SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUESTAR MARKET RESOURCES, INC.
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of
incorporation or organization)
180 East 100 South
P.O. Box 45601
Salt Lake City, Utah 84145-0601
(Zip Code)
(Address of principal executive
offices)
87-0287750
(I.R.S. Employer
Identification No.)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (801) 324-5202
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS TO BE SO REGISTERED
NONE
NAME OF EACH EXCHANGE ON WHICH EACH CLASS IS TO BE REGISTERED
NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE
(Title of class)
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS J
1(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.
TABLE OF CONTENTS
Page
Item 1. Business
Item 2. Financial Information
Item 3. Properties
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors and Executive Officers
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Legal Proceedings
Item 9. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters
Item 10. Recent Sales of Unregistered Securities
Item 11. Description of Registrant's Securities to be Registered
Item 12. Indemnification of Officers and Directors
Item 13. Financial Statements and Supplementary Data
Item 14. Changes in and Disagreements with Accountants and Financial
Disclosure
Item 15. Financial Statements and Exhibits
CERTAIN DEFINITIONS
As used herein, the following terms have the specific meanings set
out: "Bbl" means barrel. "MBbl" means thousand barrels. "MMBbl"
means million barrels. "Oil" includes crude oil and condensate.
"NGL" means natural gas liquids. "Mcf" means thousand cubic feet.
"MMcf" means million cubic feet. "Bcf" means billion cubic feet.
"MMBtu" means million British thermal units, a measure of heating
value. "Dth" means decatherm (one decatherm equals one MMBtu).
"MDth" means thousand decatherms. "MMDth" means million decatherms.
"Mcfe" means thousand cubic feet of natural gas equivalents. "Bcfe"
means billion cubic feet of natural gas equivalents. (Oil volumes are
converted to natural gas equivalents using the ratio of one barrel of
crude oil to six Mcf of natural gas). Unless otherwise indicated,
natural gas volumes are stated at the official temperature and
pressure basis of the area in which the reserves are located.
With respect to information concerning the Company's working interests
in wells or drilling locations, "gross" natural gas and oil wells or
"gross" acres is the number of wells or acres in which the Company has
an interest, and "net" gas and oil wells or "net" acres are determined
by multiplying "gross" wells or acres by the Company's working
interest in those wells or acres. A working interest in an oil and
natural gas lease is an interest that gives the owner the right to
drill, produce, and conduct operating activities on the property and
to receive a share of production of any hydrocarbons covered by the
lease. A working interest in an oil and gas lease also entitles its
owner to a proportionate interest in any well located on the lands
covered by the lease, subject to all royalties, overriding royalties
and other burdens, to all costs and expenses of exploration,
development and operation of any well located on the lease, and to all
risks in connection therewith.
A "development well" is a well drilled as an additional well to the
same horizon or horizons as other producing wells on a prospect, or a
well drilled on a spacing unit adjacent to a spacing unit with an
existing well capable of commercial production and which is intended
to extend the proven limits of a prospect. An "exploratory well" is a
well drilled to find commercially productive hydrocarbons in an
unproved area, or to extend significantly a known prospect.
"Proved reserves" means those quantities of natural gas and crude oil,
condensate and natural gas liquids on a net revenue interest basis,
which geological and engineering data demonstrate with reasonable
certainly to be recoverable under existing economic and operating
conditions. "Proved developed reserves" include proved developed
producing reserves and proved developed behind-pipe reserves. "Proved
developed producing reserves" include only those reserves expected to
be recovered from existing completion intervals in existing wells.
"Proved undeveloped reserves" includes those reserves expected to be
recovered from new wells on proved undrilled acreage or from existing
wells where a relatively major expenditure is required for
recompletion.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form includes "forward-looking statements" within the meaning of
Section 27a of the Securities Act of 1933, as amended, and Section 21e
of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included or incorporated by
reference in this Form, including, without limitation, statements
regarding the Company's future financial position, business strategy,
budgets, projected costs and plans and objectives of management for
future operations, are forward-looking statements. In addition,
forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may", "will", "could", "expect",
"intend", "project", "estimate", "anticipate", "believe", "forecast",
or "continue" or the negative thereof or variations thereon or similar
terminology. Although these statements are made in good faith and are
reasonable representations of the Company's expected performance at
the time, actual results may vary from management's stated
expectations and projections due to a variety of factors.
Important assumptions and other significant factors that could cause
actual results to differ materially from those expressed or implied
in forward-looking statements include changes in general economic
conditions, gas and oil prices and supplies, competition, regulation
of the Wexpro settlement agreement, availability of gas and oil
properties for sale or for exploration and other factors beyond the
control of the Company. These other factors include the rate of
inflation, the weather and other natural phenomena, the effect of
accounting policies issued periodically by accounting standard-setting
bodies, and adverse changes in the business or financial condition of
the Company.
The Company does not undertake an obligation to update forward-looking
information contained herein or elsewhere to reflect actual results,
changes in assumptions or changes in other factors affecting such
forward-looking information.
ITEM 1. BUSINESS
General
Questar Market Resources Inc. (the "Company" or "QMR", which reference
shall include the Company's wholly-owned subsidiaries) is a
wholly-owned subsidiary of Questar Corporation. Questar Corporation
("Questar") is a publicly traded (NYSE: STR) diversified natural gas
company with two principal business units - Market Resources and
Regulated Services.
QMR and its subsidiaries comprise the Market Resources unit of Questar
and as such engage in oil and gas exploration, development and
production; gas gathering and processing; wholesale gas, electricity,
and hydrocarbon liquids trading; and the acquisition of producing oil
and gas properties. As noted in the following Questar organization
chart, QMR is a subholding company of Questar that conducts its
activities through Questar Exploration and Production Company
("Questar E&P") and its Canadian subsidiaries Celsius Energy Resources
Ltd. ("Celsius Ltd.") and Canor Energy Ltd. ("Canor"); Wexpro Company
("Wexpro"); Questar Gas Management Company ("QGM"); and Questar Energy
Trading Company ("Questar Energy Trading").
Questar Corporation
Questar InfoComm, Inc. (Information Services)
Questar Market Resources, Inc. (Subholding Company)
Wexpro Company (Manages and develops cost-of-service
properties for Questar Gas)
Questar Exploration and Production Company (Exploration
and Production)
Celsius Energy Resources Ltd. and Canor Energy Ltd.
(Exploration & Production - Canada)
Questar Energy Trading Company (Wholesale Energy Trading)
Questar Gas Management Company (Gathering and Processing)
Questar Regulated Services Company (Subholding Company)
Questar Gas Company (Retail Distribution)
Questar Pipeline Company (Transportation and Storage)
Management of Questar has identified QMR as the primary growth area
within Questar's business strategy. Questar expects to spend 70% of
its capital budget funds over the next five years on non-regulated
activities, primarily within QMR, to expand reserves through drilling
and acquisitions and to enlarge its infrastructure of gathering
systems, processing plants, header facilities, and nonregulated
storage facilities. Management of QMR believes that the diversity of
the activities pursued by QMR enhances its basic strategy to pursue
complementary growth. As the exploration and production companies
find or acquire new reserves, QGM should have more opportunities to
expand gathering and processing activities, and Questar Energy Trading
should have more physical production to support its marketing
programs.
Business Strategy
QMR believes it can best meet and balance the expectations of its
parent and fixed income investors by pursuing the following strategies
in its business:
- achieve a prudent, disciplined program to grow reserves
- provide stakeholder value performance in both the short and
long term
- employ hedging and other risk management tools to manage
cyclicality
- maintain a strong balance sheet that permits prudent growth
opportunities
- maintain a portfolio of quality drilling prospects
- identify and divest non-core and marginal assets and
activities
- proactively avoid litigation risks
- employ technology and proven innovations to reduce costs
Oil and Gas Exploration and Production - Questar E&P and Celsius Ltd.
Together, QMR's exploration and production ("E&P") subsidiaries form a
unique E&P group that conducts a blended program of low-cost
development drilling, low-risk reserve acquisition, and high-quality
exploration. The E&P group also maintains a geographical balance and
diversity, while concentrating its activities in core areas in which
it has accumulated geologic knowledge and developed significant
management expertise. Core areas of activity include the Rocky
Mountain Region of Wyoming and Colorado; the Mid-Continent Region of
Oklahoma, the Texas Panhandle, East Texas, and the Upper Gulf Coast;
the Southwest Region of northwest New Mexico and southwest Colorado;
and the Western Canada Sedimentary Basin located primarily in the
Canadian province of Alberta.
At December 31, 1999, the Company had proved noncost-of-service
reserves (i.e., excluding cost-of-service reserves of Questar Gas
Company, an affiliate of the Company ("Questar Gas")) of 612.9 Bcfe of
natural gas, crude oil and natural gas liquids. On an energy
equivalent basis ratio of six Mcf of natural gas to one Bbl of crude
oil or natural gas liquids, natural gas comprised 84% of total
noncost-of-service proved reserves. Proved developed reserves
comprised 85% of the total noncost-of-service proved reserves on an
energy equivalent basis.
A detailed description of the Company's proved reserves and their
geographic diversity can be found under "Item 3. Properties."
Development and Production - Wexpro
QMR conducts development drilling and provides production services to
Questar Gas through Wexpro. Wexpro was incorporated in 1976 as a
subsidiary of Questar Gas. Questar Gas' efforts to transfer producing
properties and leasehold acreage to Wexpro resulted in protracted
regulatory proceedings and legal adjudications that ended with a
court-approved settlement agreement that was effective August 1, 1981.
A summary of the Wexpro settlement agreement is contained in Note 9 of
the Notes to Consolidated Financial Statements under Item 13 of this
Form 10. Ownership of Wexpro was moved from Questar Gas to QMR in
1982.
Wexpro, unlike QMR's other E&P companies, generally does not conduct
exploratory operations and does not acquire leasehold acreage for
exploration activities. It conducts oil and gas development and
production activities on certain producing properties located in the
Rocky Mountain region under the terms of the settlement agreement.
Wexpro produces gas from specified properties for Questar Gas and is
reimbursed for its costs plus a return on its investment. In
connection with its operations under the settlement agreement, Wexpro
charges Questar Gas for its cost plus a specified rate of return
(18.9% after tax at the end of 1999 and adjusted annually based on a
specified formula) on its net investment in such properties adjusted
for working capital and deferred taxes. Under the terms of the
settlement agreement, Wexpro bears all dry hole costs. The settlement
agreement is monitored by the Utah Division of Public Utilities, the
staff of the Public Service Commission of Wyoming ("PSCW"), and
experts retained by those agencies.
The gas volumes produced by Wexpro for Questar Gas are reflected in
the latter's rates at cost-of-service. Cost-of-service gas produced
by Wexpro satisfied approximately 49% of Questar Gas' system
requirements during 1999. Questar Gas relies upon Wexpro's drilling
program to develop the properties from which the cost-of-service gas
is produced. During 1999, the average wellhead cost of Questar Gas'
cost-of-service gas was $1.50 per Dth, which is lower than Questar
Gas' average price for field-purchased gas. To fulfill its
obligations to Questar Gas under the settlement agreement, Wexpro must
continue to be a prudent operator.
Wexpro participates in drilling activities in response to the demands
of other working interest owners, to protect its rights, and to meet
the needs of Questar Gas. Wexpro, in 1999, produced 38.9 Bcf of
natural gas from Questar Gas' cost-of-service properties and added
cost-of-service reserves of 52.5 Bcf through drilling activities and
reserve estimate revisions.
Wexpro has an ownership interest in the wells and appurtenant
facilities related to its oil reservoirs and in the wells and
facilities that have been installed to develop and produce gas
reservoirs described above since August 1, 1981.
Gathering and Processing - QGM
QGM conducts gathering and processing activities in the Rocky Mountain
and Mid-Continent areas. Its activities are not subject to regulation
by the Federal Energy Regulatory Commission ("FERC"). QGM was formed
in 1993, as a wholly-owned subsidiary of Questar Pipeline Company, an
affiliate of the Company ("Questar Pipeline"), to construct and
operate the Blacks Fork Processing Plant in southwestern Wyoming. It
expanded in 1996 when Questar Pipeline transferred its gathering
assets and activities to QGM. In mid-1996, ownership of QGM was moved
from Questar Pipeline to QMR and QGM acquired the processing plants
that formerly belonged to Questar E&P.
QGM's gathering system, which consists of 1,400 miles of gathering
lines, compressor stations, field dehydration plants, and measuring
stations, was largely built to gather production from Questar Gas'
cost-of-service properties. During 1999, QGM gathered 32.1 MMDth of
natural gas for Questar Gas, compared to 29.9 MMDth in 1998, for which
it received $4.7 million in demand charges in 1999 from Questar Gas.
Under the terms of a contract that was assigned with the gathering
assets from Questar Pipeline, QGM is obligated to gather Questar Gas'
cost-of-service production for the life of the properties. QGM's
total gas gathering volumes were 136.7 MMDth in 1999 compared to 120.5
MMDth in 1998.
QGM's gathering system was originally built as part of a regulated
company. QGM now must operate in a different competitive environment.
Often, new wells will have connections with more than one gathering
system, and producers insist that gathering systems be tied to more
than one pipeline.
In addition to gathering activities, QGM is also engaged in processing
activities. It owns a 50% interest in the Blacks Fork Processing
Plant, which has a daily capacity of 84 MMcf and may be expanded
during 2000. This plant, which is located in southwestern Wyoming,
strips liquids (e.g., ethane, butane) from natural gas volumes. QGM
and Wexpro jointly own a new processing facility located in the Canyon
Creek area of southwestern Wyoming that has an operating capacity of
45 MMcf per day. QGM also owns interests in other processing plants
in the Rocky Mountain and Mid-Continent areas.
Wholesale Marketing - Questar Energy Trading
Questar Energy Trading conducts energy marketing activities. It
combines gas volumes purchased from third parties and equity
production (production that is produced by affiliates) to build a
flexible and reliable portfolio. Questar Energy Trading aggregates
supplies of natural gas for delivery to large customers, including
industrial users, and other marketing entities. During 1999, Questar
Energy Trading marketed a total of 101.1 MMDth of natural gas, 2.0
MMBbls of liquids, and 10,000 megawatt-hours of electricity and earned
a gross profit margin of $4.1 million.
Questar Energy Trading uses derivatives as a risk management tool to
provide price protection for physical transactions involving equity
production and marketing transactions. Questar Energy Trading
executes hedges for equity production on behalf of Questar E&P and
does so with a variety of contracts for different periods of time.
See "Item 2. Financial Information - Market Risk."
As a wholesale marketing entity, Questar Energy Trading concentrates
on markets in the Pacific Northwest, Rocky Mountains, Midwest,
Southwest, California, and western Canada that are close to reserves
owned by affiliates or accessible by major pipelines.
To sustain its activities in an increasingly competitive environment
in which sellers and purchasers are becoming more sophisticated,
Questar Energy Trading needs to expand its capabilities. Through a
new limited liability company, it has filed an application with the
FERC and obtained authorization to construct and operate a private
storage reservoir in southwestern Wyoming adjacent to several
interstate pipelines and is negotiating partnerships with electricity
providers and others to obtain additional capability, expertise, and
access to sophisticated information technology.
Relationship with Questar
QMR and Questar are parties to several agreements which govern
different aspects of the QMR - Questar relationship. The more
significant of these agreements are described below. Also see Note 8
of the Notes to Consolidated Financial Statements under Item 13 of
this Form 10.
Tax Sharing Agreement with Questar -- Under a Tax Sharing Agreement
with Questar, QMR's revenues and expenses are included in the
consolidated Federal tax return of Questar. QMR files most of its
State income tax returns on a separate basis. QMR is allocated
Federal tax benefits and charges on the basis of statutory U.S. tax
rates applied to the Company's taxable income or loss included in the
consolidated returns. The benefits of general business credits,
foreign tax credits and any other tax credits are utilized in
computing current tax liability. QMR is paid for tax benefits
generated and utilized in Questar's consolidated federal and state
income tax returns, whether or not the Company would have been able to
utilize these benefits on a separate tax return. Income tax assets or
liabilities are settled on a quarterly basis.
Wexpro Settlement Agreement with Questar Gas -- Wexpro and Questar Gas
are parties to the Wexpro Settlement Agreement. Wexpro's operations
are subject to the terms of this agreement. The agreement became
effective August 1, 1981, and sets forth the rights of Questar Gas'
utility operations to share in the results of Wexpro's operations.
The agreement was approved by the Public Service Commission of Utah
("PSCU") and PSCW in 1981 and affirmed by the Supreme Court of Utah in
1983. Major provisions of the settlement agreement are as follows:
a. Wexpro continues to hold and operate all oil-producing
properties previously transferred from Questar Gas' nonutility
accounts. The oil production from these properties is sold at
market prices, with the revenues used to recover operating
expenses and to give Wexpro a return on its investment. The
after tax rate of return is adjusted annually and is
approximately 13.7%. Any net income remaining after recovery
of expenses and Wexpro's return on investment is divided
between Wexpro and Questar Gas, with Wexpro retaining 46%.
b. Wexpro conducts developmental oil drilling on productive oil
properties and bears any costs of dry holes. Oil discovered
from these properties is sold at market prices, with the
revenues used to recover operating expenses and to give Wexpro
a return on its investment in successful wells. The after tax
rate of return is adjusted annually and is approximately
18.7%. Any net income remaining after recovery of expenses
and Wexpro's return on investment is divided between Wexpro
and Questar Gas, with Wexpro retaining 46%.
c. Amounts received by Questar Gas from the sharing of Wexpro's
oil income are used to reduce natural gas costs to utility
customers.
d. Wexpro conducts developmental gas drilling on productive gas
properties and bears any costs of dry holes. Natural gas
produced from successful drilling is owned by Questar Gas.
Wexpro is reimbursed for the costs of producing the gas plus a
return on its investment in successful wells. The after tax
return allowed Wexpro is approximately 21.7%.
Wexpro operates natural gas properties owned by Questar Gas. Wexpro is
reimbursed for its costs of operating these properties, including a
rate of return on any investment it makes. This after tax rate of
return is approximately 13.7%.
Transportation Agreements with Affiliates -- As an affiliate of QMR,
Questar Pipeline transports natural gas produced from properties
operated by Wexpro. Questar Pipeline also transports volumes of
natural gas marketed by Questar Energy Trading, another QMR
subsidiary.
Transfer of Gas Gathering Assets -- In 1996, Questar Pipeline
transferred approximately $55 million of gas-gathering assets to its
subsidiary QGM. QGM was subsequently transferred to QMR on July 1,
1996. The transaction was in the form of a stock dividend payable to
Questar, which stock Questar contributed to QMR.
Government Regulation
QMR's operations are subject to various levels of government controls
and regulation in the United States and Canada.
United States Regulation. In the United States, legislation
affecting the oil and gas industry has been pervasive and is
subject to continuing review for amendment or expansion. Pursuant
to such legislation, numerous federal, state and local
departments and agencies have issued extensive rules and
regulations binding on the oil and gas industry and its
individual members, some of which carry substantial penalties for
the failure to comply. Such laws and regulations have a
significant impact on oil and gas drilling and production
activities, increase the cost of doing business and,
consequently, affect profitability. Inasmuch as new legislation
affecting the oil and gas industry is commonplace and existing
laws and regulations are frequently amended or reinterpreted, QMR
is unable to predict the future cost or impact of complying with
such laws and regulations.
Exploration and Production. QMR's United States operations are
subject to various types of regulation at the federal, state and
local levels. Such regulation includes requiring permits for the
drilling of wells; maintaining bonding requirements in order to
drill or operate wells; submitting and implementing spill
prevention plans; submitting notification relating to the
presence, use and release of certain contaminants incidental to
oil and gas operations; and regulating the location of wells, the
method of drilling and casing wells, the use, transportation,
storage and disposal of fluids and materials used in connection
with drilling and production activities, surface usage and the
restoration of properties upon which wells have been drilled, the
plugging and abandoning of wells and the transporting of
production. QMR's operations are also subject to various
conservation matters, including the regulation of the size of
drilling and spacing units or proration units, the number of
wells which may be drilled in a unit, and the unitization or
pooling of oil and gas properties. In this regard, some states
allow the forced pooling or integration of tracts to facilitate
exploration while other states rely on voluntary pooling of lands
and leases, which may make it more difficult to develop oil and
gas properties. In addition, state conservation laws establish
maximum rates of production from oil and gas wells, generally
prohibit the venting or flaring of gas, and impose certain
requirements regarding the ratable purchase of production. The
effect of these regulations is to limit the amounts of oil and
gas QMR can produce from its wells and to limit the number of
wells or the locations at which QMR can drill.
Certain of QMR's oil and gas leases, including most of its leases
in the San Juan Basin and many of the Company's leases in
southeast New Mexico and Wyoming, are granted by the federal
government and administered by various federal agencies. Such
leases require compliance with detailed federal regulations and
orders which regulate, among other matters, drilling and
operations on lands covered by these leases, and calculation and
disbursement of royalty payments to the federal government.
Environmental and Occupational Regulations. Various federal,
state and local laws and regulations concerning the discharge of
contaminants into the environment, the generation, storage,
transportation and disposal of contaminants or otherwise relating
to the protection of public health, natural resources, wildlife
and the environment may affect the Company's operations and
costs. In particular, the Company's oil and gas exploration,
development and production operations, its activities in
connection with storage and transportation of liquid
hydrocarbons, and its use of facilities for treating, processing,
recovering or otherwise handling hydrocarbons and wastes
therefrom are subject to environmental regulation by governmental
authorities. Such regulation has increased the cost of planning,
designing, drilling, installing, operating and abandoning the
Company's oil and gas wells and other facilities. Additionally,
these laws and regulations may impose substantial liabilities for
the Company's failure to comply with them or for any
contamination resulting from the Company's operations.
QMR takes the issue of environmental stewardship very seriously
and works diligently to comply with applicable environmental
rules and regulations. Compliance with such laws and regulations
has not had a material effect on the Company's operations or
financial condition in the past. However, because environmental
laws and regulations are becoming increasingly more stringent,
there can be no assurances that such laws and regulations or any
environmental law or regulation enacted in the future will not
have a material effect on the Company's operations or financial
condition.
QMR is also subject to laws and regulations concerning
occupational safety and health. Due to the continued changes in
these laws and regulations, and their judicial construction, QMR
is unable to predict with any reasonable degree of certainty its
future costs of complying with these laws and regulations.
Canadian Regulation. The oil and gas industry in Canada is
subject to extensive controls and regulations imposed by various
levels of government. It is not expected that any of these
controls or regulation will affect QMR's Canadian operations in a
manner materially different than they would affect other oil and
gas companies of similar size. The following are the most
important areas of control and regulation.
The North American Free Trade Agreement. The North American Free
Trade Agreement ("NAFTA") which became effective on January 1,
1994, carries forward most of the material energy terms contained
in the Canada-U.S. Free Trade Agreement. In the context of energy
resources, Canada continues to remain free to determine whether
exports to the U.S. or Mexico will be allowed, provided that any
export restrictions do not: (i) reduce the proportion of energy
exported relative to the supply of the energy resource; (ii)
impose an export price higher than the domestic price; or (iii)
disrupt normal channels of supply. All parties to NAFTA are also
prohibited from imposing minimum export or import price
requirements.
Royalties and Incentives. Each province and the federal
government of Canada have legislation and regulations governing
land tenure, royalties, production rates and taxes, environmental
protection and other matters under their respective
jurisdictions. The royalty regime is a significant factor in the
profitability of oil and natural gas production. Royalties
payable on production from lands other than Crown lands are
determined by negotiations between the parties. Crown royalties
are determined by government regulation and are generally
calculated as a percentage of the value of the gross production
with the royalty rate dependent in part upon prescribed reference
prices, well productivity, geographical location, field discovery
date and the type and quality of the petroleum product produced.
From time to time, the governments of Canada, Alberta and British
Columbia have also established incentive programs such as royalty
rate reductions, royalty holidays and tax credits for the purpose
of encouraging oil and natural gas exploration or enhanced
recovery projects. These incentives generally have the effect of
increasing the cash flow to the producer.
Pricing and Marketing. The price of oil and natural gas sold is
determined by negotiation between buyers and sellers. An order
from the National Energy Board ("NEB") is required for oil
exports from Canada. Any oil export to be made pursuant to an
export contract of longer than one year, in the case of light
crude, and two years, in the case of heavy crude, duration (up to
25 years) requires an exporter to obtain an export license from
the NEB. The issue of such a license requires the approval of
the Governor in Council. Natural gas exported from Canada is
also subject to similar regulation by the NEB. Exporters are
free to negotiate prices and other terms with purchasers,
provided that the export contracts in excess of two years must
continue to meet certain criteria prescribed by the NEB. The
governments of Alberta and British Columbia also regulate the
volume of natural gas which may be removed from those provinces
for consumption elsewhere based on such factors as reserve
availability, transportation arrangements and market
considerations.
Environmental Regulation. The oil and natural gas industry is
subject to environmental regulation pursuant to local, provincial
and federal legislation. Environmental legislation provides for
restrictions and prohibitions on releases or emissions of various
substances produced or utilized in association with certain oil
and gas industry operations. In addition, legislation requires
that well and facility sites be abandoned and reclaimed to the
satisfaction of provincial authorities. A breach of such
legislation may result in the imposition of fines and penalties.
QMR is committed to meeting its responsibilities to protect the
environment wherever it operates and anticipates making increased
expenditures of both a capital and expense nature as a result of
the increasingly stringent laws relating to the protection of the
environment. QMR's unreimbursed expenditures in 1999 concerning
such matters were immaterial, but QMR cannot predict with any
reasonable degree of certainty its future exposure concerning
such matters.
Investment Canada Act. The Investment Canada Act requires
Government of Canada approval, in certain cases, of the
acquisition of control of a Canadian business by an entity that
is not controlled by Canadians. In certain circumstances, the
acquisition of natural resource properties may be considered to
be a transaction requiring such approval.
Insurance Coverage Maintained with Respect to Operations
Principally through shared arrangements with Questar, the Company
maintains insurance policies covering its operations in amounts and
areas of coverage normal for a company of its size in the oil and gas
exploration and production industry. These include, but are not
limited to, worker's compensation, employers' liability, automotive
liability, certain environmental claims and general liability. In
addition, umbrella liability and operator's extra expense policies are
maintained. All such insurance is subject to normal deductible
levels.
Competition
The oil and gas business is highly competitive. The Company faces
competition in all aspects of its business, including, but not limited
to acquiring reserves, leases, licenses and concessions; obtaining
goods, services and labor needed to conduct its operations and manage
the Company; and marketing its oil and gas. Intense competition
occurs with respect to marketing, particularly of natural gas. The
Company's competitors include multinational energy companies, other
independent producers and individual producers and operators. Many
competitors have greater financial and other resources than the
Company.
Seasonal Nature of Business
Generally, but not always, the demand for natural gas decreases during
the summer months and increases during the winter months. Seasonal
anomalies such as mild winters sometimes lessen this fluctuation. In
addition, pipelines, utilities, local distribution companies and
industrial users utilize natural gas storage facilities and purchase
some of their anticipated winter requirements during the summer. This
can also lessen seasonal demand fluctuations.
Natural Gas and Oil Marketing
The Company markets substantially all of its own natural gas and oil
production. The revenues generated by the Company's operations are
highly dependent upon the prices of, and demand for, oil and gas. The
price received by the Company for its crude oil and natural gas
depends upon numerous market factors, the majority of which are beyond
the Company's control, including economic conditions in the United
States and elsewhere, the world political situation, OPEC actions, and
governmental regulation. The fluctuation in world oil prices
continues to reflect market uncertainty regarding the balance of world
demand for and supply of oil and gas. The fluctuation of natural gas
prices reflects the seasonal swings of storage inventory, weather
conditions, and increasing utilization of natural gas for electric
generation as it affects overall demand. Decreases in the prices of
oil and gas have had, and could have in the future, an adverse effect
on the Company's development and exploration programs, proved
reserves, revenues, profitability and cash flow. See "Item 2.
Financial Information - Market Risk."
Customers
QMR sells its gas production to a variety of customers including
pipelines, gas marketing firms, industrial users and local
distribution companies. Existing gathering systems and interstate and
intrastate pipelines are used to consummate gas sales and deliveries.
The principal customers for QMR's crude oil production are refiners,
remarketers and other companies, some of which have pipeline
facilities near the producing properties. In the event pipeline
facilities are not conveniently available, crude oil is trucked to
storage, refining or pipeline facilities.
Employees and Offices
As of March 15, 2000, the Company had 417 full-time employees. None
of the Company's employees are represented by organized labor unions.
The Company also engages, from time to time, independent consulting
petroleum engineers, environmental professionals, geologists,
geophysicists, landmen and attorneys on a fee basis.
The Company's executive offices are located at 180 East 100 South, P.
O. Box 45601, Salt Lake City, Utah 84145-0601, and its telephone
number is (801) 324-2600. Regional operating offices are also
maintained in Denver, Colorado; Oklahoma City, Oklahoma; Tulsa,
Oklahoma; Rock Springs, Wyoming; and Calgary, Alberta.
ITEM 2. FINANCIAL INFORMATION
Selected Financial Data
The following table sets forth certain selected financial data of the
Company for the five years ended December 31, 1999. This information
should be read in conjunction with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in
this item, and the Consolidated Financial Statements and the notes
thereto included in "Item 13. Financial Statements and Supplementary
Data." The financial statements of QMR included in Item 13 of this
Form 10 have been audited by Ernst & Young LLP, independent auditors,
as experts in accounting and auditing. Information disclosed in the
following table for the years ended December 31, 1996 and 1995 has not
been audited.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
(In Thousands)
<S> <C> <C> <C> <C> <C>
Revenues $498,311 $458,272 $523,640 $484,080 $309,466
Write-down of investment in oil
and gas properties 31,000 9,000
Operating income 76,778 25,629 54,837 64,688 43,853
Debt expense 17,363 12,631 10,882 8,699 6,323
Income from continuing operation 45,866 16,625 39,111 42,447 31,654
Net income 45,866 16,162 38,090 42,125 31,654
Total assets $847,891 $815,153 $696,675 $696,754 $457,620
Short-term debt 24,500 121,800 44,300 78,000 14,000
Long-term debt 264,894 181,624 133,387 120,000 53,000
Common equity 387,834 359,638 359,283 337,666 282,144
Net cash provided from operating
activities 141,245 127,513 136,935 83,309 79,596
Net cash used in investing
activities 94,858 246,693 81,306 184,453 17,606
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis addresses changes in the
Company's financial condition and results of operations.
Results of Operations -
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Operating Income -
Revenues
Natural gas sales $125,245 $98,767 $89,489
Oil and natural gas liquids sales 41,521 36,722 53,722
Cost-of-service gas operations 61,705 61,448 52,950
Energy marketing 243,296 234,565 297,413
Gas gathering and processing 22,341 21,954 25,998
Other 4,203 4,816 4,068
Total revenues 498,311 458,272 523,640
Operating expenses
Energy purchases $239,201 $230,462 $291,851
Operating and maintenance 79,916 73,763 72,958
Depreciation and amortization 78,608 71,377 67,078
Write-down of oil and gas properties 31,000 9,000
Other taxes 21,516 24,988 25,569
Oil-income sharing 2,292 1,053 2,347
Total operating expenses 421,533 432,643 468,803
Operating income $ 76,778 $ 25,629 $ 54,837
Year Ended December 31
1999 1998 1997
(In Thousands)
Operating Statistics -
Production volumes
Natural gas (in MMcf) 62,712 51,309 47,442
Oil and natural gas liquids (in MBbl) 2,866 2,894 2,938
Production revenue
Natural gas (per Mcf) $ 2.00 $ 1.92 $ 1.89
Oil and natural gas liquids (per bbl) $ 14.49 $ 12.69 $ 18.29
Wexpro investment base,
net of deferred income taxes
(in Thousands) $108,890 $ 97,594 $ 72,867
Energy-marketing volumes
(in thousands of equivalent Dth) 112,982 113,513 142,601
Natural gas-gathering volumes (in MDth)
For unaffiliated customers 84,961 72,908 57,586
For Questar Gas 32,050 29,893 28,506
For other affiliated customers 19,659 17,720 17,679
Total gathering 136,670 120,521 103,771
Gathering revenue (per Dth) $0.15 $0.16 $0.21
</TABLE>
QMR's operating income increased 36% in 1999 compared with 1998
excluding a 1998 full cost write-down. Primary factors were an
increase in gas production, higher commodity prices and an increase in
the Wexpro investment base.
Revenues from natural gas sales were 27% higher in 1999 compared with
1998. Gas production rose 22% and selling prices were 4% higher.
Revenues from selling oil and natural gas liquids climbed 13% in 1999
due to a 14% increase in average selling prices.
QMR achieved a 132% reserve replacement ratio in 1999. Reserve
additions, revisions and purchases amounted to 139 Bcfe with the
largest part of the increased reserves coming through drilling
results. QMR drilled 235 wells (93 net wells) in 1999, including
Wexpro's cost of service drilling, with a 90% success rate. In 1999,
QMR sold 34 Bcfe of nonstrategic reserves mostly in the Permian Basin
and Kansas with combined daily production of 4.3 MMcf of gas and 1,100
barrels of oil. The sale proceeds reduced the full cost amortization
rate in the fourth quarter of 1999. Reserve replacement in 1998 was
250% and 173 Bcfe, primarily the result of acquiring an estimated 150
Bcfe of proved oil and gas reserves, primarily in Oklahoma, as well as
in Texas, Arkansas and Louisiana.
Wexpro's investment base, net of deferred income taxes, grew 12% to
$108.9 million as of December 31, 1999, through its successful
development drilling program. Wexpro's effective after-tax return on
investment in those properties was 18.9% at the end of the year. A
summary of the Wexpro settlement agreement is provided in Note 9 of
the Notes to Consolidated Financial Statements under Item 13 of this
Form 10.
QMR achieved a five-year average finding cost of $.85 per Mcfe,
including cost-of-service reserves, in 1999 compared with $.93 per
Mcfe in 1998.
During 1999, QMR had forward contracts in place on approximately 59%
of its gas production at an average price of $2.03 per Mcf, net back
to the well. Approximately 56% of oil production, excluding oil
produced by Wexpro, was hedged at an average price of $15.02 per
barrel, net back to the well, which was equivalent to $16.33 per
barrel using the West Texas Intermediate benchmark. At December 31,
1999, approximately 52% of Company owned gas production in 2000 and
2001 was under hedging contracts with prices, net back to the well,
between $2.15 and $2.23 per Mcf. Oil production in 2000 and 2001 is
hedged at $17.22 to $17.67 per barrel, net back to the well, on
approximately 84% of production excluding Wexpro.
A 31% drop in the average selling price of oil and NGL caused a $31
million write-down of oil and gas properties in the fourth quarter of
1998 under full-cost accounting rules. The write-down reduced income
by $18.5 million after taxes. Revenues for QMR decreased 12% in 1998
compared with 1997, due primarily to lower marketing revenues and
lower selling prices for oil and NGL. Natural gas production
increased 8% primarily as a result of producing properties acquired in
September 1998. Lower commodity prices in Canada caused a $6 million
full-cost write-down in 1997 out of a total write-down of $9 million in 1997.
Revenues and product purchases for marketing activities increased 4%
in 1999 compared with 1998 resulting in no change in the margin year
to year. In 1999, the Company received refunds from pipelines as a
result of orders issued by FERC. Marketing volumes were unchanged year
to year.
Revenues from gas gathering and processing grew 2% in 1999. Gathering
volumes increased 13% because of increased drilling and gas production
in the Rocky Mountain region. A reduction in projected
gathering-contract revenues caused a $3 million write-down of
gathering assets in 1997 out of a total write-down of $9 million in 1997.
Operating and maintenance expenses increased 8% in 1999 primarily due
to an increase in the number of gas and oil properties. Production
costs in aggregate increased 10% in 1999 compared with 1998, but were
6% lower on an equivalent Mcf basis. The full-cost amortization rate
decreased to $.80 per Mcfe for 1999, down from $.85 in 1998.
However, depreciation and amortization expense increased 10% in 1999
because of higher gas production.
Debt expense was higher in 1999 and 1998 when compared with the
corresponding prior year, because of higher levels of borrowings used
to finance capital expansion.
The effective income tax rates were below the combined federal, state
and foreign statutory rate of about 40% primarily due to tax credits
for tight-sands gas production. Production tax credits of $5.3
million in 1999, $5.7 million in 1998, and $6.6 million in 1997
reduced income tax expenses.
Liquidity and Capital Resources -
Net cash flow provided from operating activities was sufficient to
fund 1999 capital expenditures. In 1999, QMR refinanced
reserve-based, long-term debt used to acquire gas and oil reserves in
1998. Capital expenditures amounted to $134.3 million in 1999.
Operating Activities:
Year Ended December 31
1999 1998 1997
(In Thousands)
Net Income $ 45,866 $ 16,162 $ 38,090
Non-cash transactions 90,465 100,106 77,132
Changes in working capital 4,914 11,245 21,713
Net cash provided from operating $ 141,245 $ 127,513 $ 136,935
activities
Net cash provided from operating activities increased 11% in 1999
primarily due to higher net income. Cash flows from accounts
receivable declined, representing increases in balances in 1999, due
to higher commodity prices. The write-downs of oil and gas properties
in both 1998 and 1997 and their effect on deferred income taxes were
noncash transactions.
Investing Activities: Capital expenditures and other investing
activities amounted to $134.3 million in 1999, $254.5 million in
1998, and $92.3 million is 1997. Following is a summary of capital
expenditures for 1999 and 1998, and a forecast for 2000:
<TABLE>
<CAPTION>
Year Ended December 31
2000 Forecast 1999 1998
(In Thousands)
<S> <C> <C> <>C
Capital expenditures and other
investing activities
Exploratory drilling $ 15,797 $ 1,538 $ 5,898
Development drilling 57,422 64,642 60,402
Other exploration 10,372 19,464 6,789
Reserve acquisitions 61,123 3,704 158,000
Production 11,263 12,856 8,434
Gathering and processing 7,925 12,703 11,046
General 1,605 19,362 3,977
$ 165,507 $ 134,269 $ 254,546
</TABLE>
Capital expenditures in 1999 were primarily comprised of exploration
and development of gas and oil reserves and a $9.1 million equity
contribution in a partnership that operates a liquids processing
plant. QMR participated in drilling 235 wells (93 net wells) in 1999
that resulted in 167 gas wells, 10 oil wells, 19 dry holes and 39
wells in progress at year end. The 1999 drilling success rate was
90%. Early in 2000, QMR purchased 100% of the common stock of Canor
with 61 Bcfe of gas and oil reserves for $61 million.
Financing Activities: Net cash flow provided from operating
activities was sufficient to fund 1999 capital expenditures. The
Company used the proceeds of long-term debt and collection of notes
receivable to reduce short-term borrowings and refinance
reserved-based, long-term debt used to acquire gas and oil reserves in
1998. Proceeds from a sale of nonstrategic gas and oil properties
were placed in an escrow account pending a reinvestment in
strategic-producing properties.
In 1999, QMR entered into a long-term senior-revolving-credit facility
with a syndication of banks. The credit facility has a $295 million
capacity. QMR had borrowed $264.9 million as of December 31, 1999,
under this arrangement. Net working capital was negative at December
31 because of short-term borrowings. These borrowings are typical of
a company expanding operations. QMR intends to refinance a portion of
its debt with the proceeds from the sale of senior notes in 2000.
QMR's consolidated capital structure consisted of 41% long-term debt
and 59% common shareholder's equity at December 31, 1999.
Market Risk -
QMR's primary market-risk exposures arise from commodity-price changes
for natural gas, oil and other hydrocarbons and changes in long-term
interest rates. The Company has an investment in a Canadian operation
that subjects it to exchange-rate risk. QMR also has reserved certain
volumes of pipeline capacity for which it is obligated to pay $3
million annually for the next seven years, whether or not it is able
to market the capacity to others.
Energy Price Risk Management: Energy-price risk is a function of
changes in commodity prices as supply and demand fluctuate. QMR bears
a majority of the risk associated with changes in commodity prices. A
primary objective of energy-price hedging is to protect product sales
from adverse changes in energy prices. The Company does not enter
into hedging contracts for speculative purposes.
QMR held hedge contracts covering the price exposure for about 72.1
million Dth of gas and 2.4 MMBbl of oil at December 31, 1999. A year
earlier the contracts covered 45.3 million Dth of natural gas and
464,000 barrels of oil. The hedging contracts exist for a significant
share of QMR owned gas and oil production and for a portion of
gas-marketing transactions. The contracts at December 31, 1999, had
terms extending through December 2001, with about 65% of those
contracts expiring by the end of 2000.
The mark-to-market adjustment of gas and oil price-hedging contracts
at December 31, 1999, was a negative $6.2 million. The calculation
used energy prices posted on the NYMEX from the last trading day of
1999. A 10% decline in gas and oil prices would cause a positive
$16.7 million mark-to-market adjustment resulting in a $10.5 million
balance. Conversely, a 10% increase in prices results in a $16.3
million negative mark-to-market adjustment resulting in a negative
$22.5 million balance. The fair value of hedging contracts at
December 31, 1998, was $6 million. A 10% decline in gas and oil
prices would cause the fair value of the contracts to increase by $3.9
million. A 10% increase in prices results in a $4.1 million lower
fair value calculation. This sensitivity calculation does not
consider the effect of gains or losses recognized on the underlying
physical side of these transactions, which should largely offset the
change in value.
Interest Rate Risk Management: The Company owed $264.9 million of
variable-rate long term debt at December 31, 1999, and $181.6 million
at December 31, 1998. The book value of variable rate debt
approximates its fair value. If interest rates change by 10%,
interest costs would increase or decrease about $1.7 million in 1999
and $1.1 million in 1998, correspondingly. This sensitivity
calculation does not represent the cost to retire the debt securities.
Securities Available for Sale: Securities available for sale represent
equity instruments traded on national exchanges. The value of these
investments is subject to day to day market volatility. A 10% change
in prices would either increase or decrease the value $1.0 million in
1999.
Foreign Currency Risk Management: The Company does not hedge the
Canadian currency exposure of its Canadian operation's net assets.
The net assets of the foreign operation were negative at December 31,
1999. Long-term debt held by the foreign operation, amounting to
$59.9 million (U.S.), is expected to be repaid from future operations
of the foreign company. As more fully described under "Item 3.
Properties - Recent Developments" herein, QMR expanded its foreign
operations during January 2000 when it purchased 100% of the
outstanding common stock of another Canadian company for $61 million
(U.S.).
Year 2000 Issues -
Questar established a team to address the issue of computer programs
and embedded computer chips being unable to distinguish between the
year 1900 and the year 2000 ("Y2K"). The team identified 55 projects
among Questar and its affiliated companies that were assessed,
remediated, tested, and determined to be completed. In the process,
Questar employees contacted more than 8,000 vendors and suppliers to
assess their readiness to meet obligations to Questar. The cost of
the Y2K project was approximately $5.1 million and QMR's share of
those costs was $.4 million.
The Company did not experience a disruption of operations because of
Y2K. Preparation for Y2K provided several benefits. The Company
completed an inventory of its primary systems and a testing
laboratory. Systems were tested and remediated where necessary. The
testing laboratory will become an important part of the
information-technology management. In response to the Y2K challenge,
business contingency plans were revised and successfully tested.
ITEM 3. PROPERTIES
Reserves
The following table sets forth the Company's estimated proved
reserves, the 10% present value of the estimated future net revenues
therefrom and the standardized measure of discounted net cash flows as
of December 31, 1999. Approximately 97% of QMR's reserves were
estimated by Ryder Scott Company, H. J. Gruy and Associates, Inc.,
Netherland, Sewell & Associates, Inc., Malkewicz Hueni Associates,
Inc., and Gilbert Laustsen Jung Associates Ltd., independent petroleum
engineers, with the remainder done by the Company's reservoir
engineers. The Company does not have any long-term supply contracts
with foreign governments or reserves of equity investees or of
subsidiaries with a significant minority interest.
<TABLE>
<CAPTION>
December 31, 1999
United States Canada Total
<S> <C> <C> <C>
Estimated proved reserves
Natural gas (Bcf) 494.0 20.7 514.7
Oil and NGL (MMBbls) 13.6 2.8 16.4
Proved developed reserves (Bcfe) 486.7 32.5 519.2
Present value of estimated future
net revenues before future income
taxes discounted at 10%
(in thousands) (1) $537,879 $48,568 $586,447
Standardized measure of discounted
net cash flows (in thousands) (2) $421,686 $41,663 $463,349
__________
</TABLE>
(1) Estimated future net revenue represents estimated future gross
revenue to be generated from the production of proved reserves,
net of estimated production and development costs (but excluding
the effects of general and administrative expenses; debt service;
depreciation, depletion and amortization; and income tax
expense).
(2) The standardized measure of discounted net cash flows prepared by
the Company represent the present value of estimated future net
revenues after income taxes, discounted at 10%.
In accordance with applicable requirements of the Securities and
Exchange Commission, estimates of the Company's proved reserves and
future net revenues are made using sales prices estimated to be in
effect as of the date of such reserve estimates and are held constant
throughout the life of the properties (except to the extent a contract
specifically provides for escalation). Estimated quantities of proved
reserves and future net revenues therefrom are affected by natural gas
and oil prices, which have fluctuated widely in recent years. There
are numerous uncertainties inherent in estimating natural gas and oil
reserves and their estimated values, including many factors beyond the
control of the producer. The reserve data set forth in this document
represents only estimates. Reservoir engineering is a subjective
process of estimating underground accumulations of natural gas and oil
that cannot be measured in an exact manner. The accuracy of any
reserve estimate is a function of the quality of available data and of
engineering and geological interpretation and judgement. As a result,
estimates of different engineers, including those used by the Company,
may vary. In addition, estimates of reserves are subject to revision
based upon actual production, results of future development and
exploration activities, prevailing natural gas and oil prices,
operating costs and other factors, which revisions may be material.
Accordingly, reserve estimates are often different from the quantities
of natural gas and oil that are ultimately recovered and are highly
dependent upon the accuracy of the assumptions upon which they are
based.
Reference should be made to Note 11 of the Notes to Consolidated
Financial Statements included in Item 13 of this document for
additional information pertaining to the Company's proved natural gas
and oil reserves as of the end of each of the last three years.
During 1999, the Company filed estimates of oil and gas reserves as of
December 31, 1998, with the U. S. Department of Energy's Energy
Information Administration ("EIA") on Form EIA-23. Reserve estimates
filed on Form EIA-23 are based upon the same underlying technical and
economic assumptions as the estimates of the Company's reserves
included herein. However, the EIA requires reports to include the
interests of all owners in wells that the Company operates and to
exclude all interests in wells that the Company does not operate.
The following charts illustrate QMR's reserve statistics for the years
ended December 31, 1995 through 1999:
Gas and Oil Reserves (Bcfe)
Year Year-End Reserves Annual Production* Reserve Life (Years)
1995 333.4 47.3 7.0
1996 508.8 55.5 9.2
1997 484.2 65.1 7.4
1998 587.3 68.7 8.5
1999 612.9 79.9 7.7
* Includes Wexpro oil production
Proportion of Proved Developed to Proved Reserves
and Proportion of Gas Reserves (Bcfe)
Proved Developed Natural Gas
Total Proved Developed Percent of Percentage of
Reserves Reserves Total Proved Reserves
1995 333.4 315.9 95% 78%
1996 508.8 425.3 84% 75%
1997 484.2 407.9 84% 78%
1998 587.3 519.2 88% 83%
1999 612.9 519.2 85% 84%
Geographic Diversity of Producing Properties
The following table summarizes proved reserves by the Company's major
operating areas at December 31, 1999:
Proved % of
Reserves Total
(Bcfe)
Mid-Continent 335.1 54.7%
Rocky Mountain Region (exclusive of Pinedale) 155.0 25.3%
Pinedale Anticline 54.7 8.9%
Western Canada Sedimentary Basin 37.4 6.1%
San Juan Basin 30.7 5.0%
612.9 100.0%
Production
The following table sets forth the Company's net production volumes,
the average sales prices per Mcf of gas, Bbl of oil and Bbl of natural
gas liquids produced, and the production cost per Mcfe for the years
ended December 31, 1999, 1998, and 1997, respectively:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
United States (excluding Wexpro)
Volumes produced and sold
Gas (Bcf) 59.8 48.6 44.4
Oil (MMBbls) 1.7 1.7 2.3
Natural gas liquids (MMBbls) 0.2 0.2 0.4
Sales Prices:
Gas (per Mcf) $ 2.02 $ 1.95 $ 1.92
Oil (per Bbl) $ 13.97 $ 13.17 $ 19.39
Natural gas liquids (per Bbl) $ 7.70 $ 6.36 $ 12.11
Production costs per Mcfe $ .59 $ .64 $ .65
Canada
Volumes produced and sold
Gas (Bcf) 2.9 2.7 3.1
Oil (MMBbls) 0.4 0.4 0.2
Sales Prices:
Gas (per Mcf) $ 1.61 $ 1.40 $ 1.35
Oil (per Bbl) $ 17.23 $ 14.72 $ 17.32
Production costs per Mcfe $ .67 $ .58 $ .52
</TABLE>
Productive Wells
The following table summarizes the Company's productive wells as of
December 31, 1999:
<TABLE>
<CAPTION>
Productive Wells (1)(2)
Gas Wells Oil Wells Total Wells
Gross Net Gross Net Gross Net
<S> <C> <C> <C> <C> <C> <C>
United States 3,228 1,220.1 1,249 484.5 4,477 1,704.6
Canada 82 22.3 92 27.2 174 49.5
Total: 3,310 1,242.4 1,341 511.7 4,651 1,754.1
____________
</TABLE>
(1) Although many of the Company's wells produce both oil and
gas, a well is categorized as either an oil well or a gas
well based upon the ratio of oil to gas production.
(2) Each well completed to more than one producing zone is
counted as a single well. There were 134 gross wells with
multiple completions.
The Company also held numerous overriding royalty interests in gas and
oil wells, a portion of which are convertible to working interests
after recovery of certain costs by third parties. After converting to
working interests, these overriding royalty interests will be included
in the Company's gross and net well count.
Leasehold Acreage
The following table summarizes developed and undeveloped leasehold
acreage in which the Company owns a working interest as of December
31, 1999. "Undeveloped Acreage" includes (i) leasehold interests that
already may have been classified as containing proved undeveloped
reserves; and (ii) unleased mineral interest acreage owned by the
Company. Excluded from the table is acreage in which the Company's
interest is limited to royalty, overriding royalty, and other similar
interests.
<TABLE>
<CAPTION>
Leasehold Acreage - December 31, 1999
Developed (1) Undeveloped (2) Total
Gross Net Gross Net Gross Net
<S> <C> <C> <C> <C> <C> <C>
United States
Arizona - - 480 450 480 450
Arkansas 37,729 16,569 8,984 4,478 46,713 21,047
California 80 28 35,011 15,322 35,091 15,350
Colorado 176,604 123,974 207,853 105,449 384,457 229,423
Idaho - - 44,175 10,643 44,175 10,643
Illinois 172 39 14,307 3,997 14,479 4,036
Indiana - - 1,621 467 1,621 467
Kansas 134 134 7,761 2,471 7,895 2,605
Kentucky - - 14,461 5,468 14,461 5,468
Louisiana 15,246 9,992 251 251 15,497 10,243
Michigan - - 6,200 1,266 6,200 1,266
Minnesota - - 313 104 313 104
Mississippi 25,706 21,408 - - 25,706 21,408
Montana 25,445 10,707 319,588 58,438 345,033 69,145
Nevada 320 280 680 543 1,000 823
New Mexico 92,497 68,188 31,765 9,313 124,262 77,501
North Dakota 1,333 375 145,841 21,580 147,174 21,955
Ohio - - 202 43 202 43
Oklahoma 1,570,227 294,207 52,736 33,296 1,622,963 327,503
Oregon - - 43,869 7,671 43,869 7,671
South Dakota - - 204,558 107,988 204,558 107,988
Texas 167,690 60,170 50,571 39,515 218,261 99,685
Utah 45,712 35,001 109,180 43,818 154,892 78,819
Washington - - 26,631 10,149 26,631 10,149
West Virginia 969 115 - - 969 115
Wyoming 216,991 138,681 445,315 271,418 662,306 410,099
Total U.S. 2,376,855 779,868 1,772,353 754,138 4,149,208 1,534,006
Canada
Alberta 42,080 11,910 61,760 18,541 103,840 30,451
British Columbia 34,259 8,855 39,169 22,977 73,428 31,832
Total Canada 76,339 20,765 100,929 41,518 177,268 62,283
Total Acreage ,453,194 800,633 1,873,282 795,656 4,326,476 1,596,289
________
</TABLE>
(1) Developed acres are acres spaced or assignable to productive
wells.
(2) Undeveloped acreage is leased acreage on which wells have not
been drilled or completed to a point that would permit the
production of commercial quantities of natural gas and oil
regardless of whether such acreage contains proved reserves.
Of the aggregate 1,873,282 gross and 795,656 net undeveloped
acres, 123,501 gross and 36,105 net acres are held by
production from other leasehold acreage.
Substantially all the leases summarized in the preceding table will
expire at the end of their respective primary terms unless the
existing leases are renewed or production has been obtained from the
acreage subject to the lease prior to that date, in which event the
lease will remain in effect until the cessation of production. The
following table sets forth the gross and net acres subject to leases
summarized in the preceding table that will expire during the periods
indicated:
Acres Expiring
Gross Net
Twelve Months Ending:
December 31, 2000 91,504 39,918
December 31, 2001 96,177 31,322
December 31, 2002 39,971 13,082
December 31, 2003 95,043 52,366
December 31, 2004 and later 1,550,587 658,968
Drilling Activity
The following table summarizes the number of development and
exploratory wells drilled by the Company during the years indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
Gross Net Gross Net Gross Net
<S> <C> <C> <C> <C> <C> <C>
Development Wells
United States:
Completed as natural gas wells 159 78.4 105 54.6 82 27.4
Completed as oil wells 5 2.4 29 1.0 64 6.6
Dry holes 15 6.1 12 3.7 18 5.7
Waiting on completion 29 - 13 - 26 -
Drilling 6 - 9 - 15 -
Year Ended December 31,
1999 1998 1997
Gross Net Gross Net Gross Net
Canada:
Completed as natural gas wells 7 1.2 4 0.9 4 0.9
Completed as oil wells 5 1.9 12 4.0 4 1.3
Dry holes 2 1.3 4 1.2 3 0.9
Waiting on completion 2 - 2 - 6 -
Drilling - - 1 - 2 -
Total Development Wells 230 91.3 191 65.4 224 42.8
Year Ended December 31,
1999 1998 1997
Gross Net Gross Net Gross Net
Exploratory Wells
United States:
Completed as natural gas wells 1 0.2 5 1.6 4 1.6
Completed as oil wells 1 .6 - -
Dry holes 2 1.1 4 1.4 1 0.3
Waiting on completion 1 - - - 2 -
Drilling 1 - - - - -
Canada:
Completed as natural gas wells - - - - 1 -
Completed as oil wells - - 1 .3 2 0.1
Dry holes - - 3 1.4 - 0.7
Waiting on completion - - - - 1 -
Total Exploratory Wells 5 1.3 14 5.3 11 2.7
Total Wells 235 92.6 205 70.7 235 45.5
</TABLE>
Operation of Properties
The day-to-day operations of oil and gas properties are the
responsibility of an operator designated under pooling or operating
agreements. The operator supervises production, maintains production
records, employs field personnel and performs other functions. The
charges under operating agreements customarily vary with the depth and
location of the well being operated.
QMR is the operator of approximately 50% of its wells. As operator,
QMR receives reimbursement for direct expenses incurred in the
performance of its duties as well as monthly per-well producing and
drilling overhead reimbursement at rates customarily charged in the
area to or by unaffiliated third parties. In presenting its financial
data, QMR records the monthly overhead reimbursement as a reduction of
general and administrative expense, which is a common industry
practice.
Title to Properties
Title to properties is subject to royalty, overriding royalty,
carried, net profits, working and other similar interests and
contractual arrangements customary in the oil and gas industry, liens
for current taxes not yet due and, in some instances, to other
encumbrances. The Company believes that such burdens do not
materially detract from the value of such properties or from the
respective interests therein or materially interfere with their use in
the operation of the business.
As is customary in the industry in the case of undeveloped properties,
little investigation of record title is made at the time of
acquisition (other than a preliminary review of local records).
Investigations, generally including a title opinion of outside
counsel, are made prior to the consummation of an acquisition of
producing properties and before commencement of drilling operations on
undeveloped properties.
Recent Developments
Canadian Acquisition - On January 26, 2000, the Company completed the
acquisition of all of the outstanding shares of Canor Energy Ltd.
("Canor"), an oil and gas exploration company based in Calgary,
Alberta, Canada. Canor owns and/or operates more than 800 wells
located primarily in the province of Alberta, as well as in the
provinces of British Columbia and Saskatchewan. The combination of
Canor with Celsius Ltd. will expand the Company's reported proved
reserves by approximately 61.1 Bcfe, or 10%, and add about 150,000 net
acres to the Company's Canadian undeveloped leasehold inventory,
principally in the province of Alberta. The purchase price for the
cash transaction was $61 million (U.S.).
The Canor acquisition will provide a broader operating and financial
base for the Company's Canadian activities, particularly in the areas
of exploration and exploitation opportunities. It is anticipated that
Celsius Ltd. and Canor will be amalgamated into a single entity at
some point in the future.
Pinedale Project -- In January 2000, Questar E&P and Wexpro completed
a high-volume producing well in the company's Pinedale Anticline
development in Sublette County, Wyoming. The Mesa Unit No. 3 produced
11.4 million cubic feet (MMcf) of natural gas into a pipeline and 113
barrels of oil during the initial 24-hour period. The flowing tubing
pressure was 1,100 pounds per square inch. The Mesa Unit No. 3 was drilled
to a total measured depth of 13,055 feet and was fracture-stimulated
in 11 zones of the Lance Formation. Questar E&P and Wexpro have a
combined 93.8% working interest in the well. The Company has
completed a second Mesa Unit well - No. 6 - located about one-half mile
south of the Mesa Unit No. 3. The second well encountered a similar number
of pay zones, and initial test results are comparable to the Mesa Unit No. 3.
A third well failed to produce economic quantities of gas because of
lower-quality reservoir rock. The unsuccessful well does not diminish
the Company's expectations for the development potential of its 14,800
gross acres in the Mesa area of the Pinedale Anticline. QMR
subsidiaries own a combined average 60% working interest. Based on
80-acre spacing, the Company estimates the potential for 130 or more
drilling locations structurally above the unsuccessful well.
Estimated ultimate reserves per well are expected to range between 4
and 11 Bcfe.
Office Leases
Questar E&P and Wexpro lease office space under a sublease from
Questar for its corporate headquarters at 180 East 100 South, Salt
Lake City, Utah 84145. The Company also leases regional office space
at various locations in the United States and Canada. For information
concerning the Company's lease obligations, see Note 6 of the Notes to
Consolidated Financial Statements appearing elsewhere in this Form 10.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
All of the outstanding shares of common stock ($1.00 par value per
share) of QMR are owned by Questar, whose principal executive offices
are located at 180 East 100 South, Salt Lake City, Utah 84145.
Questar possesses sole voting and investment power with respect to
such shares of common stock.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are set forth in
the following table:
Name Position Age
R. D. Cash Chairman 57
G. L. Nordloh President, CEO and Director 52
S. E. Parks Vice President, Treasurer & CFO 48
M. B. McGinley Vice President 51
M. L. Owen Vice President, Administrative Services 49
C. C. Holbrook Secretary 53
Teresa Beck Director 45
P. J. Early Director 66
C. M. Heiner Director 61
W. N. Jones Director 73
R. D. Cash, 57, Chairman of the Board of Directors, Questar (May
1985); President and Chief Executive Officer and Director, Questar
(since 1977); Chairman of the Boards of Directors, all Questar
affiliates (other than Questar Energy Trading); President and Chief
Executive Officer, QMR (from April 1982 to August 1998). Mr. Cash
also serves as a Director of Zions Bancorporation and Associated
Electric and Gas Insurance Services Limited. He is a member of the
Board of Directors of the Federal Reserve Bank (Salt Lake City Branch)
of San Francisco and is a Trustee of the Salt Lake Organizing
Committee for the Olympic Winter Games of 2002.
Gary L. Nordloh, 52, President and Chief Executive Officer, QMR
(August 1998) and all subsidiaries (commencing at various times
beginning in March 1991); Vice President, QMR (May 1996 to August
1998); Executive Vice President, Questar (February 1996); Senior Vice
President, Questar (March 1991 to February 1996); Director, Questar
(October 1996); Director, QMR (May 1991), and all QMR subsidiaries
(various times beginning in June 1989). Prior to joining the Questar
organization in 1984, Mr. Nordloh was Vice President of Engineering
and Operations for Hamilton Brothers Petroleum for three years and
Division Engineering Manager (and various other assignments) for Amoco
Production Company for nine years. Mr. Nordloh received a bachelor's
degree in Petroleum Engineering from the Colorado School of Mines. He
serves on the Board of Directors of Mountain States Legal Foundation;
is Past-President of Rocky Mountain Oil and Gas Association
(1995-1997); a member of the Society of Petroleum Engineers since
1974; is Past-President of the Society of Petroleum Engineers (Denver
Section); and served as a Regional Vice President of the Independent
Petroleum Association of America from 1989 to 1995.
S. E. Parks, 48, Vice President, Treasurer and Chief Financial
Officer, Questar and all affiliates (February 1996); Treasurer,
Questar and affiliates (at various dates beginning in May 1984);
Director, Questar E&P (May 1996). Mr. Parks received a B.A. degree
in Accounting and a M.B.A. degree in Finance from the University of
Utah. Since joining Questar in 1974, he has held a variety of
management positions in the auditing, accounting and financial areas.
Prior to joining Questar, Mr. Parks was with the Academic and
Financial Planning Department of the University of Utah.
M. B. McGinley, 51, Vice President, QMR (August 1998) and all
subsidiaries (various dates beginning in February 1990); General
Manager, Questar Energy Trading (October 1995); Director, Questar
Energy Trading (August 1998). Mr. McGinley has worked for various
Questar affiliates for 31 years in a variety of engineering and
marketing assignments. He holds a Bachelor of Science Degree in
Chemical Engineering and a Master of Science Degree in Mechanical
Engineering from the University of Utah. He is a registered
professional engineer in Utah and Colorado and a member of the
Independent Petroleum Association of America, and Rocky Mountain Oil
and Gas Association and the Pacific Coast Gas Association.
M. L. Owen, 49, Vice President, Administrative Services, QMR (August
1998) and all subsidiaries (various dates beginning in April 1989);
Director, Questar Energy Trading (August 1998). Mr. Owen has been
associated with QMR since its acquisition of Universal Resources in
1987. From 1982 to 1989, he served as Treasurer of Universal
Resources. Prior to joining Universal Resources, Mr. Owen was
employed with Arthur Andersen & Co. for eight years with various
duties, including Audit Manager. He is a Certified Public Accountant,
receiving his Accounting degree from Texas Tech University. Mr. Owen
is a member of the Independent Petroleum Association of America and
the Utah Association of Certified Public Accountants.
C. C. Holbrook, 53, General Counsel, Questar (March 1999); Vice
President Questar (October 1984); Corporate Secretary, Questar and all
affiliates (various dates beginning in March 1982); Director, Questar
E&P and QGM (various dates beginning in May 1985).
Teresa Beck, 45, Director, Questar (October 1999); Director, QMR
(October 1999). Ms. Beck was President of American Stores from 1998
to 1999. She also served as American Stores' Chief Financial Officer
from 1993 to 1998. She serves as a Director of Textron, Inc. and
Albertson's Inc. and is a Trustee of Intermountain Health Care, Inc.,
The Children's Center, and the Salt Lake Organizing Committee for the
Olympic Winter Games of 2002.
P. J. Early, 67, Director, QMR (August 1995); Director, Questar
(August 1995). Mr. Early served as Vice Chairman of Amoco Corporation
from July of 1992 until his retirement in April 1995. He was also a
Director of Amoco Corporation from 1989 to his retirement. He is a
member of the Board of Trustees of the Museum of Science and Industry
in Chicago.
Clyde M. Heiner, 61, Senior Vice President, Questar (May 1984);
President and Chief Executive Officer, Questar InfoComm (February
1993); Director, QMR (May 1984) and Questar InfoComm (February 1993).
W. N. Jones, 73, Director, QMR (May 1989); Senior Director, Questar
(May 1998); Director, Questar (May 1981 to May 1998). Mr. Jones is
Chairman of the Board, Lite Touch Inc., and a Trustee of Intermountain
Health Care, Inc.
ITEM 6. EXECUTIVE COMPENSATION
Omitted.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted.
ITEM 8. LEGAL PROCEEDINGS
Questar E&P, as well as other QMR affiliates and Questar, are named as
defendants in a class action lawsuit involving royalty payments in
Oklahoma state court. In Bridenstine vs. Kaiser-Francis Oil Company,
the plaintiffs allege fraud and contract claims and assert damages
against all defendants for a 17-year period in excess of $54,000,000
plus punitive damages. The plaintiffs' primary claim alleges that a
transportation fee charged against royalty payments was improper or
excessive. The claims involve wells connected to an intrastate
pipeline system that QGM presently owns and operates. Kaiser-Francis
and Questar E&P are the major working interest owners and operators of
a majority of the wells connected to this pipeline system. QMR
disputes these claims. The Oklahoma Supreme Court has denied
defendants' appeal from the trial court's decision to certify the
Bridenstine case as a class action. QMR cannot predict the outcome of
the lawsuit, which may result in a material liability.
Questar E&P is a defendant in a case styled Greghol Limited
Partnership vs. Universal Resources Corporation, filed in Oklahoma
state court, which was originally asserted as a statewide class action
raising issues relative to calculation of royalties, and whether such
calculations should reflect deductions for certain post-production
costs. The Court has sustained Questar E&P's motion to de-certify the
class. Questar E&P disputes these claims.
In United States ex rel. Grynberg v. Questar Corp., et al., each of
QGM, Wexpro and Universal Resources Corporation d/b/a Questar Energy
Trading Company are named as defendants in a case involving
allegations of gas mismeasurement and of improper royalty valuations.
The plaintiff filed on behalf of the federal government to recover
underpaid royalties under the False Claims Acts, and the Department of
Justice declined to intervene. This case and 75 substantially similar
cases filed by the plaintiff have been consolidated for discovery and
pre-trial rulings in Wyoming's federal district court. Motions to
dismiss have been filed. The QMR subsidiaries dispute these claims.
In Quinque Operating Company v. Gas Pipelines, et al., each of QGM,
Wexpro and Universal Resources Corporation (now known as Questar E&P)
is named as a defendant in a lawsuit involving allegations of
mismeasurement of natural gas resulting in underpayment of royalties
to private and state lessors. Plaintiffs have asked that the case be
certified as a nationwide class action. The case was removed from
state to federal court and a motion to remand is pending. There are
over 220 defendants. The QMR subsidiaries dispute these claims.
Royalty class actions such as Quinque are being asserted in numerous
states against other companies in the oil and gas production and
marketing businesses in which QMR's subsidiaries participate.
Accordingly, QMR expects similar royalty class actions to be filed in
other states in which it has significant production and marketing
activities such as Wyoming and Colorado, although such actions have
not yet been filed and are not currently threatened.
There are various other legal proceedings against subsidiaries of QMR.
While it is not currently possible to predict or determine the
outcomes of these proceedings, it is the opinion of management that
the outcomes will not have a materially adverse effect on the
Company's results of operations, financial position or liquidity.
Also see Note 6 of the Notes to Consolidated Financial Statements
under Item 13 of this Form 10.
ITEM 9. MARKET PRICE OF AND DIVIDENDS OF THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of the Company is owned entirely by Questar and,
therefore, there is no trading of the Company's stock. Dividends of
$16.6 million were declared and paid in the twelve months ended
December 31, 1999, and $15.9 million and $16.325 million were declared
and paid in the years ended 1998 and 1997, respectively. See Note 3 of
the Notes to Consolidated Financial Statements under Item 13 of this
Form 10 regarding restrictions as to dividend availability.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
There have been no sales of unregistered securities by the Company.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The following description of the capital stock of the Company and
certain provisions of the Company's Amended Articles of Incorporation
and Bylaws is a summary and is qualified in its entirety by the
provisions of the Amended Articles of Incorporation and Bylaws, which
have been filed as exhibits to this Form 10.
The Company has authorized twenty-five million (25,000,000) shares of
Common Stock with a par value of $1.00 per share. All outstanding
shares of stock are held by Questar Corporation. No preferred stock
has been issued or authorized.
Each common shareholder of record is entitled to one vote, by person
or by proxy for each share of Common Stock held on every matter
properly submitted to the stockholders for a vote. Except as
otherwise provided by law or in the Amended Articles of Incorporation
or Bylaws, stockholder votes are decided by a majority vote of the
outstanding shares.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 16-10a-901 through 16-10a-909 of the Utah
Revised Business Corporation Act, which provides for indemnification
of directors and officers in certain circumstances.
The Bylaws provide that the Company may voluntarily indemnify any
individual made a party to a proceeding because he is or was a
director, officer, employee or agent of the Company against liability
incurred in the proceeding, but only if the Company has authorized the
payment in accordance with the applicable statutory provisions of the
Utah Revised Business Corporation Act (Sections 16-10a-902, 16-10a-904
and 16-10a-907) and a determination has been made in accordance with
the procedures set forth in such provision that such individual
conducted himself in good faith, that he reasonably believed his
conduct, in his official capacity with the Company, was in its best
interests and that his conduct, in all other cases, was at least not
opposed to the Company's best interests, and that he had no reasonable
cause to believe his conduct was unlawful in the case of any criminal
proceeding. The foregoing indemnification in connection with a
proceeding by or in the right of the Company is limited to reasonable
expenses incurred in connection with the proceeding, which expenses
may be advanced by the Company. The Company's Bylaws provide that the
Company may not voluntarily indemnify a director, officer, employee or
agent of the Company in connection with a proceeding by or in the
right of the Company in which such individual was adjudged liable to
the Company or in connection with any other proceeding charging
improper personal benefit to him, whether or not involving action in
his official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him.
The Bylaws provide further that the Company shall indemnify a
director, officer, employee or agent of the Company who was wholly
successful, on the merits or otherwise, in defense of any proceeding
to which he was a party because he is or was such a director, officer,
employee or agent, against reasonable expenses incurred by him in
connection with the proceeding.
The Bylaws further provide that no director of the Company shall be
personally liable to the Company or its stockholders for monetary
damages for any action taken or any failure to take any action, as a
director, except liability for (a) the amount of a financial benefit
received by a director to which he is not entitled; (b) an intentional
infliction of harm on the Company or the shareholders; (c) for any
action that would result in liability of the director under the
applicable statutory provision concerning unlawful distributions; or
(d) an intentional violation of criminal law.
Questar, the Company's parent, maintains an insurance policy on behalf
of the officers and directors of the Company pursuant to which
(subject to the limits and limitations of such policy) the officers
and directors are insured against certain expenses in connection with
the defense of actions or proceedings, and certain liabilities which
might be imposed as a result of such actions or proceedings, to which
any of them is made a party by reason of being or having been a
director or officer.
ITEM 13.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements and Supplementary Data
Page
Financial Statements -
Report of Independent Auditors 35
Consolidated Statements of Income for the years
ended December 31, 199, 1998 and 1997 36
Consolidated Balance Sheets at December 31, 1999
and 1998 37
Consolidated Statements of Shareholder's Equity for
the years ended December 31, 1999, 1998 and 1997 39
Consolidated Statements of Cash Flows for the years
ended December 31, 1999, 1998, and 1997 40
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997 41
Supplementary Data -
Oil and Gas Producing Activities (Note 11 to
Consolidated Financial Statements) 51
Report of Independent Auditors
Board of Directors
Questar Market Resources, Inc.
We have audited the accompanying consolidated balance sheets of
Questar Market Resources, Inc. and subsidiaries as of December 31,
1999, and 1998, and the related consolidated statements of income and
common shareholder's equity and cash flows for each of the three years
in the period ended December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Questar Market Resources, Inc. and subsidiaries at December 31,
1999, and 1998, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Ernst & Young LLP
Salt Lake City, Utah
February 7, 2000
QUESTAR MARKET RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
REVENUES
From unaffiliated customers $418,603 $382,791 $451,233
From affiliates 79,708 75,481 72,407
TOTAL REVENUES 498,311 458,272 523,640
OPERATING EXPENSES
Natural gas and other product
purchases 239,201 230,462 291,851
Operating and maintenance 79,916 73,763 72,958
Depreciation and amortization 78,608 71,377 67,078
Write-down of oil and gas
properties 31,000 9,000
Other taxes 21,516 24,988 25,569
Wexpro settlement agreement -
oil income sharing 2,292 1,053 2,347
TOTAL OPERATING EXPENSES 421,533 432,643 468,803
OPERATING INCOME 76,778 25,629 54,837
INTEREST AND OTHER INCOME 4,272 3,638 5,854
INCOME (LOSS) FROM UNCONSOLIDATED
AFFILIATES 763 (930) (288)
DEBT EXPENSE (17,363) (12,631) (10,882)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 64,450 15,706 49,521
INCOME TAX EXPENSE (CREDIT) 18,584 (1,019) 10,410
INCOME FROM CONTINUING
OPERATIONS 45,866 16,725 39,111
DISCONTINUED OPERATIONS, NET OF
INCOME TAXES OF $347 IN 1998 AND
$631 IN 1997 (563) (1,021)
NET INCOME $45,866 $16,162 $38,090
</TABLE>
See accompanying notes to consolidated financial statements.
QUESTAR MARKET RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 1,894
Notes receivable from Questar Corporation $ 4,000 25,100
Accounts receivable, net of allowance of
$1,350 in 1999 and $3,253 in 1998 64,364 61,833
Accounts receivable from affiliates 11,459 11,359
Inventories, at lower of average cost or market
Gas and oil storage 8,863 8,892
Material and supplies 2,390 1,893
Total inventories 11,253 10,785
Prepaid expenses and deposits 4,452 4,369
TOTAL CURRENT ASSETS 95,528 115,340
PROPERTY, PLANT AND EQUIPMENT
Exploration and production 1,105,472 1,076,280
Cost-of-service gas operations 218,694 199,151
Gathering and processing 123,775 116,603
General support 21,735 20,607
1,469,676 1,412,641
Less allowances for depreciation and
amortization 778,695 717,129
NET PROPERTY, PLANT AND EQUIPMENT 690,981 695,512
INVESTMENT IN UNCONSOLIDATED AFFILIATES 13,301 3,673
OTHER ASSETS
Cash held in escrow account 36,727
Securities available for sale 10,402
Other 952 628
TOTAL OTHER ASSETS 48,081 628
$847,891 $815,153
</TABLE>
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
December 31
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Checks outstanding in excess of
cash balances $ 1,246
Notes payable to Questar Corporation 24,500 $121,800
Accounts payable and accrued expenses
Accounts and other payables 67,385 63,272
Accounts payable to affiliates 2,952 2,414
Federal income taxes 6,232 6,105
Other taxes 14,266 13,661
Accrued interest 1,443 1,044
Total accounts payable and accrued
expenses 92,278 86,496
TOTAL CURRENT LIABILITIES 118,024 208,296
INVESTMENT IN DISCONTINUED OPERATIONS -
Questar Energy Services 1,905
LONG-TERM DEBT 264,894 181,624
DEFERRED INCOME TAXES 59,936 52,113
OTHER LIABILITIES 14,674 11,577
MINORITY INTEREST 2,529
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock - par value $1 per share;
authorized 25,000,000 shares; issued
and outstanding 4,309,427 shares 4,309 4,309
Additional paid-in capital 116,027 116,027
Retained earnings 270,388 239,217
Other comprehensive income (loss) (2,890) 85
387,834 359,638
$847,891 $815,153
</TABLE>
See accompanying notes to consolidated financial statements.
QUESTAR MARKET RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Other
Common Paid-in Retained Comprehensive Comprehensive
Stock Capital Earnings Income Income
(In Thousands)
Balance at January 1, 1997 $4,309 $116,027 $217,190 ($181) $38,090
1997 net income 38,090
Cash dividends (16,325)
Foreign currency translation
adjustment, net of income
taxes of $98 173 173
Balance at December 31, 1997 4,309 116,027 238,955 (8) $38,263
1998 net income 16,162 16,162
Cash dividends (15,900)
Foreign currency translation
adjustment, net of income
taxes of $53 93 93
Balance at December 31, 1998 4,309 116,027 239,217 85
1999 net income 45,866 $16,255
Cash dividends (16,600) 45,866
Discontinued operations 1,905
Unrealized loss on securities
available for sale, net of
income tax credit of $1,557 (2,515) (2,515)
Foreign currency translation
adjustment, net of income
taxes of $284 (460) (460)
Balance at December 31, 1999 $4,309 $116,027 $270,388 ($2,890) $42,891
</TABLE>
See accompanying notes to consolidated financial statements.
QUESTAR MARKET RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 45,866 $ 16,162 $ 38,090
Depreciation and amortization 81,150 71,951 67,667
Deferred income taxes 9,381 (4,619) (2,428)
Write-down of oil and gas properties
(Income) loss from unconsolidated 31,000 9,000
affiliates, net of cash distributions (66) 1,211 1,872
Loss from discontinued operations 563 1,021
136,331 116,268 115,222
Changes in operating assets and
liabilities
Accounts receivable (2,631) 20,572 22,196
Inventories (468) (4,996) (1,045)
Prepaid expenses and deposits (83) 555 (191)
Accounts payable and accrued
expenses 5,050 (6,302) (3,883)
Federal income taxes payable 127 2,399 3,620
Other 2,919 (983) 1,016
NET CASH PROVIDED FROM OPERATING
ACTIVITIES 141,245 127,513 136,935
INVESTING ACTIVITIES
Capital expenditures
Purchases of property, plant
and equipment (109,405) (252,671) (92,310)
Other investments (24,864) (1,875)
(134,269) (254,546) (92,310)
Proceeds from disposition of property,
plant and equipment, and investments 39,411 7,853 11,004
NET CASH USED IN INVESTING ACTIVITIES (94,858) (246,693) (81,306)
FINANCING ACTIVITIES
Change in notes receivable from Questar
Corporation 21,100 8,400 (17,200)
Change in notes payable to Questar
Corporation (97,300) 77,500 (23,700)
Change in short-term debt (10,000)
Cash in escrow balance (36,727)
Checks written in excess of cash
balances 1,246 (2,505)
Issuance of long-term debt 275,000 64,343 63,547
Payment of long-term debt (195,000) (14,283) (48,432)
Payment of dividends (16,600) (15,900) (16,325)
NET CASH PROVIDED FROM (USED IN)
FINANCING ACTIVITIES (48,281) 120,060 54,615
Change in cash and short-term
investments (1,894) 880 1,014
Beginning cash and short-term
investments 1,894 1,014
ENDING CASH AND SHORT-TERM
INVESTMENTS $ - $1,894 $1,014
</TABLE>
See accompanying notes to consolidated financial statements.
QUESTAR MARKET RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Accounting Policies
Principles of Consolidation: The consolidated financial statements
contain the accounts of Questar Market Resources, Inc. and
subsidiaries (the Company or QMR). The Company is a wholly-owned
subsidiary of Questar Corporation (Questar). QMR, through its
subsidiaries, conducts gas and oil exploration, development and
production, gas gathering and processing, and wholesale energy
marketing. Questar Exploration and Production Company (Questar E&P),
formerly named Celsius Energy Company and Universal Resources
Corporation, conducts the exploration, development and production
activities. Wexpro Company (Wexpro) operates and develops producing
properties on behalf of Questar Gas. Questar Gas Management (QGM)
conducts gas gathering and plant processing activities. Questar
Energy Trading Company (Questar Energy Trading) performs wholesale
energy marketing activities and, through a 75% interest in Clear Creek
LLC, is constructing a gas storage facility. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Investments in Unconsolidated Affiliates: The Company owns a 15%
interest in Canyon Creek Compression Co., and a 50% interest in Blacks
Fork Gas Processing Co. The Company uses the equity method to account
for investments in affiliates in which it does not have control and
generally, its investment in these affiliates equals the underlying
equity in net assets.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
of assets and liabilities and disclosure of contingent liabilities
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Revenue Recognition: Revenues are recognized in the period that
services are provided or products are delivered.
Cash and Short-Term Investments: Short-term investments consist
principally of repurchase agreements with maturities of three months
or less.
Property, Plant and Equipment: Property, plant and equipment is
stated at cost. QMR uses the full-cost accounting method for the
majority of its gas and oil exploration and development activities.
Under the full-cost method, all costs associated with the acquisition,
exploration and development of gas and oil reserves are capitalized.
If net capitalized costs exceed the present value of estimated future
net revenues from proved gas and oil reserves plus the fair value of
unproved properties (the full-cost ceiling), the excess is expensed.
The Company recorded write-downs of oil and gas properties under the
full-cost accounting rules of $31 million in 1998 and $6 million in
1997. Wexpro uses the successful-efforts accounting method to account
for its development activities under the terms of the Wexpro
settlement agreement (Note 9). The Company follows the provisions of
Statement of Financial Accounting Standards (SFAS) 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." The provisions of SFAS 121 do not supersede full-cost
accounting rules, which require a quarterly full-cost ceiling test.
The Company wrote-down its investment in gas gathering properties by
$3 million in 1997 under the provisions of SFAS 121. The provision
for depreciation and amortization is based upon rates that will
systematically charge the costs of assets against income over the
estimated useful lives of those assets. The investment in gathering
properties and processing plants is charged to expense using the
straight-line method. The costs of gas and oil wells and leaseholds
are charged to expense using the units-of-production method. Average
depreciation and amortization rates used were as follows:
1999 1998 1997
Exploration and production, per Mcf equivalent
Full-cost amortization rate (U.S. and Canada) $0.80 $0.85 $0.84
Wexpro depreciation rate $0.42 $0.39 $0.39
Gas gathering and plant processing 4.4% 4.9% 5.8%
Capitalized Interest: The Company capitalizes interest during the
construction period of plant and equipment, when applicable, which
amounted to $357,000 in 1999, $1,363,000 in 1998 and $604,000 in 1997.
Foreign Currency Translation: The Company conducts gas and oil
exploration and production activities in western Canada. The local
currency is the functional currency of the Company's foreign
operations. Translation from the functional currency to U. S. dollars
is performed for balance sheet accounts using the exchange rate in
effect at the balance-sheet date. Revenue and expense accounts are
translated using an average exchange rate for the period. Adjustments
resulting from such translations are reported as a separate component
of other comprehensive income in shareholder's equity. Deferred
income taxes have been provided on translation adjustments because the
earnings are not considered to be permanently invested.
Energy Price Risk Management: QMR enters into swaps, futures contracts
or option agreements to hedge exposure to price fluctuations in
connection with marketing of the Company's natural gas and oil
production, and to secure a known margin for the purchase and resale
of gas, oil and electricity in marketing activities. There is a high
degree of correlation between such contracts and the physical
transactions. The timing of production and of the hedge contracts is
closely matched. Hedge prices are established in the areas of QMR's
production operations. The Company settles most contracts in cash and
recognizes the gains and losses on hedge transactions during the same
time period as the related physical transactions. Contracts no longer
qualifying for high correlation with the physical transactions would
be marked-to-market and recognized in current period income. Cash
flows from the hedge contracts are reported in the same category as
cash flows from the hedged assets. The Company does not enter into
hedging contracts for speculative purposes.
Interest Rate Risk Management: The Company uses variable rate debt as
part of its financing plans. These agreements expose the Company to
market risk related to changes in interest rates.
Credit Risk: The Company's primary market areas are the Rocky
Mountain region of the United States and Canada and the Mid-continent
region of the United States. Exposure to credit risk may be impacted
by the concentration of customers in these regions due to changes in
economic or other conditions. Customers include numerous entities that
may be affected differently by changing conditions. Management
believes that its credit-review procedures, loss reserves and customer
deposits have adequately provided for usual and customary
credit-related losses.
Income Taxes: The Company's operations are consolidated with those of
Questar and its subsidiaries for income tax purposes. The income tax
arrangement between QMR and Questar provides that amounts paid to or
received from Questar are substantially the same as would be paid or
received by the Company if it filed a separate return. The Company
also receives payment for tax benefits used in the consolidated tax
return even if such benefits would not have been usable had the
Company filed a separate return.
Comprehensive Income: QMR reports comprehensive income on the
Consolidated Statements of Shareholder's Equity. Other comprehensive
income transactions that currently apply to QMR result from changes in
market value of securities available for sale and changes in holding
value resulting from foreign currency translation adjustments. These
transactions are not the culmination of the earnings process, but
result from periodically adjusting historical balances to market
value. The balances in accumulated foreign currency translation
adjustments and unrealized losses on securities available for sale
amounted to $375,000 and $2,515,000, respectively, at December 31,
1999. The balance in accumulated foreign currency translations at
December 31, 1998, was $85,000. Income is realized when the
securities available for sale are sold. Income taxes associated with
realized gains from selling securities available for sale were
$146,000 in 1999.
New accounting standard: The Company is required to adopt the
accounting provisions of Statement of Financial Accounting Standards
(SFAS) 133 "Accounting for Derivative Instruments and Hedging
Activities" effective January 1, 2001. The new accounting rules
require that the fair value of hedging instruments be measured and
recorded as either assets or liabilities on the balance sheet with a
regular, periodic mark-to-market adjustment. The effect of adopting
this new accounting standard is not known at this time because the
Company has not completed its evaluation.
Reclassifications: Certain reclassifications were made to the 1998
and 1997 financial statements to conform with the 1999 presentations.
Note 2 - Purchases of Gas and Oil Companies
On January 26, 2000, a subsidiary of QMR acquired 100% of the
outstanding shares of Canor Energy Ltd. from NI Canada ULC, a
subsidiary of Northwest Natural Gas Co. The cost of the cash
transaction was $61 million (U.S.) and was accounted for as a
purchase. Canor owns and/or operates more than 800 wells located in
Alberta, British Columbia, and Saskatchewan provinces of Canada.
Canor's proven gas and oil reserves are estimated at 61.1 billion
cubic feet equivalent.
A subsidiary of QMR acquired 100% of the common stock of HSRTW, Inc.,
a wholly owned subsidiary of HS Resources, Inc. for $155 million,
effective September 1, 1998. QMR obtained an estimated 150 billion
cubic feet equivalent of proved oil and gas reserves primarily in
Oklahoma, as well as in Texas, Arkansas, and Louisiana as a result of
the transaction. The cash transaction was accounted for as a
purchase.
Proceeds from a sale of nonstrategic gas and oil properties were
placed in an escrow account pending reinvestment in
strategic-producing properties.
Note 3 - Debt
QMR has a $295 million senior revolving credit facility agented by
Bank of America. Borrowing under this agreement amounted to $264.9
million at December 31, 1999 at a 6.54% interest rate. The agreement
was entered into April 1999 and replaced an unsecured short-term and
long-term line-of-credit arrangements with various banks. The loan is
segmented into US and Canadian portions. The US portion of the loan
is a 5-year facility with $227 million available. The Canadian portion
amounts to $68 million and is a 6-year facility. The interest rate is
generally equal to LIBOR plus a small premium. Under the most
restrictive terms of the senior-revolving credit facility, QMR could
pay a dividend of $57.6 million at December 31, 1999.
Maturities of long-term debt for the five years following December 31,
1999, are as follows:
(In Thousands)
2000 $ -
2001 2,995
2002 30,995
2003 2,995
2004 179,995
Questar makes loans to QMR under a short-term borrowing arrangement.
Short-term notes payable to Questar outstanding as of December 31,
1999 amounted to $24.5 million with an average interest rate of 6.61%
and $121.8 million as of December 31, 1998 with an interest rate of
5.71%. QMR also invests excess cash balances with Questar. The funds
are centrally managed by Questar and earn an interest rate that is
identical to the interest rate paid for borrowings from Questar. Notes
receivable from Questar as of December 31, amounted to $4 million in
1999 and $25.1 million in 1998.
Cash paid for interest was $16,964,000 in 1999, $13,229,000 in 1998
and $11,557,000 in 1997.
Note 4 - Financial Instruments
The carrying amounts and estimated fair values of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
(In Thousands)
<S> <C> <C> <C> <C>
Financial assets
Cash and short-term
investments $ 1,894 $ 1,894
Notes receivable $ 4,000 $ 4,000 25,100 25,100
Financial liabilities
Short-term loans 25,746 25,746 121,800 121,800
Long-term debt 264,894 164,894 181,624 181,624
Gas and oil price
hedging contracts (6,200) 6,000
</TABLE>
The Company used the following methods and assumptions in estimating
fair values: (1) Cash and short-term investments, notes receivable
and short-term loans - the carrying amount approximates fair value;
(2) Long-term debt - the carrying amount of variable-rate debt
approximates fair value; (3) Gas and oil price hedging contracts - the
fair value of contracts is based on market prices as posted on the
NYMEX from the last trading day of the year.
The average price of the oil contracts at December 31, 1999 was $18.83
per bbl and was based on the average of fixed amounts in contracts
which settle against the NYMEX. All oil contracts relate to
Company-owned production where basis adjustments would result in a net
to the well price of between $17.22 and $17.67 per bbl. The average
price of the gas contracts at December 31, 1999 was $2.22 per Mcf
representing the average of contracts with different terms including
fixed, various into-the-pipe postings and NYMEX references. Gas
hedging contracts were in place for QMR-owned production and gas
marketing transactions. Transportation and heat value adjustments on
the hedges of Company-owned gas as of December 31, 1999 would result
in an average price of between $2.15 and $2.23 per Mcf, net back to
the well.
Fair value is calculated at a point in time and does not represent the
amount the Company would pay to retire the debt securities. In the
case of gas-and-oil price-hedging activities, the fair value
calculation does not consider the physical side of gas and oil
transactions.
Energy Price Risk Management: The Company held open hedge contracts
covering the price exposure for about 72.1 million Dth of gas and 2.4
million barrels of oil at December 31, 1999 and 45.3 million Dth of
gas and 464,000 barrels of oil at December 31, 1998. The hedging
contracts are primarily for gas and oil marketing activities, but also
include QMR-owned production. The contracts at December 31, 1999 had
terms extending through December 2001 with about 65% of those
contracts expiring by the end of 2000. A primary objective of
energy-price hedging is to protect product sales from adverse changes
in energy prices. The Company does not enter into hedging contracts
for speculative purposes.
Credit Risk Management: The Company's primary areas are the Rocky
Mountain and Mid-Continent regions of the United States. Exposure to
credit risk may be impacted by the concentration of customers in these
regions due to changes in economic or other conditions. Customers
include numerous industries that may be affected differently by
changing conditions. Management believes that its credit review
procedures, loss reserves, and collection procedures have adequately
protected against unusual credit related losses.
Interest Rate Risk Management: The Company had $264.9 million of
variable rate long-term debt outstanding at December 31, 1999. The
book value of variable-rate debt approximates fair value.
Foreign Currency Risk Management: The Company does not hedge the
foreign currency exposure of its foreign operation's net assets and
long-term debt. The net assets of the foreign operation were negative
at December 31, 1999. Long-term debt owned by the foreign operation,
amounting to $59.9 million (U.S.), is expected to be repaid from the
future foreign operations.
Securities Available for Sale: Securities available for sale represent
equity instruments traded on national exchanges. The value of these
investments is subject to day to day market volatility.
Note 5 - Income Taxes
The components of income taxes expense (benefit) for years ended
December 31 were as follows:
1999 1998 1997
(In Thousands)
Federal
Current $11,411 $4,263 $14,574
Deferred 4,826 (86) (1,218)
State
Current 1,568 228 1,350
Deferred 620 1,007 (291)
Foreign 159 (6,431) (4,005)
Income taxes $18,584 ($1,019) $10,410
The difference between income tax expense and the tax computed by
applying the statutory federal income tax rate of 35% to income from
continuing operations before income taxes is explained as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Income from continuing operations
before income taxes $64,450 $15,706 $49,521
Federal income taxes at statutory rate $22,558 $ 5,497 $17,332
State income taxes, net of federal
income tax benefit 1,422 803 745
Tight-sands gas production credits (5,282) (5,736) (6,633)
Foreign income taxes 48 (1,771) (630)
Other (162) 188 (404)
Income taxes $18,584 ($1,019) $10,410
Effective income tax rate 28.8% - 21.0%
</TABLE>
Significant components of the Company's deferred tax liabilities and
assets at December 31 were as follows:
<TABLE>
<CAPTION)
1999 1998
(In Thousands)
<S> <C> <C>
Deferred tax liabilities
Property, plant and equipment $74,333 $64,674
Other 509 205
74,842 64,879
Deferred tax assets
Alternative minimum tax and production
credit carry forwards 2,468 6,535
Reserves, compensation plans and other 12,438 6,231
14,906 12,766
Net deferred tax liabilities $59,936 $52,113
</TABLE>
The Company paid $7,183,000 in 1999 and $9,029,000 in 1997 for income taxes.
Cash received for income taxes amounted to $1,856,000 in 1998.
Note 6 - Litigation and Commitments
Questar E&P, as well as QMR and Questar, are named defendants in a
class action lawsuit involving royalty payments in Oklahoma state
court. In Bridenstine vs. Kaiser-Francis Oil Company, the plaintiffs
allege fraud and contract claims and assert damages against all
defendants for a 17-year period in excess of $54,000,000 plus punitive
damages. The plaintiffs' primary claim alleges that a transportation
fee charged against royalty payments was improper or excessive. The
claims involve wells connected to an intrastate pipeline system that
Questar Gas Management presently owns and operates. Kaiser-Francis
and Questar E&P are the major working interest owners and operators of
a majority of the wells connected to this pipeline system.
The Oklahoma Supreme Court has denied defendants' appeal from the
trial court's decision to certify the Bridenstine case as a class
action. Questar E&P disputes these claims. Management cannot predict
the outcome of the lawsuit, which will be tried before a jury
beginning August of 2000, and which may result in a material
liability.
There are various other legal proceedings against QMR. While it is
not currently possible to predict or determine the outcomes of these
proceedings, it is the opinion of management that the outcomes will
not have a materially adverse effect on the Company's results of
operations, financial position or liquidity.
Questar Energy Trading has contracted for firm-transportation services
with various pipelines to transport 76.2 Mdths per day of gas. The
contracts extend for the next seven years and have an annual cost of
approximately $3 million. Due to market conditions and competition,
it is possible that Questar Energy Trading may be unable to sell
enough gas to fully utilize the contracted capacity. Also, Questar
Energy Trading has reserved firm-storage capacity of 1,065 MDths per
day with Questar Pipeline through 2008 with an annual cost of
$627,000.
The minimum future payments under the terms of long-term operating
leases for the Company's primary office locations for the five years
following December 31, 1999, are as follows:
(In Thousands)
2000 $1,980
2001 1,918
2002 1,371
2003 507
2004 43
Total minimum future rental payments have not been reduced for
sublease rentals of $96,000, $96,000, and $24,000, which are expected
to be received in the years ended December 31, 2000, 2001, and 2002,
respectively.
Note 7 - Employment Benefits
Pension Plan: Substantially all of QMR's employees are covered by
Questar's defined benefit pension plan, although some employees have
elected other benefits instead of a pension benefit. Benefits are
generally based on years of service and the employee's 72-pay period
interval of highest earnings during the ten years preceding
retirement. It is the Company's policy to make contributions to the
plan at least sufficient to meet the minimum funding requirements of
applicable laws and regulations. Plan assets consist principally of
equity securities and corporate and U.S. government debt obligations.
Pension cost was $887,000 in 1999, $761,000 in 1998 and $1,345,000 in
1997. Included in pension cost for 1997 is $419,000 of expense
associated with an early retirement package offered to a limited
number of the Company's employees.
QMR's portion of plan assets and benefit obligations is not
determinable because the plan assets are not segregated or restricted
to meet the Company's pension obligations. If the Company were to
withdraw from the pension plan, the pension obligation for the
Company's employees would be retained by the pension plan. At
December 31, 1999, Questar's fair value of plan assets exceeded the
accumulated benefit obligation.
Postretirement Benefits Other Than Pensions: QMR pays a portion of
health-care costs and life insurance costs for employees. The Company
linked the health-care benefits to years of service and limited the
Company's monthly health care contribution per individual to 170% of
the 1992 contribution. Employees hired after December 31, 1996, do
not qualify for postretirement medical benefits under this plan. The
Company's policy is to fund amounts allowable for tax deduction under
the Internal Revenue Code. Plan assets consist of equity securities,
and corporate and U.S. government debt obligations. The Company is
amortizing the transition obligation over a 20-year period, which
began in 1992. Costs of postretirement benefits other than pensions
were $1,158,000 in 1999 and $1,018,000 in 1998 and $1,083,000 in 1997.
QMR's portion of plan assets and benefit obligations related to
postretirement medical and life insurance benefits is not determinable
because the plan assets are not segregated or restricted to meet the
Company's obligations.
Postemployment Benefits: The Company recognizes the net present value
of the liability for postemployment benefits, such as long-term
disability benefits and health-care and life-insurance costs, when
employees become eligible for such benefits. Postemployment benefits
are paid to former employees after employment has been terminated but
before retirement benefits are paid. The Company accrues both current
and future costs. The Company's postemployment benefit liability at
December 31, 1999 was $381,000 and in 1998 was $376,000.
Employee Investment Plan: The Company participates in Questar's
Employee Investment Plan (EIP), which allows eligible employees to
purchase Questar common stock or other investments through payroll
deduction of pretax earnings. The Company makes contributions of
Questar common stock to the EIP of approximately 75%, increasing to
80% in 1999, of the employees' purchases and contributes an additional
$200 of common stock in the name of each eligible employee. The
Company's expense and contribution to the plan was $895,000 in 1999,
$811,000 in 1998 and $747,000 in 1997.
Note 8 - Related Party Transactions
QMR receives a significant portion of its revenues from services
provided to Questar Gas Company. The Company received $79,324,000 in
1999, $75,171,000 in 1998 and $72,138,000 in 1997 for operating
cost-of-service gas properties, gathering gas and supplying a portion
of gas for resale, among other services provided to Questar Gas.
Operation of cost-of-service gas properties is described in Wexpro
Settlement Agreement (Note 9). The Company also received revenues
from other affiliated companies totaling $384,000 in 1999, $310,000 in
1998 and $269,000 in 1997.
Questar performs certain administrative functions for QMR. The
Company was charged for its allocated portion of these services which
totaled $4,469,000 in 1999, $3,970,000 in 1998 and $5,311,000 in 1997.
These costs are included in operating and maintenance expenses and are
allocated based on each affiliate's proportional share of revenues;
net of product costs; property, plant and equipment; and payroll.
Management believes that the allocation method is reasonable.
QMR's subsidiaries contracted for transportation and storage services
with Questar Pipeline and paid $3,378,000 in 1999, $3,968,000 in 1998
and $4,011,000 in 1997 for those services.
Questar InfoComm Inc is an affiliated company that provides some data
processing and communication services to QMR. The Company paid
Questar InfoComm $2,276,000 in 1999, $2,273,000 in 1998 and $2,391,000
in 1997.
QMR has a 5-year lease with Questar for space in an office building
located in Salt Lake City, Utah, and owned by a third party. The
annual lease payment, which began October of 1997, is $863,000.
The Company received interest income from affiliated companies of
$681,000 in 1999, $1,908,000 in 1998 and $2,370,000 in 1997. QMR
incurred debt expense to affiliated companies of $3,350,000 in 1999,
$3,331,000 in 1998 and $2,661,000 in 1997.
Note 9 - Wexpro Settlement Agreement
Wexpro's operations are subject to the terms of the Wexpro settlement
agreement. The agreement was effective August 1, 1981, and sets forth
the rights of Questar Gas' utility operations to share in the results
of Wexpro's operations. The agreement was approved by the PSCU and
PSCW in 1981 and affirmed by the Supreme Court of Utah in 1983. Major
provisions of the settlement agreement are as follows:
a. Wexpro continues to hold and operate all oil-producing
properties previously transferred from Questar Gas' nonutility
accounts. The oil production from these properties is sold at
market prices, with the revenues used to recover operating
expenses and to give Wexpro a return on its investment. The
after tax rate of return is adjusted annually and is
approximately 13.7%. Any net income remaining after recovery
of expenses and Wexpro's return on investment is divided
between Wexpro and Questar Gas, with Wexpro retaining 46%.
b. Wexpro conducts developmental oil drilling on productive oil
properties and bears any costs of dry holes. Oil discovered
from these properties is sold at market prices, with the
revenues used to recover operating expenses and to give Wexpro
a return on its investment in successful wells. The after tax
rate of return is adjusted annually and is approximately
18.7%. Any net income remaining after recovery of expenses
and Wexpro's return on investment is divided between Wexpro
and Questar Gas, with Wexpro retaining 46%.
c. Amounts received by Questar Gas from the sharing of Wexpro's
oil income are used to reduce natural-gas costs to utility
customers.
d. Wexpro conducts developmental gas drilling on productive gas
properties and bears any costs of dry holes. Natural gas
produced from successful drilling is owned by Questar Gas.
Wexpro is reimbursed for the costs of producing the gas plus a
return on its investment in successful wells. The after tax
rate of return allowed Wexpro is approximately 21.7%.
e. Wexpro operates natural-gas properties owned by Questar Gas.
Wexpro is reimbursed for its costs of operating these
properties, including a rate of return on any investment it
makes. This after tax rate of return is approximately 13.7%.
Note 10 - Discontinued Operations - Transfer of Questar Energy
Services
QMR transferred all of its investment in Questar Energy Services, a
wholly-owned subsidiary, effective January 1, 1999 to Questar
Regulated Services. Questar Energy Services is a retail energy
services company with assets of $7.2 million and liabilities of $9.1
million at December 31, 1998. Questar Regulated Services is a
wholly-owned subsidiary of Questar Corporation.
Note 11 - Oil and Gas Producing Activities (Unaudited)
The following information discusses QMR's oil-and-gas producing
activities, which are located in the United States and Canada.
Cost-of-service properties are those for which the operations and
return on investment are governed by the Wexpro settlement agreement
(Note 9). Production from gas properties owned or operated by Wexpro
is delivered to Questar Gas at cost of service. Production from
noncost-of-service properties is sold at market prices. These
properties include all Questar E&P properties and Wexpro oil
properties. Production from Wexpro oil properties is sold at market
prices and the income is shared with Questar Gas after operating costs
are recovered and a specified return on investment is earned.
Capitalized Costs:
The aggregate amounts of costs capitalized for noncost-of-service
oil-and-gas producing activities and the related amounts of
accumulated depreciation and amortization follow:
<TABLE>
<CAPTION>
December 31, 1999
United States Canada Total
(In Thousands)
<S> <C> <C> <C>
Proved properties $989,207 $59,006 $1,048,213
Unproved properties 58,248 11,529 69,777
1,047,455 70,535 1,117,990
Accumulated depreciation and
amortization 581,176 34,515 615,691
$466,279 $36,020 $ 502,299
December 31, 1998
United States Canada Total
(In Thousands)
Proved properties $974,768 $49,652 $1,024,420
Unproved properties 49,724 12,763 62,487
1,024,492 62,415 1,086,907
Accumulated depreciation and
amortization 538,480 29,163 567,643
$486,012 $33,252 $519,264
December 31, 1997
United States Canada Total
(In Thousands)
Proved properties $805,614 $42,882 $848,496
Unproved properties 19,200 13,390 32,590
824,814 56,272 881,086
Accumulated depreciation and
amortization 472,773 12,643 485,416
$352,041 $43,629 $395,670
</TABLE>
Full-Cost Amortization:
Unproved properties held by Questar E&P are excluded from
amortization until evaluation. A summary of costs excluded from the
amortization pool at December 31, 1999, and the year in which these
costs were incurred are listed below. Costs excluded from
amortization include $11,529,000 associated with Canadian properties.
<TABLE>
<CAPTION>
Year Costs Incurred
Total 1999 1998 1997 1996 and Prior
(In Thousands)
<S> <C> <C> <C> <C> <C>
Leaseholds $55,462 $11,728 $24,788 $5,492 $13,454
Exploration 14,315 2,447 2,956 2,276 6,636
$69,777 $14,175 $27,744 $7,768 $20,090
</TABLE>
Costs Incurred:
The following costs were incurred in noncost-of-service oil-and
gas-producing activities:
<TABLE>
<CAPTION>
Year Ended December 31, 1999
United States Canada Total
(In Thousands)
<S> <C> <C> <C>
Property acquisition
Unproved $12,547 $ 351 $12,898
Proved 3,746 18 3,764
Exploration 7,467 501 7,968
Development 53,814 3,745 57,559
$77,574 $4,615 $82,189
Year Ended December 31, 1998
United States Canada Total
(In Thousands)
Property acquisition
Unproved $ 29,367 $ 145 $ 29,512
Proved 126,723 3,144 129,867
Exploration 10,055 1,222 11,277
Development 45,497 5,363 50,860
$211,642 $9,874 221,516
Year Ended December 31, 1997
United States Canada Total
(In Thousands)
Property acquisition
Unproved $4,057 $203 $4,260
Proved 2,155 2,155
Exploration 9,975 1,198 11,173
Development 45,067 4,437 49,504
$61,254 $5,838 $67,092
</TABLE>
Results of Operations:
Following are the results of operations of noncost-of-service oil- and
gas-producing activities before corporate overhead and interest
expenses. The Company recorded write-downs of oil and gas properties
in 1998 and 1997.
<TABLE>
<CAPTION>
Year Ended December 31, 1999
United States Canada Total
(In Thousands)
<S> <C> <C> <C>
Revenues
From unaffiliated
customers $59,682 $12,316 $71,998
From affiliates 97,618 97,618
Total revenues 157,300 12,31 169,616
Production expenses 46,671 3,681 50,352
Oil-income sharing under
Wexpro settlement agreement 2,292 2,292
Depreciation and amortization 58,477 3,512 61,989
Total expenses 107,440 7,193 114,633
Revenues less expenses 49,860 5,123 54,983
Income taxes - Note A 13,294 2,567 15,861
Results of operations before
corporate overhead and
interest expenses $36,566 $ 2,556 $39,122
Year Ended December 31, 1998
United States Canada Total
(In Thousands)
Revenues
From unaffiliated
customers $60,092 $10,384 $70,476
From affiliates 69,561 69,561
Total revenues 129,653 10,384 140,037
Production expenses 42,739 3,004 45,743
Oil-income sharing under
Wexpro settlement agreement 1,053 1,053
Depreciation and amortization 50,628 5,275 55,903
Write-down of oil and gas
properties 19,000 12,000 31,000
Total expenses 113,420 20,279 133,699
Revenues less expenses 16,233 (9,895) 6,338
Income taxes - Note A 634 (3,950) (3,316)
Results of operations before
corporate overhead and
interest expenses $15,599 ($5,945) $9,654
Year Ended December 31, 1997
United States Canada Total
(In Thousands)
Revenues
From unaffiliated
customers $60,650 $8,694 $69,344
From affiliates 76,858 76,858
Total revenues 137,508 8,694 146,202
Production expenses 41,981 2,424 44,405
Oil-income sharing under
Wexpro settlement agreement 2,347 2,347
Depreciation and amortization 46,372 5,374 51,746
Write-down of oil and gas
properties 6,000 6,000
Total expenses 90,700 13,798 104,498
Revenues less
expenses 46,808 (5,104) 41,704
Income taxes - Note A 10,500 (3,079) 7,421
Results of operations before
corporate overhead and
interest expenses $36,308 ($2,025) $34,283
</TABLE>
Note A - Income tax expense has been reduced by gas production tax
credits of $5,282,000 in 1999, $5,736,000 in 1998, and $6,633,000 in
1997.
Estimated Quantities of Proved Oil and Gas Reserves for
Noncost-of-Service Properties:
The majority of the reserve estimates located in the United States
were made by Ryder Scott Company, H. J. Gruy and Associates, Inc.,
Netherland, Sewell & Associates, and Malkewicz Hueni Associates,
Incorporated, independent reservoir engineers, and the remainder by
the Company's reservoir engineers. Estimated Canadian reserves were
prepared by Gilbert Laustsen Jung Associates Ltd. Reserve estimates
are based on a complex and highly interpretive process that is subject
to continuous revision as additional production and
development-drilling information becomes available. The quantities
reported below are based on existing economic and operating conditions
using current prices and operating costs. All oil and gas reserves
reported were located in the United States and Canada. The Company
does not have any long-term supply contracts with foreign governments
or reserves of equity investees.
<TABLE>
<CAPTION>
Natural Gas Oil
United States Canada Total United States Canada Total
(MMcf) (MBbls)
<S> <C> <C> <C> <C> <C> <C>
Proved Reserves
Balance at January 1, 1997 359,572 24,475 384,047 18,657 2,127 20,784
Revisions of estimates 11,409 (4,635) 6,774 (1,847) (316) (2,163)
Extensions and discoveries 24,353 4,366 28,719 1,060 898 1,958
Purchase of reserves in place 8,166 8,166 351 351
Sale of reserves in place (1,292) (1,292) (450) (3) (453)
Production (44,370) (3,072) (47,442) (2,667) (271) (2,938)
Balance at December 31, 1997 357,838 21,134 378,972 15,104 2,435 17,539
Revisions of estimates 334 (3,568) (3,234) (3,199) 238 (2,961)
Extensions and discoveries 28,688 1,984 30,672 730 261 991
Purchase of reserves in
place 129,207 5,110 134,317 3,720 71 3,791
Sale of reserves in place (440) (440) (76) (76)
Production (48,584) (2,725) (51,309) (2,490) (404) (2,894)
Balance at December 31, 1998 467,043 21,935 488,978 13,789 2,601 16,390
Revisions of estimates 4,041 (106) 3,935 4,746 372 5,118
Extensions and discoveries 77,740 1,720 79,460 1,007 257 1,264
Purchase of reserves in
place 17,020 17,020 130 130
Sale of reserves in place (11,984) (11,984) (3,665) (3,665)
Production (59,839) (2,873) (62,712) (2,431) (435) (2,866)
Balance at December 31, 1999 494,021 20,676 514,697 13,576 2,795 16,371
Proved Developed Reserves
Balance at January 1, 1997 299,219 14,683 313,902 16,686 1,880 18,566
Balance at December 31, 1997 300,859 16,670 317,529 13,209 1,851 15,060
Balance at December 31, 1998 412,181 17,835 430,016 12,583 2,281 14,864
Balance at December 31, 1999 412,252 17,076 429,328 12,410 2,565 14,975
</TABLE>
Standardized Measure of Future Net Cash Flows Relating to Proved
Reserves for Noncost-of-Service Activities:
Future net cash flows were calculated at December 31 using year-end
prices and known contract-price changes. Year-end production,
development costs and income tax rates were used to compute the future
net cash flows. All cash flows were discounted at 10% to reflect the
time value of cash flows, without regard to the risk of specific
properties.
The assumptions used to derive the standardized measure of future net
cash flows are those required by accounting standards and do not
necessarily reflect the Company's expectations. The usefulness of the
standardized measure of future net cash flows is impaired because of
the reliance on reserve estimates and production schedules that are
inherently imprecise, and because the costs of oil-income sharing
under the Wexpro settlement agreement were not included.
<TABLE>
<CAPTION>
Year Ended December 31, 1999
United States Canada Total
(In Thousands)
<S> <C> <C> <C>
Future cash inflows $1,384,688 $107,227 $1,491,915
Future production and development
costs (472,937) (31,426) (504,363)
Future income tax expenses (196,395) (10,773) (207,168)
Future net cash flows 715,356 (293,670) 65,028
10% annual discount for estimated
timing of net cash flows (23,365) 780,384 (317,035)
Standardized measure of
discounted future net cash flows $421,686 $41,663 $463,349
Year Ended December 31, 1998
United States Canada Total
(In Thousands)
Future cash inflows $1,012,259 $66,873 $1,079,132
Future production and
development costs (374,046) (22,784) (396,830)
Future income tax expenses (81,076) (81,076)
Future net cash flows 557,137 44,089 601,226
10% annual discount for estimated
timing of net cash flows (220,117) (14,809) (234,926)
Standardized measure of discounted
future net cash flows $337,020 $29,280 $366,300
Year Ended December 31, 1997
United States Canada Total
(In Thousands)
Future cash inflows $937,059 $68,550 $1,005,609
Future production and development
costs (349,624) (25,066) (374,690)
Future income tax expenses (99,107) (99,107)
Future net cash flows 488,328 43,484 531,812
10% annual discount for estimated
timing of net cash flows (198,070) (14,885) (212,955)
Standardized measure of discounted
future net cash flows $290,258 $28,599 $318,587
</TABLE>
The principal sources of change in the standardized measure of
discounted future net cash flows were:
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Beginning balance $366,300 $318,857 $416,282
Sales of oil and gas produced,
net of production costs (119,264) (94,294) (101,797)
Net changes in prices and
production costs 177,481 (61,660) (138,678)
Extensions and discoveries,
less related costs 81,833 25,787 31,535
Revisions of quantity estimates 32,871 (14,805) (4,979)
Purchase of reserves in place 3,764 129,867 2,155
Sale of reserves in place (33,043) (540) (3,606)
Accretion of discount 36,630 31,886 41,629
Net change in income taxes (68,523) 15,727 73,804
Change in production rate (12,363) 7,314 5,025
Other (2,337) 8,161 (2,513)
Net change 97,049 47,443 (97,425)
Ending balance $463,349 $366,300 $318,857
</TABLE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Reference is made to the Index to Consolidated Financial
Statements and Supplementary Data appearing at Item 13.
Financial Statements and Supplementary Data of this Form.
(b) The following is an Index of Exhibits required by Item 601 of
Regulation S-K filed with the Securities and Exchange
Commission as part of this Form:
Exhibit
Number Description
3.1. Articles of Incorporation dated April 27, 1988 for Utah
Entrada Industries, Inc.
3.2. Articles of Merger, dated May 20, 1988, of Entrada
Industries, Inc., a Delaware corporation and Utah
Entrada Industries, Inc, a Utah corporation.
3.3. Articles of Amendment dated August 31, 1998, changing
the name of Entrada Industries, Inc. to Questar Market
Resources, Inc.
3.4. Bylaws (as amended effective February 8, 2000.)
4.1. U.S. Credit Agreement, dated April 19, 1999, by and
among Questar Market Resources, Inc., as U.S. borrower,
NationsBank, N.A., as U.S. agent, and certain financial
institutions, as lenders, with the First Amendment dated
May 17, 1999, the Second Amendment dated July 30, 1999,
and the Third Amendment dated November 30, 1999.
4.2. Long-term debt instruments with principal amounts not
exceeding 10% of QMR's total consolidated assets are
not filed as exhibits to this Report. QMR will furnish
a copy of those agreements to the SEC upon its request.
10.1.* Stipulation and Agreement, dated October 14, 1981,
executed by Mountain Fuel Supply Company [Questar Gas
Company]; Wexpro Company; the Utah Department of
Business Regulations, Division of Public Utilities; the
Utah Committee of Consumer Services; and the staff of
the Public Service Commission of Wyoming. (Exhibit No.
10(a) to Questar Gas Company's Form 10-K Annual Report
for 1981.)
10.2.1 Questar Market Resources, Inc. Annual Management
Incentive Plan, as amended and restated effective May
18, 1999.
10.3.*1Questar Corporation Executive Incentive Retirement
Plan, as amended and restated effective May 19, 1998.
(Exhibit No. 10.2. to Form 10-Q Report for Quarter Ended
June 30, 1998, filed by Questar Corporation.)
10.4.*1Questar Corporation Long-Term Stock Incentive Plan, as
amended and restated effective February 8, 2000.
(Exhibit No. 10.4. to Form 10-K Report for 1999 filed by
Questar Corporation.)
10.5.*1Questar Corporation Executive Severance Compensation
Plan, as amended and restated effective May 19, 1998.
(Exhibit No. 10.3. to Form 10-Q Report for Quarter Ended
June 30, 1998, filed by Questar Corporation.)
10.6.1 Questar Market Resources, Inc. Deferred Compensation
Plan for Directors, as amended and restated effective
May 19, 1998.
10.7.*1Questar Corporation Supplemental Executive Retirement
Plan, as amended and restated effective June 1, 1998.
(Exhibit No. 10.6. to Form 10-Q Report for Quarter Ended
June 30, 1998, filed by Questar Corporation.)
10.8.*1Questar Corporation Stock Option Plan for Directors, as
amended and restated effective October 29, 1998.
(Exhibit No. 10.10. to Form 10-Q Report for Quarter
Ended September 30, 1998, filed by Questar Corporation.)
10.9.*1Form of Individual Indemnification Agreement dated
February 9, 1993 between Questar Corporation and
directors, including directors of Questar Market
Resources, Inc. (Exhibit No. 10.11. to Form 10-K Annual
Report for 1992 filed by Questar Corporation.)
10.10.*1Questar Corporation Deferred Share Plan, as amended
and restated effective May 19, 1998. (Exhibit No. 10.7.
to Form 10-Q Report for Quarter Ended June 30, 1998,
filed by Questar Corporation.)
10.11.*1Questar Corporation Deferred Compensation Plan, as
amended and restated effective May 19, 1998. (Exhibit
No. 10.10. to Form 10-Q Report for Quarter Ended June
30, 1998, filed by Questar Corporation.)
10.12.*1Questar Corporation Directors' Stock Plan as approved
May 21, 1996. (Exhibit No. 10.15. to Form 10-Q Report
for Quarter ended June 30, 1996, filed by Questar
Corporation.)
10.13.*1Questar Corporation Deferred Share Make-Up Plan.
(Exhibit No. 10.8. to Form 10-Q Report for Quarter Ended
June 30, 1998, filed by Questar Corporation.)
10.14.*1Questar Corporation Special Situation Retirement Plan.
(Exhibit No. 10.10. to Form 10-Q Report for Quarter
Ended June 30, 1998, filed by Questar Corporation.)
12. Ratio of Earnings to Fixed Charges.
27. Financial Data Schedule.
________________________
* Exhibits so marked have been filed with the Securities and
Exchange Commission as part of the indicated filing and are
incorporated herein by reference.
1 Exhibit so marked is management contract or compensation
plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
QUESTAR MARKET RESOURCES, INC.
BY: /s/G. L. Nordloh
G. L. Nordloh
PRESIDENT AND CEO
Date: April 12, 2000
EXHIBIT INDEX
Exhibit
Number Exhibit
3.1. Articles of Incorporation dated April 27, 1988 for Utah
Entrada Industries, Inc.
3.2. Articles of Merger, dated May 20, 1988, of Entrada
Industries, Inc., a Delaware corporation and Utah Entrada
Industries, Inc, a Utah corporation.
3.3. Articles of Amendment dated August 31, 1998, changing the
name of Entrada Industries, Inc. to Questar Market
Resources, Inc.
3.4. Bylaws (as amended effective February 8, 2000.)
4.1. U.S. Credit Agreement, dated April 19, 1999, by and among
Questar Market Resources, Inc., as U.S. borrower,
NationsBank, N.A., as U.S. agent, and certain financial
institutions, as lenders, with the First Amendment dated May
17, 1999, the Second Amendment dated July 30, 1999, and the
Third Amendment dated November 30, 1999.
4.2. Long-term debt instruments with principal amounts not
exceeding 10% of QMR's total consolidated assets are
not filed as exhibits to this Report. QMR will furnish
a copy of those agreements to the SEC upon its request.
10.1.* Stipulation and Agreement, dated October 14, 1981, executed
by Mountain Fuel Supply Company [Questar Gas Company];
Wexpro Company; the Utah Department of Business Regulations,
Division of Public Utilities; the Utah Committee of Consumer
Services; and the staff of the Public Service Commission of
Wyoming. (Exhibit No. 10(a) to Questar Gas Company's Form
10-K Annual Report for 1981.)
10.2.1 Questar Market Resources, Inc. Annual Management Incentive
Plan, as amended and restated effective May 18, 1999.
10.3.*1 Questar Corporation Executive Incentive Retirement Plan, as
amended and restated effective May 19, 1998. (Exhibit No.
10.2. to Form 10-Q Report for Quarter Ended June 30, 1998,
filed by Questar Corporation.)
10.4.*1 Questar Corporation Long-Term Stock Incentive Plan, as
amended and restated effective February 8, 2000. (Exhibit
No. 10.4. to Form 10-K Report for 1999 filed by Questar
Corporation.)
10.5.*1 Questar Corporation Executive Severance Compensation Plan,
as amended and restated effective May 19, 1998. (Exhibit
No. 10.3. to Form 10-Q Report for Quarter Ended June 30,
1998, filed by Questar Corporation.)
10.6.1 Questar Market Resources, Inc. Deferred Compensation Plan
for Directors, as amended and restated effective May 19,
1998.
10.7.*1 Questar Corporation Supplemental Executive Retirement Plan,
as amended and restated effective June 1, 1998. (Exhibit
No. 10.6. to Form 10-Q Report for Quarter Ended June 30,
1998, filed by Questar Corporation.)
10.8.*1 Questar Corporation Stock Option Plan for Directors, as
amended and restated effective October 29, 1998. (Exhibit
No. 10.10. to Form 10-Q Report for Quarter Ended September
30, 1998, filed by Questar Corporation.)
10.9.*1 Form of Individual Indemnification Agreement dated February
9, 1993 between Questar Corporation and directors, including
directors of Questar Market Resources, Inc. (Exhibit No.
10.11. to Form 10-K Annual Report for 1992 filed by Questar
Corporation.)
10.10.*1 Questar Corporation Deferred Share Plan, as amended and
restated effective May 19, 1998. (Exhibit No. 10.7. to Form
10-Q Report for Quarter Ended June 30, 1998, filed by
Questar Corporation.)
10.11.*1 Questar Corporation Deferred Compensation Plan, as amended
and restated effective May 19, 1998. (Exhibit No. 10.10. to
Form 10-Q Report for Quarter Ended June 30, 1998, filed by
Questar Corporation.)
10.12.*1 Questar Corporation Directors' Stock Plan as approved May
21, 1996. (Exhibit No. 10.15. to Form 10-Q Report for
Quarter ended June 30, 1996, filed by Questar Corporation.)
10.13.*1 Questar Corporation Deferred Share Make-Up Plan. (Exhibit
No. 10.8. to Form 10-Q Report for Quarter Ended June 30,
1998, filed by Questar Corporation.)
10.14.*1 Questar Corporation Special Situation Retirement Plan.
(Exhibit No. 10.10. to Form 10-Q Report for Quarter Ended
June 30, 1998, filed by Questar Corporation.)
12. Ratio of Earnings to Fixed Charges.
27. Financial Data Schedule.
________________________
* Exhibits so marked have been filed with the Securities and
Exchange Commission as part of the indicated filing and are
incorporated herein by reference.
1 Exhibit so marked is management contract or compensation
plan or arrangement.
ARTICLES OF INCORPORATION
OF UTAH ENTRADA INDUSTRIES, INC.
We, the undersigned, natural persons of the age of twenty-one
years or more, acting as incorporators of a Corporation under the Utah
Business Corporation Act, adopt the following Articles of
Incorporation for such corporation:
ARTICLE I
NAME
The name of this Corporation is Utah Entrada Industries, Inc.
ARTICLE II
DURATION
The period of its duration is perpetual.
ARTICLE III
PURPOSES
The purposes for which the Corporation is organized are as
follows:
(a) To engage in any and all activities concerned with the
discovery, development, production, and marketing of natural
resources, real estate, research, and manufacturing:
(b) To acquire, own, manage, mortgage, sell, lease, exchange,
develop, and transfer real property for any purpose;
(c) To engage in research and development activities;
(d) To manufacture and market building products;
(e) To acquire, purchase, sell, assign, transfer, mortgage,
pledge, or otherwise dispose of shares of the capital stock of any
corporation or corporation, association or association of any state,
territory, or country and to exercise all the rights, powers, and
privileges associated with such ownership:
(f) To conduct, carry on or engage in any businesses or
enterprises incidental to or useful in connection with the purposes
above specified;
(g) To engage in and to do any lawful act concerning any lawful
businesses for which corporations may be organized under the Utah
Business Corporation Act, including but not limited to the entering
into of any lawful arrangement for sharing profits, union of
interests, reciprocal association or cooperative association with any
corporation, association, partnership, individual or other legal
entity for the carrying on of any business and to enter into any
general or limited partnership for the carrying on of any business.
ARTICLE IV
STOCK
The aggregate number of shares that the Corporation shall be
authorized to issue is Twenty Five Million (25,000,000) shares of the
par value of One Dollar ($1.00) per share. All stock of this
Corporation shall be of the same class, common, and shall have the
same rights and preferences. Fully paid stock of this Corporation
shall not be liable to any call and is non-assessable.
ARTICLE V
RIGHTS
A shareholder shall have no preemptive rights to acquire any
securities of this Corporation
ARTICLE VI
INITIAL CAPITALIZATION
This Corporation will not commence business until consideration
of a value of at least $1,000 has been received for the issuance of
shares.
ARTICLE VII
INITIAL OFFICE AND AGENT
The address of this Corporation's initial registered office and
the name of its initial registered agent at such address is:
Connie C. Holbrook
180 East First South Street
P. O. Box 11150
Salt Lake City, Utah 84147
ARTICLE VIII
DIRECTORS
The number of directors constituting the initial Board of
Directors of this corporation is three (3). The names and addresses
of persons who are to serve as directors until the first annual
meeting of stockholders or until their successors are elected and
qualify, are:
Name Address
R. D. Cash 180 East First South Street
P. O. Box 11150
Salt Lake City, Utah 84147
C. M. Heiner 141 East First South Street
P. O. Box 11865
Salt Lake City, Utah 84147
R. M. Kirsch 79 South State Street
P. O. Box 11070
Salt Lake City, Utah 84147
ARTICLE IX
LIMITATION OF LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing
violation of law; (iii) for any transaction from which the director
derived an improper personal benefit; or (iv) for any action that
would result in statutory liability of the director under Section
16-10-44 of the Utah Code Annotated. Any repeal or modification of
this paragraph by the stockholders shall be prospective only and shall
not adversely affect any limitation on the personal liability of a
director of the Corporation for acts or omissions occurring prior to
the effective date of such repeal or modification.
ARTICLE X
INCORPORATORS
The name and address of each incorporator is:
Name Address
R. D. Cash 180 East First South Street
P. O. Box 11150
Salt Lake City, Utah 84147
C. M. Heiner 141 East First South Street
P. O. Box 11865
Salt Lake City, Utah 84147
R. M. Kirsch 79 South State Street
P. O. Box 11070
Salt Lake City, Utah 84147
ARTICLE XI
CUMULATIVE VOTING OF SHARES
There shall be no cumulative voting in the election of directors
of the Corporation.
ARTICLE XII
PURCHASE OF SHARES BY CORPORATION
The Corporation may purchase its own shares to the extent of
unreserved and unrestricted capital surplus available therefore in
addition to any right to purchase its own shares provided by law.
Dated this 27th day of April, 1988.
/s/ R. D. Cash
R. D. Cash, Incorporator
/s/ Clyde M. Heiner
C. M. Heiner, Incorporator
/s/ R. M. Kirsch
R. M. Kirsch, Incorporator
/s/ Connie C. Holbrook
Connie C. Holbrook
Registered Agent
State of Utah )
: ss.
County of Salt Lake)
I, Patricia C. Naisbitt, a Notary Public, hereby certify that on
the 27th day of April, 1988, personally appeared before me R. D. Cash,
C. M. Heiner, and R. M. Kirsch, who being by me first duly sworn,
severally declared that they are the persons who signed the foregoing
document as incorporators, and that the statements therein contained
are true.
Dated this 27th day of April, 1988.
/s/ Patricia C. Naisbitt
NOTARY PUBLIC, Residing in
Salt Lake City, Utah
My Commission Expires: January 1, 1989
ARTICLES OF MERGER
OF
ENTRADA INDUSTRIES, INC.
(a Delaware corporation)
AND
UTAH ENTRADA INDUSTRIES, INC.
(a Utah corporation)
Pursuant to Section 16-10-69 of the Utah Business Corporation Act
(the "Business Corporation Act"), the undersigned corporations hereby
adopt the following Articles of Merger for the purpose of merging
Entrada Industries, Inc., a Delaware corporation ("Entrada"), with and
into Utah Entrada Industries, Inc., a Utah corporation ("Utah
Entrada"), which shall be the surviving corporation.
FIRST: Pursuant to Sections 16-10-66 and 16-10-72 of the Business
Corporation Act, the respective Boards of Directors of Entrada and
Utah Entrada, by resolutions duly adopted by each such Board, approved
the Plan and Agreement of Merger dated as of May 17, 1988, a copy of
which is attached as Exhibit A and incorporated herein by reference
(the "Merger Agreement").
SECOND: The Merger Agreement was duly approved by Questar
Corporation, a Utah corporation, the holder of 4,309,427 shares of
Entrada's Class A common stock, $1.00 par value, constituting all of
the outstanding shares of stock, by written waiver and consent dated
May 18, 1988.
THIRD: The Plan of Merger was duly approved by Entrada, the
holder of 50 shares of Utah Entrada's common stock, $1.00 par value,
constituting all the outstanding shares of stock, by written waiver
and consent dated May 18, 1988.
IN WITNESS WHEREOF, Entrada and Utah Entrada have each caused
these Articles of Merger to be executed by duly authorized officers
this 18th day of May, 1988.
ENTRADA INDUSTRIES, INC.
By /s/ R. D. Cash
R. D. Cash
Chairman, President and
Chief Executive Officer
By /s/ S. E. Parks
S. E. Parks
Assistant Secretary
UTAH ENTRADA INDUSTRIES, INC.
By /s/ W. F. Edwards
W. F. Edwards
Vice President and
Chief Financial Officer
By /s/ Connie C. Holbrook
Connie C. Holbrook
Secretary
State of Utah )
: ss.
County of Salt Lake)
I, Laura A. Hazel, a Notary Public, hereby certify that on the
18th day of May, 1988, personally appeared before me R. D. Cash and S.
E. Parks, who each being by me first duly sworn, declared that they
are the persons who signed the foregoing document and that the
statements contained therein are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
18th day of May, 1988.
/s/ Laura A. Hazel
Notary Public
Residing in Salt Lake County, Utah
My Commission Expires:
April 1, 1992
State of Utah )
: ss.
County of Salt Lake)
I, Laura A. Hazel, a Notary Public, hereby certify that on the
18th day of May, 1988, personally appeared before me W. F. Edwards and
Connie C. Holbrook, who each being by me first duly sworn, declared
that they are the persons who signed the foregoing document and that
the statements contained therein are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
18th day of May, 1988.
/s/ Laura A. Hazel
Notary Public
Residing in Salt Lake County, Utah
My Commission Expires:
April 1, 1992
Exhibit A
PLAN AND AGREEMENT OF MERGER
This Plan and Agreement of Merger dated as of May 17, 1988 (the
"Merger Agreement") between Entrada Industries, Inc., a Delaware
corporation ("Entrada") and Utah Entrada Industries, Inc., a Utah
corporation ("Utah Entrada") (collectively, the "Constituent
Corporations").
WITNESSETH:
WHEREAS, the Board of Directors of each of the Constituent
Corporations deem it advisable and in the best interest of such
corporation and its stockholder that the Constituent Corporations be
merged in a transaction through which Utah Entrada would be the
surviving corporation; Entrada would cease to have a separate
corporate existence; and, the stockholder currently holding shares of
Entrada would receive shares of Utah Entrada in substitution
therefore; and
WHEREAS, the Board of Directors of each of the Constituent
Corporations has approved this Merger Agreement by resolutions duly
adopted;
NOW, THEREFORE, in consideration of the premises and of their
mutual covenants and agreements, the Constituent Corporations hereby
agree that the terms and conditions of the merger contemplated hereby
(the "Merger") and the mode of carrying the Merger into effect, shall
be as follows:
ARTICLE ONE
The Surviving Corporation
Section 1.01. At the time when the Merger shall become effective
(the "Effective Time"), Entrada will merge into Utah Entrada and Utah
Entrada will be the continuing and surviving corporation in the
Merger, will continue to exist under the laws of the state of Utah,
and will be the only one of the Constituent Corporations to continue
its separate corporate existence after the Effective Time. As used in
this Merger Agreement, the term "Surviving Corporation" refers to Utah
Entrada at and after the Effective Time.
Section 1.02. The name of the Surviving Corporation shall be
Entrada Industries, Inc.
Section 1.03. The Articles of Incorporation and Bylaws of the
Utah Entrada in effect immediately prior to the Effective Time shall
be the Articles of Incorporation and Bylaws of the Surviving
Corporation except that Article I of the Articles of Incorporation
shall be amended to read as follows:
"The name of this Corporation shall be Entrada Industries, Inc."
Section 1.04. The principal office of the Surviving Corporation
in the state of Utah shall be at 79 South State Street, Salt Lake
City, Utah.
Section 1.05. The Surviving Corporation hereby consents to be
sued and served with process in the state of Delaware in any
proceeding in the state of Delaware to enforce against the Surviving
Corporation any obligation of Entrada, or to enforce the rights of a
dissenting shareholder of Entrada, and the Surviving Corporation
hereby irrevocably appoints the Secretary of State of Delaware as its
agent to accept service of process in any such proceeding in the state
of Delaware.
ARTICLE TWO
Distributions to Shareholders
Section 2.01. At the Effective Time and as a result of the
Merger, each issued share of Entrada's Class A Common Stock (excluding
any shares held as treasury stock) shall, automatically and without
further act of either of the Constituent Corporations or of the holder
thereof, be extinguished and converted into one issued share of the
Common Stock of the Surviving Corporation.
Section 2.02. Each issued share of Entrada's Class A Common
Stock or Class B Common Stock held in Entrada's treasury shall be
canceled and retired.
Section 2.03. At the Effective Time and as a result of the
Merger, each of the issued shares of Common Stock of Utah Entrada held
by Entrada shall be canceled and extinguished.
ARTICLE THREE
Termination and Abandonment: Amendment
Section 3.01. The Merger contemplated by this Merger Agreement
may be terminated and abandoned by the Board of Directors of either of
the Constituent Corporations at any time prior to the Effective Time
and for any reason, without notice of such action to the other
Constituent Corporation, notwithstanding approval of this Merger
Agreement by the stockholders of one or both of the Constituent
Corporations.
Section 3.02. From time to time and at any time prior to the
Merger Date, the Merger Agreement may be amended by an agreement in
writing executed in the same manner as this Merger Agreement, after
authorization of such action by the Boards of Directors of the
Constituent Corporations, but no such amendment made subsequent to the
adoption of this Merger Agreement by the stockholders of either of the
Constituent Corporations shall (i) alter or change the amount or kind
of shares or other consideration to be received by the stockholders in
the Merger, (ii) alter or change any term of the Articles of
Incorporation of the Surviving Corporation to be effected by the
Merger.
ARTICLE FOUR
Effective Date of Merger
Section 4.01. (a) After this Merger Agreement shall have been
duly adopted by the Board of Directors and the stockholder of each of
the Constituent Corporations, the Constituent Corporations shall cause
the Merger to be consummated by filing with the Secretary of State for
the State of Delaware a Certificate of Merger to be executed,
acknowledged and filed in accordance with Section 251 of the General
Corporation Law of the State of Delaware and by filing with the Utah
State Division of Corporations and Commercial Code Articles of Merger
in accordance with applicable provisions of Article 2 of the Utah
Business Corporation Act. The later date and time of issuance of the
appropriate Certificate of Merger by the Secretary of State for the
State of Delaware and the Utah State Division of Corporations and
Commercial Code, respectively, is referred to herein as the "Effective
Time."
(b) At the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a
public or private nature, of each of the Constituent Corporations, all
property, real, personal and mixed, and all debts due on whatever
account, including subscriptions to shares and all other choses in
action, and all and every other interest, of or belonging to or due to
each of the Constituent Corporations, shall be taken and deemed to be
transferred to and bested in the Surviving Corporation without further
act or deed; and the title to any real estate, or any interest
therein, vested in any of the Constituent Corporation, shall not
revert or be in any way impaired by reason of the Merger.
(c) At the Effective Time, the Surviving Corporation shall be
responsible and liable for the liabilities and obligations of each of
the Constituent Corporations and any claim existing or action or
proceeding pending by or against any of the Constituent Corporations
may be prosecuted as if such Merger had not taken place, or the
Surviving creditors nor any liens upon the property of the Constituent
Corporations shall be impaired by such Merger.
(d) The net surplus of the Constituent Corporations that was
available for dividends immediately prior to such Merger, to the
extent that such surplus is not transferred to stated capital or
capital surplus by the issuance of shares, shall continue to be
available for the payment of dividends by the Surviving Corporation.
IN WITNESS WHEREOF, this Merger Agreement has been executed on
behalf of the Constituent Corporations by their duly authorized
officers on this 17th day of May, 1988.
Entrada Industries, Inc.
Attest: a Delaware corporation
By: /s/ S. E. Parks By: /s/ R. D. Cash
S. E. Parks R. D. Cash
Assistant Secretary Chairman, President, and
Chief Executive Officer
Utah Entrada Industries, Inc.
Attest: a Utah Corporation
/s/ Connie C. Holbrook By: /s/ W. F. Edwards
Connie C. Holbrook W. F. Edwards
Secretary Vice President and
Chief Financial Officer
State of Utah )
: ss.
County of Salt Lake)
I, Laura A. Hazel, a Notary Public, hereby certify that on the
18th day of May, 1988, personally appeared before me R. D. Cash and S.
E. Parks who each being by me first duly sworn, declared that they are
the persons who signed the foregoing document and that the statements
contained therein are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
18th day of May, 1988.
/s/ Laura A. Hazel
Notary Public
Residing in Salt Lake County, Utah
My Commission Expires:
April 1, 1992
State of Utah )
: ss.
County of Salt Lake)
I, Laura A. Hazel, a Notary Public, hereby certify that on the
18th day of May, 1988, personally appeared before me W. F. Edwards and
Connie C. Holbrook, who each being by me first duly sworn, declared
that they are the persons who signed the foregoing document and that
the statements contained therein are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
18th day of May, 1988.
/s/ Laura A. Hazel
Notary Public
My Commission Expires: Presiding in Salt Lake County, Utah
April 1, 1992
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ENTRADA INDUSTRIES, INC.
Pursuant to the provisions of the Utah Business Corporation Act,
the undersigned Corporation adopts the following Articles of Amendment
to it Articles of Incorporation.
FIRST: The name of the Corporation is Entrada Industries, Inc.
SECOND: The following amendment to the Articles of
Incorporation was adopted by the shareholder of the Corporation on
August 11, 1998, in the manner prescribed by the Utah Business
Corporation Act.
Article I was amended to read as follows:
ARTICLE I
The name of the Corporation is Questar Market Resources, Inc.
THIRD: The number of shares of the Corporation outstanding at
the time of such adoption was 4,309,427 and the number of shares
entitled to vote was 4,309,427.
FOURTH: The designated number of outstanding shares of each
class of stock entitled to vote on the amendments as a class was
4,309,427 shares of common stock of the Corporation.
FIFTH: The number of shares consenting to the amendment to
Article I was 4,309,427, being 100 percent of the outstanding shares
of the Corporation. No shares were voted against the proposed
amendment.
IN WITNESS WHEREOF, the undersigned Chairman of the Board and
Secretary of the Corporation have set their hands this 12th day of
August, 1998.
ENTRADA INDUSTRIES, INC.
Attest:
/s/ Connie C. Holbrook /s/ R. D. Cash
Connie C. Holbrook R. D. Cash
Secretary Chairman of the Board
ACKNOWLEDGMENT
State of Utah )
: ss.
County of Salt Lake )
I, Lucille L. Curtis, a notary public, do hereby certify that on
August 12, 1998, personally appeared before me R. D. Cash, who being
by me first duly sworn, declared that he is Chairman of the Board of
Entrada Industries, Inc., that he signed the foregoing document as
Chairman of the Board of Entrada Industries, Inc., and that the
statements contained therein are true.
/s/ Lucille L. Curtis
Notary Public
Residing at Salt Lake City, Utah
My Commission Expires:
August 27, 1999
BYLAWS
OF
QUESTAR MARKET RESOURCES, INC.
A Utah Corporation
OFFICES
SECTION 1. The Company's principal office shall be in Salt Lake
City, Utah.
The Company may also have offices at such other places as the Board of
Directors may from time to time appoint or the business of the Company
may require.
SEAL
SECTION 2. The corporate seal shall have inscribed thereon the
name of the Company, and the words "Corporate Seal," and "Utah."
SHAREHOLDERS' MEETINGS
SECTION 3. All meetings of the shareholders shall be held at the
Company's office in Salt Lake City, Utah, or at such other place as
may be specified by resolution of the Board of Directors.
SECTION 4. The annual meeting of shareholders shall be held on
the third Tuesday in May of each year, and if such day is a legal
holiday, then on the preceding secular business day, at 12:30 p.m.,
when they shall elect by majority vote a Board of Directors and
transact such other business as may properly be brought before the
meeting.
SECTION 5. Special meetings of the shareholders may be called by
the President, the Board of Directors, or holders of not less than
one-tenth of all the shares entitled to vote at the meeting.
SECTION 6. Holders of a majority of the shares issued and
outstanding entitled to vote, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders
for the transaction of business, except as otherwise provided by law,
by the Articles of Incorporation, or by these Bylaws. If, however,
such majority shall not be present or represented at any meeting of
the shareholders, the shareholders entitled to vote present in person
or by proxy, shall have power to adjourn the meeting, from time to
time, without notice other than announcement at the meeting, until
such requisite amount of voting stock shall be present. At such
adjourned meeting at which the requisite amount of voting stock shall
be represented, any business may be transacted that might have been
transacted at the meeting as originally notified.
SECTION 7. The Secretary shall, but in case of his failure any
other office of the Company may, give written or printed notice to the
shareholders stating the place, day and hour of each shareholders'
meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called. Such notice shall be given not less than
ten (10) nor more than fifty (50) days before the date of the meeting.
SECTION 8. Notice may be given either personally or by mail, and
if given by mail, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at
his address as it appears on the stock transfer books of the Company
with postage prepaid thereon.
SECTION 9. At any meeting of shareholders, each shareholder
having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing, subscribed by such
shareholder and bearing a date not more than three months prior to
such meeting. Each shareholder shall have one vote for each share of
stock registered in such shareholder's name on the books of the
Company as of the record date set for such meeting. The vote for
directors, and upon the demand of any shareholder, the vote upon any
question before any meeting of shareholders shall be by ballot.
SECTION 10. A complete list of shareholders entitled to vote at
the ensuing election shall be prepared and be available for inspection
by any shareholder beginning two business days after notice is given
of the meeting for which the list was prepared and continuing
throughout the meeting. The list shall be arranged by voting group
and by class or series of shares within each voting group and be
alphabetical within each voting group or class. The list shall
indicate each shareholder's name, address, and number of voting
shares.
A shareholder, directly or through an agent or attorney, has the
right to inspect and copy, at his expense, the list of shareholders
prepared for each meeting of shareholders. The shareholder must make
a written request to examine the list and must examine it during the
Company's regular business hours.
SECTION 11. Business transacted at all special meetings of the
shareholders shall be confined to the objects stated in the call and
notice.
SECTION 12. Unless otherwise provided in the Articles of
Incorporation, any action that may be taken at any annual or special
meeting of the shareholders may be taken without a meeting and without
prior notice upon the receipt of a unanimous written consent.
DIRECTORS
SECTION 13. The business and affairs of the Company shall be
managed under the direction of the Board of Directors. The Board of
Directors shall consist of six directors. A majority of the Board
shall have the power to transact the business of the Company in
conformity with the powers conferred upon the Board of Directors by
the Articles of Incorporation. Directors elected at any annual or
special meeting of shareholders shall hold office until the next
annual meeting of the shareholders and until their successors shall be
duly elected. One or more directors may be removed with or without
cause by a vote of a majority of the shareholders at a meeting of
shareholders called for that purpose.
SECTION 14. In addition to the powers and authority by
these Bylaws expressly conferred upon them, the Board may exercise all
such powers of the Company and do all such lawful acts and things as
are not by statute of the State of Utah, or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised
or done by the shareholders.
COMMITTEE
SECTION 15. The Board of Directors, by resolution or resolutions
passed by a majority of the whole Board, may designate one or more
Committees, each Committee to consist of two or more of the directors
of the Company and shall have and may exercise the powers conferred
upon them by the Board of Directors. All Committees when so appointed
shall have such name or names as may be determined from time to time
by resolutions adopted by the Board of Directors.
SECTION 16. The Committees shall keep regular minutes for their
proceedings and report the same to the Board of Directors when
required.
COMPENSATION OF DIRECTORS
SECTION 17. Directors, as such, shall not receive any salary for
their services, but the Board of Directors, by resolution, may fix the
fees to be allowed and paid to directors for their services and
provide for the payment of the expenses of the directors incurred by
them in performing their duties. Nothing herein contained, however,
shall be considered to preclude any director from serving the Company
in any other capacity and receiving compensation therefore.
SECTION 18. Fees to members of special or standing committees
and expenses incurred by them in the performance of their duties shall
also be fixed and allowed by resolution of the Board of Directors.
MEETINGS OF THE BOARD
SECTION 19. The Board of Directors may meet at Salt Lake City,
Utah, or at such other place as may be determined by a majority of the
members of the Board.
SECTION 20. Regular meetings of the Board may be held without
notice at such time and place as shall from time to time be determined
by the Board.
SECTION 21. Special meetings of the Board may be called by the
President on at least two days' notice to each director, either
personally or by mail, telegram or telephone; special meetings shall
be called by the President or Secretary in like manner and on like
notice on the written request of two directors.
SECTION 22. At all meetings of the Board a majority of the
directors shall be necessary and sufficient to constitute a quorum for
the transaction of business. The act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of
the Board of Directors. Directors may participate in a Board meeting
and can be counted in a quorum by means of conference telephone or
similar communications equipment by which all directors participating
in the meeting can hear each other.
SECTION 23. Unless the Articles of Incorporation provide
otherwise, any acts required or permitted to be taken by the Board of
Directors at a meeting may be taken without a meeting if all the
directors take the action, each director signs a written consent
describing the action taken, and the consents are filed with the
records of the Company. Action taken by consent is effective when the
last director signs the consent, unless the consent specifies a
different effective date. A signed consent has the effect of a
meeting vote and may be described as such in any document.
SECTION 24. The officers of the Company shall be chosen by the
Board of Directors at its first meeting after each annual meeting and
shall include: a Chairman of the Board, a President and Chief
Executive Officer, a Vice President, a Secretary and a Treasurer. The
Board may also choose a Vice Chairman of the Board, and additional
Vice Presidents, Assistant Secretaries and Assistant Treasurers. None
of these officers except the Chairman of the Board, the Vice Chairman
of the Board, and the President need be members of the Board.
SECTION 25. The Board may appoint such other officers and agents
as it may deem necessary. Such officers and agents shall hold their
office for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board.
SECTION 26. The salaries of all officers of the Company shall be
fixed by the Board of Directors.
SECTION 27. The officers of the Company shall hold office until
their successors are chosen and qualified in their stead. Any officer
elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the whole Board of
Directors. If the office of any officer or officers becomes vacant
for any reason, the vacancy shall be filled by the affirmative vote of
a majority of the whole Board of Directors.
CHAIRMAN OF THE BOARD
SECTION 28. The Chairman of the Board shall preside at the
meetings of the shareholders and directors.
VICE CHAIRMAN OF THE BOARD
SECTION 29. The Vice Chairman of the Board shall preside at all
meetings of the shareholders and directors in the absence of the
Chairman.
PRESIDENT
SECTION 30. The President shall be the Chief Executive Officer
of the Company; shall preside at all meetings of the shareholders and
directors in the absence of the Chairman of the Board and the Vice
Chairman of the Board (if there be one); shall have general and active
management of the business of the Company; and shall see that all
orders and resolutions of the Board are carried into effect. He shall
have the general powers and duties of supervision and management
usually vested in the office of President and Chief Executive Officer
of a corporation. He shall perform such other functions and duties as
shall be prescribed by the Board of Directors.
VICE PRESIDENT
SECTION 31. Each Vice President shall perform the duties
prescribed by the President or the Board of Directors. If the
President shall become unable for any reason to perform his duties,
then the Vice President, or if there is more than one Vice President,
the one designated as Senior Vice President (if any) or the one
designated by the Board of Directors shall succeed to the duties of
the President until the President shall again become able to perform
his duties.
SECRETARY AND ASSISTANT SECRETARIES
SECTION 32. (a) The Secretary shall attend the meetings of the
Board and the meetings of the shareholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose
and shall perform like duties for the Committees appointed by the
Board when required; give or cause to be given notice of the meetings
of the shareholders and of the Board of Directors; and perform such
other duties as may be prescribed by the Board of Directors or
President.
(b) The Assistant Secretary, senior in time of service, in the
absence or disability of the Secretary, shall perform the duties and
exercise the powers of the Secretary and shall perform such other
duties as shall be prescribed by the President or the Board of
Directors.
TREASURER AND ASSISTANT TREASURERS
SECTION 33. The Treasurer and Assistant Treasurers shall perform
such duties as shall be prescribed by the President or the Board.
VACANCIES
SECTION 34. If the office of any director or directors becomes
vacant by reason of the death, resignation, disqualification, removal
from office, or otherwise, the remaining directors, not less than a
quorum, shall choose a person or persons to fill the vacancy or
vacancies who shall hold office until the successor or successors
shall have been duly appointed or elected.
CERTIFICATES OF STOCK
SECTION 35. The certificates of stock of the Company shall be
numbered and shall be entered in the books of the Company as they are
issued.
FISCAL YEAR
SECTION 36. The fiscal year shall begin the first day of January
in each year.
RECORDS AND INSPECTION RIGHTS
SECTION 37. The Company shall maintain permanent records of the
minutes of all meetings of its shareholders and Board of Directors;
all actions taken by the shareholders or Board of Directors without a
meeting; and all actions taken by a Committee of the Board of
Directors in place of the Board of Directors on behalf of the Company.
The Company shall also maintain appropriate accounting records. The
Company shall keep such records at its office in Salt Lake City, Utah,
and any other location designated by the Board of Directors.
A shareholder of the Company, directly or through an agent or
attorney, shall have limited rights to inspect and copy the Company's
records as provided under applicable state law and by complying with
the procedures specified under such law.
BANK ACCOUNTS
SECTION 38. All checks, demands for money, or other transactions
involving the Company's bank accounts shall be signed by such officers
or other responsible employees as the Board of Directors may
designate. No third party is allowed access to the Company's bank
accounts without express written authorization by the Board of
Directors.
AMENDMENTS
SECTION 39. The Company's Board of Directors may amend or repeal
the Company's Bylaws unless the Company's Articles of Incorporation or
Utah's Revised Business Corporation Act reserve this power exclusively
to the shareholders in whole or part; unless the shareholders, in
adopting, amending, or repealing a particular Bylaw provide expressly
that the Board of Directors may not amend or repeal that Bylaw; or
unless the Bylaw establishes, amends, or deletes a supermajority
shareholder quorum or voting requirement. The Company's shareholders
may amend or repeal the Company's Bylaws even though the Bylaws may
also be amended or repealed by the Board of Directors.
INDEMNIFICATION AND LIABILITY INSURANCE
SECTION 40. (a) Voluntary Indemnification. Unless otherwise
provided in the Articles of Incorporation, the Company shall indemnify
any individual made a party to a proceeding because he is or was a
director of the Company, against liability incurred in the proceeding,
but only if the Company has authorized the payment in accordance with
the applicable statutory provisions [Sections 16-10a-902 and
16-10a-904 of Utah's Revised Business Corporation Act] and a
determination has been made in accordance with the procedures set
forth in such provision that the director conducted himself in good
faith; that he reasonably believed that his conduct, if in his
official capacity with the Company, was in its best interests and that
his conduct, in all other cases, was at least not opposed to the
Company's best interests; and that he had no reasonable cause to
believe his conduct was unlawful in the case of any criminal
proceeding.
(b) The Company may not voluntarily indemnify a director in
connection with a proceeding by or in the right of the Company in
which the director was adjudged liable to the Company or in connection
with any other proceeding charging improper personal benefit to him,
whether or not involving action in his official capacity, in which he
was adjudged liable on the basis that personal benefit was improperly
received by him.
(c) Indemnification permitted under Paragraph (a) in connection
with a proceeding by or in the right of the Company is limited to
reasonable expenses incurred in connection with the proceeding.
(d) If a determination is made, using the procedures set forth
in the applicable statutory provision, that the director has satisfied
the requirements listed herein and if an authorization of payment is
made, using the procedures and standards set forth in the applicable
statutory provision, then, unless otherwise provided in the Company's
Articles of Incorporation, the Company shall pay for or reimburse the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of the final disposition of the proceeding if
the director furnishes the Company a written affirmation of his good
faith belief that he has satisfied the standard of conduct described
in this Section, furnishes the Company a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet the standard of conduct (which
undertaking must be an unlimited general obligation of the director,
but need not be secured and may be accepted without reference to
financial ability to make repayment); and if a determination is made
that the facts then known of those making the determination would not
preclude indemnification under this Section.
(e) Mandatory Indemnification. Unless otherwise provided in the
Company's Articles of Incorporation, the Company shall indemnify a
director or officer of the Company who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he was
a party because he is or was a director or officer of the Company
against reasonable expenses incurred by him in connection with the
proceeding.
(f) Court-Ordered Indemnification. Unless otherwise provided in
the Company's Articles of Incorporation, a director or officer of the
Company who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. The court may order indemnification
if it determines that the director or officer is entitled to mandatory
indemnification as provided in this Section and applicable law, in
which case the court shall also order the Company to pay the
reasonable expenses incurred by the director or officer to obtain
court-ordered indemnification. The court may also order
indemnification if it determines that the director or officer is
fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director or officer met the
applicable standard of conduct set forth in this Section and
applicable law. Any indemnification with respect to any proceeding in
which liability has been adjudged in the circumstances described in
Paragraph (b) above is limited to reasonable expenses.
(g) Indemnification of Others. Unless otherwise provided in the
Company's Articles of Incorporation, an officer, employee, or agent of
the Company shall have the same indemnification rights provided to a
director by this Section. The Board of Directors may also indemnify
and advance expenses to any officer, employee, or agent of the
Company, to any extent consistent with public policy as determined by
the general or specific purpose of the Board of Directors.
(h) Insurance. The Company may purchase and maintain liability
insurance on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent or the Company, or who, while serving as
a director, officer, employee, fiduciary, or agent of the Company, is
or was serving at the request of the Company as a director, officer,
partner, trustee, employee, fiduciary or agent of another foreign or
domestic corporation, other person, of an employee benefit plan, or
incurred by him in that capacity or arising from his status as a
director, officer, employee, fiduciary, or agent, whether or not the
Company has the power to indemnify him against the same liability
under applicable law.
LIMITATION ON LIABILITY
SECTION 41. No director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for any
action taken or any failure to take any action, as a director, except
liability for (a) the amount of a financial benefit received by a
director to which he is not entitled; (b) an intentional infliction of
harm on the Company or the shareholders; (c) for any action that would
result in liability of the director under the applicable statutory
provision concerning unlawful distributions [Section 16-10a-842 of
Utah's Revised Business Corporation Act]; or (d) an intentional
violation of criminal law. This provision shall not limit the
liability of a director for any act or omission occurring prior to
August 11, 1992. Any repeal or modification of this provision by the
stockholders shall be prospective only and shall not adversely affect
any limitation on the personal liability of a director of the Company
for acts or omissions occurring prior to the effective date of such
repeal or modification.
[execution]
US CREDIT AGREEMENT
_______________________________________________________
QUESTAR MARKET RESOURCES, INC.
as US Borrower
NATIONSBANK, N.A.
as Administrative Agent
NATIONSBANC MONTGOMERY SECURITIES, L.L.C.
as Arranger
THE FIRST NATIONAL BANK OF CHICAGO
as Syndications Agent
MELLON BANK, N.A.
as Documentation Agent
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
_______________________________________________________
US $192,000,000
April 19, 1999
TABLE OF CONTENTS
Page
CREDIT AGREEMENT...........................................1
ARTICLE I - The US Loans...................................1
Section 1.1.Commitments to Lend; US Notes.............1
Section 1.2.Requests for New US Loans.................4
Section 1.3.Continuations and Conversions of Existing US
Loans.................................................5
Section 1.4.Use of Proceeds...........................6
Section 1.5.Interest Rates and Fees...................7
Section 1.6.Prepayments...............................8
Section 1.7.Competitive Bid Loans.....................9
ARTICLE II - Letters of Credit............................11
Section 2.1.Letters of Credit........................11
Section 2.2.Requesting Letters of Credit.............12
Section 2.3.Reimbursement and Participations.........12
Section 2.4.Letter of Credit Fees....................13
Section 2.5.No Duty to Inquire.......................13
Section 2.6.LC Collateral............................14
ARTICLE III - Payments to Lenders.........................15
Section 3.1.General Procedures.......................15
Section 3.2.Increased Cost and Reduced Return........16
Section 3.3.Limitation on Types of US Loans..........18
Section 3.4.Illegality...............................18
Section 3.5.Treatment of Affected US Loans...........19
Section 3.6.Compensation.............................19
Section 3.7.Change of Applicable Lending Office......20
Section 3.8.Replacement of Lenders...................20
Section 3.9.Taxes....................................20
Section 3.10.Currency Conversion and Currency Indemnity22
ARTICLE IV - Conditions Precedent to Lending..............23
Section 4.1.Documents to be Delivered................23
Section 4.2.Additional Conditions Precedent to First US Loan
or First Letter of Credit............................24
Section 4.3.Additional Conditions Precedent to all US Loans
and Letters of Credit...,,,,,,.......................25
ARTICLE V - Representations and Warranties................25
Section 5.1.No Default...............................26
Section 5.2.Organization and Good Standing...........26
Section 5.3.Authorization............................26
Section 5.4.No Conflicts or Consents.................26
Section 5.5.Enforceable Obligations..................26
Section 5.6.Initial Financial Statements.............26
Section 5.7.Other Obligations and Restrictions.......27
Section 5.8.Full Disclosure..........................27
Section 5.9.Litigation...............................27
Section 5.10.Labor Disputes and Acts of God..........27
Section 5.11.ERISA Plans and Liabilities.............27
Section 5.12.Environmental and Other Laws............28
Section 5.13.US Borrower's Subsidiaries..............28
Section 5.14.Title to Properties; Licenses...........28
Section 5.15.Government Regulation...................29
Section 5.16.Insider.................................29
Section 5.17.Solvency................................29
Section 5.18.Year 2000 Compliance....................29
ARTICLE VI - Affirmative Covenants of US Borrower.........29
Section 6.1.Payment and Performance..................30
Section 6.2.Books, Financial Statements and Reports..30
Section 6.3.Other Information and Inspections........31
Section 6.4.Notice of Material Events and Change of
Address..............................................31
Section 6.5.Maintenance of Properties................32
Section 6.6.Maintenance of Existence and Qualifications32
Section 6.7.Payment of Trade Liabilities, Taxes, etc.32
Section 6.8.Insurance................................32
Section 6.9.Performance on US Borrower's Behalf......32
Section 6.10.Interest................................32
Section 6.11.Compliance with Agreements and Law......33
Section 6.12.Environmental Matters...................33
Section 6.13.Evidence of Compliance..................33
Section 6.14.Bank Accounts; Offset...................33
Section 6.15.Year 2000 Compliance....................34
ARTICLE VII - Negative Covenants of US Borrower...........34
Section 7.1.Indebtedness.............................34
Section 7.2.Limitation on Liens......................35
Section 7.3.Limitation on Investments and New Businesses35
Section 7.4.Limitation on Mergers....................36
Section 7.5.Limitation on Issuance of Securities by
Subsidiaries of US Borrower..........................36
Section 7.6.Transactions with Affiliates.............36
Section 7.7.Prohibited Contracts.....................36
Section 7.9.Limitation on Sales of Property..........36
Section 7.10.Hedging Contracts.......................37
Section 7.11.Funded Debt to Total Capitalization.....37
Section 7.12.Net Worth...............................38
ARTICLE VIII - Events of Default and Remedies..................38
Section 8.1.Events of Default........................38
Section 8.2.Remedies.................................40
ARTICLE IX - US Agent.....................................41
Section 9.1.Appointment, Powers, and Immunities......41
Section 9.2.Reliance by US Agent.....................41
Section 9.3.Defaults.................................42
Section 9.4.Rights as Lender.........................42
Section 9.5.Indemnification..........................42
Section 9.6.Non-Reliance on US Agent and Other Lenders42
Section 9.7.Sharing of Set-Offs and Other Payments...43
Section 9.8.Investments..............................43
Section 9.9.Benefit of Article IX....................44
Section 9.10.Resignation.............................44
Section 9.11.Lenders to Remain Pro Rata..............44
ARTICLE X - Miscellaneous.................................44
Section 10.1.Waivers and Amendments; Acknowledgments.44
Section 10.2.Survival of Agreements; Cumulative Nature46
Section 10.3.Notices.................................46
Section 10.4.Payment of Expenses; Indemnity..........47
Section 10.5.Joint and Several Liability; Parties in
Interest.............................................48
Section 10.6.Assignments and Participations..........48
Section 10.7.Confidentiality.........................50
Section 10.8.Governing Law; Submission to Process....51
Section 10.9.Limitation on Interest..................51
Section 10.10. Termination; Limited Survival.........51
Section 10.11. Severability..........................52
Section 10.12. Counterparts; Fax.....................52
Section 10.13. Waiver of Jury Trial, Punitive Damages,
etc..................................................52
Section 10.14. Defined Terms.........................52
Section 10.15. Annex I, Exhibits and Schedules; Additional
Definitions..........................................52
Section 10.16. Amendment of Defined Instruments......52
Section 10.17. References and Titles.................53
Section 10.18. Calculations and Determinations.......53
Section 10.19. Construction of Indemnities and Releases53
Schedules and Exhibits:
AnnexI - Defined Terms
Annex II - Lenders Schedule
Schedule 1-Disclosure Schedule
Schedule 2-Subordinate Note
Exhibit A-1-Tranche A Promissory Note
Exhibit A-2-Tranche B Promissory Note
Exhibit B- Borrowing Notice
Exhibit C- Continuation/Conversion Notice
Exhibit D- Certificate Accompanying Financial Statements
Exhibit E- Opinion of Counsel for Restricted Persons
Exhibit F- Assignment and Acceptance Agreement
Exhibit G- Letter of Credit Application and Agreement
Exhibit H- Competitive Bid Request
Exhibit I- Invitation to Bid
Exhibit J- Competitive Bid
Exhibit K- Competitive Bid Accept/Reject Letter
Exhibit L- Competitive Bid Note
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of April 19, 1999, by and among
Questar Market Resources, Inc., a Utah corporation (herein called "US
Borrower"), NationsBank, N.A., individually and as administrative
agent (herein called "US Agent") and the undersigned Lenders. In
consideration of the mutual covenants and agreements contained herein
the parties hereto agree as follows:
ARTICLE I - The US Loans
Section 1.1.Commitments to Lend; US Notes.
(a) Tranche A. Subject to the terms and conditions hereof, each
Lender severally agrees to make loans to US Borrower (herein called
such Lender's "Tranche A Loans") upon US Borrower's request from time
to time during the US Facility Commitment Period, provided that (i)
subject to Sections 3.3, 3.4 and 3.5, all Lenders are requested to
make Tranche A Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, (ii)
the US Facility Usage shall never exceed the US Maximum Credit Amount,
(iii) such Lender's Percentage Share of the US Facility Usage shall
never exceed such Lender's Percentage Share of the US Maximum Credit
Amount (calculated excluding Competitive Bid Loans), and (iv) such
Lender's Percentage Share of the Tranche A Facility Usage shall never
exceed such Lender's Percentage Share of the Tranche A Maximum Credit
Amount. The aggregate amount of all Tranche A Loans in any Borrowing
must be an integral multiple of US $100,000 which equals or exceeds US
$200,000 or, if less, must equal the unadvanced portion of the US
Maximum Credit Amount. The obligation of US Borrower to repay to each
Lender the aggregate amount of all Tranche A Loans made by such
Lender, together with interest accruing in connection therewith, shall
be evidenced by a single promissory note (herein called such Lender's
"Tranche A Note") made by US Borrower payable to the order of such
Lender in the form of Exhibit A-1 with appropriate insertions. The
amount of principal owing on any Lender's Tranche A Note at any given
time shall be the aggregate amount of all Tranche A Loans theretofore
made by such Lender minus all payments of principal theretofore
received by such Lender on such Tranche A Note. Interest on each
Tranche A Note shall accrue and be due and payable as provided herein
and therein. Each Tranche A Note shall be due and payable as provided
herein and therein, and shall be due and payable in full on the US
Facility Maturity Date. Subject to the terms and conditions hereof,
US Borrower may borrow, repay, and reborrow Tranche A Loans under the
US Agreement during the US Facility Commitment Period. US Borrower
may have no more than ten Borrowings of US Dollar Eurodollar Loans
(including Tranche A Loans and Tranche B Loans) outstanding at any
time.
(b) Tranche B. Subject to the terms and conditions hereof, each
Lender severally agrees to make loans to US Borrower (herein called
such Lender's "Tranche B Loans") upon US Borrower's request from time
to time during the Tranche B Revolving Period, provided that (i)
subject to Sections 3.3, 3.4 and 3.5, all Lenders are requested to
make Tranche B Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, (ii)
the US Facility Usage shall never exceed the US Maximum Credit Amount
, (iii) such Lender's Percentage Share of the US Facility Usage shall
never exceed such Lender's Percentage Share of the US Maximum Credit
Amount (calculated excluding Competitive Bid Loans), and (iv) such
Lender's Percentage Share of the Tranche B Facility Usage shall never
exceed such Lender's Percentage Share of the Tranche B Maximum Credit
Amount. The aggregate amount of all Tranche B Loans in any Borrowing
must be an integral multiple of US $100,000 which equals or exceeds US
$200,000 or, if less, must equal the unadvanced portion of the US
Maximum Credit Amount. The obligation of US Borrower to repay to each
Lender the aggregate amount of all Tranche B Loans made by such
Lender, together with interest accruing in connection therewith, shall
be evidenced by a single promissory note (herein called such Lender's
"Tranche B Note") made by US Borrower payable to the order of such
Lender in the form of Exhibit A-2 with appropriate insertions. The
amount of principal owing on any Lender's Tranche B Note at any given
time shall be the aggregate amount of all Tranche B Loans theretofore
made by such Lender minus all payments of principal theretofore
received by such Lender on such Tranche B Note. Interest on each
Tranche B Note shall accrue and be due and payable as provided herein
and therein. Each Tranche B Note shall be due and payable as provided
herein and therein, and shall be due and payable in full on the
Tranche B Maturity Date. Subject to the terms and conditions hereof,
US Borrower may borrow, repay, and reborrow Tranche B Loans under the
US Agreement during the Tranche B Revolving Period. US Borrower may
have no more than ten Borrowings of US Dollar Eurodollar Loans
(including Tranche A Loans and Tranche B Loans) outstanding at any
time.
(c) Extension of Conversion Date.
(i) US Borrower may, at its option and from time to time
during the Tranche B Revolving Period, request an offer to extend
the Tranche B Revolving Period by delivering to US Agent a
Request for an Offer of Extension not more than sixty days prior
to the then current Tranche B Conversion Date. US Agent shall
forthwith provide a copy of the Request for an Offer of Extension
to each of the Lenders. Upon receipt by each Lender from US
Agent of an executed Request for an Offer of Extension, each
Lender shall, within thirty days after the date such Lender
receives such request from US Agent, either:
(1) notify US Agent of its acceptance of the Request
for an Offer of Extension, and the terms and conditions, if
any, upon which such Lender is prepared to extend the
Tranche B Conversion Date; or
(2) notify US Agent that the Request for an Offer of
Extension has been denied, such notice to forthwith be
forwarded by US Agent to US Borrower to allow US Borrower to
seek a replacement lender pursuant to Section 1.1(e) (any
Lender giving notice of such denial is herein called a
"Non-Accepting Lender"). The failure of a Lender to so
notify US Agent within such thirty day period shall be
deemed to be notification by such Lender to US Agent that
such Lender has denied US Borrower's Request for an Offer of
Extension.
(ii) Provided that all Lenders provide notice to US Agent
under Section 1.1(c)(i) that they accept the Request for an Offer
of Extension, or if there are Non-Accepting Lenders, such Lenders
shall have been repaid pursuant to Section 1.1(e) or replacement
lenders shall have become parties hereto pursuant to Section
1.1(e) and shall have accepted the Request for an Offer of
Extension, such acceptance having common terms and conditions, US
Agent shall deliver to US Borrower an Offer of Extension
incorporating such terms and conditions. Such offer shall be
open for acceptance by US Borrower until the fifth Business Day
immediately preceding the then current Tranche B Conversion Date.
Upon written notice by US Borrower to US Agent accepting an
outstanding Offer of Extension and agreeing to the terms and
conditions, if any, specified therein (the date of such notice of
acceptance in this Section 1.1 being called the "Extension
Date"), the Tranche B Conversion Date shall be extended to the
date 364 days from the Extension Date and the terms and
conditions specified in such Offer of Extension shall be
immediately effective.
(iii) US Borrower understands that the consideration of any
Request for an Offer of Extension constitutes an independent
credit decision which each Lender retains the absolute and
unfettered discretion to make and that no commitment in this
regard is hereby given by a Lender and that any offer to extend
the Tranche B Conversion Date may be on such terms and conditions
in addition to those set out herein as the extending Lenders
stipulate.
(d) Conversion to Tranche B Term Loan. Effective at 11:59 p.m.
Dallas, Texas time on the day immediately preceding the Tranche B
Conversion Date, (i) each Lender's obligation to make new Tranche B
Loans shall be canceled automatically, and (ii) each Lender's Tranche
B Loans shall become term loans maturing on the Tranche B Maturity
Date.
(e) Non-Accepting Lender. Provided that Lenders whose
Percentage Shares represent more than 50% but less than 100% of the US
Maximum Credit Amount provide notice to US Agent under Section
1.1(c)(i) that they accept the Request for an Offer of Extension, on
notice of US Borrower to US Agent, US Borrower shall be entitled to
choose any of the following in respect of each Non-Accepting Lender
prior to the expiration of the Tranche B Revolving Period, provided
that if US Borrower does not make an election prior to the expiration
of the Tranche B Revolving Period, US Borrower shall be deemed to have
irrevocably elected to exercise the provisions of Section 1.1(e)(i):
(i) the Non-Accepting Lender's obligations to make US Loans
shall be canceled as of the Extension Date, the US Maximum Credit
Amount shall be reduced by the amount so canceled, and on or
prior to the Extension Date the US Borrower shall repay in full
all Obligations then outstanding to the Non-Accepting Lender (as
defined in Section 1.1(c)(i)(2)), or
(ii) replace the Non-Accepting Lender by reaching
satisfactory arrangements with one or more existing Lenders or
new Lenders, for the purchase, assignment and assumption of all
Canadian Obligations and US Obligations of the Non-Accepting
Lender, provided that any new Lender, with, if necessary, any
Affiliate, shall take a pro rata assignment of both Canadian
Obligations and US Obligations, and such Non-Accepting Lender
shall be obligated to sell such Obligations in accordance with
such satisfactory arrangements.
In connection with any such replacement of a Lender Party pursuant to
this Section 1.1(e), US Borrower shall pay all costs that would have
been due to such Lender Party pursuant to Section 3.6 if such Lender
Party's US Loans had been prepaid at the time of such replacement.
(f) Increase in Commitments. During the Tranche B Revolving
Period, the Tranche A Maximum Credit Amount, the Tranche B Maximum
Credit Amount, the US Maximum Credit Amount and the Canadian Maximum
Credit Amount may be increased, pro rata, by an aggregate amount of
$10,000,000 or any higher integral multiple thereof not to exceed
$50,000,000 at the request of US Borrower and with the prior written
consent of the US Agent and the Canadian Agent, which consent shall
not be unreasonably withheld, and without the consent of any Lender
provided that a new Lender becomes a party to the Credit Agreement
with the same Percentage Share under the US Credit Agreement and the
Canadian Credit Agreement, and that such Lender agrees to all of the
terms and conditions of the US Loan Documents and the Canadian Loan
Documents. Each of US Agent and Canadian Agent are hereby authorized
to execute and deliver amendments to the Loan Documents to effectuate
the foregoing on behalf of all Lenders.
Section 1.2.Requests for New US Loans. US Borrower must give to
US Agent written notice (or telephonic notice promptly confirmed in
writing) of any requested Borrowing of new US Loans to be advanced by
Lenders. Each such notice constitutes a "Borrowing Notice" hereunder
and must:
(a) specify the aggregate amount of any such Borrowing of new US
Base Rate Loans and the date on which such US Base Rate Loans are to
be advanced, or the aggregate amount of any such Borrowing of new US
Dollar Eurodollar Loans, the date on which such US Dollar Eurodollar
Loans are to be advanced (which shall be the first day of the
Eurodollar Interest Period which is to apply thereto), and the length
of the applicable Eurodollar Interest Period; and
(b) be received by US Agent not later than 11:00 a.m., Dallas,
Texas time, on the day on which any such US Base Rate Loans are to be
made, or the second Business Day preceding the day on which any such
US Dollar Eurodollar Loans are to be made.
Each such written request or confirmation must be made in the form and
substance of the "Borrowing Notice" attached hereto as Exhibit B, duly
completed and signed by an officer of the US Borrower or such other
Person duly authorized by the President of US Borrower, provided that
US Borrower shall deliver a copy of such authorization to US Agent.
Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by US Borrower as to the
matters which are required to be set out in such written confirmation.
Upon receipt of any such Borrowing Notice, US Agent shall give each
Lender notice of the terms thereof not later than 1:00 p.m., Dallas,
Texas time on the day it receives such Borrowing Notice from US
Borrower if it receives such Borrowing Notice by 11:00 a.m., Dallas,
Texas time, otherwise on the next Business Day. If all conditions
precedent to such new US Loans have been met, each Lender will on the
date requested promptly remit to US Agent at US Agent's office in
Dallas, Texas the amount of such Lender's new US Loan in immediately
available funds, and upon receipt of such funds, unless to its actual
knowledge any conditions precedent to such US Loans have been neither
met nor waived as provided herein, US Agent shall promptly make such
US Loans available to US Borrower. Unless US Agent shall have
received prompt notice from a Lender that such Lender will not make
available to US Agent such Lender's new US Loan, US Agent may in its
discretion assume that such Lender has made such US Loan available to
US Agent in accordance with this section and US Agent may if it
chooses, in reliance upon such assumption, make such US Loan available
to US Borrower. If and to the extent such Lender shall not so make
its new US Loan available to US Agent, such Lender and US Borrower
severally agree to pay or repay to US Agent within three days after
demand the amount of such US Loan together with interest thereon, for
each day from the date such amount was made available to US Borrower
until the date such amount is paid or repaid to US Agent, with
interest at (1) the Federal Funds Rate, if such Lender is making such
payment; provided that US Agent gave notice of the terms of the
Borrowing Notice to such Lender in accordance with the terms of this
Section 1.2, and (2) the interest rate applicable at the time to the
other new US Loans made on such date, if US Borrower is making such
repayment. If neither such Lender nor US Borrower pays or repays to
US Agent such amount within such three-day period, US Agent shall in
addition to such amount be entitled to recover from such Lender and
from US Borrower, on demand, interest thereon at the Default Rate for
US Base Rate Loans, calculated from the date such amount was made
available to US Borrower. The failure of any Lender to make any new
US Loan to be made by it hereunder shall not relieve any other Lender
of its obligation hereunder, if any, to make its new US Loan, but no
Lender shall be responsible for the failure of any other Lender to
make any new US Loan to be made by such other Lender.
Section 1.3.Continuations and Conversions of Existing US Loans.
US Borrower may make the following elections with respect to US Loans
already outstanding under this Agreement: to convert US Base Rate
Loans to US Dollar Eurodollar Loans, to convert US Dollar Eurodollar
Loans to US Base Rate Loans on the last day of the Eurodollar Interest
Period applicable thereto, and to continue US Dollar Eurodollar Loans
beyond the expiration of such Eurodollar Interest Period by
designating a new Eurodollar Interest Period to take effect at the
time of such expiration. In making such elections, US Borrower may
combine existing Tranche A Loans made pursuant to separate Borrowings
into one new Borrowing or divide existing Tranche A Loans made
pursuant to one Borrowing into separate new Borrowings, or combine
existing Tranche B Loans made pursuant to separate Borrowings into one
new Borrowing or divide existing Tranche B Loans made pursuant to one
Borrowing into separate new Borrowings, provided that US Borrower may
have no more than ten Borrowings of US Dollar Eurodollar Loans
outstanding at any time. To make any such election, US Borrower must
give to US Agent written notice (or telephonic notice promptly
confirmed in writing) of any such Conversion or Continuation of
existing US Loans, with a separate notice given for each new
Borrowing. Each such notice constitutes a "Continuation/Conversion
Notice" hereunder and must:
(a) specify the existing US Loans made under this Agreement
which are to be continued or converted and whether such US Loans are
Tranche A Loans or Tranche B Loans;
(b) specify the aggregate amount of any Borrowing of US Base
Rate Loans into which such existing US Loans are to be continued or
converted and the date on which such Continuation or Conversion is to
occur, or the aggregate amount of any Borrowing of US Dollar
Eurodollar Loans into which such existing US Dollar Eurodollar Loans
are to be continued or converted, the date on which such Continuation
or Conversion is to occur (which shall be the first day of the
Eurodollar Interest Period which is to apply to such US Dollar
Eurodollar Loans), and the length of the applicable Eurodollar
Interest Period; and
(c) be received by US Agent not later than 11:00 a.m., Dallas,
Texas time, on the day on which any such Continuation or Conversion
to US Base Rate Loans is to occur, or the second Business Day
preceding the day on which any such Continuation or Conversion to US
Dollar Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and
substance of the "Continuation/Conversion Notice" attached hereto as
Exhibit C, duly completed. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by US
Borrower as to the matters which are required to be set out in such
written confirmation. Upon receipt of any such
Continuation/Conversion Notice, US Agent shall give each Lender prompt
notice of the terms thereof. Each Continuation/Conversion Notice
shall be irrevocable and binding on US Borrower. During the
continuance of any Default, US Borrower may not make any election to
convert existing US Loans made under this Agreement into US Dollar
Eurodollar Loans or continue existing US Loans made under this
Agreement as US Dollar Eurodollar Loans. If (due to the existence of
a Default or for any other reason) US Borrower fails to timely and
properly give any Continuation/Conversion Notice with respect to a
Borrowing of existing US Dollar Eurodollar Loans at least two Business
Days prior to the end of the Eurodollar Interest Period applicable
thereto, such US Dollar Eurodollar Loans shall automatically be
converted into US Base Rate Loans at the end of such Eurodollar
Interest Period. No new funds shall be repaid by US Borrower or
advanced by any Lender in connection with any Continuation or
Conversion of existing US Loans pursuant to this section, and no such
Continuation or Conversion shall be deemed to be a new advance of
funds for any purpose; such Continuations and Conversions merely
constitute a change in the interest rate applicable to already
outstanding US Loans.
Section 1.4.Use of Proceeds. US Borrower shall use all US Loans
made under this Agreement to refinance existing indebtedness, to
finance capital expenditures, to refinance Matured US LC Obligations
outstanding under this Agreement, and provide working capital for its
operations and for other general business purposes. US Borrower shall
use all Letters of Credit for its general corporate purposes. In no
event shall the funds from any US Loan or any Letter of Credit be used
directly or indirectly by any Person for personal, family, household
or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" (as such term is defined in Regulation U promulgated by
the Board of Governors of the Federal Reserve System) or to extend
credit to others directly or indirectly for the purpose of purchasing
or carrying any such margin stock. US Borrower represents and
warrants that US Borrower is not engaged principally, or as one of US
Borrower's important activities, in the business of extending credit
to others for the purpose of purchasing or carrying such margin stock.
Section 1.5.Interest Rates and Fees.
(a) Tranche A Loans. The following interest and fees shall be
payable with respect to Tranche A Loans:
(i) Interest. Each Tranche A Loan that is a US Base Rate
Loan shall bear interest on each day outstanding at the US Base
Rate in effect on such day. Each Tranche A Loan that is a US
Dollar Eurodollar Loan shall bear interest on each day during the
related Eurodollar Interest Period at the related Adjusted US
Dollar Eurodollar Rate in effect on such day.
(ii) Commitment Fees. In consideration of each Lender's
commitment to make Tranche A Loans under this Agreement, US
Borrower will pay to US Agent for the account of each Lender a
commitment fee determined on a daily basis by applying the
Five-Year Commitment Fee Rate to such Lender's Percentage Share
of the amount by which the Tranche A Maximum Credit Amount
exceeds the Tranche A Facility Usage on each day during the US
Facility Commitment Period. This commitment fee shall be due and
payable in arrears on the fifteenth day after the end of each
Fiscal Quarter and at the end of the US Facility Commitment
Period.
(b) Tranche B Loans. The following interest and fees shall be
payable with respect to
Tranche B Loans:
(i) Interest. Each Tranche B Loan that is a US Base Rate
Loan shall bear interest on each day outstanding at the US Base
Rate in effect on such day. Each Tranche B Loan that is a US
Dollar Eurodollar Loan shall bear interest on each day during the
related Eurodollar Interest Period at the related Adjusted US
Dollar Eurodollar Rate in effect on such day.
(ii) Commitment Fees. In consideration of each Lender's
commitment to make Tranche B Loans under this Agreement, US
Borrower will pay to US Agent for the account of each Lender a
commitment fee determined on a daily basis by applying the
364-Day Commitment Fee Rate to such Lender's Percentage Share of
the amount by which the Tranche B Maximum Credit Amount exceeds
the outstanding principal balance of the Tranche B Loans on each
day during the period from the date hereof until the Tranche B
Maturity Date. This commitment fee shall be due and payable in
arrears on the fifteenth day after the end of each Fiscal Quarter
and on the Tranche B Maturity Date.
(c) Utilization Fees. In consideration of each Lender's
commitment to make US Loans under this Agreement, US Borrower will pay
to US Agent for the account of each Lender a utilization fee for each
day during the US Facility Commitment Period that the US Facility
Usage exceeds fifty percent (50%) of the US Maximum Credit Amount.
The amount of the utilization fee shall be determined on a daily basis
by applying the Utilization Fee Rate to such Lender's Percentage Share
of the US Facility Usage on each such day. This utilization fee shall
be due and payable in arrears on each Interest Payment Date for US
Base Rate Loans and at the end of the US Facility Commitment Period.
(d) Competitive Bid Loans. Each Competitive Bid Loan shall bear
interest on each day outstanding at the Competitive Bid Rate for such
Competitive Bid Loan.
(e) All US Loans. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing, all US Loans shall bear
interest on each day outstanding at the applicable Default Rate. Past
due payments of principal and interest shall bear interest at the
rates and in the manner set forth in the US Notes.
(f) Administrative Fees. In addition to all other amounts due
to US Agent under the US Loan Documents, US Borrower will pay fees to
US Agent as described in a letter agreement dated January 14, 1999,
executed by US Agent and accepted and agreed to by US Borrower on
January 15, 1999.
Section 1.6.Prepayments.
(a) Optional Prepayments. US Borrower may, upon giving notice
to US Agent by 11:00 a.m., Dallas, Texas time on the Business Day of
prepayment, from time to time and without premium or penalty prepay
the US Notes, including Competitive Bid Notes, in whole or in part, so
long as all partial prepayments of principal concurrently paid on the
US Notes are in increments of US $100,000 and in an aggregate amount
greater than or equal to US $200,000, and so long as US Borrower pays
all amounts owing in connection with the prepayment of any US Dollar
Eurodollar Loan or Competitive Bid Loan owing under Section 3.6. US
Agent shall give each Lender notice thereof by 2:00 p.m. Dallas, Texas
time on the date such notice is received from US Borrower. Each
prepayment of principal under this section shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. Any
principal or interest prepaid pursuant to this section shall be in
addition to, and not in lieu of, all payments otherwise required to be
paid under the US Loan Documents at the time of such prepayment.
Unless otherwise designated by US Borrower, any prepayment of
Competitive Bid Loans shall be applied to the outstanding Competitive
Bid Loans in order of shortest maturity.
(b) Mandatory Prepayments of Tranche A Loans. If the Tranche A
Facility Usage exceeds the Tranche A Maximum Credit Amount, US
Borrower shall immediately prepay the principal of the Tranche A Loans
in an amount at least equal to such excess.
(c) Mandatory Prepayments of Tranche B Loans. If the aggregate
amount of the outstanding Tranche B Loans ever exceeds the Tranche B
Maximum Credit Amount, US Borrower shall immediately prepay the
principal of the Tranche B Loans in an amount at least equal to such
excess.
(d) Procedures. Each prepayment of principal under this
Section shall be accompanied by all interest then accrued and unpaid on the
principal so prepaid. Any principal or interest prepaid pursuant to
this section shall be in addition to, and not in lieu of, all payments
otherwise required to be paid under the US Loan Documents at the time
of such prepayment.
Section 1.7.Competitive Bid Loans.
(a) US Borrower may request that each Lender submit Competitive
Bids (on a several basis) to US Borrower on any Business Day during
the US Facility Commitment Period, provided that all Lenders are
requested to make a Competitive Bid on the same basis at the same
time. In order to request Competitive Bids, US Borrower shall deliver
by hand or facsimile to US Agent a Competitive Bid Request, to be
received by US Agent not later than 9:00 a.m., Dallas, Texas time one
Business Day before the date specified for a proposed Competitive Bid
Loan. A Competitive Bid Request that does not conform substantially
to the format of Exhibit H may be rejected in US Agent's sole
discretion, and US Agent shall promptly notify US Borrower of such
rejection by facsimile. After receiving an acceptable Competitive Bid
Request, US Agent shall no later than 12:00 noon, Dallas, Texas time
on the date such Competitive Bid Request is received by US Agent, by
facsimile deliver to Lenders an Invitation to Bid substantially in the
form of Exhibit I with respect thereto.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to US Agent responsive to each Competitive Bid
Request given by US Borrower. Each Competitive Bid by a Lender must
be received by US Agent by facsimile not later than 9:00 a.m., Dallas,
Texas time on the date specified for a proposed Competitive Bid Loan.
Multiple bids may be accepted by US Agent. Competitive Bids that do
not conform substantially to the format of Exhibit J may be rejected
by US Agent after conferring with, and upon the instruction of, US
Borrower, and US Agent shall notify the bidding Lender of such
rejection as soon as practicable. If any Lender shall elect not to
make a Competitive Bid, such Lender shall so notify US Agent by
facsimile not later than 9:00 a.m., Dallas, Texas time, on the date
specified for a Competitive Bid Loan; provided, however, that failure
by any Lender to give such notice shall not cause such Lender to be
obligated to make any Competitive Bid Loan and by such failure such
Lender shall be deemed to have rejected such Competitive Bid. A
Competitive Bid submitted by a Lender shall be irrevocable.
(c) Promptly, and in no event later than 9:30 a.m., Dallas,
Texas time, on the date specified for a proposed Competitive Bid Loan,
US Agent shall notify US Borrower by facsimile of all the Competitive
Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Bid Loan in respect of which a Competitive Bid was made,
and the identity of each Lender that made each Competitive Bid. US
Agent shall send a copy of all Competitive Bids to US Borrower for its
records as soon as practicable after completion of the bidding
process.
(d) US Borrower may, subject only to the provisions hereof,
accept or reject any Competitive Bid. US Borrower shall notify US
Agent by facsimile pursuant to a Competitive Bid Accept/Reject Letter
whether and to what extent US Borrower has decided to accept or reject
any or all of the Competitive Bids, not later than 10:00 a.m., Dallas,
Texas time, on the date specified for a proposed Competitive Bid Loan;
provided, however, that:
(i) the failure by US Borrower to accept or reject any
Competitive Bid within the time period specified herein shall be
deemed to be a rejection of such Competitive Bid,
(ii) the aggregate amount of the Competitive Bids accepted
by US Borrower shall not exceed the principal amount specified in
the Competitive Bid Request,
(iii)after such Competitive Bid Loan is made, the US
Facility Usage shall not exceed the US Maximum Credit Amount,
(iv) if US Borrower shall accept a Competitive Bid or
Competitive Bids made at a particular Competitive Bid Rate, but
the amount of such Competitive Bid or Competitive Bids shall
cause the total amount of Competitive Bids to be accepted by US
Borrower to exceed the amount specified in the Competitive Bid
Request, then US Borrower shall accept a portion of such
Competitive Bid or Competitive Bids in an amount equal to the
amount specified in the Competitive Bid Request less the amount
of all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such
Competitive Bid at such Competitive Bid Rate, and
(v) no Competitive Bid shall be accepted for a Competitive
Bid Loan unless such Competitive Bid Loan is in a minimum
principal amount of US $5,000,000 or a higher integral multiple
of $1,000,000; provided, however, that if a Competitive Bid Loan
must be in an amount less than US $5,000,000 because of the
provisions of clause (iv) above, such Competitive Bid Loan may be
for a minimum of US $1,000,000 or any higher integral multiple
thereof, and in calculating the pro rata allocation of
acceptances or portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv), the amounts shall
be rounded to integral multiples of US $1,000,000 in a manner
which shall be in the sole and absolute discretion of US
Borrower.
(e) Promptly on each date US Borrower accepts a Competitive Bid,
US Agent shall notify each Lender whether or not its Competitive Bid
has been accepted (and if so, in what amount and at what Competitive
Bid Rate) by facsimile transmission sent by US Agent, and each
successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Competitive Bid Loan in
respect of which its Competitive Bid has been accepted. After
completing the notifications referred to in the immediately preceding
sentence, US Agent shall notify each Lender of the aggregate principal
amount of all Competitive Bids accepted. Each Lender which is to make
a Competitive Bid Loan shall, before 11:00 a.m., Dallas, Texas time,
on the borrowing date specified in the Competitive Bid Request
applicable thereto, make available to US Agent in immediately
available funds the amount of each Competitive Bid Loan to be made by
such Lender, and US Agent shall promptly deposit such funds to an
account designated by US Borrower. As soon as practicable thereafter,
US Agent shall notify each Lender of the aggregate amount of
Competitive Bid Loans advanced, the respective Competitive Bid
Interest Periods thereof and Competitive Bid Rate applicable thereto.
(f) The obligation of US Borrower to repay to each Lender the
aggregate amount of all Competitive Bid Loans made by such Lender,
together with interest accruing in connection therewith, shall be
evidenced by promissory notes (respectively, such Lender's
"Competitive Bid Note") made by US Borrower payable to the order of
such Lender in the form of Exhibit L, with appropriate insertions.
The amount of principal owing on any Lender's Competitive Bid Note at
any given time shall be the aggregate amount of all Competitive Bid
Loans theretofore made by such Lender thereunder minus all payments of
principal theretofore received by such Lender thereon. Interest on
each Competitive Bid Note shall accrue and be due and payable as
provided herein and therein. US Borrower shall repay on the final day
of the Competitive Bid Interest Period of each Competitive Bid Loan
(such date being that specified by US Borrower for repayment of such
Competitive Bid Loan in the related Competitive Bid Request and such
date being no later than six months after the date of the Competitive
Bid Loan) the then unpaid principal amount of such Competitive Bid
Loan. Subject to Section 1.6 and the payment of amounts described in
Section 3.6, US Borrower shall have the right to prepay any principal
amount of any Competitive Bid Loan.
(g) No Competitive Bid Loan shall be made within five Business
Days after the date of any other Competitive Bid Loan, unless US
Borrower and US Agent shall mutually agree otherwise. If US Agent
shall at any time elect to submit a Competitive Bid in its capacity as
a Lender, it shall submit such bid directly to US Borrower requesting
such Competitive Bid one quarter of an hour earlier than the latest
time at which the other Lenders are required to submit their bids to
US Agent.
ARTICLE II - Letters of Credit
Section 2.1.Letters of Credit. Subject to the terms and
conditions hereof, US Borrower may during the US Facility Commitment
Period request US LC Issuer to issue one or more Letters of Credit,
provided that, after taking such Letter of Credit into account:
(a) the Tranche A Facility Usage does not exceed the Tranche A
Maximum Credit Amount and the US Facility Usage does not exceed the US
Maximum Credit Amount at such time;
(b) the aggregate amount of US LC Obligations arising from
Letters of Credit issued under this Agreement at such time does not
exceed the US LC Sublimit;
(c) the expiration date of such Letter of Credit is prior to the
end of the US Facility Commitment Period;
(d) such Letter of Credit is to be used for general corporate
purposes of US Borrower;
(e) such Letter of Credit is not directly or indirectly used to
assure payment of or otherwise support any Indebtedness of any Person
other than Indebtedness of any Restricted Person permitted by this
Agreement;
(f) the issuance of such Letter of Credit will be in compliance
with all applicable governmental restrictions, policies, and
guidelines and will not subject US LC Issuer to any cost which is not
reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable
to US LC Issuer in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
US LC Issuer will honor any such request if the foregoing conditions
(a) through (h) (in the following Section 2.2 called the "LC
Conditions") have been met as of the date of issuance of such Letter
of Credit. US LC Issuer may choose to honor any such request for any
other Letter of Credit but has no obligation to do so and may refuse
to issue any other requested Letter of Credit for any reason which US
LC Issuer in its sole discretion deems relevant.
Section 2.2.Requesting Letters of Credit. US Borrower must make
written application for any Letter of Credit at least three Business
Days before the date on which US Borrower desires for US LC Issuer to
issue such Letter of Credit. By making any such written application
US Borrower shall be deemed to have represented and warranted that the
LC Conditions described in Section 2.1 will be met as of the date of
issuance of such Letter of Credit. Each such written application for
a Letter of Credit must be made in writing in the form and substance
of Exhibit G, the terms and provisions of which are hereby
incorporated herein by reference (or in such other form as may
mutually be agreed upon by US LC Issuer and US Borrower). Two
Business Days after the LC Conditions for a Letter of Credit have been
met as described in Section 2.1 (or if US LC Issuer otherwise desires
to issue such Letter of Credit), US LC Issuer will issue such Letter
of Credit at US LC Issuer's office in Dallas, Texas. If any
provisions of any LC Application conflict with any provisions of this
Agreement, the provisions of this Agreement shall govern and control.
Section 2.3.Reimbursement and Participations.
(a) Reimbursement by US Borrower. If the beneficiary of any
Letter of Credit issued hereunder makes a draft or other demand for
payment thereunder then Tranche A Loans that are US Base Rate Loans
shall be made by Lenders to US Borrower in the amount of such draft or
demand notwithstanding the fact that one or more conditions precedent
to the making of such US Base Rate Loans may not have been satisfied.
Such US Base Rate Loans shall be made concurrently with US LC Issuer's
payment of such draft or demand without any request therefor by US
Borrower and shall be immediately used by US LC Issuer to repay the
amount of the resulting Matured US LC Obligation.
(b) Participation by Lenders. US LC Issuer irrevocably agrees
to grant and hereby grants to each Lender, and to induce US LC Issuer
to issue Letters of Credit hereunder, each Lender irrevocably agrees
to accept and purchase and hereby accepts and purchases from US LC
Issuer, on the terms and conditions hereinafter stated and for such
Lender's own account and risk, an undivided interest equal to such
Lender's Percentage Share of US LC Issuer's obligations and rights
under each Letter of Credit issued hereunder and the amount of each
Matured US LC Obligation paid by US LC Issuer thereunder. Each Lender
unconditionally and irrevocably agrees with US LC Issuer that, if a
Matured US LC Obligation is paid under any Letter of Credit issued
hereunder for which US LC Issuer is not reimbursed in full, whether
pursuant to Section 2.3(a) above or otherwise, such Lender shall (in
all circumstances and without set-off or counterclaim) pay to US LC
Issuer on demand, in immediately available funds at US LC Issuer's
address for notices hereunder, such Lender's Percentage Share of such
Matured US LC Obligation (or any portion thereof which has not been
reimbursed by US Borrower). Each Lender's obligation to pay US LC
Issuer pursuant to the terms of this subsection is irrevocable and
unconditional. If any amount required to be paid by any Lender to US
LC Issuer pursuant to this subsection is paid by such Lender to US LC
Issuer within three Business Days after the date such payment is due,
US LC Issuer shall in addition to such amount be entitled to recover
from such Lender, on demand, interest thereon calculated from such due
date at the Federal Funds Rate. If any amount required to be paid by
any Lender to US LC Issuer pursuant to this subsection is not paid by
such Lender to US LC Issuer within three Business Days after the date
such payment is due, US LC Issuer shall in addition to such amount be
entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Default Rate.
(c) Distributions to Participants. Whenever US LC Issuer has in
accordance with this section received from any Lender payment of such
Lender's Percentage Share of any Matured US LC Obligation, if US LC
Issuer thereafter receives any payment of such Matured US LC
Obligation or any payment of interest thereon (whether directly from
US Borrower or by application of LC Collateral or otherwise, and
excluding only interest for any period prior to US LC Issuer's demand
that such Lender make such payment of its Percentage Share), US LC
Issuer will distribute to such Lender its Percentage Share of the
amounts so received by US LC Issuer; provided, however, that if any
such payment received by US LC Issuer must thereafter be returned by
US LC Issuer, such Lender shall return to US LC Issuer the portion
thereof which US LC Issuer has previously distributed to it.
(d) Calculations. A written advice setting forth in reasonable
detail the amounts owing under this section, submitted by US LC Issuer
to US Borrower or any Lender from time to time, shall be conclusive,
absent manifest error, as to the amounts thereof.
Section 2.4.Letter of Credit Fees. In consideration of US LC
Issuer's issuance of any Letter of Credit, US Borrower agrees to pay
A. to US LC Issuer for its own account, a letter of credit fronting
fee at a rate equal to 12.5 Basis Points per annum, prorated for the
term of the Letter of Credit, multiplied by the face amount of such
Letter of Credit, payable on the date of issuance, and (b) to US
Agent, for the account of all Lenders in accordance with their
respective Percentage Shares, a letter of credit issuance fee
calculated by applying the Applicable Margin to the face amount of all
Letters of Credit outstanding on each day, payable in arrears on the
last day of each Fiscal Quarter.
Section 2.5.No Duty to Inquire.
(a) Drafts and Demands. US LC Issuer is authorized and
instructed to accept and pay drafts and demands for payment under any
Letter of Credit without requiring, and without responsibility for,
any determination as to the existence of any event giving rise to said
draft, either at the time of acceptance or payment or thereafter. US
LC Issuer is under no duty to determine the proper identity of anyone
presenting such a draft or making such a demand (whether by tested
telex or otherwise) as the officer, representative or agent of any
beneficiary under any Letter of Credit, and payment by US LC Issuer to
any such beneficiary when requested by any such purported officer,
representative or agent is hereby authorized and approved. US
Borrower releases each Lender Party from, and agrees to hold each
Lender Party harmless and indemnified against, any liability or claim
in connection with or arising out of the subject matter of this
section, which indemnity shall apply whether or not any such liability
or claim is in any way or to any extent caused, in whole or in part,
by any negligent act or omission of any kind by any Lender Party,
provided only that no Lender Party shall be entitled to
indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or
willful misconduct, as determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter of
Credit is extended by its terms or by Law or governmental action, if
any extension of the maturity or time for presentation of drafts or
any other modification of the terms of any Letter of Credit is made at
the request of any Restricted Person, or if the amount of any Letter
of Credit is increased at the request of any Restricted Person, this
Agreement shall be binding upon all Restricted Persons with respect to
such Letter of Credit as so extended, increased or otherwise modified,
with respect to drafts and property covered thereby, and with respect
to any action taken by US LC Issuer, US LC Issuer's correspondents, or
any Lender Party in accordance with such extension, increase or other
modification.
(c) Transferees of Letters of Credit. If any Letter of Credit
provides that it is transferable, US LC Issuer shall have no duty to
determine the proper identity of anyone appearing as transferee of
such Letter of Credit, nor shall US LC Issuer be charged with
responsibility of any nature or character for the validity or
correctness of any transfer or successive transfers, and payment by US
LC Issuer to any purported transferee or transferees as determined by
US LC Issuer is hereby authorized and approved, and US Borrower
releases each Lender Party from, and agrees to hold each Lender Party
harmless and indemnified against, any liability or claim in connection
with or arising out of the foregoing, which indemnity shall apply
whether or not any such liability or claim is in any way or to any
extent caused, in whole or in part, by any negligent act or omission
of any kind by any Lender Party, provided only that no Lender Party
shall be entitled to indemnification for that portion, if any, of any
liability or claim which is proximately caused by its own individual
gross negligence or willful misconduct, as determined in a final
judgment.
Section 2.6.LC Collateral.
(a) US LC Obligations in Excess of US Maximum Credit Amount.
If, after the making of all mandatory prepayments required under
Section 1.6(b), the US LC Obligations outstanding under the US
Agreement will exceed the Tranche A Maximum Credit Amount, then in
addition to prepayment of the entire principal balance of the US Loans
US Borrower will immediately pay to US LC Issuer an amount equal to
such excess. US LC Issuer will hold such amount as security for the
remaining US LC Obligations outstanding under the US Agreement (all
such amounts held as security for US LC Obligations being herein
collectively called "LC Collateral") and the other US Obligations, and
such collateral may be applied from time to time to any Matured US LC
Obligations or other US Obligations which are due and payable.
Neither this subsection nor the following subsection shall, however,
limit or impair any rights which US LC Issuer may have under any other
document or agreement relating to any Letter of Credit, LC Collateral
or US LC Obligation, including any LC Application, or any rights which
any Lender Party may have to otherwise apply any payments by US
Borrower and any LC Collateral under Section 3.1.
(b) Acceleration of US LC Obligations. If the US Obligations or
any part thereof become immediately due and payable pursuant to
Section 8.1 then, unless Required Lenders otherwise specifically elect
to the contrary (which election may thereafter be retracted by
Required Lenders at any time), all US LC Obligations shall become
immediately due and payable without regard to whether or not actual
drawings or payments on the Letters of Credit have occurred, and US
Borrower shall be obligated to pay to US LC Issuer immediately an
amount equal to the aggregate US LC Obligations which are then
outstanding.
(c) Investment of LC Collateral. Pending application thereof,
all LC Collateral shall be invested by US LC Issuer in such
Investments as US LC Issuer may choose in its sole discretion. All
interest on (and other proceeds of) such Investments shall be
reinvested or applied to Matured US LC Obligations or other US
Obligations which are due and payable. When all US Obligations have
been satisfied in full, including all US LC Obligations, all Letters
of Credit have expired or been terminated, and all of US Borrower's
reimbursement obligations in connection therewith have been satisfied
in full, US LC Issuer shall release any remaining LC Collateral. US
Borrower hereby assigns and grants to US LC Issuer a continuing
security interest in all LC Collateral paid by it to US LC Issuer, all
Investments purchased with such LC Collateral, and all proceeds
thereof to secure its Matured US LC Obligations and the other US
Obligations hereunder, each US Note, and the other US Loan Documents.
US Borrower further agrees that US LC Issuer shall have all of the
rights and remedies of a secured party under the Uniform Commercial
Code as adopted in the State of Utah with respect to such security
interest and that an Event of Default under this Agreement shall
constitute a default for purposes of such security interest. When US
Borrower is required to provide LC Collateral for any reason and fails
to do so on the day when required, US LC Issuer may without notice to
US Borrower or any other Restricted Person provide such LC Collateral
(whether by transfers from other accounts maintained with US LC
Issuer, or otherwise) using any available funds of US Borrower or any
other Person also liable to make such payments.
ARTICLE III - Payments to Lenders
Section 3.1.General Procedures. US Borrower will make each
payment which it owes under the US Loan Documents to US Agent for the
account of the Lender Party to whom such payment is owed, in lawful
money of the United States of America, without set-off, deduction or
counterclaim, and in immediately available funds. Each such payment
must be received by US Agent not later than 11:00 a.m., Dallas, Texas
time, on the date such payment becomes due and payable. Any payment
received by US Agent after such time will be deemed to have been made
on the next following Business Day. Should any such payment become
due and payable on a day other than a Business Day, the maturity of
such payment shall be extended to the next succeeding Business Day,
and, in the case of a payment of principal or past due interest,
interest shall accrue and be payable thereon for the period of such
extension as provided in the US Loan Document under which such payment
is due. Each payment under a US Loan Document shall be due and
payable at the place provided therein and, if no specific place of
payment is provided, shall be due and payable at the place of payment
of US Agent's US Note. When US Agent collects or receives money on
account of the US Obligations, US Agent shall distribute all money so
collected or received by 2:00 p.m. Dallas, Texas time on the Business
Day received, if received by *[11:00] a.m. Dallas, Texas time,
otherwise on the day of deemed receipt, and each Lender Party shall
apply all such money so distributed, as follows:
(a) first, for the payment of all US Obligations which are then
due (and if such money is insufficient to pay all such US Obligations,
first to any reimbursements due US Agent under Section 6.9 or 10.4,
then to any reimbursement due any other Lender Party under Section
10.4, and then to the partial payment of all other US Obligations then
due in proportion to the amounts thereof, or as Lender Parties shall
otherwise agree);
(b) then for the prepayment of amounts owing under the US Loan
Documents (other than principal on the US Notes) if so specified by US
Borrower;
(c) then for the prepayment of principal on the US Notes,
together with accrued and unpaid interest on the principal so prepaid;
and
(d) last, for the payment or prepayment of any other US
Obligations.
All payments applied to principal or interest on any US Note shall be
applied first to any interest then due and payable, then to principal
then due and payable, and last to any prepayment of principal and
interest in compliance with Sections 1.6 and 2.1. All distributions
of amounts described in any of subsections (b), (c) or (d) above shall
be made by US Agent pro rata to each Lender Party then owed US
Obligations described in such subsection in proportion to all amounts
owed to all Lender Parties which are described in such subsection;
provided that if any Lender then owes payments to US LC Issuer for the
purchase of a participation under Section 2.3(b) or to US Agent under
Section 9.7, any amounts otherwise distributable under this section to
such Lender shall be deemed to belong to US LC Issuer, or US Agent,
respectively, to the extent of such unpaid payments, and US Agent
shall apply such amounts to make such unpaid payments rather than
distribute such amounts to such Lender.
Section 3.2.Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable
Law, rule, or regulation, or any change in any applicable Law, rule,
or regulation, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender Party (or its Applicable Lending Office) with
any request or directive (whether or not having the force of Law) of
any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender Party (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to
any US Dollar Eurodollar Loans or Competitive Bid Loans, or its
obligation to make US Dollar Eurodollar Loans, or change the
basis of taxation of any amounts payable to such Lender Party (or
its Applicable Lending Office) under this Agreement or its Note
in respect of any US Dollar Eurodollar Loans or Competitive Bid
Loans (other than taxes (including franchise taxes) imposed on
the overall net income of such Lender Party by the jurisdiction
in which such Lender Party has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than
the Reserve Requirement utilized in the determination of the
Adjusted US Dollar Eurodollar Rate) relating to any extensions of
credit or other assets of, or any deposits with or other
liabilities or commitments of, such Lender Party (or its
Applicable Lending Office), including the commitment of such
Lender Party hereunder; or
(iii) shall impose on such Lender Party (or its Applicable
Lending Office) or the London interbank market any other
condition affecting this Agreement or its US Notes or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender Party (or its Applicable Lending Office) of making, converting
into, continuing, or maintaining any US Dollar Eurodollar Loans or
Competitive Bid Loans or to reduce any sum received or receivable by
such Lender Party (or its Applicable Lending Office) under this
Agreement or its US Notes with respect to any US Dollar Eurodollar
Loans or Competitive Bid Loans, then US Borrower shall pay to such
Lender Party on demand such amount or amounts as will compensate such
Lender Party for such increased cost or reduction. If any Lender
Party requests compensation by US Borrower under this Section 3.2(a),
US Borrower may, by notice to such Lender Party (with a copy to US
Agent), suspend the obligation of such Lender Party to make or
continue US Loans of the Type with respect to which such compensation
is requested, or to convert US Loans of any other Type into US Loans
of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.5
shall be applicable); provided that such suspension shall not affect
the right of such Lender Party to receive the compensation so
requested.
(b) If, after the date hereof, any Lender Party shall have
determined that the adoption of any applicable Law, rule, or
regulation regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of Law) of
any such Governmental Authority, central bank, or comparable agency,
has the effect of reducing the rate of return on the capital of such
Lender Party or any corporation controlling such Lender Party as a
consequence of the obligations of such Lender Party hereunder to a
level below that which such Lender Party or such corporation could
have achieved but for such adoption, change, request, or directive
(taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand US Borrower shall pay
such Lender Party such additional amount or amounts as will compensate
such Lender Party for such reduction, but only to the extent that such
Lender Party has not been compensated therefor by any increase in the
Adjusted US Dollar Eurodollar Rate; provided that if such Lender Party
fails to give notice to US Borrower of any additional costs within
ninety (90) days after it has actual knowledge thereof, such Lender
Party shall not be entitled to compensation for such additional costs
incurred more than ninety (90) days prior to the date on which notice
is given by such Lender Party.
(c) US LC Issuer and each Lender Party shall promptly notify US
Borrower and US Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle US LC Issuer or
such Lender Party to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Lender Party, be otherwise
disadvantageous to it.
(d) US LC Issuer or any Lender Party claiming compensation under
this Section 3.2 or Section 3.6 shall furnish to US Borrower and US
Agent a statement setting forth the additional amount or amounts to be
paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, US LC Issuer or such
Lender Party shall act in good faith and may use any reasonable
averaging and attribution methods.
Section 3.3.Limitation on Types of US Loans. If on or prior to
the first day of any Eurodollar Interest Period for any US Dollar
Eurodollar Loan:
(a) US Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining
the US Dollar Eurodollar Rate for such Eurodollar Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify US Agent that the Adjusted US Dollar Eurodollar
Rate will not adequately and fairly reflect the cost to the Lenders of
funding US Dollar Eurodollar Loans or for such Eurodollar Interest
Period; then US Agent shall give US Borrower prompt notice thereof
specifying the relevant amounts or periods, and so long as such
condition remains in effect, the Lender Parties shall be under no
obligation to make additional US Dollar Eurodollar Loans, continue US
Dollar Eurodollar Loans or convert US Base Rate Loans into US Dollar
Eurodollar Loans, and US Borrower shall, on the last day(s) of the
then current Eurodollar Interest Period(s) for the outstanding US
Dollar Eurodollar Loans, either prepay such US Loans or convert such
US Loans into US Base Rate Loans in accordance with the terms of this
Agreement.
Section 3.4.Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Lender
Party or its Applicable Lending Office to make, maintain, or fund US
Dollar Eurodollar Loans hereunder, then such Lender Party shall
promptly notify US Borrower thereof and such Lender Party's obligation
to make or continue US Dollar Eurodollar Loans and to convert US Base
Rate Loans into US Dollar Eurodollar Loans shall be suspended until
such time as such Lender Party may again make, maintain, and fund US
Dollar Eurodollar Loans (in which case the provisions of Section 3.5
shall be applicable).
Section 3.5.Treatment of Affected US Loans. If the obligation of
any Lender Party to make a particular Type of Loan or to continue, or
to convert US Loans of any other Type into, US Loans of a particular
Type shall be suspended pursuant to Sections 3.2, 3.3 or 3.4 hereof
(US Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender Party's
Affected Loans shall be automatically converted into US Base Rate
Loans on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion required by Section
3.4 hereof, on such earlier date as such Lender Party may specify to
US Borrower with a copy to US Agent) and, unless and until such Lender
Party gives notice as provided below that the circumstances specified
in Sections 3.2, 3.3 or 3.4 hereof that gave rise to such Conversion
no longer exist:
(a) to the extent that such Lender Party's Affected Loans have
been so converted, all payments and prepayments of principal that
would otherwise be applied to such Lender Party's Affected Loans shall
be applied instead to its US Base Rate Loans; and
(b) all US Loans that would otherwise be made or continued by
such Lender Party as US Loans of the Affected Type shall be made or
continued instead as US Base Rate Loans, and all US Loans of such
Lender Party that would otherwise be converted into US Loans of the
Affected Type shall be converted instead into (or shall remain as) US
Base Rate Loans.
If such Lender Party gives notice to US Borrower (with a copy to US
Agent) that the circumstances specified in Section 3.2, 3.3 or 3.4
hereof that gave rise to the Conversion of such Lender Party's
Affected Loans pursuant to this Section no longer exist (which such
Lender Party agrees to do promptly upon such circumstances ceasing to
exist) at a time when US Loans of the Affected Type made by other
Lender Parties are outstanding, such Lender Party's US Base Rate Loans
shall be automatically converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding US Loans of the
Affected Type, to the extent necessary so that, after giving effect
thereto, all US Loans held by the Lender Parties holding US Loans of
the Affected Type and by such Lender Party are held pro rata (as to
principal amounts, Types, and Interest Periods) in accordance with
their Percentage Shares of the US Maximum Credit Amount.
Section 3.6.Compensation. Upon the request of any Lender Party,
US Borrower shall pay to such Lender Party such amount or amounts as
shall be sufficient (in the reasonable opinion of such Lender Party)
to compensate it for any loss, cost, or expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a US Dollar
Eurodollar Loan for any reason (including, without limitation, the
acceleration of the US Loans pursuant to Section 8.1) on a date other
than the last day of the Interest Period for such US Loan; or
(b) any failure by US Borrower for any reason (including,
without limitation, the failure of any condition precedent specified
in Article IV to be satisfied) to borrow, convert, continue, or prepay
a US Dollar Eurodollar Loan on the date for such borrowing,
Conversion, Continuation, or prepayment specified in the relevant
notice of borrowing, prepayment, Continuation, or Conversion under
this Agreement.
Section 3.7.Change of Applicable Lending Office. Each Lender
Party agrees that, upon the occurrence of any event giving rise to the
operation of Sections 3.2 through 3.5 with respect to such Lender
Party, it will, if requested by US Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender Party) to
designate another Applicable Lending Office, provided that such
designation is made on such terms that such Lender Party and its
Applicable Lending Office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event
giving rise to the operation of any such section. Nothing in this
section shall affect or postpone any of the obligations of US Borrower
or the rights of any Lender Party provided in Sections 3.2 through
3.5.
Section 3.8.Replacement of Lenders. If any Lender Party seeks
reimbursement for increased costs under Sections 3.2 through 3.5, or
if a US Borrower is required to increase any such payment under
Section 3.9, then within ninety days thereafter -- provided no Event
of Default then exists -- US Borrower shall have the right (unless
such Lender Party withdraws its request for additional compensation)
to replace such Lender Party by requiring such Lender Party to assign
its US Loans, US Notes, US LC Obligations, Canadian Advances, Canadian
Notes, Canadian LC Obligations and its commitments hereunder and under
the Canadian Agreement to an Eligible Transferee reasonably acceptable
to all Borrowers, provided that: all Obligations of Borrowers owing
to such Lender Party being replaced (including such increased costs,
but excluding principal and accrued interest on the US Notes and the
Canadian Notes being assigned) shall be paid in full to such Lender
Party concurrently with such assignment, and the replacement Eligible
Transferee shall purchase the foregoing by paying to such Lender Party
a price equal to the principal amount thereof plus accrued and unpaid
interest thereon. In connection with any such assignment US Borrower,
US Agent, such Lender Party and the replacement Eligible Transferee
shall otherwise comply with Section 10.5. Notwithstanding the
foregoing rights of US Borrower under this section, however, US
Borrower may not replace any Lender Party which seeks reimbursement
for increased costs under Section 3.2 through 3.5 unless US Borrower
is at the same time replacing all Lender Parties which are then
seeking such compensation. In connection with any such replacement of
a Lender Party, US Borrower shall pay all costs that would have been
due to such Lender Party pursuant to Section 3.6 if such Lender
Party's US Loans had been prepaid at the time of such replacement.
Section 3.9.Taxes. (a) Any and all payments by US Borrower to
or for the account of any Lender Party, US Agent or US LC Issuer
hereunder or under any other US Loan Document shall be made free and
clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of
each Lender Party, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the Laws of which such Lender
Party (or its Applicable Lending Office) is organized or is a resident
for tax purposes or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter in this section 3.9
referred to as "Taxes"). If US Borrower shall be required by Law to
deduct any Taxes from or in respect of any sum payable under this
Agreement or any other US Loan Document to any Lender Party, the sum
payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional
sums payable under this section) such Lender Party receives an amount
equal to the sum it would have received had no such deductions been
made, US Borrower shall make such deductions, and US Borrower shall
pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable Law.
(b) In addition, US Borrower agrees to pay any and all present
or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made
under this Agreement or any other US Loan Document or from the
execution or delivery of, or otherwise with respect to, this Agreement
or any other US Loan Document (hereinafter in this Section 3.9
referred to as "Other Taxes").
(c) US Borrower agrees to indemnify each Lender Party, US Agent
and US LC Issuer for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this section)
paid by such Lender Party or US Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
(d) Each Lender Party organized under the Laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender
Party listed on the signature pages hereof and on or prior to the date
on which it becomes a Lender Party in the case of each other Lender
Party, and from time to time thereafter if requested in writing by US
Borrower or US Agent (but only so long as such Lender Party remains
lawfully able to do so), shall provide US Borrower and US Agent with a
properly executed Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender Party is entitled to benefits
under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
United States, Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and
881(c) of the Internal Revenue Code), certifying that such Lender
Party is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other US Loan
Documents.
(e) For any period with respect to which a Lender Party has
failed to provide US Borrower and US Agent with the appropriate form
pursuant to Section 3.9(d) (unless such failure is due to a change in
treaty, Law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender Party shall
not be entitled to indemnification under Sections 3.9(a), 3.9(b) or
3.9(c) with respect to Taxes imposed by the United States; provided,
however, that should a Lender Party, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder, US
Borrower shall take such steps as such Lender Party shall reasonably
request to assist such Lender Party to recover such Taxes. Further,
US Borrower shall not be required to indemnify such Lender Party for
any withholding taxes which US Borrower is required to withhold and
remit in respect of any principal, interest or other amount paid or
payable by US Borrower to or for account of any Lender Party hereunder
or under any other US Loan Document.
(f) If US Borrower is required to pay additional amounts to or
for the account of any Lender Party pursuant to this Section, then
such Lender Party will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender Party, is not otherwise
disadvantageous to such Lender Party and in the event Lender Party is
reimbursed for an amount paid by US Borrower pursuant to this Section,
it shall promptly return such amount to US Borrower.
(g) Within thirty (30) days after the date of any payment of
Taxes, US Borrower shall furnish to US Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
US Borrower hereunder, the agreements and obligations of US Borrower
contained in this section shall survive the termination of the US
Facility Commitment Period and the payment in full of the US Notes.
Section 3.10.Currency Conversion and Currency Indemnity.
(a) Restricted Persons shall make payment relative to any US
Obligation in the currency (the "Agreed Currency") in which the US
Obligation was incurred. If any payment is received on account of any
US Obligation in any currency (the "Other Currency") other than the
Agreed Currency (whether voluntarily or pursuant to an order or
judgment or the enforcement thereof or the realization of any security
or the liquidation of such Restricted Person or otherwise howsoever),
such payment shall constitute a discharge of the liability of a
Restricted Person hereunder and under the other US Loan Documents in
respect of such US Obligation only to the extent of the amount of the
Agreed Currency which the relevant Lender Parties are able to purchase
with the amount of the Other Currency received by it on the Business
Day next following such receipt in accordance with its normal
procedures and after deducting any premium and costs of exchange.
(b) If, for the purpose of obtaining or enforcing judgment in
any court in any jurisdiction, it becomes necessary to convert into a
particular currency (the"Judgment Currency") any amount due in the
Agreed Currency then the conversion shall be made on the basis of the
rate of exchange prevailing on the next Business Day following the
date such judgment is given and in any event each Restricted Person
shall be obligated to pay the Lender Parties any deficiency in
accordance with Section 3.10(c). For the foregoing purposes "rate of
exchange" means the rate at which the relevant Lender Parties, as
applicable, in accordance with their normal banking procedures are
able on the relevant date to purchase the Agreed Currency with the
Judgment Currency after deducting any premium and costs of exchange.
(c) If any Lender Party receives any payment or payments on
account of the liability of a Restricted Person hereunder pursuant to
any judgment or order in any Other Currency, and the amount of the
Agreed Currency which the relevant Lender Party is able to purchase on
the Business Day next following such receipt with the proceeds of such
payment or payments in accordance with its normal procedures and after
deducting any premiums and costs of exchange is less than the amount
of the Agreed Currency due in respect of such US Obligations
immediately prior to such judgment or order, then US Borrower on
demand shall, and US Borrower hereby agrees to, indemnify and save
such Lender Party harmless from and against any loss, cost or expense
arising out of or in connection with such deficiency. The agreement
of indemnity provided for in this Section 3.10(c) shall constitute an
obligation separate and independent from all other obligations
contained in this Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any
indulgence granted by the Lender Parties or any of them from time to
time, and shall continue in full force and effect notwithstanding any
judgment or order for a liquidated sum in respect of an amount due
hereunder or under any judgment or order.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1.Documents to be Delivered. No Lender has any
obligation to make its first US Loan, and US LC Issuer has no
obligation to issue the first Letter of Credit, unless US Agent shall
have received all of the following, at US Agent's office in Dallas,
Texas, duly executed and delivered and in form, substance and date
satisfactory to US Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
(b) Each US Note.
(c) Certain certificates of US Borrower including:
(i) An "Omnibus Certificate" of the Secretary or Assistant
Secretary and of the Chairman of the Board, President, Chief
Financial Officer or Vice President of Administrative Services of
US Borrower, which shall contain the names and signatures of the
officers of US Borrower authorized to execute US Loan Documents
and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: a copy
of resolutions duly adopted by the Board of Directors of US
Borrower and in full force and effect at the time this Agreement
is entered into, authorizing the execution of this Agreement and
the other US Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, a copy of the charter documents
of US Borrower and all amendments thereto, certified by the
appropriate official of US Borrower's state of organization, and
a copy of any bylaws of US Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board
or President and of the Chief Financial Officer of US Borrower,
of even date with such US Loan or such Letter of Credit, in which
such officers certify to the satisfaction of the conditions set
out in subsections (a), (b), and (c) of Section 4.3.
(d) A certificate (or certificates) of the due formation, valid
existence and good standing of US Borrower in the State of Utah,
issued by the appropriate official of such State.
(e) A favorable opinion of Eric L. Dady, Senior Counsel for
Restricted Persons, substantially in the form set forth in Exhibit E.
(f) A favorable opinion of Dorsey & Whitney, special Utah
counsel for US Agent.
(g) The Initial Financial Statements.
(h) Documents confirming the payment in full of all indebtedness
under that certain Amended and Restated Credit Agreement, dated as of
February 7, 1997, by and among Celsius Energy Company, Wexpro Company,
Universal Resources Corporation and Celsius Energy Resources, Ltd, the
Lenders thereunder, Mellon Bank, N.A., as Administrative Agent and
Mellon Bank Canada, as Canadian Funding Agent, together with the
promissory notes issued pursuant thereto.
Section 4.2.Additional Conditions Precedent to First US Loan or
First Letter of Credit. No Lender has any obligation to make its
first US Loan, and US LC Issuer has no obligation to issue the first
Letter of Credit, unless on the date thereof:
(a) All commitment, facility, agency, legal and other fees
required to be paid or
reimbursed to any Lender pursuant to any US Loan Documents or any
commitment agreement heretofore entered into shall have been paid.
(b) No event which would reasonably be expected to have a
Material Adverse Effect shall have occurred since December 31, 1998.
(c) US Borrower shall have certified to US Agent and Lenders
that the Initial Financial Statements fairly present US Borrower's
Consolidated financial position at the respective dates thereof and
the Consolidated results of US Borrower's operations and US Borrower's
Consolidated cash flows for the respective periods thereof.
(d) US Borrower shall have certified to US Agent and Lenders
that no Restricted Person has any outstanding Liabilities of any kind
(including contingent obligations, tax assessments, and unusual
forward or long-term commitments) which are, in the aggregate,
material to US Borrower or material with respect to US Borrower's
Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule.
(e) All legal matters relating to the US Loan Documents and the
consummation of the transactions contemplated thereby shall be
satisfactory to Thompson & Knight, a Professional Corporation, counsel
to US Agent.
(f) The credit rating for US Borrower's long-term debt given (i)
by Moody's must be Baa3 or above or (ii) by S&P must be BBB- or above.
Section 4.3.Additional Conditions Precedent to all US Loans and
Letters of Credit. No Lender has any obligation to make any US Loan
(including its first), and US LC Issuer has no obligation to issue any
Letter of Credit (including its first), unless the following
conditions precedent have been satisfied:
(a) All representations and warranties made by any Restricted
Person in any US Loan Document shall be true on and as of the date of
such US Loan or the date of issuance of such Letter of Credit (except
to the extent that the facts upon which such representations are based
have been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such US
Loan or the date of issuance of such Letter of Credit.
(b) No Default shall exist at the date of such US Loan or the
date of issuance of such Letter of Credit.
(c) Only with respect to the making of a new Loan, pursuant to
Section 1.2, no event which would reasonably be expected to have a
Material Adverse Effect shall have occurred since the date of the
audited annual Initial Financial Statements.
(d) Each Restricted Person shall have performed and complied
with all agreements and conditions required in the US Loan Documents
to be performed or complied with by it on or prior to the date of such
US Loan or the date of issuance of such Letter of Credit.
(e) The making of such US Loan or the issuance of such Letter of
Credit shall not be prohibited by any Law and shall not subject any
Lender or any LC Issuer to any penalty or other onerous condition
under or pursuant to any such Law.
(f) US Agent shall have received all documents and instruments
which US Agent has then requested, in addition to those described in
Section 4.1 (including opinions of legal counsel for Restricted
Persons and US Agent; corporate documents and records; documents
evidencing governmental authorizations, consents, approvals, licenses
and exemptions; and certificates of public officials and of officers
and representatives of US Borrower and other Persons), as to the
accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this
Agreement and the other US Loan Documents, the satisfaction of all
conditions contained herein or therein, and all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to US Agent in form, substance and
date.
ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted
Persons and Restricted Persons' businesses, properties and obligations
and to induce each Lender to enter into this Agreement and to extend
credit hereunder, US Borrower represents and warrants to each Lender
that:
Section 5.1.No Default. No event has occurred and is continuing
which constitutes a Default.
Section 5.2.Organization and Good Standing. Each Restricted
Person is duly organized, validly existing and in good standing under
the Laws of its jurisdiction of organization, having all powers
required to carry on its business and enter into and carry out the
transactions contemplated hereby. Each Restricted Person is duly
qualified, in good standing, and authorized to do business in all
other jurisdictions within the United States wherein the character of
the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary. Each Restricted
Person has taken all actions and procedures customarily taken in order
to enter, for the purpose of conducting business or owning property,
each jurisdiction outside the United States wherein the character of
the properties owned or held by it or the nature of the business
transacted by it makes such actions and procedures desirable.
Section 5.3.Authorization. US Borrower and Canadian Borrower
have duly taken all action necessary to authorize the execution and
delivery by it of the Loan Documents to which it is a party and to
authorize the consummation of the transactions contemplated thereby
and the performance of its obligations thereunder. US Borrower is
duly authorized to borrow funds hereunder.
Section 5.4.No Conflicts or Consents. The execution and delivery
by the various Restricted Persons of the Loan Documents to which each
is a party, the performance by each of its obligations under such Loan
Documents, and the consummation of the transactions contemplated by
the various Loan Documents, do not and will not B. conflict with any
provision of any Law, the organizational documents of any Restricted
Person, or any agreement, judgment, license, order or permit
applicable to or binding upon any Restricted Person, or result in the
acceleration of any Indebtedness owed by any Restricted Person, or
result in or require the creation of any Lien upon any assets or
properties of any Restricted Person, except as expressly contemplated
or permitted in the Loan Documents. Except as expressly contemplated
in the Loan Documents no consent, approval, authorization or order of,
and no notice to or filing with, any Tribunal or third party is
required in connection with the execution, delivery or performance by
any Restricted Person of any Loan Document or to consummate any
transactions contemplated by the Loan Documents.
Section 5.5.Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal,
valid and binding obligations of each Restricted Person which is a
party hereto or thereto, enforceable in accordance with their terms
except as such enforcement may be limited by bankruptcy, insolvency or
similar Laws of general application relating to the enforcement of
creditors' rights.
Section 5.6.Initial Financial Statements. US Borrower has
heretofore delivered to each Lender true, correct and complete copies
of the Initial Financial Statements. The Initial Financial Statements
fairly present US Borrower's Consolidated financial position at the
respective dates thereof and the Consolidated results of US Borrower's
operations and US Borrower's Consolidated cash flows for the
respective periods thereof. Since the date of the annual Initial
Financial Statements no event which would cause a Material Adverse
Effect has occurred, except as reflected in the Disclosure Schedule.
All Initial Financial Statements were prepared in accordance with
GAAP.
Section 5.7.Other Obligations and Restrictions. No Restricted
Person has any outstanding Liabilities of any kind (including
contingent obligations, tax assessments, and unusual forward or
long-term commitments) which are, in the aggregate, material to US
Borrower or material with respect to US Borrower's Consolidated
financial condition and not shown in the Initial Financial Statements
or disclosed in the Disclosure Schedule. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule,
no Restricted Person is subject to or restricted by any franchise,
contract, deed, charter restriction, or other instrument or
restriction which could cause a Material Adverse Effect.
Section 5.8.Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person
to any Lender in connection with the negotiation of this Agreement or
in connection with any transaction contemplated hereby contains any
untrue statement of a material fact or omits to state any material
fact known to any Restricted Person (other than industry-wide risks
normally associated with the types of businesses conducted by
Restricted Persons) necessary to make the statements contained herein
or therein not misleading as of the date made or deemed made. There
is no fact known to any Restricted Person (other than industry-wide
risks normally associated with the types of businesses conducted by
Restricted Persons) that has not been disclosed to each Lender in
writing which would reasonably be expected to have a Material Adverse
Effect.
Section 5.9.Litigation. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule: there are no
actions, suits or legal, equitable, arbitrative or administrative
proceedings pending, or to the knowledge of any Restricted Person
threatened, against any Restricted Person before any Tribunal which
would reasonably be expected to have a Material Adverse Effect, and C.
there are no outstanding judgments, injunctions, writs, rulings or
orders by any such Tribunal against any Restricted Person which would
reasonably be expected to have a Material Adverse Effect.
Section 5.10.Labor Disputes and Acts of God. Except as disclosed
in the Disclosure Schedule, neither the business nor the properties of
any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which would reasonably
be expected to have a Material Adverse Effect.
Section 5.11.ERISA Plans and Liabilities. All currently existing
ERISA Plans are listed in the Disclosure Schedule. Except as
disclosed in the Initial Financial Statements or in the Disclosure
Schedule, no Termination Event has occurred with respect to any ERISA
Plan and all ERISA Affiliates are in compliance with ERISA in all
material respects. No ERISA Affiliate is required to contribute to,
or has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA. Except as
set forth in the Disclosure Schedule: no "accumulated funding
deficiency" (as defined in Section 412(a) of the Internal Revenue
Code) exists with respect to any ERISA Plan, whether or not waived by
the Secretary of the Treasury or his delegate, and the current value
of each ERISA Plan's benefits does not exceed the current value of
such ERISA Plan's assets available for the payment of such benefits by
more than US $25,000,000.
Section 5.12.Environmental and Other Laws. Except as disclosed
in the Disclosure Schedule: Restricted Persons are conducting their
businesses in material compliance with all applicable Laws, including
Environmental Laws, and have and are in compliance with all licenses
and permits required under any such Laws; none of the operations or
properties of any Restricted Person is the subject of federal, state
or local investigation evaluating whether any material remedial action
is needed to respond to a release of any Hazardous Materials into the
environment or to the improper storage or disposal (including storage
or disposal at offsite locations) of any Hazardous Materials; and no
Restricted Person (and to the best knowledge of US Borrower, no other
Person) has filed any notice under any Law indicating that any
Restricted Person is responsible for the improper release into the
environment, or the improper storage or disposal, of any material
amount of any Hazardous Materials or that any Hazardous Materials have
been improperly released, or are improperly stored or disposed of,
upon any property of any Restricted Person; (d) no Restricted Person
has transported or arranged for the transportation of any Hazardous
Material to any location which is (i) listed on the National
Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, listed for
possible inclusion on such National Priorities List by the
Environmental Protection Agency in its Comprehensive Environmental
Response, Compensation and Liability Information System List, or
listed on any similar state list or (ii) the subject of federal, state
or local enforcement actions or other investigations which may lead to
claims against any Restricted Person for clean-up costs, remedial
work, damages to natural resources or for personal injury claims
(whether under Environmental Laws or otherwise); and (e) no Restricted
Person otherwise has any known material contingent liability under any
Environmental Laws or in connection with the release into the
environment, or the storage or disposal, of any Hazardous Materials.
Section 5.13.US Borrower's Subsidiaries. US Borrower does not
presently have any Subsidiary or own any stock in any other
corporation or association except those listed in the Disclosure
Schedule and except in cases where US Borrower owns less than 5% of
the outstanding capital stock of any such corporation. Neither US
Borrower nor any Restricted Person is a member of any general or
limited partnership, limited liability company, joint venture formed
under the laws of the United States or any State thereof or
association of any type whatsoever except those listed in the
Disclosure Schedule and associations, joint ventures or other
relationships which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for
purposes of federal income taxation only, D. which are not
corporations or partnerships (or subject to the Uniform Partnership
Act) under applicable state Law, and whose businesses are limited to
the exploration, development and operation of oil, gas or mineral
properties, pipelines or gathering systems and interests owned
directly by the parties in such associations, joint ventures or
relationships. US Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the
Disclosure Schedule.
Section 5.14.Title to Properties; Licenses. Each Restricted
Person has good and defensible title to all of its material properties
and assets, free and clear of all Liens other than Permitted Liens and
of all impediments to the use of such properties and assets in such
Restricted Person's business. Each Restricted Person possesses all
licenses, permits, franchises, patents, copyrights, trademarks and
trade names, and other intellectual property (or otherwise possesses
the right to use such intellectual property without violation of the
rights of any other Person) which are necessary to carry out its
business as presently conducted and as presently proposed to be
conducted hereafter, and no Restricted Person is in violation in any
material respect of the terms under which it possesses such
intellectual property or the right to use such intellectual property.
Section 5.15.Government Regulation. Neither US Borrower nor any
other Restricted Person owing Obligations is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding
acts have been amended) or any other Law which regulates the incurring
by such Person of Indebtedness, including Laws relating to common
contract carriers or the sale of electricity, gas, steam, water or
other public utility services.
Section 5.16.Insider. No Restricted Person, nor any Person
having "control" (as that term is defined in 12 U.S.C. 375b(9) or in
regulations promulgated pursuant thereto) of any Restricted Person, is
a "director" or an "executive officer" or "principal shareholder" (as
those terms are defined in 12 U.S.C. 375b(8) or (9) or in
regulations promulgated pursuant thereto) of any Lender, of a bank
holding company of which any Lender is a Subsidiary or of any
Subsidiary of a bank holding company of which any Lender is a
Subsidiary.
Section 5.17.Solvency. Upon giving effect to the issuance of the
US Notes, the execution of the US Loan Documents by US Borrower and
the consummation of the transactions contemplated hereby, US Borrower
will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws).
Section 5.18.Year 2000 Compliance. US Borrower has E. initiated
a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by
suppliers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by US
Borrower and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and to date,
implemented that plan in accordance with that timetable. US Borrower
reasonably believes that all computer applications (including those of
its suppliers and vendors) that are material to its or any of its
Subsidiaries' business and operations will on a timely basis be able
to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 compliant"), except to
the extent that a failure to do so would not reasonably be expected to
have a Material Adverse Effect.
ARTICLE VI - Affirmative Covenants of US Borrower
To conform with the terms and conditions under which each Lender
is willing to have credit outstanding to US Borrower, and to induce
each Lender to enter into this Agreement and extend credit hereunder,
US Borrower warrants, covenants and agrees that until the full and
final payment of the Obligations and the termination of this
Agreement, unless Required Lenders have previously agreed otherwise:
Section 6.1.Payment and Performance. US Borrower will pay all
amounts due under the US Loan Documents in accordance with the terms
thereof and will observe, perform and comply with every covenant, term
and condition expressed or implied in the US Loan Documents. US
Borrower will cause each other Restricted Person to observe, perform
and comply with every such term, covenant and condition in any Loan
Document.
Section 6.2.Books, Financial Statements and Reports. Each
Restricted Person will at all times maintain full and accurate books
of account and records. US Borrower will maintain and will cause its
Subsidiaries to maintain a standard system of accounting, will
maintain its Fiscal Year, and will furnish the following statements
and reports to each Lender Party at US Borrower's expense:
(a) As soon as available, and in any event within one hundred
twenty (120) days after the end of each Fiscal Year, complete
Consolidated financial statements of US Borrower together with all
notes thereto, prepared in reasonable detail in accordance with US
GAAP, together with an unqualified opinion, based on an audit using
generally accepted auditing standards, by one of the six largest
independent certified public accounting firms in the United States,
stating that such Consolidated financial statements have been so
prepared. These financial statements shall contain a Consolidated
balance sheet as of the end of such Fiscal Year and Consolidated
statements of earnings, of cash flows, and of changes in owners'
equity for such Fiscal Year, each setting forth in comparative form
the corresponding figures for the preceding Fiscal Year. In addition,
within one hundred twenty (120) days after the end of each Fiscal Year
US Borrower will furnish to US Agent and each Lender a certificate in
the form of Exhibit D signed by the President, Chief Financial
Officer, Controller or Vice President of Administrative Services of US
Borrower, stating that such financial statements fairly present the
financial condition of US Borrower, stating that such Person has
reviewed the US Loan Documents, containing all calculations required
to be made to show compliance or non-compliance with the provisions of
Sections 7.11 and 7.12, and further stating that there is no condition
or event at the end of such Fiscal Year or at the time of such
certificate which constitutes a Default and specifying the nature and
period of existence of any such condition or event.
(b) As soon as available, and in any event within sixty (60)
days after the end of each Fiscal Quarter, US Borrower's Consolidated
and consolidating balance sheet and income statement as of the end of
such Fiscal Quarter and a Consolidated statement of cash flows for the
period from the beginning of the then current Fiscal Year to the end
of such Fiscal Quarter, all in reasonable detail and prepared in
accordance with US GAAP, subject to changes resulting from normal
year-end adjustments. In addition US Borrower will, together with
each such set of financial statements, furnish a certificate in the
form of Exhibit D signed by the President, Chief Financial Officer,
Controller or Vice President of Administrative Services of US Borrower
stating that such financial statements are accurate and complete
(subject to normal year-end adjustments), stating that such Person has
reviewed the US Loan Documents, containing all calculations required
to be made by US Borrower to show compliance or non-compliance with
the provisions of Sections 7.11 and 7.12 and further stating that
there is no condition or event at the end of such Fiscal Quarter or at
the time of such certificate which constitutes a Default and
specifying the nature and period of existence of any such condition or
event.
(c) Promptly upon their becoming available, US Borrower shall
provided copies of all registration statements, periodic reports and
other statements and schedules filed by any Restricted Person with any
securities exchange, the Securities and Exchange Commission or any
similar Governmental Authority.
Section 6.3Other Information and Inspections. US Borrower will
furnish to each Lender any information which US Agent may from time to
time reasonably request concerning any covenant, provision or
condition of the Loan Documents or any matter in connection with
Restricted Persons' businesses and operations. US Borrower will
permit, and will cause the other Restricted Persons to permit,
representatives appointed by US Agent (including independent
accountants, auditors, agents, attorneys, appraisers and any other
Persons) to visit and inspect during normal business hours any of the
Restricted Persons properties, including its books of account, other
books and records, and any facilities or other business assets, and to
make extra copies therefrom and photocopies and photographs thereof,
and to write down and record any information such representatives
obtain, and US Borrower will permit, and will cause the other
Restricted Persons to permit, US Agent or its representatives to
investigate and verify the accuracy of the information furnished to US
Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, employees and
representatives.
Section 6.4.Notice of Material Events and Change of Address. US
Borrower will promptly notify each Lender in writing, stating that
such notice is being given pursuant to this Agreement, of:
(a) the occurrence of any event which would have a Material
Adverse Effect,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed by
any Restricted Person having a principal balance of more than US
$25,000,000, or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which
any of them is a party or by which any of them or any of their
properties is bound, if such default would have a Material Adverse
Effect,
(d) the occurrence of any Termination Event,
(e) any claim of US $10,000,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount,
or any other material adverse claim asserted against any Restricted
Person or with respect to any Restricted Person's properties, and
(f) the filing of any suit or proceeding against any Restricted
Person in which an adverse decision would have a Material Adverse
Effect.
Upon the occurrence of any of the foregoing, Restricted Persons will
take all necessary or appropriate steps to remedy promptly any such
Material Adverse Effect, Default, acceleration, default or Termination
Event, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any
of the foregoing. US Borrower will also notify US Agent and US
Agent's counsel in writing promptly in the event that any Restricted
Person changes its name or the location of its chief executive office.
Section 6.5Maintenance of Properties. Each Restricted Person
will maintain, preserve, protect, and keep all property used or useful
in the conduct of its business in good condition and in compliance
with all applicable Laws, and will from time to time make all repairs,
renewals and replacements needed to enable the business and operations
carried on in connection therewith to be promptly and advantageously
conducted at all times.
Section 6.6.Maintenance of Existence and Qualifications. Each
Restricted Person will maintain and preserve its existence and its
rights and franchises in full force and effect and will qualify to do
business in all states or jurisdictions where required by applicable
Law, except where the failure so to qualify will not have a Material
Adverse Effect.
Section 6.7.Payment of Trade Liabilities, Taxes, etc. Each
Restricted Person will (b)timely file all required tax returns; (c)
timely pay all taxes, assessments, and other governmental charges or
levies imposed upon it or upon its income, profits or property; and
(d)maintain appropriate accruals and reserves for all of the foregoing
in accordance with US GAAP. Each Restricted Person may, however,
delay paying or discharging any of the foregoing so long as it is in
good faith contesting the validity thereof by appropriate proceedings
and has set aside on its books adequate reserves therefor.
Section 6.8.Insurance. In accordance with industry standards,
each Restricted Person will keep or cause to be kept insured or
self-insured, at the option of each Restricted Person, its surface
equipment and other property of a character usually insured by similar
Persons engaged in the same or similar businesses. The insurance
coverages and amounts will be reasonably determined by each Restricted
Person, based on coverages carried by prudent owners of similar
equipment and property.
Section 6.9.Performance on US Borrower's Behalf. If any
Restricted Person fails to pay any taxes, insurance premiums,
expenses, attorneys' fees or other amounts it is required to pay under
any US Loan Document during any period in which a Default exists, US
Agent may pay the same. US Borrower shall immediately reimburse US
Agent for any such payments and each amount paid by US Agent shall
constitute an US Obligation owed hereunder which is due and payable on
the date such amount is paid by US Agent.
Section 6.10.Interest. US Borrower hereby promises to each
Lender Party to pay interest at the Default Rate applicable to Base
Rate Loans on all US Obligations (including US Obligations to pay fees
or to reimburse or indemnify any Lender) which US Borrower has in this
Agreement promised to pay to such Lender Party and which are not paid
when due. Such interest shall accrue from the date such US
Obligations become due until they are paid.
Section 6.11.Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to perform
under the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument
or obligation to which it is a party or by which it or any of its
properties is bound. Each Restricted Person will conduct its business
and affairs in compliance with all Laws applicable thereto.
Section 6.12.Environmental Matters.
(a) Each Restricted Person will comply in all material respects
with all Environmental Laws now or hereafter applicable to such
Restricted Person, as well as all contractual obligations and
agreements with respect to environmental remediation or other
environmental matters, and shall obtain, at or prior to the time
required by applicable Environmental Laws, all environmental, health
and safety permits, licenses and other authorizations necessary for
its operations and will maintain such authorizations in full force and
effect.
(b) will promptly furnish to US Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments,
suits or other proceedings received by US Borrower, or of which it has
notice, pending or threatened against US Borrower, by any Governmental
Authority with respect to any alleged violation of or non-compliance
with any Environmental Laws or any permits, licenses or authorizations
in connection with its ownership or use of its properties or the
operation of its business, if the violation, order, claim, citation,
complaint, penalty assessment, suit or other proceeding could
reasonably be expected to result in liability to US Borrower in excess
of $10,000,000 .
(c) US Borrower will promptly furnish to US Agent all requests
for information, notices of claim, demand letters, and other
notifications, received by US Borrower in connection with its
ownership or use of its properties or the conduct of its business,
relating to potential responsibility with respect to any investigation
or clean-up of Hazardous Material at any location.
Section 6.13.Evidence of Compliance. Each Restricted Person will
furnish to each Lender at such Restricted Person's or Borrower's
expense all evidence which US Agent from time to time reasonably
requests in writing as to the accuracy and validity of or compliance
with all representations, warranties and covenants made by any
Restricted Person in the US Loan Documents, the satisfaction of all
conditions contained therein, and all other matters pertaining
thereto.
Section 6.14.Bank Accounts; Offset. To secure the repayment of
the Obligations US Borrower hereby grants to each Lender a right of
offset, each of which shall be in addition to all other interests,
liens, and rights of any Lender at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and against
(e) any and all moneys, securities or other property (and the proceeds
therefrom) of US Borrower now or hereafter held or received by or in
transit to any Lender from or for the account of US Borrower, whether
for safekeeping, custody, pledge, transmission, collection or
otherwise, (f)any and all deposits (general or special, time or
demand, provisional or final) of US Borrower with any Lender, and (g)
any other credits and claims of US Borrower at any time existing
against any Lender, including claims under certificates of deposit.
At any time and from time to time after the occurrence of any Default,
each Lender is hereby authorized to offset against the Obligations
then due and payable (in either case without notice to US Borrower),
any and all items hereinabove referred to. To the extent that US
Borrower has accounts designated as royalty or joint interest owner
accounts, the foregoing right of offset shall not extend to funds in
such accounts which belong to, or otherwise arise from payments to US
Borrower for the account of, third party royalty or joint interest
owners.
Section 6.15.Year 2000 Compliance. US Borrower will promptly
notify US Agent in the event US Borrower discovers or determines that
any computer application (including those of its suppliers and
vendors) that is material to its or any of its Subsidiaries' business
and operations that will not be Year 2000 compliant on a timely basis,
except to the extent that such failure would not reasonably be
expected to have a Material Adverse Effect.
ARTICLE VII - Negative Covenants of US Borrower
To conform with the terms and conditions under which each Lender
is willing to have credit outstanding to US Borrower, and to induce
each Lender to enter into this Agreement and make the US Loans, US
Borrower warrants, covenants and agrees that until the full and final
payment of the Obligations and the termination of this Agreement,
unless Required Lenders have previously agreed otherwise:
Section 7.1.Indebtedness. No Restricted Person (other than US
Borrower) will in any manner owe or be liable for Indebtedness except:
(a) the US Obligations and the Canadian Obligations.
(b) capital lease obligations (excluding oil, gas or mineral
leases) entered into in the ordinary course of such Restricted
Person's business in arm's length transactions at competitive market
rates under competitive terms and conditions in all respects, provided
that the obligations required to be paid in any Fiscal Year under any
such capital leases do not in the aggregate exceed US $2,000,000 for
all Restricted Persons.
(c) unsecured Liabilities owed among Restricted Persons.
(d) guaranties by one Restricted Person of Liabilities owed by
another Restricted Person, if such Liabilities either (i) are not
Indebtedness, or (ii) are allowed under subsections (a), (b) or (c) of
this Section 7.1.
(e) Indebtedness of the Restricted Persons for plugging and
abandonment bonds issued by third parties or for letters of credit
issued in place thereof which are required by regulatory authorities
in the area of operations, and Indebtedness of the Restricted Persons
for other bonds or letters of credit which are required by such
regulatory authorities with respect to other normal oil and gas
operations.
(f) non-recourse Indebtedness as to which no Restricted Person
(i) provides any guaranty or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (ii) is directly or indirectly liable (as
a guarantor or otherwise); provided, that after giving effect to such
Indebtedness outstanding from time to time, US Borrower is not in
violation of Sections 7.11 and 7.12.
(g) Indebtedness that is subordinated to the US Obligations and
the Canadian Obligations on terms acceptable to Required Lenders.
(h) Indebtedness to Questar Corporation that is subordinated to
the Obligations on the terms described in the promissory note attached
hereto as Schedule 2.
(i) Acquired Debt which meets the following requirements: (A)
the documentation evidencing such Indebtedness shall contain no terms,
conditions or defaults (other than pricing) which are more favorable
to the third party creditor than those contained in this Agreement are
to Lenders and (B) at the time such Indebtedness is incurred, no
Default or Event of Default shall have occurred and be continuing
hereunder.
(j) Indebtedness under Hedging Contracts permitted under Section
7.10.
(k) unsecured Indebtedness of the Restricted Persons not
described in subsections (a) through (j) above which meets the
following requirements: (A) the documentation evidencing such
Indebtedness shall contain no terms, conditions or defaults (other
than pricing) which are more favorable to the third party creditor
than those contained in this Agreement are to Lenders and (B) at the
time such Indebtedness is incurred, no Default or Event of Default
shall have occurred and be continuing hereunder; provided that the
Indebtedness of the Restricted Persons (other than US Borrower)
permitted under this subsection (k) shall not exceed US $30,000,000 in
the aggregate, excluding guaranties of Indebtedness of other
Restricted Persons.
Section 7.2.Limitation on Liens. Except for Permitted Liens, no
Restricted Person will create, assume or permit to exist any Lien upon
any of the properties or assets which it now owns or hereafter
acquires. No Restricted Person will allow the filing or continued
existence of any financing statement describing as collateral any
assets or property of such Restricted Person, other than financing
statements which describe only collateral subject to a Lien permitted
under this section and which name as secured party or lessor only the
holder of such Lien.
Section 7.3.Limitation on Investments and New Businesses. No
Restricted Person will:
(a) engage directly or indirectly in any business or conduct any
operations, except (i) in connection with or incidental to its present
businesses and operations or complementary to such businesses or
operations or (ii) in connection with businesses or operations that
are not material to US Borrower and its Subsidiaries on a consolidated
basis;
(b) make any acquisitions of or capital contributions to any
Person or any other Investment, except (i) Investments in the ordinary
course of business, (ii) demand loans to Questar Corporation, and
(iii) purchases of equity interests in Persons involved in the oil and
gas industry if the aggregate amount of the purchase price for all
such purchases (including the purchase in question) made by the
Restricted Persons after the date hereof does not exceed US
$30,000,000.
Section 7.4.Limitation on Mergers. US Borrower will not merge or
consolidate with or into any other Person unless US Borrower is the
surviving business entity and no Default exists prior to such merger
or consolidation or will exist immediately thereafter..
Section 7.5.Limitation on Issuance of Securities by Subsidiaries
of US Borrower. No Restricted Subsidiary of US Borrower will issue
any additional shares of its capital stock, additional partnership
interests or other equity securities or any options, warrants or other
rights to acquire such additional shares, partnership interests or
other securities except to another Restricted Person of which such
issuer is already directly or indirectly a Subsidiary of US Borrower.
Section 7.6.Transactions with Affiliates. No Restricted Person
will engage in any material transaction with any of its Affiliates on
terms which are less favorable in any material respect to it than
those which would have been obtainable at the time in arm's-length
dealing with Persons other than such Affiliates.
Section 7.7.Prohibited Contracts. Except as expressly provided
for in the US Loan Documents, no Restricted Person will, directly or
indirectly, enter into, create, or otherwise allow to exist any
contract or other consensual restriction on the ability of any
Restricted Person that is a Subsidiary of US Borrower: (a) to pay
dividends or make other distributions to US Borrower, (b) to redeem
equity interests held in it by US Borrower, (c) to repay loans and
other indebtedness owing by it to US Borrower, or (d) to transfer any
of its assets to US Borrower.
Section 7.8.ERISA. No ERISA Affiliate will incur any obligation
to contribute to any "multiemployer plan" as defined in Section 4001
of ERISA.
Section 7.9.Limitation on Sales of Property. No Restricted
Person will sell, transfer, lease, exchange, alienate or dispose of
any of its material assets or properties or any material interest
therein, or discount, sell, pledge or assign any notes payable to it,
accounts receivable or future income, except:
(a) equipment which is worthless or obsolete or which is
replaced by equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and
seismic data) which is sold in the ordinary course of business on
ordinary trade terms;
(c) capital stock of any of US Borrower's Subsidiaries which is
transferred to US Borrower or a wholly owned Subsidiary of US
Borrower;
(d) interests in oil and gas properties, or portions thereof, to
which no proved reserves of oil, gas or other liquid or gaseous
hydrocarbons are properly attributed.
(e) notwithstanding the above, other property which is sold for
fair consideration in an aggregate amount not to exceed twenty percent
(20%) of the Consolidated net book value of US Borrower's property,
plant and equipment during any Fiscal Year.
Section 7.10.Hedging Contracts. No Restricted Person will be a
party to or in any manner be liable on any Hedging Contract, unless
such contracts are entered into as a hedge of equity oil and gas
production (whether production is produced by any Restricted Person or
purchased from third parties), floating rate Indebtedness or foreign
currency needs (and not as a speculative investment), such contracts
are entered into in the ordinary course of the Restricted Persons'
businesses, and
(i) if such contracts are entered into with the purpose and
effect of fixing prices on oil or gas expected to be produced by
Restricted Persons:
(A) such contracts for any single month (determined,
in the case of contracts that are not settled on a monthly
basis, by a monthly proration acceptable to US Agent) do
not, in the aggregate, cover amounts greater than
seventy-five percent (75%) of the Restricted Persons'
aggregate Projected Oil and Gas Production anticipated to be
sold in the ordinary course of the Restricted Persons'
businesses for such month; and
(B) such contracts do not require any Restricted
Person to provide any Lien to secure US Borrower's
obligations thereunder, other than Liens on cash or cash
equivalents in an aggregate amount not more than US
$10,000,000.
As used in this subsection (i), the term "Projected Oil and Gas
Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price) for
the term of the contracts or a particular month, as applicable,
from properties and interests owned by any Restricted Person
which have attributable to them proved oil or gas reserves.
(ii) if such contracts are entered into with the purpose and
effect of fixing interest rates on a principal amount of
indebtedness of such Restricted Person that is accruing interest
at a variable rate, the aggregate notional amount of such
contracts never exceeds the anticipated outstanding principal
balance of the indebtedness to be hedged by such contracts or an
average of such principal balances calculated using a generally
accepted method of matching interest swap contracts to declining
principal balances, and the floating rate index of each such
contract generally matches the index used to determine the
floating rates of interest on the corresponding indebtedness to
be hedged by such contract.
Section 7.11.Funded Debt to Total Capitalization. As of the end
of each Fiscal Quarter, the Debt to Capitalization Ratio will not
exceed 0.6 to 1.0.
Section 7.12.Net Worth. US Borrower's Consolidated Net Worth
will never be less than the sum of (a) eighty-five percent (85%) of US
Borrower's Consolidated Net Worth as of December 31, 1998 plus (b) an
aggregate amount equal to fifty percent (50%) of its Consolidated Net
Income for each Fiscal Quarter (but, in each case, only including such
Fiscal Quarters for which Consolidated Net Income is a positive
number) from and after December 31,1998 to and including the date of
determination thereof, computed on a cumulative basis for such period.
ARTICLE VIII - Events of Default and Remedies
Section 8.1.Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) US Borrower fails to pay any principal component of any US
Obligation (including without limitation, any Matured US LC
Obligations) when due and payable or fails to pay any other US
Obligation within five (5) Business Days after the date when due and
payable, whether at a date for the payment of a fixed installment or
as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any US Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) US Borrower fails to duly observe, perform or comply with
Section 6.3 or Section 6.4 of this Agreement, with the exception of
the failure to provide notice in the event that any Restricted Person
changes its name or location of its chief executive office;
(d) US Borrower fails (other than as referred to in subsections
(a), (b) or (c) above) to duly observe, perform or comply with any
covenant, agreement, condition or provision of any US Loan Document,
and such failure remains unremedied for a period of thirty (30) days
after notice of such failure is given by US Agent to US Borrower;
(e) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Restricted Person in
connection with any US Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made,
or this Agreement or any US Note is asserted to be or at any time
ceases to be valid, binding and enforceable in any material respect as
warranted in Section 5.5 for any reason other than its release or
subordination by US Agent;
(f) Any Restricted Person fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of
any instrument, if such failure could reasonably be expected to have a
Material Adverse Effect upon US Borrower;
(g) Any Restricted Person (i) fails to duly pay any Indebtedness
in excess of US $10,000,000 constituting principal or interest owed by
it with respect to borrowed money or money otherwise owed under any
note, bond, or similar instrument, or (ii) breaches or defaults in the
performance of any agreement or instrument by which any such
Indebtedness is issued, evidenced, governed, or secured, other than a
breach or default described in clause (i) above, and any such failure,
breach or default continues beyond any applicable period of grace
provided therefor;
(h) US Borrower or any other Restricted Person having assets
with a book value of at least US $10,000,000:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or
hereafter in effect, including the federal Bankruptcy Code, as
from time to time amended, or has any such proceeding commenced
against it which remains undismissed for a period of thirty days;
or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time
amended; or applies for or consents to the entry of an order for
relief in an involuntary case under any such Law; or makes a
general assignment for the benefit of creditors; or fails
generally to pay (or admits in writing its inability to pay) its
debts as such debts become due; or takes corporate or other
action to authorize any of the foregoing; or
(iii)suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of all or a substantial part of its property
in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor
discharged within thirty days after the making thereof, or such
appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for
the payment of money in an amount that exceeds (x) the valid and
collectible insurance in respect thereof or (y) the amount of an
indemnity with respect thereto reasonably acceptable to the
Required Lenders by US $10,000,000 or more, unless the same is
discharged within thirty days after the date of entry thereof or
an appeal or appropriate proceeding for review thereof is taken
within such period and a stay of execution pending such appeal is
obtained; or
(v) suffers a writ or warrant of attachment or similar
process to be issued by any Tribunal against all or any part of
its property having a book value of at least US $10,000,000, and
such writ or warrant of attachment or any similar process is not
stayed or released within thirty days after the entry or levy
thereof or after any stay is vacated or set aside;
(i) Either (i) any "accumulated funding deficiency" (as defined
in Section 412(a) of the Internal Revenue Code) in excess of US
$10,000,000 exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or his delegate, or (ii) any
Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefit liabilities exceeds the
then current value of such ERISA Plan's assets available for the
payment of such benefit liabilities by more than US $10,000,000 (or in
the case of a Termination Event involving the withdrawal of a
substantial employer, the withdrawing employer's proportionate share
of such excess exceeds such amount);
(j) Questar Corporation ceases to own 100% of the capital stock
of US Borrower; and
(k) Any "Event of Default" occurs under the Canadian Agreement.
Upon the occurrence of an Event of Default described in subsection
(h)(i), (h)(ii) or (h)(iii) of this section with respect to US
Borrower, all of the US Obligations shall thereupon be immediately due
and payable, without demand, presentment, notice of demand or of
dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any
other notice or declaration of any kind, all of which are hereby
expressly waived by US Borrower and each Restricted Person who at any
time ratifies or approves this Agreement. Upon any such acceleration,
any obligation of any Lender to make any further US Loans and any
obligation of US LC Issuer to issue Letters of Credit hereunder shall
be permanently terminated. During the continuance of any other Event
of Default, US Agent at any time and from time to time may (and upon
written instructions from Required Lenders, US Agent shall), without
notice to US Borrower or any other Restricted Person, do either or
both of the following: (1) terminate any obligation of Lenders to
make US Loans hereunder, and any obligation of US LC Issuer to issue
Letters of Credit hereunder, and (2) declare any or all of the US
Obligations immediately due and payable, and all such US Obligations
shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest,
notice of protest, notice of intention to accelerate, declaration or
notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by US Borrower and each
Restricted Person who at any time ratifies or approves this Agreement.
In the event any Competitive Bid Note is accelerated in accordance
with the terms herein, any obligation of any Lender to make any
further US Loans and any obligation of US LC Issuer to issue Letters
of Credit shall be permanently terminated.
Section 8.2.Remedies. If any Default shall occur and be
continuing, each Lender Party may protect and enforce its rights under
the US Loan Documents by any appropriate proceedings, including
proceedings for specific performance of any covenant or agreement
contained in any Loan Document, and each Lender Party may enforce the
payment of any US Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers
conferred upon Lender Parties under the US Loan Documents shall be
deemed cumulative and not exclusive of any other rights, remedies or
powers available under the US Loan Documents or at Law or in equity.
ARTICLE IX - US Agent
Section 9.1.Appointment, Powers, and Immunities. Each Lender
hereby irrevocably appoints and authorizes US Agent to act as its
agent under this Agreement and the other US Loan Documents with such
powers and discretion as are specifically delegated to US Agent by the
terms of this Agreement and the other US Loan Documents, together with
such other powers as are reasonably incidental thereto. US Agent
(which term as used in this sentence and in Section 9.5 and the first
sentence of Section 9.6 hereof shall include its Affiliates and its
own and its Affiliates' officers, directors, employees, and agents):
(a)shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall not be responsible to the Lenders
for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Loan Document or
any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency
of any Loan Document, or any other document referred to or provided
for therein or for any failure by any Restricted Person or any other
Person to perform any of its obligations thereunder; (c)shall not be
responsible for or have any duty to ascertain, inquire into, or verify
the performance or observance of any covenants or agreements by any
Restricted Person or the satisfaction of any condition or, except at
the written direction of any Lender, to inspect the property
(including the books and records) of any Restricted Person or any of
its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Loan
Document; and (e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan
Document, except for its own gross negligence or willful misconduct.
US Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
Section 9.2.Reliance by US Agent. US Agent shall be entitled to
rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone
or telecopy) believed by it to be genuine and correct and to have been
signed, sent or made by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel for
any Restricted Person), independent accountants, and other experts
selected by US Agent. US Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until US
Agent receives and accepts an Assignment and Acceptance executed in
accordance with Section 10.6 hereof. As to any matters not expressly
provided for by this Agreement, US Agent shall not be required to
exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that US Agent shall not be required to
take any action that exposes US Agent to personal liability or that is
contrary to any Loan Document or applicable Law or unless it shall
first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of
taking any such action.
Section 9.3.Defaults. US Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default
unless US Agent has received written notice from a Lender or US
Borrower specifying such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that US Agent
receives such a notice of the occurrence of a Default or Event of
Default, US Agent shall give prompt notice thereof to the Lenders. US
Agent shall (subject to Section 9.1 hereof) take such action with
respect to such Default or Event of Default as shall reasonably be
directed by the Required Lenders. Notwithstanding the foregoing,
unless and until US Agent shall have received such directions, US
Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the
Lenders.
Section 9.4.Rights as Lender. With respect to its Percentage
Share of the US Maximum Credit Amount and the US Loans made by it, US
Agent (and any successor acting as US Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not
acting as US Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include US Agent in its individual
capacity. US Agent (and any successor acting as US Agent) and its
Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to, make Investments in, provide
services to, and generally engage in any kind of lending, trust, or
other business with any Restricted Person or any of its Subsidiaries
or Affiliates as if it were not acting as US Agent, and US Agent (and
any successor acting as US Agent) and its Affiliates may accept fees
and other consideration from any Restricted Person or any of its
Subsidiaries or Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to the
Lenders.
Section 9.5.Indemnification. The Lenders agree to indemnify US
Agent (to the extent not reimbursed under Section 10.4 hereof, but
without limiting the obligations of US Borrower under such section)
ratably in accordance with their respective Percentage Shares, for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, reasonable costs and expenses (including attorneys'
fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against US Agent (including by any
Lender) in any way relating to or arising out of any Loan Document or
the transactions contemplated thereby or any action taken or omitted
by US Agent under any Loan Document (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF US AGENT); provided that no Lender
shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees
to reimburse US Agent promptly upon demand for its ratable share of
any costs or expenses payable by US Borrower under Section 10.4, to
the extent that US Agent is not promptly reimbursed for such costs and
expenses by US Borrower. The agreements contained in this section
shall survive payment in full of the US Loans and all other amounts
payable under this Agreement.
Section 9.6.Non-Reliance on US Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on US
Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own credit analysis of the US
Borrower and its Subsidiaries and decision to enter into this
Agreement and that it will, independently and without reliance upon US
Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the US
Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by US
Agent hereunder, US Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
affairs, financial condition, or business of any Restricted Person or
any of its Subsidiaries or Affiliates that may come into the
possession of US Agent or any of its Affiliates.
Section 9.7.Sharing of Set-Offs and Other Payments. Each Lender
Party agrees that if it shall, whether through the exercise of rights
under US Loan Documents or rights of banker's lien, set off, or
counterclaim against US Borrower or otherwise, obtain payment of a
portion of the aggregate Obligations owed to it which, taking into
account all distributions made by US Agent under Section 3.1, causes
such Lender Party to have received more than it would have received
had such payment been received by US Agent and distributed pursuant to
Section 3.1, then (a) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the
Obligations as necessary to cause all Lender Parties to share all
payments as provided for in Section 3.1, and (b) such other
adjustments shall be made from time to time as shall be equitable to
ensure that US Agent and all Lender Parties share all payments of
Obligations as provided in Section 3.1; provided, however, that
nothing herein contained shall in any way affect the right of any
Lender Party to obtain payment (whether by exercise of rights of
banker's lien, set-off or counterclaim or otherwise) of indebtedness
other than the Obligations. US Borrower expressly consents to the
foregoing arrangements and agrees that any holder of any such interest
or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent
permitted by Law exercise any and all rights of banker's lien,
set-off, or counterclaim as fully as if such holder were a holder of
the Obligations in the amount of such interest or other participation.
If all or any part of any funds transferred pursuant to this section
is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be
deemed to have been rescinded to the extent of such recovery, together
with interest, if any, if interest is required pursuant to the of a
Tribunal order to be paid on account of the possession of such funds
prior to such recovery.
Section 9.8.Investments. Whenever US Agent in good faith
determines that it is uncertain about how to distribute to Lender
Parties any funds which it has received, or whenever US Agent in good
faith determines that there is any dispute among Lender Parties about
how such funds should be distributed, US Agent may choose to defer
distribution of the funds which are the subject of such uncertainty or
dispute. If US Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if US Agent is otherwise
required to invest funds pending distribution to Lender Parties, US
Agent shall invest such funds pending distribution; all interest on
any such Investment shall be distributed upon the distribution of such
Investment and in the same proportion and to the same Persons as such
Investment. All moneys received by US Agent for distribution to
Lender Parties (other than to the Person who is US Agent in its
separate capacity as a Lender Party) shall be held by US Agent pending
such distribution solely as US Agent for such Lender Parties, and US
Agent shall have no equitable title to any portion thereof.
Section 9.9.Benefit of Article IX. The provisions of this
Article (other than the following Section 9.11) are intended solely
for the benefit of Lender Parties, and no Restricted Person shall be
entitled to rely on any such provision or assert any such provision in
a claim or defense against any Lender. Lender Parties may waive or
amend such provisions as they desire without any notice to or consent
of US Borrower or any Restricted Person.
Section 9.10.Resignation. US Agent may resign at any time by
giving written notice thereof to Lenders and US Borrower. Each such
notice shall set forth the date of such resignation. Upon any such
resignation, Required Lenders shall have the right to appoint a
successor US Agent. A successor must be appointed for any retiring US
Agent, and such US Agent's resignation shall become effective when
such successor accepts such appointment. If, within thirty days after
the date of the retiring US Agent's resignation, no successor US Agent
has been appointed and has accepted such appointment, then the
retiring US Agent may appoint a successor US Agent, which shall be a
commercial bank organized or licensed to conduct a banking or trust
business under the Laws of the United States of America or of any
state thereof and if no Default or Event of Default has occurred and
is continuing, retiring US Agent shall obtain the consent of US
Borrower. Upon the acceptance of any appointment as US Agent
hereunder by a successor US Agent, the retiring US Agent shall be
discharged from its duties and obligations under this Agreement and
the other US Loan Documents. After any retiring US Agent's
resignation hereunder the provisions of this Article IX shall continue
to inure to its benefit as to any actions taken or omitted to be taken
by it while it was US Agent under the US Loan Documents.
Section 9.11.Lenders to Remain Pro Rata. It is the intent of all
parties hereto that, except for Competitive Bid Loans and matters
related thereto, the pro rata share of each Lender in the US
Obligations and in the Canadian Obligations shall be substantially the
same at all times during the term of this Agreement. Accordingly, the
initial Percentage Share of each Lender in the US Maximum Credit
Amount will be the same as the initial Percentage Share of such Lender
in the Canadian Maximum Credit Amount. All subsequent assignments and
adjustments of the interests of the Lenders in the US Obligations and
the Canadian Obligations will be made so as to maintain such a pro
rata arrangement; provided that for the purposes of determining these
pro rata shares, any Percentage Share held by any Lender's Affiliates
shall be included in determining the interests of such Lender.
ARTICLE X - Miscellaneous
Section 10.1.Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by
course of conduct or otherwise) by any Lender Party in exercising any
right, power or remedy which such Lender Party may have under any of
the US Loan Documents shall operate as a waiver thereof or of any
other right, power or remedy, nor shall any single or partial exercise
by any Lender Party of any such right, power or remedy preclude any
other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any US Loan Document and no
consent to any departure therefrom shall ever be effective unless it
is in writing and signed as provided below in this section, and then
such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Restricted
Person shall in any case of itself entitle any Restricted Person to
any other or further notice or demand in similar or other
circumstances. This Agreement and the other US Loan Documents set
forth the entire understanding between the parties hereto with respect
to the transactions contemplated herein and therein and supersede all
prior discussions and understandings with respect to the subject
matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the
other US Loan Documents shall be valid or effective against any party
hereto unless the same is in writing and signed by (i) if such party
is US Borrower, by US Borrower, (ii) if such party is US Agent or US
LC Issuer, by such party, and (iii) if such party is a Lender, by such
Lender or by US Agent on behalf of Lenders with the written consent of
Required Lenders (which consent has already been given as to the
termination of the US Loan Documents as provided in Section 10.10).
Notwithstanding the foregoing or anything to the contrary herein, US
Agent shall not, without the prior consent of all Lenders, execute and
deliver on behalf of such Lender any waiver or amendment which would
increase the US Maximum Credit Amount hereunder. Notwithstanding the
foregoing or anything to the contrary herein, US Agent shall not,
without the prior consent of each individual Lender, execute and
deliver on behalf of such Lender any waiver or amendment which would:
(1) waive any of the conditions specified in Article IV, (2) increase
the maximum amount which such Lender is committed hereunder to lend,
(3) reduce any fees payable to such Lender hereunder, or the principal
of, or interest on, such Lender's Note, (4) postpone any date fixed
for any payment of any such fees, principal or interest, (5) amend the
definition herein of "Required Lenders," "Majority Lenders," or
otherwise change the aggregate amount of Percentage Shares which is
required for US Agent, Lenders or any of them to take any particular
action under the US Loan Documents, (6) release US Borrower from its
obligation to pay such Lender's Note, or (7) amend this Section
10.1(a).
(b) Acknowledgments and Admissions. US Borrower hereby
represents, warrants, acknowledges and admits that (i) it has been
advised by counsel in the negotiation, execution and delivery of the
US Loan Documents to which it is a party, (ii) it has made an
independent decision to enter into this Agreement and the other US
Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by US Agent or any
Lender, whether written, oral or implicit, other than as expressly set
out in this Agreement or in another Loan Document delivered on or
after the date hereof, (iii) there are no representations, warranties,
covenants, undertakings or agreements by any Lender as to the US Loan
Documents except as expressly set out in this Agreement or in another
Loan Document delivered on or after the date hereof, (iv) no Lender
has any fiduciary obligation toward US Borrower with respect to any
Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the US Loan Documents between US Borrower and
the other Restricted Persons, on one hand, and each Lender, on the
other hand, is and shall be solely that of debtor and creditor,
respectively, (vi) no partnership or joint venture exists with respect
to the US Loan Documents between any Restricted Person and any Lender,
(vii) US Agent is not US Borrower's US Agent, but US Agent for
Lenders, (viii) without limiting any of the foregoing, US Borrower is
not relying upon any representation or covenant by any Lender, or any
representative thereof, and no such representation or covenant has
been made, that any Lender will, at the time of an Event of Default or
Default, or at any other time, waive, negotiate, discuss, or take or
refrain from taking any action permitted under the US Loan Documents
with respect to any such Event of Default or Default or any other
provision of the US Loan Documents, and (ix) all Lender Parties have
relied upon the truthfulness of the acknowledgments in this section in
deciding to execute and deliver this Agreement and to become obligated
hereunder.
(c) Joint Acknowledgment. This written Agreement and the other
US Loan Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
Section 10.2.Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the US Loan Documents shall survive the execution and
delivery of this Agreement and the other US Loan Documents and the
performance hereof and thereof, including the making or granting of
the US Loans and the delivery of the US Notes and the other US Loan
Documents, and shall further survive until all of the US Obligations
are paid in full to each Lender Party and all of Lender Parties'
obligations to US Borrower are terminated. All statements and
agreements contained in any certificate or other instrument delivered
by any Restricted Person to any Lender Party under any Loan Document
shall be deemed representations and warranties by US Borrower or
agreements and covenants of US Borrower under this Agreement. The
representations, warranties, indemnities, and covenants made by
Restricted Persons in the US Loan Documents, and the rights, powers,
and privileges granted to Lender Parties in the US Loan Documents, are
cumulative, and, except for expressly specified waivers and consents,
no Loan Document shall be construed in the context of another to
diminish, nullify, or otherwise reduce the benefit to any Lender Party
of any such representation, warranty, indemnity, covenant, right,
power or privilege. In particular and without limitation, no
exception set out in this Agreement to any representation, warranty,
indemnity, or covenant herein contained shall apply to any similar
representation, warranty, indemnity, or covenant contained in any
other Loan Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions which
are expressly made applicable to it by the terms of the various US
Loan Documents.
Section 10.3.Notices. All notices, requests, consents, demands
and other communications required or permitted under any Loan Document
shall be in writing, unless otherwise specifically provided in such
Loan Document (provided that US Agent may give telephonic notices to
the other Lender Parties), and shall be deemed sufficiently given or
furnished if delivered by personal delivery, by facsimile or other
electronic transmission, by delivery service with proof of delivery,
or by registered or certified United States mail, postage prepaid, to
US Borrower and Restricted Persons at the address of US Borrower
specified on the signature pages hereto and to each Lender Party at
its address specified on Annex II hereto (unless changed by similar
notice in writing given by the particular Person whose address is to
be changed). Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service,
as of the date of first attempted delivery during normal business
hours at the address provided herein, (b) in the case of facsimile or
other electronic transmission, upon receipt, or (c) in the case of
registered or certified United States mail, three days after deposit
in the mail; provided, however, that no Borrowing Notice shall become
effective until actually received by US Agent.
Section 10.4.Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, US Borrower will
promptly (and in any event, within 30 days after any invoice or other
statement or notice) pay: (i) all reasonable costs and expenses
incurred by or on behalf of US Agent (including, without limitation,
external attorneys' fees, consultants' fees, travel costs and
miscellaneous expenses) in connection with the negotiation,
preparation, execution and delivery of the US Loan Documents, and any
and all consents, waivers or other documents or instruments relating
thereto, and (ii) all reasonable costs and expenses incurred by or on
behalf of any Lender Party (including, without limitation, external
attorneys' fees, consultants' fees, accounting fees, travel costs and
miscellaneous expenses) in connection with the defense or enforcement
of any of the US Loan Documents (including this section) or the
defense of any Lender Party's exercise of its rights thereunder.
(b) Indemnity. US Borrower agrees to indemnify each Lender
Party , upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions,
judgments, suits, settlements, reasonable costs and expenses or
disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this
section collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or
asserted against such Lender Party growing out of, resulting from or
in any other way associated with the US Loan Documents and the
transactions and events (including the enforcement or defense thereof)
at any time associated therewith or contemplated therein (whether
arising in contract or in tort or otherwise and including any
violation or noncompliance with any Environmental Laws by any Lender
Party or any other Person or any liabilities or duties of any Lender
Party or any other Person with respect to Hazardous Materials found in
or released into the environment).
The foregoing indemnification shall apply whether or not such
liabilities and costs are in any way or to any extent owed, in whole
or in part, under any claim or theory of strict liability or caused,
in whole or in part by any negligent act or omission of any kind by
any Lender Party,
provided only that no Lender Party shall be entitled under this
section to receive indemnification for that portion, if any, of any
liabilities and costs which is proximately caused by its own
individual gross negligence or willful misconduct, as determined in a
final judgment. If any Person (including US Borrower or any of its
Affiliates) ever alleges such gross negligence or willful misconduct
by any Lender Party, the indemnification provided for in this section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction
enters a final judgment as to the extent and effect of the alleged
gross negligence or willful misconduct. As used in this section the
term "Lender Party" shall refer not only to each Person designated as
such in Section 1.1 but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Person.
Section 10.5.Joint and Several Liability; Parties in Interest.
All Obligations which are incurred by two or more Restricted Persons
shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the US Loan Documents
shall bind and inure to the benefit of the parties thereto and their
respective successors and assigns; provided, however, that no
Restricted Person may assign or transfer any of its rights or delegate
any of its duties or obligations under any Loan Document without the
prior consent of all of the Lenders. Neither US Borrower nor any
Affiliates of US Borrower shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender nor will any
Lender accept any offer to do so, unless each Lender shall have
received substantially the same offer with respect to the same
Percentage Share of the Obligations owed to it. If US Borrower or any
Affiliate of US Borrower at any time purchases some but less than all
of the Obligations owed to all Lender Parties, such purchaser shall
not be entitled to any rights of any Lender under the US Loan
Documents unless and until US Borrower or its Affiliates have
purchased all of the Obligations.
Section 10.6.Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Transferees
all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its US Loans, its
Note, and its Percentage Share of the US Maximum Credit Amount);
provided, however, that
(i) each such assignment shall be to an Eligible
Transferee;
(ii) together with each such assignment of its rights and
obligations under this Agreement, such Lender shall assign the
same Percentage Share of its rights and obligations under the
Canadian Agreement to the same Eligible Transferee or an
Affiliate of such Eligible Transferee.
(iii)except in the case of such an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, any partial assignment of such
Lender's rights and obligations under this Agreement and under
the Canadian Agreement shall be in a collective amount at least
equal to US $20,000,000 or an integral multiple of US $5,000,000
in excess thereof;
(iv) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under the US Loan Documents;
(v) the parties to such assignment shall execute and
deliver to US Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit F hereto, together with any
Note subject to such assignment and a processing fee of US
$3,500; and
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to
the extent of such assignment, have the obligations, rights, and
benefits of a Lender hereunder and the assigning Lender shall, to the
extent of such assignment, relinquish its rights and be released from
its obligations under this Agreement. Upon the consummation of any
assignment pursuant to this section, the assignor, US Agent and US
Borrower shall make appropriate arrangements so that, if required, new
US Notes are issued to the assignor and the assignee. If the assignee
is not incorporated under the Laws of the United States of America or
a state thereof, it shall deliver to US Borrower and US Agent
certification as to exemption from deduction or withholding of Taxes
in accordance with Section 3.9.
(b) US Agent shall maintain at its address referred to in
Section 10.3 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and their Percentage Share of the US Maximum
Credit Amount of, and principal amount of the US Loans owing to, each
Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and US Borrower, US Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by US Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Note subject to such assignment
and payment of the processing fee, US Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
Exhibit F hereto, (i) accept such Assignment and Acceptance,
(ii)record the information contained therein in the Register and (iii)
give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons
that are Eligible Transferees in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its US
Maximum Credit Amount and its US Loans); provided, however, that (i)
such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions
contained in Article III and the right of offset contained in Section
6.14, and (iv)US Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of US Borrower relating to its
US Loans and its Note and to approve any amendment, modification, or
waiver of any provision of this Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of or the
rate at which interest is payable on such US Loans or Note, extending
any scheduled principal payment date or date fixed for the payment of
interest on such US Loans or Note, or extending its US Maximum Credit
Amount).
(e) Notwithstanding anything to the contrary contained herein,
Lender (a "Granting Bank") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by
the Granting Bank to the US Agent and the US Borrower, the option to
provide to the US Borrower all or any part of any Loan that such
Granting Bank would otherwise be obligated to make to the US Borrower
pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan, and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Bank shall be obligated to
make such Loan pursuant to the terms hereof. The making of a Loan by
an SPC hereunder shall utilize the Percentage Share of the US Maximum
Credit Amount of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or payment under this
Agreement for which a Lender would otherwise be liable for so long as,
and to the extent, the Granting Bank provides such indemnity or makes
such payment. In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join
any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this
Section 10.6(e), any SPC may (i) with notice to, but without the prior
written consent of, the US Borrower and the US Agent and without
paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Bank or to any financial
institutions providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancement
to such SPC. This Section 10.6(e) may not be amended without the
written consent of the Granting Bank. Notwithstanding the above (i)
any Granting Bank's obligations under this Agreement as a Lender
hereunder shall remain unchanged, (ii) such Granting Bank shall remain
solely responsible to the other parties hereto for the performance of
such obligations, and (iii) US Borrower shall continue to deal solely
and directly with such Granting Bank in connection with such Granting
Bank's rights and obligations under this Agreement, and such Granting
Bank shall retain the sole right to enforce the obligations of US
Borrower relating to the US Loans and its Note and to approve any
amendment, modification, or waiver of any provision of this Agreement.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its US Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning US
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants), subject, however, to the provisions of
Section 10.7 hereof.
Section 10.7.Confidentiality. US Agent and each Lender (each, a
"Lending Party") agrees to keep confidential any information furnished
or made available to it by US Borrower pursuant to this Agreement that
is marked confidential; provided that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other
Lending Party or any Affiliate of any Lending Party, or any officer,
director, employee, US Agent, or advisor of any Lending Party or
Affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided
herein, (c) as required by any Law, rule, or regulation, (d) upon the
order of any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or becomes
available to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any litigation to
which such Lending Party or any of its Affiliates may be a party, (h)
to the extent necessary in connection with the exercise of any remedy
under this Agreement or any other Loan Document, and (i) subject to
provisions substantially similar to those contained in this section,
to any actual or proposed participant or assignee.
Section 10.8.Governing Law; Submission to Process. Except to the
extent that the law of another jurisdiction is expressly elected in a
Loan Document, the US Loan Documents shall be deemed contracts and
instruments made under the laws of the State of Utah and shall be
construed and enforced in accordance with and governed by the laws of
the State of Utah and the laws of the United States of America,
without regard to principles of conflicts of law. US Borrower hereby
irrevocably submits itself and each other Restricted Person to the
non-exclusive jurisdiction of the state and federal courts sitting in
the State of Utah and agrees and consents that service of process may
be made upon it or any Restricted Person in any legal proceeding
relating to the US Loan Documents or the Obligations by any means
allowed under Utah or federal law.
Section 10.9.Limitation on Interest. Lender Parties, Restricted
Persons and the other parties to the US Loan Documents intend to
contract in strict compliance with applicable usury Law from time to
time in effect. In furtherance thereof such persons stipulate and
agree that none of the terms and provisions contained in the US Loan
Documents shall ever be construed to provide for interest in excess of
the maximum amount of interest permitted to be charged by applicable
Law from time to time in effect. Neither any Restricted Person nor
any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay
interest in excess of the maximum amount that may be lawfully charged
under applicable Law from time to time in effect, and the provisions
of this section shall control over all other provisions of the US Loan
Documents which may be conflict or apparent conflict herewith. As
used in this section the term "applicable Law" means the Laws of the
State of Texas or the Laws of the United States of America, whichever
Laws allow the greater interest, as such Laws now exist or may be
changed or amended or come into effect in the future.
Section 10.10. Termination; Limited Survival. In its sole and
absolute discretion US Borrower may at any time that no Obligations
are owing elect in a written notice delivered to US Agent to terminate
this Agreement. Upon receipt by US Agent of such a notice, if no
Obligations are then owing this Agreement and all other US Loan
Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding
the foregoing or anything herein to the contrary, any waivers or
admissions made by any Restricted Person in any Loan Document, any
Obligations under Sections 3.2 through 3.6, and any obligations which
any Person may have to indemnify or compensate any Lender Party shall
survive any termination of this Agreement or any other Loan Document.
At the request and expense of US Borrower, US Agent shall prepare and
execute all necessary instruments to reflect and effect such
termination of the US Loan Documents. US Agent is hereby authorized
to execute all such instruments on behalf of all Lenders, without the
joinder of or further action by any Lender.
Section 10.11. Severability. If any term or provision of any
Loan Document shall be determined to be illegal or unenforceable all
other terms and provisions of the US Loan Documents shall nevertheless
remain effective and shall be enforced to the fullest extent permitted
by applicable Law.
Section 10.12. Counterparts; Fax. This Agreement may be
separately executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to constitute one and the same Agreement.
This Agreement and the US Loan Documents may be validly executed and
delivered by facsimile or other electronic transmission.
Section 10.13. Waiver of Jury Trial, Punitive Damages, etc. US
Borrower and each Lender Party hereby knowingly, voluntarily,
intentionally, and irrevocably (a) waives, to the maximum extent not
prohibited by Law, any right it may have to a trial by jury in respect
of any litigation based hereon, or directly or indirectly at any time
arising out of, under or in connection with the US Loan Documents or
any transaction contemplated thereby or associated therewith, before
or after maturity; (b) waives, to the maximum extent not prohibited by
Law, any right it may have to claim or recover in any such litigation
any "Special Damages", as defined below, (c) certifies that no party
hereto nor any representative or agent or counsel for any party hereto
has represented, expressly or otherwise, or implied that such party
would not, in the event of litigation, seek to enforce the foregoing
waivers, and (d) acknowledges that it has been induced to enter into
this Agreement, the other US Loan Documents and the transactions
contemplated hereby and thereby by, among other things, the mutual
waivers and certifications contained in this section. As used in this
section, "Special Damages" includes all special, consequential,
exemplary, or punitive damages (regardless of how named), but does not
include any payments or funds which any party hereto has expressly
promised to pay or deliver to any other party hereto.
Section 10.14. Defined Terms. Capitalized terms and phrases used
and not otherwise defined herein shall for all purposes of this
Agreement have the meaning given to such terms and phrases in Annex I
hereto.
Section 10.15. Annex I, Exhibits and Schedules; Additional
Definitions. Annex I and all Exhibits and Schedules attached to this
Agreement are a part hereof for all purposes.
Section 10.16. Amendment of Defined Instruments. Unless the
context otherwise requires or unless otherwise provided herein the
terms defined in this Agreement which refer to a particular agreement,
instrument or document also refer to and include all renewals,
extensions, modifications, amendments and restatements of such
agreement, instrument or document, provided that nothing contained in
this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 10.17. References and Titles. All references in this
Agreement to Exhibits, Schedules, articles, sections, subsections and
other subdivisions refer to the Exhibits, Schedules, articles,
sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise. Titles appearing at the beginning of
any subdivisions are for convenience only and do not constitute any
part of such subdivisions and shall be disregarded in construing the
language contained in such subdivisions. The words "this Agreement",
"this instrument", "herein", "hereof", "hereby", "hereunder" and words
of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the
sections or subsections hereof in which such phrases occur. The word
"or" is not exclusive, and the word "including" (in its various forms)
means "including without limitation". Pronouns in masculine, feminine
and neuter genders shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires.
Section 10.18. Calculations and Determinations. All calculations
under the US Loan Documents of interest chargeable with respect to
Eurodollar Loans and of fees shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of
360 days. All other calculations of interest made under the US Loan
Documents shall be made on the basis of actual days elapsed (including
the first day but excluding the last) and a year of 365 or 366 days,
as appropriate. Each determination by a Lender Party of amounts to be
paid under Article III or any other matters which are to be determined
hereunder by a Lender Party (such as any US Dollar Eurodollar Rate,
Adjusted US Dollar Eurodollar Rate, Business Day, Interest Period, or
Reserve Requirement) shall, in the absence of manifest error, be
conclusive and binding. Unless otherwise expressly provided herein or
unless Required Lenders otherwise consent all financial statements and
reports furnished to any Lender Party hereunder shall be prepared and
all financial computations and determinations pursuant hereto shall be
made in accordance with US GAAP.
Section 10.19. Construction of Indemnities and Releases. All
indemnification and release provisions of this Agreement shall be
construed broadly (and not narrowly) in favor of the Persons receiving
indemnification from or being released.
IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.
QUESTAR MARKET RESOURCES, INC.
US Borrower
By: /s/Gary L. Nordloh
Gary L. Nordloh
President and Chief Executive Officer
Mailing Address:
P.O. Box 45433
Salt Lake City, Utah 84145
Attention:
Street Address:
180 East 100 South
Salt Lake City, Utah 84111
Telephone: (801) 324-5497
Fax: (801) 324-5483
NATIONSBANK, N.A.,
Administrative Agent, US LC Issuer
and Lender
By: /s/David C. Rubenking
David C. Rubenking
Title:
Address:
370 17th Street, Suite 3200
Denver, Colorado 80202
Attention: David C. Rubenking
Telephone: (303) 629-6969
Fax: (303) 629-6303
TORONTO DOMINION (TEXAS), INC.
Lender
By: /s/Jimmy Simien
Jimmy Simien
Vice President
Address:
909 Fannin Street, Suite 1700
Houston, TX 77010
Attn: Carolyn Faeth
Telephone: (713) 427-8520
Fax: (713) 951-9951
BANK OF MONTREAL
Lender
By: /s/James Whitmore
James Whitmore
Director
Address:
700 Louisiana Street, Suite 4400
Houston, TX 77002
Attention: Frank Russo
Telephone: (713) 546-9760
Fax: (713) 223-4007
THE FIRST NATIONAL BANK OF CHICAGO
Lender
By: /s/Carl E. Skoog
Carl E. Skoog
Vice President
Address:
Mail Code: IL1-0362
One First National Plaza
Chicago, IL 60670
Attention: Energy and Minerals
Telephone: (312) 732-6886
Fax: (312) 732-3055
FIRST SECURITY BANK, N.A.
Lender
By:
Name:
Title:
Address:
15 East 100 South, 2nd Floor
Salt Lake City, UT 84111
Attention: Troy S. Akagi
Telephone: (801) 246-5524
Fax: (801) 246-5532
MELLON BANK, N.A.
Lender
By: /s/Roger E. Howard
Roger E. Howard
Vice President
Address:
One Mellon Bank Center,
Room 4425
Pittsburgh, PA 15258
Attention: Roger E. Howard
Telephone: (412) 234-5606
Fax: (412) 236-1840
[Execution]
FIRST AMENDMENT TO US CREDIT AGREEMENT
THIS FIRST AMENDMENT TO US CREDIT AGREEMENT (herein called the
"Amendment") made as of May 17, 1999, by and among Questar Market
Resources, Inc., a Utah corporation ("US Borrower"), NationsBank,
N.A., individually and as administrative agent ("US Agent"), and the
undersigned Lenders, party to the Original Agreement (the "Lenders"),
defined below.
W I T N E S S E T H:
WHEREAS, US Borrower, US Agent and the Lenders entered into that
certain US Credit Agreement dated as of April 19, 1999 (the "Original
Agreement"), for the purpose and consideration therein expressed,
whereby the Lenders became obligated to make loans to US Borrower as
therein provided; and
WHEREAS, US Borrower, US Agent and the Lenders, desire to amend
the definition of the US Maximum Credit Amount, the Tranche A Maximum
Credit Amount and the Tranche B Maximum Credit Amount; and
WHEREAS, the increases in the US Maximum Credit Amount, the
Tranche A Maximum Credit Amount and the Tranche B Maximum Credit
Amount will be commitments of First Security Bank, N.A. ("First
Security"), and the obligations of the other Lenders will not be
increased by this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original
Agreement, in consideration of the loans which may hereafter be made
by Lenders to US Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Agreement. Unless
the context otherwise requires or unless otherwise expressly defined
herein, the terms defined in the Original Agreement shall have the
same meanings whenever used in this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have
the meanings assigned to them in this Section 1.2.
"Amendment" means this First Amendment to US Credit
Agreement.
"Amendment Documents" means this Amendment, the Tranche A
Renewal Note and the Tranche B Renewal Note.
"Tranche A Renewal Note" means the Tranche A Note of even
date herewith in the stated principal amount of US $9,000,000
made payable to the order of First Security, attached hereto as
Exhibit A-1, which note is given in increase, replacement and
substitution of the Tranche A Note dated April 19, 1999, made
payable to the order of First Security.
"Tranche B Renewal Note" means the Tranche B Note of even
date herewith inthe stated principal amount of US $2,520,000 made
payable to the order of First Security Bank, N.A., attached hereto
as Exhibit A-2, which note is given in increase, replacement and
substitution of the Tranche B Note dated April 19, 1999, made payable
to the order of First Security.
"US Credit Agreement" means the Original Agreement as
amended hereby.
ARTICLE II.
Amendments to Original Agreement
Section 2.1. Defined Terms. The definitions of "US Maximum
Credit Amount", "Tranche A Maximum Credit Amount" and "Tranche B
Maximum Credit Amount" in Annex I of the Original Agreement are hereby
amended in their entirety to read as follows:
"'Tranche A Maximum Credit Amount'" means the amount of US
$153,000,000; provided that the Tranche A Maximum Credit Amount may
be increased up to $180,000,000 pursuant to Section 1.1(f) of the US
Agreement."
"'Tranche B Maximum Credit Amount'" means the amount of US
$42,840,000; provided that the Tranche B Maximum Credit Amount may
be increased up to $50,000,000 pursuant to Section 1.1(f) of the US
Agreement."
"'US Maximum Credit Amount' means the amount of US
$195,840,000; provided that the US Maximum Credit Amount may be
increased up to US $230,000,000 pursuant to Section 1.1(f) of the
US Agreement."
Section 2.2. Lenders Schedule. Annex II to the Original
Agreement is hereby amended in its entirety to read as set forth in
Exhibit B attached hereto.
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become
effective as of the date first above written when, and only when, (i)
US Agent shall have received, at US Agent's office, a counterpart of
this Amendment executed and delivered by US Borrower and each Lender,
(ii) US Borrower shall have issued and delivered to US Agent, for
subsequent delivery to First Security, a Tranche A Renewal Note and a
Tranche B Renewal Note with appropriate insertions payable to the
order of First Security, duly executed on behalf of US Borrower, dated
the date hereof, and (iii) US Agent shall have additionally received
from US Borrower, in connection with such US Loan Documents, all other
fees and reimbursements to be paid to US Agent pursuant to any US Loan
Documents, or otherwise due US Agent and including fees and
disbursements of US Agent's attorneys.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Borrower. In
order to induce each Lender to enter into this Amendment, US Borrower
represents and warrants to each Lender that:
(a) The representations and warranties contained in Article
V of the Original Agreement are true and correct at and as of the
time of the effectiveness hereof.
(b) US Borrower has duly taken all action necessary to
authorize the execution and delivery by it of the Amendment
Documents and to authorize the consummation of the transactions
contemplated hereby and thereby and the performance of its
obligations hereunder and thereunder. US Borrower is duly
authorized to borrow funds under the US Credit Agreement.
(c) The execution and delivery by the various Restricted
Persons of the Amendment Documents to which each is a party, the
performance by each of its obligations under such Amendment
Documents and the consummation of the transactions contemplated
by the various Amendment Documents do not and will not (a)
conflict with any provision of (i) any Law, (ii) the
organizational documents of any Restricted Person, or (iii) any
agreement, judgment, license, order or permit applicable to or
binding upon any Restricted Person, or (b) result in the
acceleration of any Indebtedness owed by any Restricted Person,
or (c) result in or require the creation of any Lien upon any
assets or properties of any Restricted Person, except as
expressly contemplated or permitted in the Loan Documents.
Except as expressly contemplated in the Loan Documents no
consent, approval, authorization or order of, and no notice to or
filing with any Tribunal or third party is required in connection
with the execution, delivery or performance by any Restricted
Person of any Amendment Document or to consummate any
transactions contemplated by the Amendment Documents.
(d) This Amendment is, and the other Amendment Documents
when duly executed and delivered will be, a legal, valid and
binding obligation of each Restricted Person which is a party
hereto or thereto, enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy,
insolvency or similar Laws of general application relating to the
enforcement of creditors' rights and by equitable principles of
general application relating to the enforcement of creditor's
rights.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Agreement
as hereby amended is hereby ratified and confirmed in all respects.
The US Loan Documents, as they may be amended or affected by the
various Amendment Documents, are hereby ratified and confirmed in all
respects. Any reference to the US Credit Agreement in any Loan
Document shall be deemed to be a reference to the Original Agreement
as hereby amended. Any reference to the Tranche A Notes and the
Tranche B Notes in any other US Loan Document shall be deemed to
include a reference to the Tranche A Renewal Note and the Tranche B
Renewal Note issued and delivered pursuant to this Amendment. The
execution, delivery and effectiveness of this Amendment and each of
the Tranche A Renewal Note and the Tranche B Renewal Note shall not,
except as expressly provided herein or therein, operate as a waiver of
any right, power or remedy of Lenders under the US Credit Agreement,
the US Notes, or any other US Loan Document nor constitute a waiver of
any provision of the US Credit Agreement, the US Notes or any other US
Loan Document.
Section 5.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements herein shall survive the execution and delivery of this
Amendment and the other Amendment Documents and the performance hereof
and thereof, including without limitation the making or granting of
the US Loans and the delivery of the Tranche A Renewal Note and the
Tranche B Renewal Note, and shall further survive until all of the US
Obligations are paid in full to each Lender Party and all of Lender
Parties' obligations to US Borrower are terminated. All statements
and agreements contained in any certificate or instrument delivered by
any Restricted Person hereunder or under the US Credit Agreement to
any Lender Party shall be deemed representations and warranties by US
Borrower or agreements and covenants of US Borrower under this
Amendment and under the US Credit Agreement. The representations,
warranties, indemnities, and covenants made by Restricted Persons in
the US Loan Documents, and the rights, powers, and privileges granted
to Lender Parties in the US Loan Documents, are cumulative, and,
except for expressly specified waivers and consents, no Loan Document
shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to any Lender Party of any such
representation, warranty, indemnity, covenant, right, power or
privilege. In particular and without limitation, no exception set out
in this Amendment or any other Amendment Document to any
representation, warranty, indemnity, or covenant herein or therein
contained shall apply to any similar representation, warranty,
indemnity, or covenant contained in any other Loan Document, and each
such similar representation, warranty, indemnity, or covenant shall be
subject only to those exceptions which are expressly made applicable
to it by the terms of the various US Loan Documents.
Section 5.3. Delivery of Notes. First Security shall promptly
deliver to US Agent, for subsequent delivery to US Borrower, the
Tranche A Note and the Tranche B Note heretofore delivered to it under
the Original Agreement.
Section 5.4. Loan Documents. This Amendment and each of the
Tranche A Renewal Note and the Tranche B Renewal Note are each a US
Loan Document, and all provisions in the US Credit Agreement
pertaining to US Loan Documents apply hereto and thereto.
Section 5.5. Governing Law. This Amendment shall be governed by
and construed in accordance the laws of the State of Utah and any
applicable laws of the United States of America in all respects,
including construction, validity and performance. US Borrower hereby
irrevocably submits itself and each other Restricted Person to the
non-exclusive jurisdiction of the state and federal courts sitting in
the State of Utah and agrees and consents that service of process may
be made upon it or any Restricted Person in any legal proceeding
relating to the Amendment Documents or the Obligations by any means
allowed under Utah or federal law.
Section 5.6. Counterparts. This Amendment may be separately
executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed shall
be deemed to constitute one and the same Amendment. This Amendment
may be validly executed and delivered by facsimile or other electronic
transmission.
THIS AMENDMENT AND THE OTHER US LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, this Amendment is executed as of the date
first above written.
QUESTAR MARKET RESOURCES, INC.
US Borrower
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
Mailing Address:
P.O. Box 45433
Salt Lake City, Utah 84145
Attention: Martin H. Craven
Street Address:
180 East 100 South
Salt Lake City, Utah 84111
Telephone: (801) 324-5497
Fax: (801) 324-5483
NATIONSBANK, N.A.,
Administrative Agent, US LC Issuer
and Lender
By: /s/David C. Rubenking
David C. Rubenking
Senior Vice President
TORONTO DOMINION (TEXAS), INC.
Lender
By: /s/Carolyn Faeth
Carolyn Faeth
Manager
BANK OF MONTREAL
Lender
By: /s/James Whitmore
James Whitmore
Director
THE FIRST NATIONAL BANK OF CHICAGO
Lender
By: /s/Carl E. Skoog
Carl E. Skoog
Vice President
MELLON BANK, N.A.
Lender
By: /s/Roger E. Howard
Roger E. Howard
Vice President
FIRST SECURITY BANK, N.A.
Lender
By: /s/Troy S. Akagi
Troy S. Akagi
Title: Vice President
EXHIBIT A-1
PROMISSORY NOTE
US$ 9,000,000 [Tranche A Note] May__, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of First Security Bank, N.A. (herein called
"Lender"), the principal sum of Nine Million and no/100 Dollars
(US$ 9,000,000), or, if greater or less, the aggregate unpaid
principal amount of the Tranche A Loans made under this Note by Lender
to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of
America at the offices of US Agent under the Credit Agreement, 901
Main Street, Dallas, Texas or at such other place within Dallas
County, Texas, as from time to time may be designated by the holder of
this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999, among Borrower,
NationsBank, N.A., individually and as administrative agent ("US
Agent"), and the lenders (including Lender) referred to therein, as
amended by that certain First Amendment to US Credit Agreement dated
of even date herewith among Borrower, US Agent and the lenders
(including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the "Credit Agreement"), and
is a "Tranche A Note" as defined therein and (b) is subject to the
terms and provisions of the Credit Agreement, which contains
provisions for payments and prepayments hereunder and acceleration of
the maturity hereof upon the happening of certain stated events.
Payments on this Note shall be made and applied as provided herein and
in the Credit Agreement. Reference is hereby made to the Credit
Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the US Facility
Maturity Date.
Tranche A Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche A Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note is given in renewal and extension (but not in
extinguishment or novation) of that certain Promissory Note dated
April 19, 1999 executed and delivered by Borrower and payable to the
order of Lender in the stated principal amount of US $6,000,000.
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
EXHIBIT A-2
PROMISSORY NOTE
US$ 2,520,000 [Tranche B Note] May __, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of First Security Bank, N.A. (herein called
"Lender"), the principal sum of Two Million Five Hundred Twenty
Thousand and no/100 Dollars (US$2,520,000), or, if greater or less,
the aggregate unpaid principal amount of the Tranche B Loans made
under this Note by Lender to Borrower pursuant to the terms of the
Credit Agreement (as hereinafter defined), together with interest on
the unpaid principal balance thereof as hereinafter set forth, both
principal and interest payable as herein provided in lawful money of
the United States of America at the offices of US Agent under the
Credit Agreement, 901 Main Street, Dallas, Texas or at such other
place within Dallas County, Texas, as from time to time may be
designated by the holder of this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999 among Borrower,
NationsBank, N.A., individually and as administrative agent ("US
Agent"), and the lenders (including Lender) referred to therein, as
amended by that certain First Amendment to US Credit Agreement dated
of even date herewith among Borrower, US Agent and the lenders
(including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the "Credit Agreement"), and
is a "Tranche B Note" as defined therein and (b) is subject to the
terms and provisions of the Credit Agreement, which contains
provisions for payments and prepayments hereunder and acceleration of
the maturity hereof upon the happening of certain stated events.
Payments on this Note shall be made and applied as provided herein and
in the Credit Agreement. Reference is hereby made to the Credit
Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the Tranche B
Maturity Date.
Tranche B Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche B Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note is given in renewal and extension (but not in
extinguishment or novation) of that certain Promissory Note dated
April 19, 1999 executed and delivered by Borrower and payable to the
order of Lender in the stated principal amount of US $1,680,000
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of Utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
EXHIBIT B
LENDER'S SCHEDULE
BANK OF AMERICA
Percentage Share:25.4902%
US Agreement
Name of Affiliate that is Lender under US Agreement:NationsBank, N.A.
Applicable Lending Office for US Loans: 901 Main Street, 64th Floor
Dallas, Texas 75202
Address for Notices: 901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Renita M. Cummings
US Tranche A Note Amount (5 year): US$ 39,000,000
US Tranche B Note Amount (364 day): US$ 10,920,000
Competitive Bid Note Amount: see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:Bank of
America Canada
Applicable Lending Office for Canadian Advances:200 Front Street West,
Suite 2700
Toronto, Ontario M5V3L2
Address for Notices: 200 Front Street West,
Suite 2700
Toronto, Ontario M5V3L2
Attention: Richard J. Hall
Canadian Note Amount: US$ 15,080,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
MELLON BANK, N.A.
Percentage Share: 23.5294%
US Agreement
Name of Affiliate that is Lender under US Agreement:Mellon Bank, N.A.
Applicable Lending Office for US Loans: One Mellon Bank Center
Room 4425
Pittsburgh, Pennsylvania 15258
Address for Notices: One Mellon Bank Center
Room 4425
Pittsburgh, Pennsylvania 15258
Attention: Roger E. Howard
US Tranche A Note Amount (5 year): US$ 36,000,000
US Tranche B Note Amount (364 day): US$ 10,080,000
Competitive Bid Note Amount: see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:Mellon Bank
Canada
Applicable Lending Office for Canadian Advances:77 King Street West,
Suite 3200
Toronto, Ontario M5K 1K2
Canada
Address for Notices: 77 King Street West, Suite
3200
Toronto, Ontario M5K 1K2
Canada
Attention: Wendy B. H. Bocti
Canadian Note Amount: US$ 13,920,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
BANK OF MONTREAL
Percentage Share: 13.7255%
US Agreement
Name of Affiliate that is Lender under US Agreement:Bank of Montreal
Applicable Lending Office for US Loans: 700 Louisiana, Suite 4400
Houston, Texas 77002
Address for Notices: 700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Frank Russo
US Tranche A Note Amount (5 year): US$ 21,000,000
US Tranche B Note Amount (364 day): US$ 5,880,000
Competitive Bid Note Amount: see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:Bank of
Montreal
Applicable Lending Office for Canadian Advances:350-7th Avenue S.W.
(Floor 24)
Calgary, Alberta
Canada T2P 3N9
Address for Notices: 350-7th Avenue S.W.
(Floor 24)
Calgary, Alberta
Canada T2P 3N9
Attention: Scott C. McDermid
Canadian Note Amount: US$ 8,120,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
THE FIRST NATIONAL BANK OF CHICAGO
Percentage Share: 23.5294%
US Agreement
Name of Affiliate that is Lender under US Agreement:The First National
Bank of Chicago
Applicable Lending Office for US Loans: One First National Plaza
IL 1-0362
Chicago, Illinois 60670
Address for Notices: One First National Plaza
IL 1-0362
Chicago, Illinois 60670
Attention: Energy & Minerals
US Tranche A Note Amount (5 year): US$ 36,000,000
US Tranche B Note Amount (364 day): US$ 10,080,000
Competitive Bid Note Amount: see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:First
Chicago NBD Bank, Canada
Applicable Lending Office for Canadian Advances:161 Bay Street, Suite
4240, Toronto, Ontario M5J 2S1
Address for Notices: 161 Bay Street, Suite 4240
Toronto, Ontario M5J 2S1
Attention: Jeremiah A. Hynes
Canadian Note Amount: US$ 13,920,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
THE TORONTO-DOMINION BANK
Percentage Share: 7.8431%
US Agreement
Name of Affiliate that is Lender under US Agreement:Toronto-Dominion
(Texas), Inc.
Applicable Lending Office for US Loans: 909 Fannin Street
Suite 1700
Houston, Texas 77010
Address for Notices: 909 Fannin Street
Suite 1700
Houston, Texas 77010
Attention: Carolyn Faeth
US Tranche A Note Amount (5 year) US$ 12,000,000
US Tranche B Note Amount (364 day) US$ 3,360,000
Competitive Bid Note Amount see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:The
Toronto-Dominion Bank
Applicable Lending Office for Canadian Advances:Corporate and
Investment
Banking Group
8th floor Home Oil Tower
324-8th Avenue S.W.
Calgary, Alberta
T2P 2Z2
Address for Notices: Corporate and Investment
Banking Group
8th floor Home Oil Tower
324-8th Avenue S.W.
Calgary, Alberta
T2P 2Z2
Canadian Note Amount: US$ 4,640,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
FIRST SECURITY BANK, N.A.
Percentage Share: 5.8824%
US Agreement
Name of Affiliate that is Lender under US Agreement:First Security
Bank, N.A.
Applicable Lending Office for US Loans: 15 E. 100 South, 2nd Floor
Salt Lake City, Utah 84111
Address for Notices: 15 E. 100 South, 2nd Floor
Salt Lake City, Utah 84111
Attention: Troy S. Akagi
US Tranche A Note Amount (5 year) US$ 9,000,000
US Tranche B Note Amount (364 day) US$ 2,520,000
Competitive Bid Note Amount see Section 1.7 of US
Agreement
Canadian Agreement
Name of Affiliate that is Lender under Canadian Agreement:First
Security Bank, N.A.
Applicable Lending Office for Canadian Advances: 15 E. 100 South, 2nd Floor
Salt Lake City, Utah 84111
Address for Notices: 15 E. 100 South, 2nd Floor
Salt Lake City, Utah 84111
Canadian Note Amount: US$ 3,480,000
Competitive Bid Note Amount: see Section 1.9 of Canadian
Agreement
[Execution]
**[NOTE: THE THIRD AMENDMENT (THE NEXT AMENDMENT) MUST INCORPORATE
CHANGES REQUESTED BY THE BANK OF TOKYO AND REQUIRE ALL LENDERS TO SIGN
THE NEXT AMENDMENT]**
SECOND AMENDMENT TO US CREDIT AGREEMENT
THIS SECOND AMENDMENT TO US CREDIT AGREEMENT (herein called the
"Amendment") made as of July 30, 1999, by and among Questar Market
Resources, Inc., a Utah corporation ("US Borrower"), Bank of America,
N.A., f/k/a NationsBank, N.A., individually and as administrative
agent for the Lenders, as defined below ("US Agent"), US Bank National
Association ("US Bank") and The Bank of Tokyo-Mitsubishi, Ltd, Houston
Agency ("Bank of Tokyo").
W I T N E S S E T H:
WHEREAS, US Borrower, US Agent and the lenders as signatories
thereto (the "Original Lenders") entered into that certain US Credit
Agreement dated as of April 19, 1999, as amended by that certain First
Amendment to US Credit Agreement dated as of May 17, 1999 among the
same parties (the "Original Agreement"), for the purpose and
consideration therein expressed, whereby the Original Lenders became
obligated to make loans to US Borrower as therein provided; and
WHEREAS, US Borrower and US Agent acting individually and on
behalf of each Original Lender pursuant to Section 1.1(f) of the
Original Agreement (which allows a pro rata increase in the Tranche A
Maximum Credit Amount, the Tranche B Maximum Credit Amount, the US
Maximum Credit Amount and the Canadian Maximum Credit Amount by an
aggregate amount of at least $10,000,000 or more, not to exceed
$50,000,000) desire to amend the definition of the US Maximum Credit
Amount, the Tranche A Maximum Credit Amount and the Tranche B Maximum
Credit Amount; and
WHEREAS, the increases in the US Maximum Credit Amount, the
Tranche A Maximum Credit Amount and the Tranche B Maximum Credit
Amount will be commitments of US Bank and Bank of Tokyo, and the
obligations of the Original Lenders will not be increased by this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original
Agreement, in consideration of the loans which may hereafter be made
by Lenders to US Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Agreement. Unless
the context otherwise requires or unless otherwise expressly defined
herein, the terms defined in the Original Agreement shall have the
same meanings whenever used in this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have
the meanings assigned to them in this Section 1.2
.
"Amendment" means this Second Amendment to US Credit
Agreement.
"Amendment Documents" means this Amendment, the US Bank
Tranche A Note, the US Bank Tranche B Note, the Bank of Tokyo
Tranche A Note and the Bank of Tokyo Tranche B Note.
"Bank of Tokyo Tranche A Note" means the Tranche A Note of
even date herewith in the stated principal amount of US
$9,000,000 made payable to the order of Bank of Tokyo, attached
hereto as Exhibit A-1.
"Bank of Tokyo Tranche B Note" means the Tranche B Note of
even date herewith in the stated principal amount of US
$2,520,000 made payable to the order of Bank of Tokyo, attached
hereto as Exhibit A-2.
"Lenders" means the Original Lenders, US Bank and Bank of
Tokyo.
"US Bank Tranche A Note" means the Tranche A Note of even
date herewith in the stated principal amount of US $15,000,000
made payable to the order of US Bank, attached hereto as Exhibit
A-3.
"US Bank Tranche B Note" means the Tranche B Note of even
date herewith in the stated principal amount of US $4,200,000
made payable to the order of US Bank, attached hereto as Exhibit
A-4, made payable to the order of US Bank.
"US Credit Agreement" means the Original Agreement as
amended hereby.
ARTICLE II.
Amendments to Original Agreement and Fee Arrangements
Section 2.1. Defined Terms. The definitions of "US Maximum
Credit Amount", "Tranche A Maximum Credit Amount" and "Tranche B
Maximum Credit Amount" in Annex I of the Original Agreement are hereby
amended in their entirety to read as follows:
"'Tranche A Maximum Credit Amount'" means the amount of US
$177,000,000; provided that the Tranche A Maximum Credit Amount
may be increased up to $180,000,000 pursuant to Section 1.1(f) of
the US Agreement."
"'Tranche B Maximum Credit Amount'" means the amount of US
$49,560,000; provided that the Tranche B Maximum Credit Amount
may be increased up to $50,000,000 pursuant to Section 1.1(f) of
the US Agreement."
"'US Maximum Credit Amount' means the amount of US
$226,560,000; provided that the US Maximum Credit Amount may be
increased up to US $230,000,000 pursuant to Section 1.1(f) of the
US Agreement."
Section 2.2. Lenders Schedule. Annex II to the Original
Agreement is hereby amended in its entirety to read as set forth in
Exhibit B attached hereto.
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become
effective as of the date first above written when, and only when, (i)
US Agent shall have received, at US Agent's office, a counterpart of
this Amendment executed and delivered by US Borrower, US Bank and Bank
of Tokyo (ii) US Borrower shall have issued and delivered to US Agent,
for subsequent delivery to US Bank, a US Bank Tranche A Note and a US
Bank Tranche B Note with appropriate insertions payable to the order
of US Bank, duly executed on behalf of US Borrower, dated the date
hereof, (iii) US Borrower shall have issued and delivered to US Agent,
for subsequent delivery to Bank of Tokyo, a Bank of Tokyo Tranche A
Note and a Bank of Tokyo Tranche B Note with appropriate insertions
payable to the order of Bank of Tokyo, duly executed on behalf of US
Borrower, dated the date hereof, and (iv) US Agent shall have
additionally received from US Borrower, in connection with such US
Loan Documents, all other fees and reimbursements to be paid to US
Agent pursuant to any US Loan Documents, or otherwise due US Agent and
including fees and disbursements of US Agent's attorneys.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Borrower. In
order to induce US Agent and the undersigned Lenders to enter into
this Amendment, US Borrower represents and warrants to US Agent that:
(a) The representations and warranties contained in Article
V of the Original Agreement are true and correct at and as of the
time of the effectiveness hereof.
(b) US Borrower has duly taken all action necessary to
authorize the execution and delivery by it of the Amendment
Documents and to authorize the consummation of the transactions
contemplated hereby and thereby and the performance of its
obligations hereunder and thereunder. US Borrower is duly
authorized to borrow funds under the US Credit Agreement.
(c) The execution and delivery by the various Restricted
Persons of the Amendment Documents to which each is a party, the
performance by each of its obligations under such Amendment
Documents and the consummation of the transactions contemplated
by the various Amendment Documents do not and will not (a)
conflict with any provision of (i) any Law, (ii) the
organizational documents of any Restricted Person, or (iii) any
agreement, judgment, license, order or permit applicable to or
binding upon any Restricted Person, or (b) result in the
acceleration of any Indebtedness owed by any Restricted Person,
or (c) result in or require the creation of any Lien upon any
assets or properties of any Restricted Person, except as
expressly contemplated or permitted in the Loan Documents.
Except as expressly contemplated in the Loan Documents no
consent, approval, authorization or order of, and no notice to or
filing with any Tribunal or third party is required in connection
with the execution, delivery or performance by any Restricted
Person of any Amendment Document or to consummate any
transactions contemplated by the Amendment Documents.
(d) This Amendment is, and the other Amendment Documents
when duly executed and delivered will be, a legal, valid and
binding obligation of each Restricted Person which is a party
hereto or thereto, enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy,
insolvency or similar Laws of general application relating to the
enforcement of creditors' rights and by equitable principles of
general application relating to the enforcement of creditor's
rights.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Agreement
as hereby amended is hereby ratified and confirmed in all respects.
The US Loan Documents, as they may be amended or affected by the
various Amendment Documents, are hereby ratified and confirmed in all
respects. Any reference to the US Credit Agreement in any Loan
Document shall be deemed to be a reference to the Original Agreement
as hereby amended. Any reference to the Lenders or the Lender Parties
in any Loan Document shall be deemed to include US Bank and Bank of
Tokyo. Any reference to the Tranche A Notes and the Tranche B Notes
in any other US Loan Document shall be deemed to include a reference
to the US Bank Tranche A Note, the US Bank Tranche B Note, the Bank of
Tokyo Tranche A Note and the Bank of Tokyo Tranche B Note issued and
delivered pursuant to this Amendment. The execution, delivery and
effectiveness of this Amendment and each of the US Bank Tranche A
Note, the US Bank Tranche B Note, the Bank of Tokyo Tranche A Note and
the Bank of Tokyo Tranche B Note shall not, except as expressly
provided herein or therein, operate as a waiver of any right, power or
remedy of Lenders under the US Credit Agreement, the US Notes, or any
other US Loan Document nor constitute a waiver of any provision of the
US Credit Agreement, the US Notes or any other US Loan Document.
Section 5.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements herein shall survive the execution and delivery of this
Amendment and the other Amendment Documents and the performance hereof
and thereof, including without limitation the making or granting of
the US Loans and the delivery of the US Bank Tranche A Note, the US
Bank Tranche B Note, the Bank of Tokyo Tranche A Note and the Bank of
Tokyo Tranche B Note, and shall further survive until all of the US
Obligations are paid in full to each Lender Party and all of Lender
Parties' obligations to US Borrower are terminated. All statements
and agreements contained in any certificate or instrument delivered by
any Restricted Person hereunder or under the US Credit Agreement to
any Lender Party shall be deemed representations and warranties by US
Borrower or agreements and covenants of US Borrower under this
Amendment and under the US Credit Agreement. The representations,
warranties, indemnities, and covenants made by Restricted Persons in
the US Loan Documents, and the rights, powers, and privileges granted
to Lender Parties in the US Loan Documents, are cumulative, and,
except for expressly specified waivers and consents, no Loan Document
shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to any Lender Party of any such
representation, warranty, indemnity, covenant, right, power or
privilege. In particular and without limitation, no exception set out
in this Amendment or any other Amendment Document to any
representation, warranty, indemnity, or covenant herein or therein
contained shall apply to any similar representation, warranty,
indemnity, or covenant contained in any other Loan Document, and each
such similar representation, warranty, indemnity, or covenant shall be
subject only to those exceptions which are expressly made applicable
to it by the terms of the various US Loan Documents.
Section 5.3. Loan Documents. This Amendment and each of the US
Bank Tranche A Note, the US Bank Tranche B Note, the Bank of Tokyo
Tranche A Note and the Bank of Tokyo Tranche B Note are each a US Loan
Document, and all provisions in the US Credit Agreement pertaining to
US Loan Documents apply hereto and thereto.
Section 5.5. Governing Law. This Amendment shall be governed by
and construed in accordance the laws of the State of Utah and any
applicable laws of the United States of America in all respects,
including construction, validity and performance. US Borrower hereby
irrevocably submits itself and each other Restricted Person to the
non-exclusive jurisdiction of the state and federal courts sitting in
the State of Utah and agrees and consents that service of process may
be made upon it or any Restricted Person in any legal proceeding
relating to the Amendment Documents or the Obligations by any means
allowed under Utah or federal law.
Section 5.6. Counterparts. This Amendment may be separately
executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed shall
be deemed to constitute one and the same Amendment. This Amendment
may be validly executed and delivered by facsimile or other electronic
transmission.
THIS AMENDMENT AND THE OTHER US LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, this Amendment is executed as of the date
first above written.
QUESTAR MARKET RESOURCES, INC.
US Borrower
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
Mailing Address:
P.O. Box 45433
Salt Lake City, Utah 84145
Attention: Martin H. Craven
Street Address:
180 East 100 South
Salt Lake City, Utah 84111
Telephone: (801) 324-5497
Fax: (801) 324-5483
BANK OF AMERICA, N.A., f/k/a
NATIONSBANK, N.A.
Administrative Agent, US LC Issuer and Lender
By: /s/David C. Rubenking
David C. Rubenking
Senior Vice President
US BANK NATIONAL ASSOCIATION
Lender
By: /s/Mark E. Thompson
Mark E. Thompson
Vice President
THE BANK OF TOKYO-MITSUBISHI,
LTD.,HOUSTON AGENCY
Lender
By:
Name:
Title:
EXHIBIT A-1
PROMISSORY NOTE
US$9,000,000 [Tranche A Note] July ___, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of The Bank of Tokyo-Mitsubishi, Ltd., Houston
Agency (herein called "Lender"), the principal sum of Nine Million and
no/100 Dollars (US$9,000,000), or, if greater or less, the aggregate
unpaid principal amount of the Tranche A Loans made under this Note by
Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of
America at the offices of US Agent under the Credit Agreement, 901
Main Street, Dallas, Texas or at such other place within Dallas
County, Texas, as from time to time may be designated by the holder of
this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999, among Borrower, Bank of
America, N.A., f/k/a NationsBank, N.A., individually and as
administrative agent ("US Agent"), and the lenders (including Lender)
referred to therein, as amended by that certain First Amendment to US
Credit Agreement dated May 17, 1999 among Borrower, US Agent and the
lenders referred to therein, and as amended by that certain Second
Amendment to US Credit Agreement of even date herewith among Borrower,
US Agent and Lender (herein, as from time to time supplemented,
amended or restated, called the "Credit Agreement"), and is a "Tranche
A Note" as defined therein and (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity
hereof upon the happening of certain stated events. Payments on this
Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms
used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the US Facility
Maturity Date.
Tranche A Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche A Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of Utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive
Officer
EXHIBIT A-2
PROMISSORY NOTE
US$2,520,000 [Tranche B Note] July __, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of The Bank of Tokyo-Mitsubishi, Ltd., Houston
Agency (herein called "Lender"), the principal sum of Two Million Five
Hundred Twenty Thousand and no/100 Dollars (US$2,520,000), or, if
greater or less, the aggregate unpaid principal amount of the Tranche
B Loans made under this Note by Lender to Borrower pursuant to the
terms of the Credit Agreement (as hereinafter defined), together with
interest on the unpaid principal balance thereof as hereinafter set
forth, both principal and interest payable as herein provided in
lawful money of the United States of America at the offices of US
Agent under the Credit Agreement, 901 Main Street, Dallas, Texas or at
such other place within Dallas County, Texas, as from time to time may
be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999 among Borrower, Bank of
America, N.A., f/k/a NationsBank, N.A., individually and as
administrative agent ("US Agent"), and the lenders (including Lender)
referred to therein, as amended by that certain First Amendment to US
Credit Agreement dated May 17, 1999 among Borrower, US Agent and the
lenders referred to therein, and as amended by that certain Second
Amendment to US Credit Agreement of even date herewith among Borrower,
US Agent and Lender (herein, as from time to time supplemented,
amended or restated, called the "Credit Agreement"), and is a "Tranche
B Note" as defined therein and (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity
hereof upon the happening of certain stated events. Payments on this
Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms
used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the Tranche B
Maturity Date.
Tranche B Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche B Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of Utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
EXHIBIT A-3
PROMISSORY NOTE
US$15,000,000 [Tranche A Note] July ___, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of US Bank National Association (herein called
"Lender"), the principal sum of Fifteen Million and no/100 Dollars
(US$15,000,000), or, if greater or less, the aggregate unpaid
principal amount of the Tranche A Loans made under this Note by Lender
to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of
America at the offices of US Agent under the Credit Agreement, 901
Main Street, Dallas, Texas or at such other place within Dallas
County, Texas, as from time to time may be designated by the holder of
this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999, among Borrower, Bank of
America, N.A., f/k/a NationsBank, N.A., individually and as
administrative agent ("US Agent"), and the lenders (including Lender)
referred to therein, as amended by that certain First Amendment to US
Credit Agreement dated May 17, 1999 among Borrower, US Agent and the
lenders referred to therein, and as amended by that certain Second
Amendment to US Credit Agreement of even date herewith among Borrower,
US Agent and Lender (herein, as from time to time supplemented,
amended or restated, called the "Credit Agreement"), and is a "Tranche
A Note" as defined therein and (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity
hereof upon the happening of certain stated events. Payments on this
Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms
used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the US Facility
Maturity Date.
Tranche A Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche A Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of Utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
EXHIBIT A-4
PROMISSORY NOTE
US$4,200,000 [Tranche B Note] July __, 1999
FOR VALUE RECEIVED, the undersigned, Questar Market Resources,
Inc., a Utah corporation (herein called "Borrower"), hereby promises
to pay to the order of US Bank National Association (herein called
"Lender"), the principal sum of Four Million Two Hundred Thousand and
no/100 Dollars (US$4,200,000), or, if greater or less, the aggregate
unpaid principal amount of the Tranche B Loans made under this Note by
Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of
America at the offices of US Agent under the Credit Agreement, 901
Main Street, Dallas, Texas or at such other place within Dallas
County, Texas, as from time to time may be designated by the holder of
this Note.
This Note (a) is issued and delivered under that certain US
Credit Agreement dated as of April 19, 1999 among Borrower, Bank of
America, N.A., f/k/a NationsBank, N.A., individually and as
administrative agent ("US Agent"), and the lenders (including Lender)
referred to therein, as amended by that certain First Amendment to US
Credit Agreement dated May 17, 1999 among Borrower, US Agent and the
lenders referred to therein, and as amended by that certain Second
Amendment to US Credit Agreement of even date herewith among Borrower,
US Agent and Lender (herein, as from time to time supplemented,
amended or restated, called the "Credit Agreement"), and is a "Tranche
B Note" as defined therein and (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity
hereof upon the happening of certain stated events. Payments on this
Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms
used and not defined herein.
The principal amount of this Note, together with all interest
accrued hereon, shall be due and payable in full on the Tranche B
Maturity Date.
Tranche B Loans that are US Base Rate Loans (exclusive of any
past due principal or interest) from time to time outstanding shall
bear interest on each day outstanding at the US Base Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, US Base Rate Loans shall bear interest on each day
outstanding at the applicable Default Rate in effect on such day. On
each Interest Payment Date Borrower shall pay to the holder hereof all
unpaid interest which has accrued on the US Base Rate Loans to but not
including such Interest Payment Date. Each Tranche B Loan that is a
US Dollar Eurodollar Loan (exclusive of any past due principal or
interest) shall bear interest on each day during the related Interest
Period at the related Adjusted US Dollar Eurodollar Rate in effect on
such day; provided that if an Event of Default has occurred and is
continuing, such US Dollar Eurodollar Loan shall bear interest on each
day outstanding at the applicable Default Rate in effect on such day.
On each Interest Payment Date relating to such US Dollar Eurodollar
Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such US Dollar Eurodollar Loan to but not
including such Interest Payment Date.
All past due principal of and past due interest on the Loans
shall bear interest on each day outstanding at the applicable Default
Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest
is payable on this Note is limited by the Highest Lawful Rate (by the
foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of US Base Rate, Adjusted US Dollar Eurodollar Rate,
and Default Rate), this Note shall bear interest at the Highest Lawful
Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals
(but does not exceed) the total amount of interest which would have
accrued hereon had there been no Highest Lawful Rate applicable
hereto.
Notwithstanding the foregoing paragraph and all other provisions
of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which,
under applicable Law, may be charged on this Note, and this Note is
expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon.
The term "applicable Law" as used in this Note shall mean the laws of
the State of Utah or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed
or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest,
notice of intention to accelerate the maturity of this Note,
declaration or notice of acceleration of the maturity of this Note,
diligence in collecting, the bringing of any suit against any party
and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act
of any trustee or any holder hereof, whether before or after maturity.
This Note and the rights and duties of the parties hereto shall
be governed by the Laws of the State of Utah (without regard to
principles of conflicts of law), except to the extent the same are
governed by applicable federal Law.
QUESTAR MARKET RESOURCES, INC.
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
EXHIBIT B
LENDER'S SCHEDULE
[Execution]
THIRD AMENDMENT TO US CREDIT AGREEMENT
THIS THIRD AMENDMENT TO US CREDIT AGREEMENT (herein called the
"Amendment") made as of November 30, 1999, by and among Questar Market
Resources, Inc., a Utah corporation ("US Borrower"), Bank of America,
N.A., individually and as administrative agent for the Lenders as
defined below ("US Agent"), and the undersigned Lenders.
W I T N E S S E T H:
WHEREAS, US Borrower, US Agent and the lenders as signatories
thereto (the "Lenders") entered into that certain US Credit Agreement
dated as of April 19, 1999, as amended by that certain First Amendment
to US Credit Agreement dated as of May 17, 1999, and as amended by
that certain Second Amendment to US Credit Agreement dated as of July
30, 1999 (the "Original Agreement"), for the purpose and consideration
therein expressed, whereby the Lenders became obligated to make loans
to US Borrower as therein provided; and
WHEREAS, US Borrower, US Agent and the undersigned Lenders desire
to amend the Original Agreement for the purposes as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original
Agreement, in consideration of the loans which may hereafter be made
by Lenders to US Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Agreement. Unless
the context otherwise requires or unless otherwise expressly defined
herein, the terms defined in the Original Agreement shall have the
same meanings whenever used in this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have
the meanings assigned to them in this Section 1.2.
"Amendment" means this Third Amendment to US Credit
Agreement.
"US Credit Agreement" means the Original Agreement as
amended hereby.
ARTICLE II.
Amendments to Original Agreement
Section 2.1. Hedging Contracts. Section 7.10(i)(B) of the
Original Agreement is hereby amended in its entirety to read as
follows:
"(B) such contracts do not require any Restricted Person to
provide any Lien to secure US Borrower's obligations thereunder,
other than Liens on cash or cash equivalents in an aggregate
amount not more than US $30,000,000."
ARTICLE III.
Waiver
Section 3.1. Waiver. US Borrower has informed US Agent that US
Borrower and Restricted Persons are in violation of the provisions of
Section 7.10(i) of the Original Agreement for the period covering
August 20, 1999 to and including the date hereof. US Agent and the
undersigned Lenders hereby (a) waive any such violation of Section
7.10(i) and (b) waive any Default or Event of Default resulting from
such violation
ARTICLE IV.
Conditions of Effectiveness
Section 4.1. Effective Date. This Amendment shall become
effective as of the date first above written when, and only when, (i)
US Agent shall have received, at US Agent's office, a counterpart of
this Amendment executed and delivered by US Borrower and Required
Lenders and (ii) US Agent shall have additionally received from US
Borrower, in connection with such US Loan Documents, all other fees
and reimbursements to be paid to US Agent pursuant to any US Loan
Documents, or otherwise due US Agent and including fees and
disbursements of US Agent's attorneys.
ARTICLE V.
Representations and Warranties
Section 5.1. Representations and Warranties of Borrower. In
order to induce US Agent and Lenders to enter into this Amendment, US
Borrower represents and warrants to US Agent that:
(a) The representations and warranties contained in Article
V of the Original Agreement are true and correct at and as of the
time of the effectiveness hereof.
(b) US Borrower has duly taken all action necessary to
authorize the execution and delivery by it of this Amendment and
to authorize the consummation of the transactions contemplated
hereby and the performance of its obligations hereunder. US
Borrower is duly authorized to borrow funds under the US Credit
Agreement.
(c) The execution and delivery by US Borrower of this
Amendment, the performance by US Borrower of its obligations
hereunder and the consummation of the transactions contemplated
herein do not and will not (a) conflict with any provision of (i)
any Law, (ii) the organizational documents of US Borrower, or
(iii) any agreement, judgment, license, order or permit
applicable to or binding upon US Borrower, or (b) result in the
acceleration of any Indebtedness owed by US Borrower, or (c)
result in or require the creation of any Lien upon any assets or
properties of US Borrower, except as expressly contemplated or
permitted in the Loan Documents. Except as expressly
contemplated in the Loan Documents no consent, approval,
authorization or order of, and no notice to or filing with any
Tribunal or third party is required in connection with the
execution, delivery or performance by US Borrower of this
Amendment or to consummate any transactions contemplated herein.
(d) This Amendment is a legal, valid and binding obligation
of US Borrower, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency or
similar Laws of general application relating to the enforcement
of creditors' rights and by equitable principles of general
application relating to the enforcement of creditor's rights.
ARTICLE VI.
Miscellaneous
Section 6.1. Ratification of Agreements. The Original Agreement
as hereby amended is hereby ratified and confirmed in all respects.
The US Loan Documents, as they may be amended or affected by this
Amendment, are hereby ratified and confirmed in all respects. Any
reference to the US Credit Agreement in any Loan Document shall be
deemed to be a reference to the Original Agreement as hereby amended.
The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right,
power or remedy of Lenders under the US Credit Agreement, the US
Notes, or any other US Loan Document nor constitute a waiver of any
provision of the US Credit Agreement, the US Notes or any other US
Loan Document.
Section 6.2. Survival of Agreements; Cumulative Nature. All of
US Borrower's various representations, warranties, covenants and
agreements herein shall survive the execution and delivery of this
Amendment and the performance hereof, including without limitation the
making or granting of the US Loans, and shall further survive until
all of the US Obligations are paid in full to each Lender Party and
all of Lender Parties' obligations to US Borrower are terminated. All
statements and agreements contained in any certificate or instrument
delivered by any Restricted Person hereunder or under the US Credit
Agreement to any Lender Party shall be deemed representations and
warranties by US Borrower or agreements and covenants of US Borrower
under this Amendment and under the US Credit Agreement. The
representations, warranties, indemnities, and covenants made by
Restricted Persons in the US Loan Documents, and the rights, powers,
and privileges granted to Lender Parties in the US Loan Documents, are
cumulative, and, except for expressly specified waivers and consents,
no Loan Document shall be construed in the context of another to
diminish, nullify, or otherwise reduce the benefit to any Lender Party
of any such representation, warranty, indemnity, covenant, right,
power or privilege. In particular and without limitation, no
exception set out in this Amendment to any representation, warranty,
indemnity, or covenant herein contained shall apply to any similar
representation, warranty, indemnity, or covenant contained in any
other Loan Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions which
are expressly made applicable to it by the terms of the various US
Loan Documents.
Section 6.3. Loan Documents. This Amendment is a US Loan
Document, and all provisions in the US Credit Agreement pertaining to
US Loan Documents apply hereto.
Section 6.4. Governing Law. This Amendment shall be governed by
and construed in accordance the laws of the State of Utah and any
applicable laws of the United States of America in all respects,
including construction, validity and performance. US Borrower hereby
irrevocably submits itself and each other Restricted Person to the
non-exclusive jurisdiction of the state and federal courts sitting in
the State of Utah and agrees and consents that service of process may
be made upon it or any Restricted Person in any legal proceeding
relating to the Amendment Documents or the Obligations by any means
allowed under Utah or federal law.
Section 6.5. Counterparts. This Amendment may be separately
executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed shall
be deemed to constitute one and the same Amendment. This Amendment
may be validly executed and delivered by facsimile or other electronic
transmission.
THIS AMENDMENT AND THE OTHER US LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, this Amendment is executed as of the date
first above written.
QUESTAR MARKET RESOURCES, INC.
US Borrower
By: /s/G. L. Nordloh
G. L. Nordloh
President and Chief Executive Officer
Mailing Address:
P.O. Box 45433
Salt Lake City, Utah 84145
Attention: Martin H. Craven
Street Address:
180 East 100 South
Salt Lake City, Utah 84111
Telephone: (801) 324-5497
Fax: (801) 324-5483
BANK OF AMERICA, N.A.,
Administrative Agent, US LC Issuer and
Lender
By:
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
Lender
By: /s/Jimmy Simien
Jimmy Simien
Vice President
BANK OF MONTREAL
Lender
By: /s/James Whitmore
James Whitmore
Director
BANK ONE, N.A., f/k/a THE FIRST
NATIONAL BANK OF CHICAGO
Lender
By:
Name:
Title:
FIRST SECURITY BANK, N.A.
Lender
By:
Name:
Title:
MELLON BANK, N.A.
Lender
By: /s/Roger E. Howard
Roger E. Howard
Vice President
US BANK NATIONAL ASSOCIATION
Lender
By: /s/Mark E. Thompson
Mark E. Thompson
Vice President
THE BANK OF TOKYO-MITSUBISHI,
LTD.,HOUSTON AGENCY
Lender
By:
Name:
Title:
QUESTAR MARKET RESOURCES, INC.
ANNUAL MANAGEMENT INCENTIVE PLAN
(As Amended and Restated Effective May 18, 1999)
Paragraph 1. Name. The name of this Plan is the Annual
Management Incentive Plan (the Plan) for Questar Market Resources,
Inc. (the Company).
Paragraph 2. Purpose. The purpose of the Plan is to
provide an incentive to officers and key employees of the Company for
the accomplishment of major organizational and individual objectives
designed to further the efficiency, profitability, and growth of the
Company.
Paragraph 3. Administration. The Management Performance
Committee (Committee) of the Board of Directors of Questar Corporation
(Questar) shall have full power and authority to interpret and
administer the Plan. Such Committee shall consist of no less than
three disinterested members of the Board of Directors.
Recommendations made by the Committee shall be reviewed by the Boards
of Directors of participating employers.
Paragraph 4. Participation. Within 60 days after the
beginning of each year, the Committee shall nominate Participants from
the officers and key employees for such year. The Committee shall
also establish a target bonus for the year for each Participant
expressed as a percentage of base salary or specified portion of base
salary. Participants shall be notified of their selection and their
target bonus as soon as practicable.
Paragraph 5. Determination of Performance Objectives.
Within 60 days after the beginning of each year, the Committee shall
establish target, minimum, and maximum performance objectives for the
Company and for its affiliates and shall determine the manner in which
the target bonus is allocated among the performance objectives. The
Committee shall also recommend a dollar maximum for payments to
Participants for any Plan year. The Board of Directors shall take
action concerning the recommended dollar maximum within 60 days after
the beginning of the Plan year. Participants shall be notified of the
performance objectives as soon as practicable once such objectives
have been established.
Paragraph 6. Determination and Distribution of Awards. As
soon as practicable, but in no event more than 90 days after the close
of each year during which the Plan is in effect, the Committee shall
compute incentive awards for eligible participants in such amounts as
the members deem fair and equitable, giving consideration to the
degree to which the Participant's performance has contributed to the
performance of the Company and its affiliated companies and using the
target bonuses and performance objectives previously specified.
Aggregate awards calculated under the Plan shall not exceed the
maximum limits approved by the Board of Directors for the year
involved. To be eligible to receive a payment, the Participant must be
actively employed by the Company or an affiliate as of the date of
distribution except as provided in Paragraph 8.
Amounts shall be paid (less appropriate withholding taxes
and FICA deductions) according to the following schedule:
Award Distribution Schedule
Percent of
Award Date
Initial Award 75% As soon as possible after initial
(First Year of award is determined
Participation)
25 One year after initial award is
determined
100%
Subsequent Awards 50% As soon as possible after award is
determined
25 One year after award is determined
25 Two years after award is determined
100%
Paragraph 7. Restricted Stock in Lieu of Cash.
Participants who have a target bonus of $10,000 or higher shall be
paid all deferred portions of such bonus with restricted shares of
Questar's common stock under Questar's Long-Term Stock Incentive Plan.
Such stock shall be granted to the participant when the initial award
is determined, but shall vest free of restrictions according to the
schedule specified above in Paragraph 6.
Paragraph 8. Termination of Employment.
(a) In the event a Participant ceases to be an employee
during a year by reason of death, disability or approved retirement,
an award, or a reduction in force, if any, determined in accordance
with Paragraph 6 for the year of such event, shall be reduced to
reflect partial participation by multiplying the award by a fraction
equal to the months of participation during the applicable year
through the date of termination rounded up to whole months divided by
12.
For the purpose of this Plan, approved retirement shall mean
any termination of service on or after age 60, or, with approval of
the Board of Directors, early retirement under Questar's qualified
retirement plan. For the purpose of this Plan, disability shall mean
any termination of service that results in payments under Questar's
long-term disability plan. A reduction in force, for the purpose of
this Plan, shall mean any involuntary termination of employment due to
the Company's economic condition, sale of assets, shift in focus, or
other reasons independent of the Participant's performance.
The entire amount of any award that is determined after the
death of a Participant shall be paid in accordance with the terms of
Paragraph 11.
In the event of termination of employment due to disability,
approved retirement, or a reduction in force, a Participant shall be
paid the undistributed portion of any prior awards in his final
paycheck or in accordance with the terms of elections to voluntarily
defer receipt of awards earned prior to February 12, 1991, or deferred
under the terms of Questar's Deferred Compensation Plan. In the event
of termination due to disability, approved retirement, or a reduction
in force, any shares of common stock previously credited to a
Participant shall be distributed free of restrictions during the last
month of employment. The current market value (defined as the closing
price for the stock on the New York Stock Exchange on the date in
question) of such shares shall be included in the Participant's final
paycheck. Such Participant shall be paid the full amount of any award
(adjusted for partial participation) declared subsequent to the date
of such termination within 30 days of the date of declaration. Any
partial payments shall be made in cash.
(b) In the event a Participant ceases to be an employee
during a year by reason of a change in control, he shall be entitled
to receive all amounts deferred by him prior to February 12, 1991, and
all undistributed portions for prior Plan years. He shall also be
entitled to an award for the year of such event as if he had been an
employee throughout such year. The entire amount of any award for
such year shall be paid in a lump sum within 60 days after the end of
the year in question. Such amounts shall be paid in cash.
For the purpose of this Plan, a "change in control" shall be
deemed to have occurred if (i) any Acquiring Person (as that term is
used in the Rights Agreement dated February 13, 1996, between Questar
and ChaseMellon Shareholder Services, L.L.C. ("Rights Agreement")) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of Questar
representing 25 percent or more of the combined voting power of
Questar, or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as
directors of Questar: individuals who, as of May 19, 1998, constitute
Questar's Board of Directors (Board) and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
Questar) whose appointment of election by the Board or nomination for
election by Questar's stockholders was approved or recommended by a
vote of at least two-thirds of the directors when still in office who
either were directors on May 19, 1998, or who appointment, election or
nomination for election was previously so approved or recommended; or
(iii Questar stockholders approve a merger or consolidation of Questar
or any direct of indirect subsidiary of Questar with any other
corporation, other than a merger of consolidation that would result in
the voting securities of Questar outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 60 percent of the
combined voting power of the securities of Questar or such surviving
entity or its parent outstanding immediately after such merger or
consolidation, or a merger or consolidation effected to implement a
recapitalization of Questar (or similar transaction) in which no
person is or becomes the beneficial owner, directly or indirectly, of
securities of Questar representing 25 percent or more of the combined
voting power of Questar's then outstanding securities; or (iv)
Questar's stockholders approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for
the sale or disposition by Questar of all or substantially all of
Questar's assets, other than a sale of disposition by Questar of all
or substantially all of the Company's assets to an entity, at least 60
percent of the combined voting power of the voting securities of which
are owned by stockholders of Questar in substantially the same
proportion as their ownership of Questar immediately prior to such
sale. A change in control, however, shall not be considered to have
occurred until all conditions precedent to the transaction, including
but not limited to, all required regulatory approvals have been
obtained.
Paragraph 9. Interest on Previously Deferred Amounts.
Amounts voluntarily deferred prior to February 12, 1991, shall be
credited with interest from the date the payment was first available
in cash to the date of actual payment. Such interest shall be
calculated at a monthly rate using the typical rates paid by major
banks on new issues of negotiable Certificates of Deposit in the
amounts of $1,000,000 or more for one year as quoted in The Wall
Street Journal on the first day of the relevant calendar month or the
next preceding business day if the first day of the month is a
non-business day.
Paragraph 10. Coordination with Deferred Compensation Plan.
Some Participants are entitled to defer the receipt of their cash
bonuses under the terms of Questar's Deferred Compensation Plan, which
became effective November 1, 1993. Any cash bonuses deferred pursuant
to the Deferred Compensation Plan shall be accounted for and
distributed according to the terms of such plan and the choices made
by the Participant.
Paragraph 11. Death and Beneficiary Designation. In the
event of the death of a Participant, any undistributed portions of
prior awards shall become payable. Amounts previously deferred by the
Participant, together with credited interest to the date of death,
shall also become payable. Each Participant shall designate a
beneficiary to receive any amounts that become payable after death
under this Paragraph or Paragraph 8. In the event that no valid
beneficiary designation exists at death, all amounts due shall be paid
as a lump sum to the estate of the Participant. Any shares of
restricted stock previously credited to the Participant shall be
distributed to the Participant's beneficiary or, in the absence of a
valid beneficiary designation, to the Participant's estate, at the
same time any cash is paid.
Paragraph 12. Amendment of Plan. The Company's Board of
Directors, at any time, may amend, modify, suspend, or terminate the
Plan, but such action shall not affect the awards and the payment of
such awards for any prior years. The Board of Directors cannot
terminate the Plan in any year in which a change of control has
occurred without the written consent of the Participants. The Plan
shall be deemed suspended for any year for which the Board of
Directors has not fixed a maximum dollar amount available for award.
Paragraph 13. Nonassignability. No right or interest of
any Participant under this Plan shall be assignable or transferable in
whole or in part, either directly or by operation of law or otherwise,
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy, or in any other manner, and no right
or interest of any Participant under the Plan shall be liable for, or
subject to, any obligation or liability of such Participant. Any
assignment, transfer, or other act in violation of this provision
shall be void.
Paragraph 14. Effective Date of the Plan. The Plan shall
be effective with respect to the fiscal year beginning January 1,
1998, and shall remain in effect until it is suspended or terminated
as provided by Paragraph 12. This Plan replaces the individual plans
previously adopted by entities within Questar Market Resources. Plan
participants who previously received awards under any Annual
Management Incentive Plan adopted by the Company or an affiliate shall
be treated as ongoing participants for purposes of the distribution
schedule in Paragraph 6.
QUESTAR MARKET RESOURCES, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
(As Amended and Restated May 19, 1998)
1. Purpose of Plan.
The purpose of the Deferred Compensation Plan for Directors
("Plan") is to provide Directors of Questar Market Resources,
Inc. (the "Company") with an opportunity to defer compensation
paid to them for their services as Directors of the Company and
to maintain a Deferred Account Balance until they cease to serve
as Directors of the Company or its affiliates.
2. Eligibility.
Subject to the conditions specified in this Plan or
otherwise set by the Company's Board of Directors, all voting
Directors of the Company who receive compensation for their
service as Directors are eligible to participate in the Plan.
Eligible Directors are referred to as "Directors." Directors who
elect to defer receipt of fees or who have account balances are
referred to as "Participants" in this Plan.
3. Administration.
The Company's Board of Directors shall administer the Plan
and shall have full authority to make such rules and regulations
deemed necessary or desirable to administer the Plan and to
interpret its provisions.
4. Election to Defer Compensation.
(a) Time of Election. A Director can elect to defer future
compensation or to change the nature of his election for future
compensation by submitting a notice prior to the beginning of the
calendar year. A newly elected Director is entitled to make a
choice within five days of the date of his election or
appointment to serve as a Director to defer payment of
compensation for future service. An election shall continue in
effect until the termination of the Participant's service as a
Director or until the end of the calendar year during which the
Director serves written notice of the discontinuance of his
election.
All notices of election, change of election, or
discontinuance of election shall be made on forms prepared by the
Corporate Secretary and shall be dated, signed, and filed with
the Corporate Secretary. A notice of change of election or
discontinuance of election shall operate prospectively from the
beginning of the calendar year, but any compensation deferred
shall continue to be held and shall be paid in accordance with
the notice of election under which it was withheld.
(b) Amount of Deferral. A Participant may elect to defer
receipt of all or a specified portion of the compensation payable
to him for serving as a Director and attending Board and
Committee Meetings as a Director. For purposes of this Plan,
compensation does not include any funds paid to a Director to
reimburse him for expenses.
(c) Period of Deferral. When making an election to defer
all or a specified percentage of his compensation, a Participant
shall elect to receive the deferred compensation in a lump sum
payment within 45 days following the end of his service as a
Director or in a number of annual installments (not to exceed
four), the first of which would be payable within 45 days
following the end of his service as a Director with each
subsequent payment payable one year thereafter. Under an
installment payout, the Participant's first installment shall be
equal to a fraction of the balance in his Deferred Compensation
Account as of the last day of the calendar month preceding such
payment, the numerator of which is one and the denominator of
which is the total number of installments selected. The amount
of each subsequent payment shall be a fraction of the balance in
the Participant's Account as of the last day of the calendar
month preceding each subsequent payment, the numerator of which
is one and the denominator of which is the total number of
installments elected minus the number of installments previously
paid. The term "balance," as used herein, refers to the amount
credited to a Participant's Account or to the Fair Market Value
(as defined in Section 5 (a)) of the Phantom Shares of Questar
Corporation's common stock ("Common Stock") credited to his
Account.
(d) Phantom Stock Option and Certificates of Deposit
Option. When making an election to defer all or a specified
percentage of his compensation, a Participant shall choose
between two methods of determining earnings on the deferred
compensation. He may choose to have such earnings calculated as
if the deferred compensation had been invested in Common Stock at
the Fair Market Value (as defined in Section 5 (a)) of such stock
as of the date such compensation amount would have otherwise been
payable to him ("Phantom Stock Option"). Or he may choose to
have earnings calculated as if the deferred compensation had been
invested in negotiable certificates of deposit at the time such
compensation would otherwise be payable to him ("Certificates of
Deposit Option").
The Participant must choose between the two options for all
of the compensation he elects to defer in any given year. He may
change the option for future compensation by filing the
appropriate notice with the Corporate Secretary before the first
day of each calendar year, but such change shall not affect the
method of determining earnings for any compensation deferred in a
prior year.
5. Deferred Compensation Account.
A Deferred Compensation Account ("Account") shall be
established for each Participant.
(a) Phantom Stock Option Account. If a Participant elects
the Phantom Stock Option, his Account will include the number of
shares and partial shares of Common Stock (to four decimals) that
could have been purchased on the date such compensation would
have otherwise been payable to him. The purchase price for such
stock is the Fair Market Value of such stock, i.e., the closing
price of such stock as reported on the Composite Tape of the New
York Stock Exchange for such date or the next preceding day on
which sales took place if no sales occurred on the actual payable
date.
The Participant's Account shall also include the dividends
that would have become payable during the deferral period if
actual purchases of Common Stock had been made, with such
dividends treated as if invested in Common Stock as of the
payable date for such dividends.
(b) Certificates of Deposit Option Account. If a
Participant elects the Certificates of Deposit Option, his
Account will be credited with any compensation deferred by the
Participant at the time such compensation would otherwise be
payable and with interest calculated at a monthly rate using the
typical rates paid by major banks on new issues of negotiable
Certificates of Deposit on amounts of $1,000,000 or more for one
year as quoted in The Wall Street Journal under "Money Rates" on
the first day of the relevant calendar month or the next
preceding business day if the first day of the month is a
non-business day. The interest credited to each Account shall be
based on the amount held in the Account at the beginning of each
particular month.
6. Statement of Deferred Compensation Account.
Within 45 days after the end of the calendar year, a
statement will be sent to each Participant listing the balance in
his Account as of the end of the year.
7. Retirement.
Upon retirement or resignation as a Director from the Board
of Directors, a Participant shall receive payment of the balance
in his Account in accordance with the terms of his prior
instructions and the terms of the Plan unless he is still serving
as a voting director of Questar Corporation ("Questar"). Upon
retirement or resignation as a Director of Questar or upon
appointment as a non-voting Senior Director of Questar, a
Participant shall receive payment of the balance in his Account
in accordance with the terms of his prior instructions and the
terms of the Plan unless he is currently serving as a Director of
the Company.
8. Payment of Deferred Compensation.
(a) Phantom Stock Option. The amount payable to the
Participant choosing the Phantom Stock Option shall be the cash
equivalent of the stock using the Fair Market Value of such stock
on the date of withdrawal.
(b) Certificates of Deposit Option. The amount payable to
the Participant choosing the Certificate of Deposit Option shall
include the interest on all sums credited to the Account, with
such interest credited to the date of withdrawal.
(c) The date of withdrawal for both the Phantom Stock
Option Account and the Certificates of Deposit Option Account
shall be the last day of the calendar month preceding payment or
if payment is made because of death, the date of death.
(d) The payment shall be made in the manner (lump sum or
installment) chosen by the Participant. In the event of a
Participant's death, payment shall be made within 45 days of the
Participant's death to the beneficiary designated by the
Participant or, in the absence of such designation, to the
Participant's estate.
9. Payment, Change in Control.
Notwithstanding any other provisions of this Plan or
deferral elections made pursuant to Section 4 of this Plan, a
Director, in the event of a Change in Control of Questar, shall
be entitled to elect a distribution of his account balance within
60 days following the date of a Change in Control. For the
purpose of this Plan, a "Change in Control" shall be deemed to
have occurred if (i) any "Acquiring Person" (as that term is used
in the Rights Agreement dated February 13, 1996, between Questar
and ChaseMellon Shareholder Services, L.L.C. ("Rights
Agreement")) is or becomes the beneficial owner (as such term is
used in Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of Questar representing 25 percent or more of the
combined voting power of Questar, or (ii) the following
individuals cease for any reason to constitute a majority of the
number of directors then serving as directors of Questar:
individuals who, as of May 19, 1998, constitute Questar's Board
of Directors ("Board") and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of Questar) whose appointment of election by the Board
or nomination for election by Questar's stockholders was approved
or recommended by a vote of at least two-thirds of the directors
when still in office who either were directors on May 19, 1998,
or who appointment, election or nomination for election was
previously so approved or recommended; or (iii Questar
stockholders approve a merger or consolidation of Questar or any
direct of indirect subsidiary of Questar with any other
corporation, other than a merger of consolidation that would
result in the voting securities of Questar outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 60 percent of the combined voting power of the
securities of Questar or such surviving entity or its parent
outstanding immediately after such merger or consolidation, or a
merger or consolidation effected to implement a recapitalization
of Questar (or similar transaction) in which no person is or
becomes the beneficial owner, directly or indirectly, of
securities of Questar representing 25 percent or more of the
combined voting power of Questar's then outstanding securities;
or (iv) Questar's stockholders approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by Questar of all or
substantially all of Questar's assets, other than a sale of
disposition by Questar of all or substantially all of the
Company's assets to an entity, at least 60 percent of the
combined voting power of the voting securities of which are owned
by stockholders of Questar in substantially the same proportion
as their ownership of Questar immediately prior to such sale. A
Change in Control, however, shall not be considered to have
occurred until all conditions precedent to the transaction,
including but not limited to, all required regulatory approvals
have been obtained.
10. Hardship Withdrawal.
Upon petition to and approval by the Company's Board of
Directors, a Participant may withdraw all or a portion of the
balance in his Account in the case of financial hardship in the
nature of an emergency, provided that the amount of such
withdrawal cannot exceed the amount reasonable necessary to meet
the financial hardship. The Board of Directors shall have sole
discretion to determine the circumstances under which such
withdrawals are permitted.
11. Amendment and Termination of Plan.
The Plan may be amended, modified or terminated by the
Company's Board of Directors. No amendment, modification, or
termination shall adversely affect a Participant's rights with
respect to amounts accrued in his Account. In the event that the
Plan is terminated, the Board of Directors has the right to make
lump-sum payments of all Account balances on such date as it may
determine.
12. Nonassignability of Plan.
The right of a Participant to receive any unpaid portion of
his Account shall not be assigned, transferred, pledged or
encumbered or be subject in any manner to alienation or
attachment.
13. No Creation of Rights.
Nothing in this Plan shall confer upon any Participant the
right to continue as a Director. The right of a Participant to
receive any unpaid portion of his Account shall be an unsecured
claim against the general assets and will be subordinated to the
general obligations of the Company.
14. Effective Date.
The Plan was effective on June 1, 1982, and shall remain in
effect until it is discontinued by action of the Company's Board
of Directors. The effective date of the amendment to the Plan
establishing a Phantom Stock Option is January 1, 1983. The Plan
was amended and restated effective April 30, 1991, was amended
and restated effective February 13, 1996, and was further amended
and restated effective May 19, 1998.
Exhibit 12
Questar Market Resources, Inc. and Subsidiaries
Ratio of Earnings to Fixed Charges
The ratios of earnings to fixed charges for 1997, 1998 and 1999 are
derived from audited financial statements of Questar Market Resources.
The ratios for 1995 and 1996 are from unaudited financial statements.
<TABLE>
<CAPTION>
12 months ended December 31,
1999 1998 1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Earnings
Income from continuing operations
before income taxes $64,450 $15,706 $49,521 $56,134 $48,991
Less income, plus loss from Canyon
Creek (231) (202) (160) 35 (141)
Plus distribution from Canyon Creek 297 281 334 60 314
Plus loss from Questar WMC 65 546 114
Plus debt expense 17,363 12,631 10,882 8,699 8,299
Plus interest capitalized during
construction 357 1,363 604 70 63
Plus interest portion of rental
expense 855 699 556 500 441
$83,091 $30,478 $61,802 $66,044 $58,081
Fixed Charges
Debt expense $17,363 $12,631 $10,882 $8,699 $8,299
Plus interest capitalized during
construction 357 1,363 604 70 63
Plus interest portion of rental
expense 855 699 556 500 441
$18,575 $14,693 $12,042 $9,269 $8,803
Ratio of Earnings to Fixed Charges 4.47 2.07 5.13 7.13 6.60
</TABLE>
1/ For purposes of this presentation, earnings represent income from
continuing operations before income taxes and fixed charges. Fixed
charges consist of total interest charges, amortization of debt issuance
costs and debt discounts, and the interest portion of rental costs (which
is estimated at 50%).
2/ Income from continuing operations before income taxes includes
QMR's 50% share of pretax earnings from Blacks Fork.
3/ Distributions from Canyon Creek are included and earnings are
excluded because QMR owns less than 50%. QMR's ownership interest in
Canyon Creek is 15%.
4/ Write-downs of investment in oil and gas properties reduced income
before income taxes of $31million in 1998 and $6 million in 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Market Resources, Inc. Consolidated Statements of Income
and Balance Sheets for the periods ended December 31, 1999, 1998 and 1997,
and are qualified in its entirety by reference to such audited financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 0 1,894 1,014
<SECURITIES> 0 0 0
<RECEIVABLES> 79,823 98,292 127,264
<ALLOWANCES> (1,350) (3,252) (1,508)
<INVENTORY> 11,253 10,785 5,789
<CURRENT-ASSETS> 95,528 115,340 138,991
<PP&E> 1,469,676 1,412,641 1,175,241
<DEPRECIATION> 778,695 717,129 620,065
<TOTAL-ASSETS> 847,891 815,153 696,675
<CURRENT-LIABILITIES> 118,024 208,296 134,699
<BONDS> 264,894 181,624 133,387
0 0 0
0 0 0
<COMMON> 4,309 4,309 4,309
<OTHER-SE> 383,525 355,329 354,974
<TOTAL-LIABILITY-AND-EQUITY> 847,891 815,153 696,675
<SALES> 0 0 0
<TOTAL-REVENUES> 498,311 458,272 523,640
<CGS> 0 0 0
<TOTAL-COSTS> 329,117 304,225 364,809
<OTHER-EXPENSES> 102,416 128,418 103,994
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 17,363 12,631 10,882
<INCOME-PRETAX> 64,450 15,706 49,521
<INCOME-TAX> 18,584 (1,019) 10,410
<INCOME-CONTINUING> 45,866 16,725 39,111
<DISCONTINUED> 0 (563) (1,021)
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 45,866 16,162 38,090
<EPS-BASIC> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
