Document:

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                                                                    Exhibit 10.1

                              TAX SHARING AGREEMENT

                  This Tax Sharing Agreement (the "Agreement"), dated as of this
12th 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.

                  "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.

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                  "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 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.

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                  "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.

                  "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.

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                  "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 or related
liabilities (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, 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.

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                  "Statement of Facts" means the Statement of Facts and
Representations for Opinion dated March 1, 1999 made in connection with
receiving the Tax Opinion.

                  "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.

                  "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 Opinion" means the legal opinion received in connection
with the Restructuring relating to certain tax aspects of the Restructuring.

                  "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.

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                  "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.

                  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).

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                  (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 2000.

                  (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 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

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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.

                  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.

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                                   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.

                  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 subsequently determined 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 its own stand-alone
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 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 shall indemnify KMC and all
members of the KMC Group for and hold them harmless from any such Taxes.

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                  (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 subsequently determined 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 and 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 and 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), 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 and 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) shall be paid by the KMC Group to the PKS
Group.

                   (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

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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 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 or
involves 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.

                                       11
<PAGE>   12
                  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 4.3,
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 the 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 each
applicable year determined under this Article III, less (ii) estimated Tax
deposits paid by the KMC Group to PKS or the PKS Group in respect of such Tax
liability for each applicable year.

                  (b) State Income Taxes. For the Taxable Year 1999 and Taxable
Year 2000, in accordance with Section 3.6 (e), KMC shall pay to PKS an amount
equal to (i) the allocable Combined State Income Tax liability of the KMC Group
for each applicable year determined under this Article III for each state, less
(ii) estimated Tax deposits paid by the KMC Group to PKS in respect of such Tax
liability for each state for each applicable year.

                  (c) Estimated Federal Income Tax Payments for the Consolidated
Group. For the Taxable Year 1999 and the Taxable Year 2000, PKS shall determine
and notify KMC on or before September 30, 2000 of the amount of the estimated
Consolidated Group 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),

                                       12
<PAGE>   13
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.

                  (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

                                       13
<PAGE>   14
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
Section 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.

                  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.

                                       14
<PAGE>   15
                                   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 or statement set
forth in Exhibit A, or (ii) make any such representation or statement inaccurate
or misleading. All of the representations and statements set forth in Exhibit A
are complete and accurate as of the date hereof and will be complete and
accurate as of the Distribution Date. All of the representations and statements
pertaining to KMC and its Affiliates set forth in the Statement of Facts were
complete and accurate as of March 1, 1999. All facts pertaining to KMC and all
facts pertaining to its Affiliates as set forth in the Ruling Request are
complete and accurate as of the date hereof and will be complete and accurate as
of the Distribution Date. All facts pertaining to KMC and all facts pertaining
to its Affiliates as set forth in the Statement of Facts were complete and
accurate as of March 1, 1999. 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 or statement 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 and statements set forth in Exhibit B are complete
and accurate as of the date hereof and will be complete and accurate as of the
Distribution Date. All representations and statements pertaining to PKS and its
Affiliates set forth in the Statement of Facts were complete and accurate as of
March 1, 1999. All facts pertaining to PKS and all facts pertaining to its
Affiliates set forth in the Ruling Request are complete and accurate as of the
date hereof and will be complete and accurate as of the Distribution Date. All
facts pertaining to PKS and all facts pertaining to its Affiliates as set forth
in the Statement of Facts were complete and accurate as of March 1, 1999.

                  (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 of such
transaction or arrangement, 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,

                                       15
<PAGE>   16
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 of the Code and
corresponding state tax provisions (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 any step of the Restructuring to be taxable in whole
or in part 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), (i) if KMC or any KMC Affiliate takes any action that is
prohibited under Section 4.1(a) or breaches of any representations, statements
or facts contained or referenced in Section 4.1(a) or (ii) if any of the
representations, statements or facts contained or referenced in Section 4.1(a)
are determined to be incomplete, inaccurate or misleading as of the applicable
date, KMC shall pay all Taxes imposed on PKS or any PKS Affiliate (and related
costs and expenses) caused by such action or incomplete, inaccurate or
misleading representation, statement or fact 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, statement or fact, 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. 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.

                  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), (i) if PKS or any member of the PKS Group takes any action that
is prohibited under Section 4.1(b), breaches any of the representations,
statements or facts contained or referenced in Section 4.1(b), or (ii) if any of
the representations, statements or facts contained or referenced in Section
4.1(b) are determined to be incomplete, inaccurate or misleading, 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

                                       16
<PAGE>   17
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.

                  Section 4.4. Inaccurate Representations, Statements, Facts. 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 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 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. If
it is determined that (i) there are one or more representations, statements or
facts contained in the Statement of Facts pertaining to KMC or its Affiliates
that are inaccurate or incomplete and such inaccurate or incomplete facts,
representations or statements caused the Restructuring to be taxable in whole or
in part and, (ii) there are one or more representations, statements or facts
contained in the Statement of Facts pertaining to PKS or its Affiliates that are
inaccurate or incomplete and such inaccurate or incomplete facts,
representations or statements caused the 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. If
it is determined that there are one or more representations, statements or facts
contained in the Statement of Facts or the Ruling Request pertaining to both KMC
or its Affiliates and PKS or its Affiliates and such representations, statements
or facts are determined to be inaccurate or incomplete as to both, 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. Breach. PKS shall indemnify and hold harmless
each member of the KMC Group and KMC shall indemnify and hold harmless each of
the member of the PKS Group from and against any payment required to be made by
the indemnified party, as the case may be, as a result of the breach by a member
of the PKS Group (or an Affiliate of PKS) or the KMC Group (or an Affiliate of
KMC), as the case may be, of any payment obligation under this Agreement.

                                       17
<PAGE>   18
                                    ARTICLE V
            COOPERATION; MAINTENANCE AND EXCHANGE OF INFORMATION; TAX
                                 CONTROVERSIES

                  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 (i) the preparation and filing
of any Tax Return, (ii) the conduct of any audit, dispute, proceeding, suit or
other Tax action concerning any issues or (iii) 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
(other than the KMC Nonfiling Entities), or in connection with any audit,
proceeding, suit, action or matter 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 prepared
concerning the other Party for nine (9) years following the Split-Off. 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 for a period of nine
(9) years. Upon request by PKS, KMC agrees to provide such documents or
information to PKS. Neither Party shall be liable to the other Party (for
amounts other than the Tax) 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 similar documents.

                                       18
<PAGE>   19
                  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. 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.

                  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

                                       19
<PAGE>   20
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 shall (or shall cause one or more of its
Affiliates to) 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 or other amount 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 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 nonindemnity payments made between the
Parties.

                  Section 7.3. Characterization of Payments. The Parties agree
to treat, and to cause their respective Affiliates to treat, where appropriate
(i) any payment (by one Party or its Affiliates to the other Party or its
Affiliates) required by this Agreement (other than a payment described in
Section 7.4 or reasonable fees described in Section 5.2(a)) as either a
contribution by PKS to KMC

                                       20
<PAGE>   21
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 Parties in the
same after-Tax position they would have been in had such Final Determination not
occurred. To the extent the Parties cannot be placed in the same after-Tax
position, the payment between the Parties shall be adjusted so that each Party
bears 50% of any Tax Detriment resulting from 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 plus three (3) percentage points, 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
                           Omaha, Nebraska  68131
                           Attn:  Tax Department
                           Fax:  (402) 271-2983

KMC at:                    Kiewit Materials Company
                           3555 Farnam Street
                           Omaha, Nebraska  68131
                           Attn:  Tax Department
                           Fax:  (402) 536-3607

                                       21
<PAGE>   22
                  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 as between or among PKS and its Affiliates, on
the one hand, and KMC and its Affiliates, on the other hand. This Agreement
shall not be amended except by agreement in writing signed by both Parties.

                  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. PKS
shall indemnify KMC for any Taxes imposed on United Metro Materials Inc.
attributable to any deferred intercompany gain that may have been 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).

                  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 shall (and shall
cause its Affiliates to) hold and cause its consultants and advisors to hold in
strict confidence, unless compelled to 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 under this Section 7.13 if its exercises
the same care as it takes to preserve confidentiality for its own similar
information.

                                       22
<PAGE>   23
                  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. 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 Affiliates to the extent such
Taxes are attributable to any assets that, on or prior to the Distribution Date,
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).

                           [Signatures on next page.]

                                       23
<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: /s/ Kenneth E. Stinson
    ----------------------------------------
Title: Chairman of the Board and President
      --------------------------------------

Kiewit Materials Company

By: /s/ Christopher J. Murphy
    ----------------------------------------
Title: President and Chief Executive Officer
      --------------------------------------

                                       24
<PAGE>   25
                                    EXHIBIT A

(a)      Any indebtedness owed by KMC to PKS after the Split-Off will not
         constitute stock or securities.

(b)      The principal amount of the Controlled Debentures received in the
         Debenture Exchange will be equal to or less than the principal amount
         of the Distributing Debentures surrendered in exchange therefor.

(c)      Immediately after the Split-Off, at least 90 percent of the fair market
         value of the gross assets of KMC will consist of the stock of Tanner
         Companies (Yuma) Inc., United Metro Materials Inc., and Twin Mountain
         Rock Company, each of which is engaged in the active conduct of a trade
         or business under Section 355(b) of the Code.

(d)      The five years of financial information submitted to the IRS on behalf
         of KMC, Tanner Companies (Yuma) Inc., United Metro Materials Inc., and
         Twin Mountain Rock Company represents the present operations of each
         corporation and, with respect to each, there have been no substantial
         operational changes since the date of the last financial statements
         submitted.

(e)      Following the Split-Off, Tanner Companies (Yuma) Inc., United Metro
         Materials Inc., and Twin Mountain Rock Company each will continue the
         active conduct of its business, independently and with its separate
         employees.

(f)      The Split-Off is being carried out to allow certain key employees of
         KMC to acquire a meaningfully increased equity interest in the
         materials segment of PKS that reflects solely the performance of the
         materials segment of PKS' construction business. The Split-Off is
         motivated, in whole or substantial part, by this corporation business
         purpose.

(g)      There is no plan or intention to liquidate any of KMC, Tanner Companies
         (Yuma) Inc., United Metro Materials Inc., or Twin Mountain Rock
         Company, to merge any of these corporations with any other corporation
         or to sell or otherwise dispose of the assets of any of these
         corporations after the Split-Off.

(h)      KMC is not an investment company as defined in Section
         368(a)(2)(F)(iii) and (iv) of the Code.

(i)      The Split-Off is not part of a plan or series of related transactions
         (within the meaning of Section 355(e) of the Code) pursuant to which
         one or more persons will acquire, directly or indirectly, stock
         possessing 50 percent or more of the total combined voting power of all
         classes of stock of KMC entitled to vote, or stock possessing 50
         percent or more of the total value of all classes of stock of KMC.

(j)      There is no plan or intention by KMC, directly or through any
         subsidiary corporation, to purchase any of its outstanding stock after
         the Split-Off, other than through stock purchases meeting the
         requirements of section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1
         C.B. 696.
<PAGE>   26
                                    EXHIBIT B

(a)      The principal amount of the New Distributing Debentures received in the
         Debenture Exchange will be equal to or less than the principal amount
         of the Distributing Debentures surrendered in exchange therefore.

(b)      Immediately after the Split-Off, at least 90 percent of the fair market
         value of the gross assets of PKS will consist of stock of Kiewit
         Construction Group Inc.

(c)      Immediately after the Split-Off, at least 90 percent of the fair market
         value of the gross assets of Kiewit Construction Group Inc. will
         consist of the stock of Kiewit Construction Company and Gilbert
         Southern Corp., each of which is engaged in the active conduct of a
         trade or business under Section 355(b) of the Code.

(d)      The five years of financial information submitted to the IRS on behalf
         of PKS, Kiewit Construction Group Inc., Kiewit Construction Company,
         and Gilbert Southern Corp. represents the present operations of each
         corporation and, with respect to each, there have been no substantial
         operational changes since the date of the last financial statements
         submitted.

(e)      The management of PKS, to its best knowledge, is not aware of any plan
         or intention on the part of any remaining shareholder or security
         holder of PKS, to sell, exchange, transfer by gift or otherwise dispose
         of any stock in, or securities of, PKS after the Split-Off (apart from
         sales of Distributing Stock or Distributing Debentures to PKS in
         connection with a holder's termination of employment with PKS and
         possible future conversions of Distributing Debentures or New
         Distributing Debentures, respectively).

(f)      Following the Split-Off, Kiewit Construction Company and Gilbert
         Southern Corp. each will continue the active conduct of its business,
         independently and with its separate employees.

(g)      There is no plan or intention to liquidate any of PKS, Kiewit
         Construction Group Inc., Kiewit Construction Company, or Gilbert
         Southern Corp., to merge any of these corporations with any other
         corporation or to sell or otherwise dispose of the assets of any of
         these corporations after the Split-Off, except for the possible
         distribution by Kiewit Construction Company of all of the stock of its
         two subsidiaries, Kiewit Western Co. and Kiewit Pacific Co., to Kiewit
         Construction Group Inc.

(h)      PKS is not an investment company as defined in Section
         368(a)(2)(F)(iii) and (iv) of the Code.<PAGE>   1
                                                                   EXHIBIT 10.13

                   EXTENSION AND FOURTH MODIFICATION OF LEASE

      THIS EXTENSION AND FOURTH MODIFICATION OF LEASE dated the 30th day of
March 2000, by and between THETA HOLDING COMPANY, L.P., a New Jersey limited
partnership (hereinafter referred to as "Landlord"); and BISYS MANAGEMENT
COMPANY, a Delaware corporation (hereinafter referred to as "Tenant").

                                WITNESSETH THAT:

      WHEREAS, Overlook at Great Notch ("Overlook"), Landlord's predecessor in
title, and Bisys, Inc. entered into a certain lease dated January 9, 1991 (the
"Original Lease", which as amended, shall hereinafter be collectively referred
to as the "Lease") affecting certain premises (consisting of approximately 2,831
square feet) on the eighth floor of the building known as Overlook at Great
Notch (hereinafter the "Building") located at 150 Clove Road, Little Falls,
County of Passaic, State of New Jersey, which land is also improved with
landscaping, parking facilities and other improvements, all of which, together
with the Building and underlying land, shall hereinafter be known as and
referred to collectively as the "Project" or "Property"; and

      WHEREAS, Overlook and Bisys, Inc. entered into a First Modification of
Lease dated June 3, 1992, whereby the parties added 1,321 square feet to the
eighth floor premises covered by the Original Lease; and

      WHEREAS, the Prudential Insurance Company of America, successor in
interest to Overlook and Landlord's immediate predecessor in title, and Bisys,
Inc. entered into an Extension and Second Modification of Lease dated December
3, 1993, whereby Bisys, Inc. leased from Landlord 5,793 rentable square feet of
space on the tenth floor of the Building, and simultaneously therewith
surrendered to Landlord all space previously leased by Bisys, Inc. on the eighth
floor of the Building; and

      WHEREAS, Landlord and Bisys, Inc. entered into an Extension and Third
Modification of Lease dated October 11, 1995, whereby Bisys, Inc. leased from
Landlord an additional 2,666 rentable square feet contiguous to the 5,793
rentable square feet on the tenth floor of the Building previously leased by
Bisys, Inc., making a total of approximately 8,459 rentable square feet in the
Building which shall be hereinafter referred to as the "Current Premises"; and

      WHEREAS, Bisys, Inc. and Tenant are subsidiaries of The Bisys Group; and

      WHEREAS, Bisys, Inc. has assigned the aforementioned Lease to the Tenant,
and Tenant has accepted such assignment, transfer and conveyance of all of
Bisys, Inc.'s rights, liabilities and leasehold interests in, to and under the
Lease; and

      WHEREAS, in consideration for the Extension and Fourth Modification of
Lease, The Bisys Group agrees to guarantee the rights and obligations of Tenant
pursuant to the Lease; and

      WHEREAS, Landlord and Tenant desire to spread said Lease over an
additional approximately 2,434 rentable square feet contiguous to the Current
Premises on the 10th floor of the Building, making a total of approximately
10,893 rentable square feet in the Building and to modify certain other
provisions of said Lease in connection with the taking of said additional
approximately 2,434 rentable square feet; and

      WHEREAS, the Lease is in full force and effect and Landlord and Tenant are
in compliance with all terms and conditions thereof; and

      WHEREAS, Tenant and Landlord desire to modify the Lease as hereinafter set
forth;

      NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and valuable consideration having been exchanged between
the parties the receipt of which is hereby acknowledged, Landlord and Tenant
hereby agree to modify the Lease, and The Guarantor hereby agree to guarantee
the rights and obligations of Tenant, as follows:

1. Guarantee. The Bisys Group hereby guarantees the full performance of all of
the terms, covenants and conditions of the Lease to be kept and performed by the
Tenant, including the covenant to pay rent and other charges to accrue
thereunder.

                                       1
<PAGE>   2
2. Additional Space. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord approximately 2,434 rentable square feet, subject to final
measurement, located on the tenth floor of Building (the "Additional Space"), as
shown on the attached Exhibit "A". Coupled with Tenant's Current Premises of
approximately 8,459 rentable square feet located on the tenth floor of Building,
the new "Enlarged Premises" totals approximately 10,893 rentable square feet,
subject to final measurement of the Additional Space.

3. Commencement Date. The date of commencement for the Additional Space (the
"Additional Space Commencement Date") shall be the date of substantial
completion of Landlord's Work, as hereinafter defined, in the Additional Space,
which is projected to be three (3) months from Landlord's receipt of final
approved Working Drawings, as hereinafter defined, or such earlier date as
Tenant takes possession or commences use of the Additional Space for any purpose
other than construction. The Additional Space Commencement Date and the
commencement of rental payment hereunder shall not be extended or delayed for
any period of time that substantial completion of Landlord's Work and the
delivery of possession of the Additional Space is delayed beyond that date which
is three (3) months from Landlord's receipt of final approved Working Drawings,
as hereinafter defined, by any reason of: (i) special work, changes, alterations
or additions required or made by Tenant in the Additional Space; (ii) delays
and/or default on the part of Tenant in submitting on a timely basis any plans
and/or specifications, supplying information, approving plans, specifications or
estimates, or giving authorizations required hereunder or otherwise for the
completion of Landlord's Work; and/or (iii) delays otherwise caused in whole or
in part by Tenant. However, in no event shall the Additional Space Commencement
Date and the commencement of rental payment hereunder be later than July 1,
2000. The foregoing notwithstanding, if the Additional Space shall not be
substantially complete and the Tenant shall not have taken possession or
commenced use of the Additional Space on or before the date which shall be one
hundred fifty (150) days from the date Landlord commences construction of
Landlord's Work as herein defined, as such date may be extended by the number of
days, if any, of any (i) Tenant Delays, as herein defined; (ii) Force Majeure
delays; and/or (iii) any other delays pursuant to this Section, then Tenant
shall receive a credit at the next monthly rent payment date equal to ninety
five dollars ($95) for each business day the Commencement Date is delayed beyond
such one hundred fifty (150) day period, as such may be extended. "Force
Majeure" means, with respect to the occurrence of a specified date or event, any
and all events beyond the reasonable control of Landlord, including, without
limitation, strikes, lockouts, acts of God, enemy actions, civil commotion or
war, casualties and governmental actions, but excluding lack of funds, which
events delay the occurrence of the specified date or event in question. If the
Additional Space Commencement Date occurs on any day other that the first day of
a month, then the Basic Rent will be pro-rated on a daily basis (i.e., annual
rental divided by 365 days, or 366 days in a leap year). As of the Additional
Space Commencement Date, the Additional Space shall be deemed to be a part of
the Premises demised under the Lease.

4. Extension Term. The Term of the Lease for the Enlarged Premises is hereby
extended so that the Termination Date shall be June 30, 2007.

5. Basic Annual Rent. Tenant's Basic Annual Rent for the Current Premises and
the Additional Space, subject to adjustment to reflect the final measurement of
rentable square feet of the Additional Space, from and after the Additional
Space Commencement Date shall be payable as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                  Rent per
                                  Rentable    Monthly Rent   Annual Rent
                                  Sq. Ft.
--------------------------------------------------------------------------------

<S>                               <C>         <C>            <C>
Through the 5th anniversary of
the Additional Space
Commencement Date:

Current Premises                   $28.50      $20,090.13    $241,081.50
Additional Space                    28.50        5,780.75      69,369.00
                                               ----------    -----------
     Enlarged Premises              28.50       25,870.88     310,450.50
</TABLE>

                                       2
<PAGE>   3
<TABLE>
<S>                               <C>         <C>            <C>
From and after the 5th
anniversary of the Additional
Space Commencement Date through
the Termination Date:

Current Premises                   $31.00       21,852.42     262,229.00
Additional Space                    31.00        6,287.83      75,454.00
                                                ---------      ---------
     Enlarged Premises              31.00       28,140.25     337,683.00
</TABLE>

6. Tenant's Percentage Share. From and after the Additional Space Commencement
Date, Tenant's Share of Operating Expenses and Taxes as provided for in Item 6
of Exhibit "B" of the Original Lease shall be increased to 2.56% (10,893 sq. ft.
divided by 425,000 sq. ft.), subject to adjustment to reflect the final
measurement of rentable square feet of the Additional Space.

7. Base Year. From and after the Additional Space Commencement Date, Tenant's
Base Year for Operating Expenses and Tax Increases as provided for in Item 7 of
Exhibit "B" of the Original Lease shall be calendar year 2000.

8. Tenant Electric. Tenant shall pay an Electric Energy Charge for the
Additional Space in accordance with Article 5.2 and Exhibit "B" of the Original
Lease. At Landlord's option, separate meters for such utilities and services may
be installed for the Enlarged Premises, and upon demand, Tenant shall
immediately pay Landlord for the installation, maintenance and/or repair of such
meters and for all charges with respect to consumption of such utilities or
services so metered or provided.

9. Landlord's Work.

      9.1 Plans. (a) Tenant and Landlord have approved the construction drawings
(hereinafter the "Working Drawings") prepared by The ISS Architectural Group,
Inc. dated January 6, 2000, as revised on February 22, 2000, for the
installation of Tenant's initial improvements to the Additional Space and
improvements and/or alterations to the Current Premises (the "Improvements").
Any review or approval by Landlord of the Working Drawings is solely for
Landlord's benefit, and without any representation or express or implied
warranty to Tenant with respect to the adequacy, correctness or efficiency
thereof, its compliance with laws or otherwise.

            (b) Any and all change orders which Tenant may initiate during the
course of construction are also subject to Landlord's approval which shall not
be unreasonably withheld or delayed. Notwithstanding anything contained herein,
Landlord shall not be required to perform, and Tenant shall not request, work
which would (i) require changes to structural components or infrastructure of
the Building or the exterior design of the Building, (ii) require any material
modification to the Building's mechanical installation or installations outside
the Current Premises and/or the Additional Space, (iii) not comply with all
applicable laws, rules, regulations, and requirements of any governmental
department having jurisdiction over the construction of the improvements in the
Building and/or Additional Space, (iv) be incompatible with the Building plans
filed with the Township of Little Falls or with the occupancy of the Building as
an office building, (v) delay the completion of the Additional Space or any part
thereof beyond a normal construction period for all such work or (vi) not meet
minimum Building Standards as detailed on Exhibit "B" attached hereto. Any
changes required by any governmental department affecting the construction of
the Additional Space shall not be deemed to be a violation of any provision of
this Lease or a Tenant Delay and shall be unilaterally accepted by Landlord and
Tenant.

      9.2 Landlord's Work. All work shown on the final approved Working
Drawings, excluding any telephone/data/communication cabling work, or any such
portion thereof, if any, specifically designated as Tenant's Work, is
collectively called "Landlord's Work". The Additional Space shall be finished by
Landlord in accordance with the final approved Working Drawings in a good and
workmanlike manner. Landlord shall obtain all permits and inspections required
for occupancy, exclusive of any special permits or approvals relating to
Tenant's equipment or business operations, and shall furnish all labor, material
and equipment required to complete Landlord's Work described herein. Landlord
shall be responsible for the costs and expenses in connection with the Design
Development Documents, the Working Drawings, permits and inspections to be
obtained by Landlord, Landlord's Work and Landlord's construction supervisory
fees which shall not exceed 2.5% of the Improvement Cost as defined,
(collectively referred to as the "Improvement Cost") up to the initial aggregate
of $13.00 per rentable square feet of the Additional Space, plus $6.00 per
rentable square feet of Current Premises, for a total of $82,396.00, hereinafter
referred to as the "Improvement Allowance", except as set forth in Section 9.4
below. In the event that the Improvement Cost shall exceed the Improvement
Allowance, then any amount in excess of the Improvement Allowance shall be paid
by Tenant to Landlord in accordance with Section 9.5 below.

                                       3
<PAGE>   4
In the event that the Improvement Cost shall be less than the Improvement
Allowance, Tenant shall be entitled to apply any remaining amount to rent. The
Improvements shall, upon installation, become the property of Landlord and shall
be surrendered by Tenant to Landlord at the end or other expiration of the term
of the Lease.

      Tenant agrees that Landlord's Work or any part thereof may be performed,
furnished, installed, and provided by or through contractors, suppliers and/or a
construction manager of the Landlord's choice.

      Tenant and Landlord agree that Landlord's Work in Construction Area I, as
shown on Exhibit "C" attached hereto and by this reference made a part hereof,
will be performed during normal business hours, with the exception of any core
drilling, jack hammering or "shooting" of additional anchors in the ceiling if
provided for in the approved Working Drawings. It is further agreed that
Landlord's Work in Construction Area II, as shown on Exhibit "C" shall be
performed after normal business hours, or on weekends, unless such work shall
not unreasonably interfere with Tenant's normal operations within the Current
Premises.

      If Landlord shall be delayed in substantially completing Landlord's Work
as a direct result of any act, neglect, failure, or omission of Tenant, its
agents, servants, employees, contractors, or subcontractors, including without
limitation any of the following, such delay shall be deemed a Tenant Delay:

      a)    Tenant's failure to deliver the Design Development Documents or
            Tenant's delay in submitting objections to or approval of the Design
            Development Documents and/or the Working Drawings in accordance with
            Section 9.1 above; or

      b)    Tenant's delay in submitting or approving any other drawing, plans
            or specifications or in supplying information; or

      c)    Tenant's request for non-standard building materials, finishes, or
            installations which are not readily available at the time Landlord
            is ready to install same; or for standard building materials,
            finishes, or installations which are not readily available at the
            time Landlord is ready to install same and for which a substitute
            material, finish or installation of equal quality is available; or

      d)    Tenant's changes in approved drawings, plans, or specifications
            submitted to or prepared by Landlord; or

      e)    the performance of work by a person, firm, or corporation employed
            by Tenant which interferes with implementation of Landlord's Work
            and delays in the completion of such work by that person, firm or
            corporation; or

      f)    by reason of Tenant's Work which unreasonably interferes with
            implementation of Landlord's Work including, without limitation, any
            delay in the preparation of mechanical and electrical drawings for
            the Additional Space by reason of additional time required to
            reflect Tenant's Work.

      g)    Tenant's request for Landlord's Work to be performed after normal
            business hours or on weekends, unless it has been agreed that such
            work is to be performed during those hours as specifically set forth
            herein.

In the event the Improvement Cost exceeds the Improvement Allowance, Tenant
shall pay to Landlord, as Additional Rent, a sum equal to any "Additional Cost
to Landlord" in completing Landlord's Work resulting from Tenant Delay, but only
to the extent that the Improvement Cost exceed the Improvement Allowance.
"Additional Cost to Landlord" shall mean the cost over and above such cost as
would have been the aggregate cost to Landlord of completing Landlord's Work had
there been no Tenant Delay. Any such sums shall be paid to Landlord within ten
(10) days after Landlord bills Tenant therefor. Such costs shall be collectible
whether or not the term of the Additional Space shall have commenced.

      Unless otherwise provided herein, in the event that either party hereto
submits any drawings, plans, or other materials to the other party for their
approval, the receiving party shall, within ten (10) business days thereafter,
respond in writing, either approving such materials or requesting the other
party to make specific changes therein. Unless otherwise provided herein, the
receiving party's failure to respond within the time period set forth in the
preceding sentence shall be deemed approval of such submission.

                                       4
<PAGE>   5
      Landlord's Work shall be deemed "substantially complete" upon receipt of a
Certificate of Occupancy for the Additional Space and the Additional Space being
in such condition the Tenant can legally operate Tenant's business in the
Additional Space. Landlord shall give Tenant five (5) business days prior
written notice of the date on which substantial completion is anticipated.
Notwithstanding substantial completion, Tenant shall be permitted to submit a
"Punchlist" to Landlord within thirty (30) days following the Additional Space
Commencement Date. Such Punchlist shall list items that are incomplete or
defective. Upon receipt of the Punchlist, Landlord shall promptly commence
correction of those items appropriately listed.

      9.3 Tenant's Work. Tenant's Work shall mean any work performed by or on
behalf of Tenant in the Additional Space which is not included in Landlord's
Work or otherwise performed by Landlord on behalf of Tenant. Contractors and
subcontractors doing Tenant's Work shall be of Tenant's choice but shall be
subject to Landlord's prior approval, which shall not be unreasonably withheld,
and such rules and regulations as Landlord, in its reasonable discretion, may
impose. Notwithstanding the foregoing, the approval of any contractors or
subcontractors performing any alterations or modifications which affects the
plumbing, sprinkler, heating, ventilation or air conditioning systems or the
electrical risers, conduits, meters, panel boxes, transformers, switch gear or
the wiring thereto, or affects the structure of the Building, shall rest solely
within Landlord's determination. TENANT'S WORK MAY BE DONE DURING NORMAL WORKING
HOURS PRIOR TO THE ADDITIONAL SPACE COMMENCEMENT DATE, SUBJECT TO AND IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LEASE, PROVIDED LANDLORD'S WORK
HAS PROGRESSED SUFFICIENTLY THAT TENANT'S WORK WILL NOT UNREASONABLY INTERFERE
WITH REMAINING LANDLORD'S WORK. Tenant shall receive, without charge, water,
heat and ventilation during normal working hours. Tenant shall pay for all
rubbish removal service in connection with its work.

      IT IS UNDERSTOOD AND AGREED THAT TENANT'S ACCESS AND ENTRY PRIOR TO THE
ADDITIONAL SPACE COMMENCEMENT DATE TO MAKE ITS INSTALLATIONS IS CONDITIONED UPON
TENANT'S CONTRACTORS, SUBCONTRACTORS AND MATERIAL SUPPLIERS WORKING IN HARMONY
AND NOT UNREASONABLY INTERFERING WITH THE LABOR FORCES EMPLOYED BY LANDLORD OR
ANY OTHER TENANT, OR THEIR CONTRACTORS, SUBCONTRACTORS AND MATERIAL SUPPLIERS.
If at any time such entry shall cause disharmony or unreasonable interference,
then Tenant's right to such access and entry may be withdrawn by Landlord
immediately, however, such entry will be restored if within twenty four (24)
hours notice the Tenant cures such interference. Workmen's Compensation, General
Liability and Property Damage insurance, all in amounts and with companies and
on forms reasonably satisfactory to Landlord, shall be provided and at all times
maintained by Tenant or its contractors engaged in the performance of Tenant's
Work before proceeding with any Tenant's Work. CERTIFICATES FOR SUCH INSURANCE
SHALL BE FURNISHED TO LANDLORD PRIOR TO THE COMMENCEMENT OF ANY TENANT'S WORK.
Access and entry by Tenant before the Additional Space Commencement Date, in
accordance with Tenant's Work above, shall be deemed to be under all of the
terms, covenants, provisions and conditions of the Lease, except as to the
covenant to pay rent. Landlord shall not be liable in any way for any injury,
loss or damage which may occur to any of Tenant's decorations or installations
so made prior to the commencement term of the Additional Space, except to the
extent that any such injury, loss or damage is caused by the gross negligence
and/or willful misconduct of Landlord or Landlord's employees. Moreover, any
injury, loss or damage as a result of Tenant's Work which may occur to
Landlord's Work, or to any of the material or equipment used to complete
Landlord's Work, shall be replaced or repaired at Landlord's sole option, and
Tenant shall pay Landlord for all costs and expenses related thereto promptly
after the rendering of bills. Tenant shall perform all of Tenant's Work strictly
in compliance with all required governmental requirements and shall obtain all
required governmental permits for such work, at Tenant's sole cost and expense.

      9.4 Change Orders. Any and all excess costs and expenses in connection
with change orders or other modifications to the final approved Working Plans
which Tenant may initiate during the course of construction shall be paid by
Tenant to Landlord promptly after the rendering of bills. No credit shall be
granted for the omission of Landlord's Work where no replacement in kind is
made.

      9.5 Improvement Costs. In the event that the Improvement Cost shall exceed
the Improvement Allowance, then any amount in excess shall be paid by Tenant to
Landlord as Additional Rent. Said amounts may be paid in one lump sum payment on
the Additional Space Commencement Date or together with interest at an annual
rate of twelve percent (12%), in 42 equal installments on the first of each
month commencing as of the Additional Space Commencement Date.

                                       5
<PAGE>   6
10. Parking Spaces. From and after the Additional Space Commencement Date, the
number of unreserved parking spaces provided for in Item 10 of Exhibit "B" of
the Original Lease, as amended, shall be increased from twenty four (24) total
spaces to thirty two (32) total spaces.

11. Option to Renew. The Option to Renew set forth in Article 45 of said
Original Lease, as modified in the Extension and Third Modification of Lease, is
hereby deleted in its entirety and the following is hereby inserted in lieu
thereof:

                          Article 45 - Option to Renew

      (a) By written notice delivered to Landlord on or before the date which is
twelve (12) months prior to the expiration of the Term of this Lease (the
"Exercise Date"), "time being of the essence", provided that Tenant is not
default in any respect under the terms and conditions of this Lease beyond any
applicable notice and grace period on the Exercise Date and the Termination Date
and Tenant occupies the entire Enlarged Premises, Tenant shall have the option
to extend the term of this Lease for one (1) five (5) year optional renewal
period commencing on the first day following the Termination Date and ending on
the date which is five (5) years thereafter (hereinafter called the "Renewal
Term") upon the same terms and conditions hereof except that the Basic Rent to
be paid by Tenant for the Renewal Term, if exercised, shall be 100% of the then
annual fair market rental value of the Premises, as determined as hereinafter
set forth, and to be effective on the first day of the Renewal Term but in no
event less than the rent, including Additional Rent pursuant to Article 3 of the
Original Lease, payable by Tenant on the Termination Date. In this regard, no
earlier than one hundred fifty (150) days and no later than one hundred five
(105) days prior to the Termination Date, which forty-five (45) day period is
hereinafter referred to as the "Exchange Period", Landlord shall submit to
Tenant a statement of Landlord's determination of the annual fair market value
for the Premises for the Renewal Term, which statement shall show the basis upon
which such determination was made. Landlord's determination of the annual fair
market rental value shall give due consideration to the rents charged by
Landlord for all leases of comparable space (excluding exercise of renewal
rights where the tenant had a right of renewal under the terms of its lease)
entered into by Landlord for the twelve (12) month period preceding the first
day of the Exchange Period, except that if there were no such leases or such
leases were so peculiar to a particular situation that no true comparables would
be derived, Landlord may expand the basis of its determination to include the
rents being charged by other owners of comparable first class office buildings
located in the northern New Jersey area. Within ten (10) business days after
receipt of Landlord's determination, Tenant may either (i) rescind the exercise
of its option, (ii) accept Landlord's determination of the annual fair market
rental value or (iii) provide Landlord with its own determination of the annual
fair market rental value, including the basis upon which such determination was
made. If Tenant elects option (iii), then Landlord and Tenant shall, for a
period of thirty (30) days after Landlord's receipt of Tenant's determination,
negotiate in good faith to determine the annual fair market rental value and if
Landlord or Tenant are unsuccessful in reaching agreement within such thirty
(30) days, either Landlord and Tenant may cause the issue to be arbitrated as
hereinafter in this Article 45 set forth. If neither party choose to cause the
issue to be arbitrated as hereinafter in this Article 45 set forth, this option
to renew shall automatically be null and void and of no force or effect twenty
(20) days following the thirty (30) day period following Landlord's receipt of
Tenant's determination of the annual fair market rental value. Except for the
Monthly Basic Rent, the Renewal Term shall be upon all of the terms, covenants
and conditions contained in this Lease.

      (b) In the event either Landlord or Tenant elect to arbitrate the issue of
the annual fair market rental value, such issue shall be determined by
arbitration as hereinafter provided. Landlord and Tenant shall each appoint a
fit and impartial person as arbitrator who shall have at least ten (10) years'
experience in the commercial real estate industry in the northern New Jersey
area (a "Qualified Arbitrator"). Such appointment shall be indicated in writing
by each party to the other within ten (10) days following the thirty (30) day
period following Landlord's receipt of Tenant's determination of the annual fair
market rental value, as aforesaid. If the arbitrators are unable to determine
the annual fair market rental value as set forth herein within twenty (20) days
of their appointment, the arbitrators so appointed shall immediately appoint a
third Qualified Arbitrator. In case either party shall fail to appoint a
Qualified Arbitrator within a period of ten (10) business days after written
notice from the other party to make such appointment, the American Arbitration
Association, or its successor (the "AAA") shall appoint such Qualified
Arbitrator(s). The two (2) arbitrators so appointed shall appoint the third
(3rd) arbitrator, as aforesaid, otherwise the AAA shall similarly make such
appointment. The arbitrators shall proceed with all reasonable dispatch to
determine the annual fair market rental value and under all circumstances shall
be bound by the terms of this Lease and shall not add to,

                                       6
<PAGE>   7
subtract from, or otherwise modify such provisions. The arbitrators sole
discretion in determining the question submitted shall be limited to selecting
one of the annual fair market rental values submitted by Landlord or Tenant. The
decision of the arbitrators shall, in any event, be rendered within thirty (30)
days after the appointment of the first and second arbitrators and such decision
shall be in writing and in duplicate with one counterpart delivered to each
Landlord and Tenant. The arbitration shall be conducted in accordance with the
rules of the AAA and applicable New Jersey law, and a decision of a majority of
the arbitrators shall be binding, final and conclusive upon Landlord and Tenant.
The fees of the arbitrators and the expenses incident to the proceedings shall
be shared equally between Landlord and Tenant.

      (c) In the event the determination of the Monthly Basic Rent is not
finalized until after the first day of the Renewal Term, Tenant shall continue
paying the Monthly Basic Rent payable for the last year of the term of this
Lease, and Additional Rent as provided in this Lease. At such time as the
Monthly Basic Rent is determined, the Monthly Basic Rent shall be retroactively
adjusted to the first day of the Renewal Term, and if the Monthly Basic Rent for
the Renewal Term is greater than the Monthly Basic Rent for the Lease Term,
Tenant shall, within ten (10) business days of Landlord's written demand, pay to
Landlord the increased Monthly Basic Rent for the period between the first day
of the Renewal Term and the last day of the month in which Landlord's demand for
such payment was made, and commencing on the first day of the month following
the month in which such demand for the lump sum payment was made by Landlord,
Tenant shall start making monthly installments of Monthly Basic Rent in the
amount as finally determined.

12. Environmental Laws. Article 46, ECRA, of said Lease is hereby deleted in its
entirety and the following is hereby inserted in lieu thereof:

                         Article 46 - Environmental Laws

Tenant and Landlord shall comply with all Environmental Laws (as hereinafter
defined) concerning the proper storage, handling and disposal of any Hazardous
Material (as hereinafter defined) with respect to the Project. Environmental
Laws shall mean any law governing the use, storage, disposal or generation of
any Hazardous Material (as hereinafter defined), including without limitation,
the Industrial Site Recovery Act, ISRA, as amended and the Resource Conservation
and Recovery Act of 1976, as amended. Hazardous Material shall mean any such
substances, materials and wastes which are or become regulated under any
Environmental Law; or which are or become classified as hazardous or toxic under
any Environmental Law; and explosives and firearms, radioactive material,
asbestos, and polychlorinated biphenyls. Except for small amounts Hazardous
Material typically used in the operation of general offices and machinery and
equipment typically used or operated therein, which are in appropriate
containers, Tenant shall not generate, store, handle or dispose of any Hazardous
Material in, on, or about the Property without the prior written consent of
Landlord. In the event that Tenant is notified of any investigation or violation
of any Environmental Law arising from Tenant's activities at the Property,
Tenant shall immediately deliver to Landlord a copy of such notice. In such
event or in the event Landlord reasonably believes that a violation of
Environmental Law exists, Landlord may conduct such tests and studies relating
to compliance by Tenant with Environmental Laws or the alleged presence of
Hazardous Materials upon the Property as Landlord deems desirable, and if in
fact Tenant has violated Environmental Laws, all such tests and studies shall be
completed at Tenant's expense. Landlord's inspection and testing rights are for
Landlord's own protection only, and Landlord has not, and shall not be deemed to
have assumed any responsibility to Tenant or any other party for compliance with
Environmental Laws, as a result of the exercise, or non-exercise of such rights.
Tenant shall indemnify, defend, protect and hold harmless the Landlord, any
Mortgagee ("Mortgagee" shall mean any holder of a mortgage, deed of trust or
other security instrument encumbering the Project or Landlord's interest therein
or any ground lessor of the Project), the property manager and the leasing
manager for the Project and their respective directors, officers, agents,
shareholders, partners and employees (collectively referred to herein as the
"Indemnities") from any and all loss, claim, expense, liability and cost
(including attorney's fees) arising out of or in any way related to the presence
of any Hazardous Material introduced to the Premises during the Lease term by
any party other than Landlord and/or the Indemnities or introduced to the
Property by Tenant, or any of its officers, employees, agents, contractors,
licensees, visitors, guests or invitees. If any Hazardous Material is released,
discharged or disposed of on or about the Project and such release, discharge or
disposal is not caused by Tenant or other occupants of the Premises, or their
employees, agents, or contractors, such release, discharge or disposal shall be
deemed casualty damage under Article 17 to the extent that the Premises are
affected thereby; in such case, Landlord and Tenant shall have the obligations
and rights respecting such casualty damage provided under such Article.

                                       7
<PAGE>   8
13. Environmental Matters. The following is hereby added to the Lease as Article
48:

                       Article 48 - Environmental Matters

      (a) (i) Tenant represents and warrants that it is not an "Industrial
Establishment" as that term is defined in the Industrial Site Recovery Act,
N.J.S.A. 13:Ik-6 et sea. as same may be amended from time to time (the "Act").
Tenant shall not do or suffer anything that will cause it to become an
Industrial Establishment under the Act during the term of the Lease. Landlord
may from time to time require Tenant at Tenant's sole expense to provide proof
satisfactory to Landlord that Tenant is not an Industrial Establishment. In the
event that Tenant now is or hereafter becomes an Industrial Establishment (which
event shall cause Tenant to be in Default of this Lease) Tenant shall comply
with all conditions as set forth below.

            (ii) Tenant agrees that it shall, at its sole cost and expense,
fulfill, observe and comply with all of the terms and provisions of the Act and
all rules, regulations, ordinances, opinions, orders and directives issued or
promulgated pursuant to or in connection with said Act by the Department of
Environmental Protection ("DEP"). (The Act and all said rules, regulations,
ordinances, opinions, orders and directives are hereinafter collectively
referred to as "ISRA"). Without limiting the forgoing, upon Landlord's request
therefor, and in all events no later than sixty (60) days prior to "closing,
terminating or transferring operation" (as said terms are defined in ISRA) which
would be subject to an obligation to comply with ISRA if an industrial
establishment is present at the Premises, Tenant at its sole cost and expense,
shall provide the Landlord with a true copy of:

                  (A) an opinion letter from DEP (or such other agency or body
which shall then have jurisdiction over ISRA matters) in form satisfactory to
Landlord's counsel, stating the ISRA does not apply to Tenant, Tenant's use and
occupancy of the Premises and to the closing, terminating or transferring of
operations at the Premises; or

                  (B) a Negative Declaration (as said term is defined in ISRA)
duly approved by DEP (or such other agency or body then having jurisdiction over
ISRA matters); or

                  (C) a Remedial Action Workplan (as said term is defined in
ISRA) duly approved by DEP (or such other agency or body which shall then have
jurisdiction over ISRA matters).

            (iii) Nothing contained in this Article shall be construed as
limiting Tenant's obligation to otherwise comply with ISRA.

            (iv) In the event Tenant complies with subparagraph (a) (ii) of this
Article 48 by obtaining an approved Remedial Action Workplan, Tenant agrees that
it shall, at its sole cost and expense:

                  (A) post any financial guarantee or other assurance required
to secure implementation and completion of such Remedial Action Workplan; and

                  (B) promptly implement and diligently prosecute to completion
said Remedial Action Workplan in accordance with the schedule contained therein
or as may otherwise be ordered or directed by DEP or such other agency or body
which shall then have jurisdiction over such Remedial Action Workplan. Tenant
expressly understands, acknowledges and agrees that Tenant's compliance with the
provisions of this subparagraph (iv) may require Tenant to expend or do acts
after the expiration or termination of the Term and Tenant shall not be excused
therefrom. Any remediation conducted at the Premises by Tenant under ISRA or
otherwise shall be to the most stringent standard applicable to ISRA and shall
not involve alternative standards, institutional or engineering controls.

            (v) Within ten (10) days after a written request by the Landlord or
any Mortgagee, Tenant shall deliver to Landlord and the Mortgagee if any, a duly
executed and acknowledged affidavit of an executive officer of Tenant,
certifying:

                  (A) the proper four digit Standard Industrial Classification
Number relating to Tenant's then current use of the Premises (Standard
Industrial Classification Number to be obtained by reference to the then current
Standard Industrial Classification manual

                                       8
<PAGE>   9
prepared and published by the Executive Office of the President, Office of
Management and Budget or the successor to such publication); and

                  (B) (i) that Tenant's then current use of the Premises does
not involve the generation, manufacture, refining, transportation, treatment,
storage, handling or disposal of Hazardous Material on the site, above ground or
below ground, or (ii) that Tenant's then current use does involve the presence
of Hazardous Material, in which event, said affidavit shall describe in complete
detail Tenant's operations which involves the presence of Hazardous Material.
Such description shall, inter alia, identify each Hazardous Material and
describe the manner in which Tenant generated, handled, manufactured, refined,
transported, treated, stored, and/or disposed of same. Tenant shall supply
Landlord and the Mortgagee if any, with such additional information relating to
the presence of Hazardous Materials Landlord or its Mortgagee requests (nothing
contained in this subsection (B) shall be deemed or construed to permit Tenant
to use Hazardous Material)

            (vi) Without limiting the foregoing, Tenant agrees:

                  (i) at its sole cost and expense, to promptly discharge and
remove any lien or encumbrance against the Premises, or any other property owned
or controlled, in whole or in part, by Landlord imposed due to Tenant's failure
to comply with ISRA, and

                  (ii) to defend (with counsel approved by Landlord), indemnify
and hold Landlord harmless from and against any and all liability, penalty, loss
expenses, damages, costs, claims, causes of action, judgments and/or the like,
of whatever nature, including but not limited to reasonable attorney's fees and
other costs of litigation or preparation therefor, to the extent such costs
arise from or in connection with Tenant's failure or inability, for any reason
whatsoever, to observe or comply with ISRA and/or provisions of this Article
48(a).

            (vii) Tenant agrees that each and every provision of this Article
48(a) shall survive the expiration or early termination of the term of this
Lease. The parties hereto expressly acknowledge and agree that the Landlord
would not enter into this Lease but for the provisions of this Article 48(a) and
the aforesaid survival thereof.

      (b) (i) Tenant agrees that it shall, at its sole cost and expense,
observe, comply and fulfill all of the terms and provisions of the Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq., as the same may be
amended from time to time (the "Spill Compensation and Control Act") and all
rules, regulations, ordinances, opinions orders and directives issued or
promulgated pursuant to or in connection with said Spill Compensation and
Control Act by DEP, any subdivision or bureau thereof or governmental or
quasi-governmental agency or body having jurisdiction thereof (said Spill
Compensation and Control Act and all said rules, regulation, ordinances,
opinions, orders and directives are hereinafter in this Article 48(b)
collectively referred to as "Spill Act").

            (ii) Without limiting the foregoing, the Tenant agrees:

                  (A) that it shall not do, omit to do or suffer the commission
or omission of any act which is prohibited by or may result in any liability
under the Spill Act including without limitation the discharge of petroleum
products or other hazardous substances (as said terms are defined in the Spill
Act); and

                  (B) whenever the Spill Act requires the "owner or operator" to
do any act in or to the Premises, Tenant shall do such act and fulfill all such
obligations at its sole cost and expense, it being the intention of the parties
hereto that Landlord shall be free of all expenses and obligations arising from
or in connection with such compliance with the Spill Act.

            (iii) Without limiting the forgoing, Tenant agrees:

                  (A) at its sole cost and expense, to promptly discharge and to
remove any lien or any encumbrance against the Premises, or any other property
owned or controlled, in whole or in part, by Landlord, imposed by Tenant's
failure to comply with the Spill Act; and

                  (B) to defend (with counsel approved by Landlord), indemnify
and hold Landlord harmless from and against any and all liability, penalty,
loss, expenses, damages, costs, claims, causes of action, judgments and/or the
like, of whatever nature, including but not limited to reasonable attorney's
fees and other expenses of litigation or preparation therefor, to the

                                       9
<PAGE>   10
extent such costs arise from or in connection with Tenant's failure or
inability, for any reason whatsoever, to observe or comply with the Spill Act
and/or the provisions of this Article 48(b).

            (iv) Tenant agrees that each and every provision of this Article
48(b) shall survive the expiration or earlier termination of the Term. The
parties hereto expressly agree and acknowledge that the Landlord would not enter
into this Lease but for the provisions of this Article 48(b) and the aforesaid
survival thereof.

      (c) (i) Tenant agrees that it shall, at its sole cost and expense,
promptly comply with all Environmental Laws applicable to its business and
properties, wheresoever located, or the Premises. Without limiting the
foregoing, Tenant agrees:

                  (A) that it shall not allow to occur any action or omission
which is prohibited by or may result in any liability under any Environmental
Law; and

                  (B) whenever during the term of this Lease any Environmental
Law requires any action of either or both of the owner or operator of the
Premises, Tenant shall fulfill all such obligations at its sole cost and
expense, it being the intention of the parties hereto that the Landlord shall be
free of all expenses or obligations arising from or in connection with
compliance with any Environmental Law and Tenant shall bear all such expenses
and obligations as if it is the sole owner and operator of the Premises.

            (ii) Without limiting the foregoing, Tenant agrees:

                  (A) at its sole cost and expense to promptly discharge and
remove any lien or encumbrance against the Premises or any property owned or
controlled in whole or in part by the Landlord, imposed by reason of Tenant's
failure to comply with any Environmental Law or any provision of this Article
48(c).

                  (B) to defend (with counsel approved by Landlord), indemnify
and hold Landlord harmless from and against any and all liabilities, penalties,
losses, expenses, damages, costs, claims, causes of actions, judgments and/or
the like, of whatever nature, including but not limited to reasonable attorney's
fees and other expenses of litigation or preparation thereof arising including
any action brought under this Article 48(c), to the extent such costs arise from
or in connection with Tenant's failure to comply with any Environmental Law or
any provision of this Article 48(c).

            (iii) Within ten (10) days after a written request by the Landlord
or any Mortgagee, Tenant shall deliver to Landlord and the Mortgagee, if any, a
fully executed acknowledged affidavit of an executive officer of Tenant,
certifying that the Tenant is not in violation of any Environmental Law. Tenant
shall supply Landlord and the Mortgagee, if any, with all information relating
to any alleged or actual violation of Tenant or any of its officers, employees,
agents, assigns, contractors or licensees or any of Tenant's visitors, guests or
invitees while in the Premises and/or the Project, of any Environmental Law as
the Landlord or Mortgagee reasonably requests within ten (10) days of a written
request for such information.

            (iv) Tenant agrees that each and every provision of this Article
48(c) shall survive the expiration or earlier termination of the Term. The
parties hereto expressly agree and acknowledge that the Landlord would not enter
into this Lease but for the provisions of this Article 48(c) and the survival
thereof.

      (d) Without limitation of any of the provisions of this Article 48, Tenant
shall not store, generate, manufacture, produce, treat, dispose of, release or
discharge on, under or about the Premises any Hazardous Material.

14. American with Disabilities Act. The following is hereby added to the Lease
as Article 49:

                  Article 49 - Americans with Disabilities Act

Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990
(42 U.S.C. S12101 et seq.) and regulations and guidelines promulgated
thereunder, as all of the same may be amended and supplemented from time to time
(collectively referred to herein as the "ADA") establish requirements for
business operations, accessibility and barrier removal, and that such
requirements may or may not apply to the Premises and the Building depending on,
among other

                                       10
<PAGE>   11
things: (1) whether Tenant's business is deemed a "public accommodation" or
"commercial facility", (2) whether such requirements are "readily achievable",
and (3) whether a given alteration affects a "primary function area" or triggers
"path of travel" requirements. The parties hereby agree that: (a) Landlord shall
be responsible for ADA Title III compliance in the Common Areas, except as
provided below, (b) Tenant shall be responsible for ADA Title III compliance in
the Premises, except for any Improvements to be performed by Landlord as part of
Landlord's Work defined herein only in connection with this Extension and Fourth
Modification of Lease, (c) Landlord may perform, or require that Tenant perform,
and Tenant shall be responsible for the cost of, ADA Title III "path of travel"
requirements triggered by alterations in the Premises other than as set forth in
(b) above, and (d) Landlord may perform, or require Tenant to perform, and
Tenant shall be responsible for the cost of, ADA Title III compliance in the
Common Areas necessitated by the Building being deemed to be a "public
accommodation" instead of a "commercial facility" as a result of the Tenant's
use of the Premises. Tenant shall be solely responsible for requirements under
Title I of the ADA relating to Tenant's employees.

15. Business Days and Business Hours. From and after the Additional Space
Commencement Date, the term "Business Days" shall mean Monday to Friday,
inclusive, and Saturday from 8:00 a.m. to 1:00 p.m., excluding all days observed
as holidays by the State or Federal governments ("Holidays") and the term
"Business Hours" shall mean all times between 8:00 a.m. and 6:00 p.m. on Monday
to Friday, inclusive, excluding Holidays, and Saturdays from 8:00 a.m. to 1:00
p.m., excluding Holidays.

16. Extra Hours Charge. Subject to periodic adjustment as set forth in Article
5.3 of the Original Lease, Extra Hours Charge, as of the Additional Space
Commencement Date the Extra Hours Charge shall be $75.00 per hour.

17. Insurance. The words "Such insurance shall be an amount of not less than
$1,000,000 combined single limit for bodily injury and property damage" on lines
25 through 27 of Article 13 of the Original Lease is hereby deleted and the
following inserted in lieu thereof: "Such insurance shall be an amount of not
less than $2,000,000 combined single limit for bodily injury and property
damage".

18. Article 19 of the Lease - Relocation. Article 19 of the Lease - Relocation
is hereby deleted in its entirety.

19. Rules and Regulations. Exhibit "C", "Rules and Regulations" of the Original
Lease is hereby deleted in its entirety and Exhibit "D", "Rules and Regulations"
attached hereto and by this reference made a part hereof is hereby inserted in
lieu thereof.

20. Addresses for Payments and Notices. Item 11 of Exhibit "B" of the Original
Lease, is hereby amended to be:

(a)   Landlord:   Theta Holding Company, L.P.
                  150 Clove Road
                  Little Falls, New Jersey  07424
                  Attn:  Building Manager

(b)   Tenant:     Bisys Management Company
                  c/o The Bisys Group
                  150 Clove Road (10th floor)
                  Little Falls, New Jersey  07424
                  Attn:  General Counsel

21. Broker. Landlord and Tenant represent and warrant to each other that it has
not directly or indirectly dealt with any real estate broker other than CB
Richard Ellis, Inc., 400 W Frank W. Burr Blvd., Teaneck, New Jersey in
connection with this Extension and Fourth Modification of Lease. Each party
covenants and agrees to indemnify, defend and hold the other party harmless from
and against any and all liabilities, claims, suits, demands, judgments, costs,
interest and expenses (including, but not limited to, reasonable counsel fees
incurred in the defense of any action or proceeding) to which the other party
may be subject or suffer by reason of the other indemnifying party's having had
dealings with respect to this Extension and Fourth Modification of Lease with
any other real estate agent or broker. This Article shall survive the expiration
or earlier termination of the Lease and shall control in all respects in which
it may conflict with the printed form of the Lease and this Extension and Fourth
Modification of Lease. Landlord shall

                                       11
<PAGE>   12
pay brokerage commissions in connection with this Extension and Fourth
Modification of Lease to CB Richard Ellis, Inc. pursuant to the terms and
conditions set forth in any separate agreements by and between CB Richard Ellis,
Inc. and Landlord.

22. Tenant hereby renews its obligations to Landlord for the full, prompt and
timely payment of all Basic Rent, Additional Rent and all other sums of money
required to be paid by Tenant during the Term of said Lease, as herein modified,
and for the full, prompt and timely performance, compliance and observance of
all terms contained in the Lease, as herein modified. Landlord acknowledges that
all the benefits and conditions applicable to the Current Premises under said
Lease, hereby apply to the Additional Space pursuant hereto originally as if
same were part of the Lease.

23. The provisions hereof shall inure to the benefit of and be binding upon the
respective successors and assigns of each of the parties hereto.

24. Except as herein specifically modified and to the extent as herein modified,
the provisions of said Lease, as amended, shall remain in full force and effect.

IN WITNESS HEREOF, Landlord, Tenant and Guarantor have caused these presents to
be signed by their respective duly authorized officer, the day and year first
above written.

                              LANDLORD:

                              THETA HOLDING COMPANY, L.P.
                              By M&E Packaging Corp., its General Partner

                              By:   /s/ Alfred S. Teo
                                    --------------------------------------
                                    Alfred S. Teo, President

                                       12
<PAGE>   13
                              TENANT:

                              BISYS MANAGEMENT COMPANY

                              By:   /s/ Dennis R. Sheehan
                                    --------------------------------------
                                                (Signature)

                              Name: Dennis R. Sheehan
                                    --------------------------------------

                              Title: Executive Vice President
                                    --------------------------------------

                              GUARANTOR:

                              By:   /s/ Dennis R. Sheehan
                                    --------------------------------------
                                                (Signature)

                              Name: Dennis R. Sheehan
                                    --------------------------------------

                              Title: Executive Vice President
                                    --------------------------------------

                                       13

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