Off to become taxable, in
whole or in part, for federal or State Income Tax purposes.  As of the
Distribution Date, the management of KMC does not have any plan or intention
(and is not aware of any person having a plan or intention) to enter into any
transaction after the Distribution Date that may result in PKS or any PKS
Affiliate recognizing gain as a result of Section 355(e) of the Code.  KMC shall
not enter into or engage in (or permit) any transaction or series of
transactions where such transaction or transactions may result in PKS or any PKS
Affiliate recognizing gain as a result of Section 355(e) of the Code.



         (b)     PKS agrees that it will not (and it will not permit any PKS
Affiliate to) enter into or engage in any transaction or arrangement that would
(i) result in a failure to comply with any representation set forth in Exhibit
B, or (ii) make any such representation or statement inaccurate or misleading.
PKS agrees that, following the Split-Off, it will not (and it will not permit
any PKS Affiliate to) enter into or engage in any transaction or arrangement
that would cause all or part of the Restructuring or Split-Off to become
taxable, in whole or in part, for federal or State Income Tax purposes. All of
the representations set forth in Exhibit B are complete and accurate as of the
date hereof.






                                       16
<PAGE>   17

PKS shall return to KMC any amounts paid to PKS for Taxes and related costs and
expenses under this Section 4.2 in connection with a judicial decision (that is
not a Final Determination) to the extent such amounts, pursuant to a subsequent
Final Determination, are returned by a Taxing Authority to PKS.





         (c)     Notwithstanding Section 4.1(a) and (b), a Party may enter into
or engage in any transaction or arrangement referred to in this Section 4.1 if
(i) the other Party expressly consents in writing in advance to such action or
(ii) the Party entering into or engaging in such transaction or arrangement, at
its own expense, obtains a supplemental private letter ruling from the IRS or an
opinion from a nationally recognized independent tax advisor, which ruling or
opinion and tax advisor are reasonably satisfactory to the other Party, stating
that (x) in the case of the Split-Off, such transaction or arrangement will not
have any adverse impact on the qualification or tax consequences of the
Split-Off under Sections 355 and 368 (and other applicable sections) of the Code
(and will not have any adverse impact on the tax consequences of the Split-Off
under other applicable Sections of the Code and corresponding State tax
provisions and will not result in the Split-Off being taxable in whole or in
part as a result of Section 355(e) of the Code, or otherwise), and (y) in the
case of the Restructuring, such transaction or arrangement will not cause part
or all of the Restructuring to be taxable for federal or State Income Tax
purposes.



         Section 4.2. KMC's Tax Indemnification of PKS.  Notwithstanding any
other provision of this Agreement to the contrary (other than Sections 4.4, 7.14
and 7.17), if KMC or any KMC Affiliate (i) takes any action that is prohibited
under Section 4.1, (ii) breaches of any representations or statements contained
or referenced in Section 4.1 or (iii) if any of the representations or
statements set forth in Section 4.1 are determined to be incomplete, inaccurate
or misleading, KMC shall pay all Taxes imposed on PKS or any PKS Affiliate (and
related costs and expenses) caused by such action or inaccurate or misleading
representation and shall indemnify and hold harmless PKS and any PKS Affiliate
from and against all such Taxes (and related costs and expenses), including but
not limited to any such Taxes paid at any time by PKS or any PKS Affiliate.  KMC
shall make such payment and indemnification no later than 10 business days after
written notice from PKS that a payment will be due pursuant to a Final
Determination (or any earlier judicial decision that is not a Final
Determination) with respect to such Taxes, which notice shall be accompanied by
a computation of the amounts due.  If, as a result of any such action or
incomplete, inaccurate or misleading representation or statement, PKS or any PKS
Affiliate becomes legally obligated to make a payment (a "PKS Shareholder Tax
Indemnity Payment") to shareholders who participated in the Split-Off and such
PKS Shareholder Tax Indemnity Payment is required to be made as a result of the
Split-Off constituting in whole or in part a taxable transaction, then KMC shall
be required to indemnify PKS and hold PKS harmless for any PKS Shareholder Tax
Indemnity Payment.  KMC shall make such payment no later than 10 business days
after written notice from PKS of a Final Determination with respect to any PKS
Shareholder Tax Indemnity Payment, which notice shall be accompanied by a
computation of the amounts due.



         Section 4.3. PKS's Tax Indemnification of KMC.  Notwithstanding any
other provision of this Agreement to the contrary (other than Sections 4.4, 7.14
and 7.17), if PKS or any member of the PKS Group takes any action that is
prohibited under Section 4.1 or breaches any of the representations or
statements contained or referred to in Section 4.1, PKS shall pay any Taxes
imposed on any member of the KMC Group caused by such action and shall indemnify
and hold harmless each member of the KMC Group from and against all such Taxes
(and related costs and expenses), including but not limited to any such Taxes
(and related costs and expenses) paid at any time by any member of the KMC
Group. PKS shall make such payment and indemnification no later than 10 business
days after written notice from KMC of a Final Determination with respect to such
Taxes, which notice shall be accompanied by a computation of the amounts due.






                                       17
<PAGE>   18

         Section 4.4.  Inaccurate Representations. If it is determined that (i)
there are one or more representations or statements in Exhibit A (or one or more
facts in the Ruling Request pertaining to KMC or its Affiliates) that are
inaccurate or incomplete and such inaccurate or incomplete facts,
representations or statements caused the Split-Off to fail to qualify under
Sections 355 or 368 of the Code (or caused the Split-Off or Restructuring to be
taxable in whole or in part) and, (ii) there are one or more representations in
Exhibit B (or one or more facts in the Ruling Request pertaining to PKS or its
Affiliates) that are inaccurate or incomplete and such inaccurate or incomplete
facts, representations or statements caused the Split-Off to fail to qualify
under Sections 355 or 368 of the Code (or caused the Split-Off or Restructuring
to be taxable in whole or in part), then each Party shall bear and be
responsible for (and indemnify the other Party for) its share of Taxes, costs
and liabilities or other payments caused by such inaccurate or incomplete facts,
representations or statements. For purposes of this Section 4.4, a Party's share
of such Taxes, costs and liabilities or other payments shall be determined under
Article 6 and shall be based on such Party's relative fault in connection with
the inaccurate or incomplete facts, representations or statements.




         Section 4.5.  Guarantee.  KMC shall guarantee all obligations of any
KMC Affiliate as provided hereunder, including any payment to PKS or its
Affiliates required to be made under this Agreement as a result of the breach
by any KMC Affiliate of any obligation under this Agreement (or otherwise).
PKS shall guarantee all obligations of its Affiliates as provided hereunder,
including any payment to KMC or its Affiliates (other than the KMC Nonfiling
Entities) required to be made under this Agreement as a result of the breach by
any PKS Affiliate of any obligation under this Agreement (or otherwise).


                                   ARTICLE V
                    COOPERATION AND EXCHANGE OF INFORMATION

         Section 5.1.  Cooperation.


         (a)     PKS and KMC shall cooperate (and shall cause each of their
Affiliates to cooperate) fully at such time and to the extent reasonably
requested by the other Party in connection with the preparation and filing of
any Tax Return or the conduct of any audit, dispute, proceeding, suit or other
Tax action concerning any issues or any other matter contemplated hereunder.
Such cooperation shall include, without limitation, the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax Return by PKS, the PKS Affiliates, KMC, or the KMC
Affiliates, or in connection with any audit, proceeding, suit or action
addressed in the preceding sentence. In addition, each Party shall make its
employees and facilities available on a mutually convenient basis to facilitate
such cooperation.


         (b)     Each Party shall provide prompt notice to the other Party of
any pending or threatened Tax controversy, including, without limitation, any
audit, any protest to any Taxing Authority or any litigation in Tax Court or any
other court of competent jurisdiction (a "Tax Controversy"), that (i) relates to
a Tax or Tax Attribute of the other Party or (ii) could give rise to the
liability of the other Party to make a payment pursuant to this Agreement (both
clauses (i) and (ii) of this Section 5.1(b) constituting a "Liability Issue" of
the other Party).  PKS and KMC shall promptly furnish each other copies of any
inquiries or requests for information or other correspondence from any Taxing
Authority or any other administrative, judicial, or other governmental authority
concerning any such Liability Issue.  Without limiting the generality of the
foregoing, PKS and KMC, as the case may be, shall each promptly furnish to the
other upon receipt of a copy of any RAR or similar report, notice of proposed
adjustment, or notice of deficiency received by PKS or any PKS Affiliate or by
KMC or any KMC Affiliate, as the case may be, and, if requested, all other
documents relating to any Liability Issue of the other Party. Notwithstanding
anything to the contrary contained in this Article V, PKS shall not be required
to provide to KMC or any KMC Affiliate copies of information document requests
received from any Taxing Authority during PKS's handling of any Tax Controversy
under Section 5.2(a).

         (c)     Each Party agrees to maintain all Tax Returns and related
workpapers, supporting schedules and other documentation that it prepares
concerning





                                       18
<PAGE>   19
the other Party until the expiration of the applicable statute of limitations
(giving effect to any extension, waiver, or mitigation thereof). Following the
Split-Off, KMC agrees to maintain any documents, workpapers, supporting
schedules or other information supporting all tax positions taken on the Tax
Returns of the Consolidated Group or any Combined Return. Upon request by PKS,
KMC agrees to provide such documents or information to PKS. Neither Party shall
be liable to the other for failing to maintain the documents described in this
Section 5.1(c), to the extent such Party exercises the same care in maintaining
its own documents.

         Section 5.2.  Contest Provisions.  In addition to the provisions of
Section 5.1:


         (a)     PKS shall control the handling of and may settle any Tax
Controversy (i) involving a Tax Return of the Consolidated Group or a Combined
Return or (ii) potentially affecting PKS or any of its Affiliates; provided,
however, KMC shall pay upon request, reasonable fees to PKS for handling KMC
Liability Issues.  At its election, KMC may at its sole cost participate in any
such proceedings to the extent the proceedings relate to a KMC Liability Issue.
The participation rights described in the previous sentence shall include
participation in all conferences, meetings or proceedings with any Taxing
Authority, the subject matter of which includes the KMC Liability Issue and
participation in the preparation of documentation, protests, memoranda of fact
and law and briefs with respect to the KMC Liability Issue.


         (b)     KMC shall control (and may settle) any Tax Controversy
pertaining solely to KMC but only if such controversy does not involve or
relate to a Consolidated Group or Combined Return. Except to the extent KMC's
consent is required to settle a KMC Liability issue as provided in Section
5.1(a), PKS shall control (and may settle) any Tax Controversy pertaining to
PKS or its Affiliates.

         (c)     In the event that any Taxing Authority proposes that members
of one Party's group be included in a unitary, combined or consolidated return
with members of the other Party's group with respect to a Tax Return that was
not filed as a Combined Return, such Tax Return shall be treated as a Combined
Return subject to the provisions of Section 5.2(a) for purposes of determining
control of such Tax Controversy.

         (d)     In the event of any Tax Controversy described in Section
5.2(a), PKS (or its Affiliates) in its sole and absolute discretion shall have
the right to extend the applicable statue of limitations.

         Section 5.3.  Earnings and Profits.  PKS shall determine the amount of
PKS's earnings and profits that are properly allocated to the PKS Group and the
KMC Group at the time of the Split-Off under Treasury Regulation Section
1.312-10.

                                   ARTICLE VI
                               DISPUTE RESOLUTION

         Section 6.1.  Good Faith Negotiation.  In the event of any dispute or
disagreement relating to this Agreement, including, without limitation, any
dispute or disagreement with respect to the calculation or allocation of
liability for Taxes or Tax Attributes hereunder, the manner of preparing any
Tax Return or the meaning of any provision in this Agreement, senior management
of the Parties shall negotiate in good faith and attempt to resolve the dispute
or disagreement.





                                       19
<PAGE>   20
         Section 6.2.  Arbitration.  In the event that senior management is
unable to resolve any dispute or disagreement pursuant to Section 6.1, and such
matter is not a matter that, under the terms of this Agreement, is to be
determined in the sole and absolute discretion of a particular Party, the
Parties shall submit the matter to an arbitration panel.  The arbitration panel
shall be composed of three members: PKS and KMC shall each appoint one member
(who shall not be an employee, officer or director, professional consultant
(including, without limitation, outside attorney or accountant) or otherwise
related to the appointing party) within 15 days after the matter has been
submitted to arbitration.  If either Party fails to appoint its arbitrator
within such 15 day period, the other Party may apply to the American
Arbitration Association (the "AAA") to appoint an arbitrator on behalf of the
Party that has failed to appoint its arbitrator.  The two arbitrators appointed
by or on behalf of the Parties shall jointly appoint a third arbitrator who
shall chair the arbitration panel.  If the two arbitrators cannot agree on a
third arbitrator, the third arbitrator shall be appointed by the AAA.  The
arbitration proceedings shall take place in Chicago, Illinois, and shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA.  The
decision of the arbitration panel with respect to such dispute or disagreement
shall be final and binding on the Parties hereunder.  All expenses of such
arbitration proceedings shall be allocated between PKS and KMC in proportion to
each Party's liability with respect to the issue submitted to arbitration.

         Section 6.3.  Timing of Payments.  All amounts determined pursuant to
Sections 6.1 or 6.2 to be payable by one Party to the other shall be due and
payable on or before the date that is 10 business days after the determination
that such amount is payable.

                                  ARTICLE VII
                                 MISCELLANEOUS

         Section 7.1.  Timing of Certain Payments.  Upon payment of any Taxes
with respect to which a Party is entitled to receive indemnification hereunder,
such receiving Party (the "Indemnified Party") shall send the other Party (the
"Indemnifying Party") a notice accompanied by evidence of payment and a
statement detailing the Taxes paid and describing in reasonable detail the
particular facts relating thereto.  Unless a different deadline is expressly
provided herein, the Indemnifying Party (or one or more of its Affiliates) shall
remit payment for Taxes for which the Indemnifying Party is liable hereunder to
the Indemnified Party (or one or more of its Affiliates) no later than 30
business days after such notice is sent to the Indemnifying Party.  Unless
otherwise provided herein, all other payments between the Parties shall be due
and payable on or before the date that is 30 business days after notice
requesting such payment is sent to the other Party.

         Section 7.2.  Net of Tax Benefits and Detriments.  If any Indemnified
Party realizes a Tax Benefit or a Tax Detriment by reason of having incurred
any Tax for which such Indemnified Party is entitled to receive indemnification
hereunder (including a Tax Detriment realized by reason of having received an
indemnity payment hereunder





                                       20
<PAGE>   21

with respect to such Tax), then such Indemnified Party shall pay to the
Indemnifying Party an amount equal to the Tax Benefit, or such Indemnifying
Party shall pay to such Indemnified Party an additional amount equal to the Tax
Detriment (taking into account any Tax Detriment resulting from the receipt of
such additional amounts), as the case may be.  In the event that, subsequent to
such payment, any portion of such Tax Benefit is disallowed or any portion of
such Tax Detriment is refunded, the amount paid by one Party to the other with
respect to that portion of the Tax Benefit or Tax Detriment shall be repaid to
the other Party. The principles of this Section 7.2 apply equally to
non-indemnity payments made between the Parties.


         Section 7.3.  Characterization of Payments.  The Parties agree to
treat, and to cause their respective Affiliates to treat, (i) any payment (by
one Party or its Affiliates to the other Party or its Affiliates) required by
this Agreement as either a contribution by PKS to KMC or a distribution by KMC
to PKS, as the case may be, occurring immediately prior to the Split-Off and
(ii) any payment of interest or Taxes (other than federal Income Taxes) by or
to a Taxing Authority as taxable or deductible, as the case may be, to the
Party entitled under this Agreement to retain such payment or required under
this Agreement to make such payment, in either case, except as otherwise
mandated by applicable law; provided, however, that in the event it is
determined as a result of a Final Determination that any such treatment is not
permissible, the payment between the Parties (including any indemnification
payment described in Section 7.2) shall be adjusted to place the Indemnified
Party in the same after-Tax position it would have been in prior to such Final
Determination.

         Section 7.4.  Interest on Overdue Payments.  Any payment that is
required to be made pursuant to this Agreement (i) by KMC (or a KMC Affiliate)
to PKS (or a PKS Affiliate) or (ii) by PKS (or a PKS Affiliate) to KMC (or a
KMC Affiliate), that is not made on or prior to the date that such payment is
required to be made pursuant to this Agreement shall thereafter bear interest
at the rate established for underpayments pursuant to Section 6621(a)(2) of the
Code, compounded daily.

         Section 7.5.  Payments by Wire Transfer.  Any payment that is required
to be made pursuant to this Agreement (i) by KMC (or a KMC Affiliate) to PKS
(or a PKS Affiliate) or (ii) by PKS (or a PKS Affiliate) to KMC (or a KMC
Affiliate), shall be made by wire transfer of immediately available funds,
provided, however, that if the amount of any payment is less than $10,000, such
payment may be made in a form other than a wire transfer.


         Section 7.6.  Notices.  Any notice, demand, claim or other
communication pursuant to this Agreement shall be in writing and shall be deemed
given upon delivery if delivered personally, upon the fifth day following the
date of mailing if sent by certified mail (return receipt requested and postage
prepaid) or upon completion of transmission if sent by telecopy or facsimile, to
the Parties at the following address:


PKS at:                   Peter Kiewit Sons', Inc.
                          1000 Kiewit Plaza





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<PAGE>   22
                          Omaha, Nebraska  68131
                          Attn: Tax Department
                          Fax:  (402) 271-2983

KMC at:                   Kiewit Materials Company
                          3355 Farnam Street
                          Omaha, Nebraska  68131
                          Attn: Tax Department
                          Fax:  (402) 536-3607

         Section 7.7.  Complete Agreement.  This Agreement is subject to the
provisions of the PKS/Level 3 Tax Sharing Agreement and, except for such
agreement, constitutes the entire agreement of the Parties concerning the
subject matter hereof, and supersedes all other agreements, whether or not
written, in respect of any Tax between or among PKS and its Affiliates, on the
one hand, and KMC and its Affiliates, on the other hand.

         Section 7.8.  Governing Law.  This Agreement shall be governed by and
construed in accordance with, the laws of the State of Delaware.

         Section 7.9.  Successors and Assigns.  A Party's rights and
obligations under this Agreement may not be assigned without the prior written
consent of the other Party.  All of the provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.

         Section 7.10.  No Third-Party Beneficiaries.  This Agreement is solely
for the benefit of the Parties to this Agreement and their respective
Affiliates (other than the KMC Nonfiling Entities) and should not be deemed to
confer upon third Parties any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without this Agreement.

         Section 7.11.  Legal Enforceability.  Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions.  Any
prohibition or unenforceability of any provision of this Agreement in any
jurisdiction shall not invalidate or render unenforceable the provision in any
other jurisdiction.

         Section 7.12.  Expenses.  Unless otherwise expressly provided in this
Agreement, each Party shall bear any and all expenses that arise from their
respective obligations under this Agreement.

         Section 7.13.  Confidentiality.  Each Party and its Affiliates shall
hold and cause its consultants and advisors to hold in strict confidence,
unless compelled to





                                       22
<PAGE>   23
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information (other than any such
information relating solely to the business or affairs of such Party)
concerning the other Party or its Affiliates hereto furnished it by such other
Party or its representatives pursuant to this Agreement (except to the extent
that such information can be shown to have been (a) previously known by the
Party to which it was furnished, (b) in the public domain through no fault of
such Party, or (c) later lawfully acquired from other sources by the Party to
which it was furnished), and each Party shall not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of
the provisions of this Section 7.13.  Each Party shall be deemed to have
satisfied its obligation to hold confidential information concerning or
supplied by the other Party if its exercises the same care as it takes to
preserve confidentiality for its own similar information.

         Section 7.14.    No Double Recovery.  Notwithstanding anything
contained herein to the contrary, no Party shall be entitled to indemnification
hereunder for any amount to the extent such Party has otherwise been reimbursed
hereunder (or otherwise) for such amount.

         Section 7.15.  Application to Subsidiaries.  The Agreement is entered
into by PKS and KMC on behalf of themselves and each member of the PKS Group
and the KMC Group, respectively.  This Agreement constitutes a direct
obligation of each such member.

         Section 7.16.  Descriptive Titles and Headings.  Descriptive titles
and section headings used in this Agreement are for convenience and reference
only and shall not affect the construction of the Agreement.


         Section 7.17.  Indemnification for Tax Relating to Assets or Divisions.
Notwithstanding anything contained in this Agreement to the contrary, KMC shall
be liable for (and shall indemnify Pks for) any Taxes imposed on PKS or its
Affiliate to the extent such Taxes are attributable to any assets that were
transferred to KMC or its Affiliates (including any Taxes caused by recognition
of deferred intercompany gains or excess loss accounts in connection with the
Split-Off or otherwise). PKS shall indemnify KMC for any Taxes imposed on United
Metro Materials Inc. attributable to any deferred intercompany gain created in
1994 solely with respect to assets of United Metro Materials that were
transferred in such year to the PKS Group and remained with the PKS Group as of
the Distribution Date (i.e., the assets were not transferred back to KMC or its
Affiliates).






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<PAGE>   24
         This Agreement may be signed in two counterparts, each of which
shall be an original, with the same effect as if the signature thereto and
hereto were upon the same instrument.

         IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.

Peter Kiewit Sons', Inc.

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



Kiewit Materials Company

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





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