SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____
Commission File No. 0-14147
QUESTAR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
STATE OF UTAH 87-0307414
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 45360, 180 East 100 South, Salt Lake City, Utah 84145-0360
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 324-2400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of September 30, 1998
Common Stock, $1.00 par value 6,550,843 shares
Registrant meets the conditions set forth in General Instruction H(a)(1) and
(b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure
format.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
QUESTAR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $27,233 $25,889 $81,081 $78,517 $108,001 $104,707
OPERATING EXPENSES
Operating and maintenance 10,491 8,981 29,984 27,526 39,792 38,333
Depreciation 3,794 3,758 10,109 10,969 13,937 14,726
Other taxes 697 705 1,885 2,120 2,581 2,146
TOTAL OPERATING EXPENSES 14,982 13,444 41,978 40,615 56,310 55,205
OPERATING INCOME 12,251 12,445 39,103 37,902 51,691 49,502
INTEREST AND OTHER
INCOME (EXPENSE) (13) 923 (89) 1,019 215 1,648
INCOME FROM UNCONSOLIDATED
AFFILIATES 944 4,092 2,094 4,018 2,705 3,988
DEBT EXPENSE (3,606) (3,349) (10,540) (10,014) (14,062) (13,395)
INCOME BEFORE INCOME TAXES 9,576 14,111 30,568 32,925 40,549 41,743
INCOME TAXES 3,605 5,549 10,983 12,581 14,740 15,662
NET INCOME $5,971 $8,562 $19,585 $20,344 $25,809 $26,081
</TABLE>
See notes to financial statements
QUESTAR PIPELINE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997 1997
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments $2,922 $288 $7,075
Accounts receivable 10,995 5,118 10,851
Inventories 2,217 2,273 2,303
Other current assets 1,590 1,805 2,035
Total current assets 17,724 9,484 22,264
Property, plant and equipment 603,262 574,613 580,603
Less allowances for depreciation 211,643 205,007 202,427
Net property, plant and equipment 391,619 369,606 378,176
Investment in unconsolidated
affiliates 66,564 25,217 26,977
Other assets 12,957 13,404 10,147
$488,864 $417,711 $437,564
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Notes payable to Questar
Corporation $92,900 $10,600 $25,800
Accounts payable and accrued
expenses 19,803 16,922 20,069
Total current liabilities 112,703 27,522 45,869
Long-term debt 114,577 134,558 134,563
Other liabilities 4,267 5,817 4,523
Deferred income taxes 63,171 60,727 62,298
Common shareholder's equity
Common stock 6,551 6,551 6,551
Additional paid-in capital 82,034 82,034 82,034
Retained earnings 105,561 100,502 101,726
Total common shareholder's equity 194,146 189,087 190,311
$488,864 $417,711 $437,564
</TABLE>
See notes to financial statements
QUESTAR PIPELINE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
9 Months Ended
September 30,
1998 1997
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $19,585 $20,344
Depreciation 11,063 11,781
Deferred income taxes 873 (45)
Income from unconsolidated
affiliates (2,094) (4,018)
29,427 28,062
Change in operating assets and
liabilities (2,931) 4,762
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 26,496 32,824
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant
and equipment (22,319) (11,533)
Investment in unconsolidated
affiliates (37,493) (5,064)
Total capital expenditures (59,812) (16,597)
Costs of disposition of property,
plant and equipment (2,187) (1,539)
NET CASH USED IN INVESTING
ACTIVITIES (61,999) (18,136)
FINANCING ACTIVITIES
Increase (decrease) in notes payable
to Questar Corporation 67,100 (1,200)
Decrease in long-term debt (20,000)
Payment of dividends (15,750) (15,750)
NET CASH PROVIDED FROM (USED
IN) FINANCING ACTIVITIES 31,350 (16,950)
DECREASE IN CASH AND SHORT-
TERM INVESTMENTS ($4,153) ($2,262)
</TABLE>
See notes to financial statements
QUESTAR PIPELINE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
Note 1 - Basis of Presentation
The interim financial statements reflect all adjustments which are,
in the opinion of management, necessary for a fair presentation of
the results for the interim periods presented. All such adjustments
are of a normal recurring nature. The results of operations for the
three- and nine-month periods ended September 30, 1998, are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1998. For further information refer to the
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1997.
Note 2 - Planned Purchase of a Pipeline
On June 25, 1998, the Company announced that it had reached an
agreement in principle with ARCO Pipe Line Company to acquire an oil
pipeline running from the Paradox producing basin of northwestern New
Mexico to Long Beach, California. The purchase price of the line is
$38 million. A subsidiary of Questar Pipeline expects to complete
the purchase in the fourth quarter of 1998. The Company intends to
convert this line to transport natural gas to customers in the Los
Angeles basin. At this time, conversion is expected to add
approximately $60 million to the total cost of the project and to be
completed in 18-24 months.
Note 3 - Investment in Unconsolidated Affiliates
Questar Pipeline has interests in partnerships accounted for on an
equity basis. Transportation of natural gas is the primary business
activity of these partnerships. Summarized operating results of the
partnerships are as follows:
9 Months Ended
September 30,
1998 1997
(In Thousands)
Revenues $3,666 $2,697
Operating income (loss) 1,306 (46)
Income before income taxes 4,668 7,982
Note 4 - Financing
Questar Pipeline filed a registration statement with the Securities
and Exchange Commission for the issuance of up to $175 million in
medium-term notes effective September 2, 1998. Questar Pipeline
issued $60.1 million of medium-term notes in October of 1998. The
notes have a weighted average coupon rate of 6.15% and a weighted
average maturity of 13 years. The net proceeds from the sale of
these notes will be used to finance a portion of capital expenditures
and repay a portion of short-term debt.
TransColorado Gas Transmission Co., a partnership in which Questar
Pipeline owns a 50% interest in through a subsidiary, entered into a
$200 million, three-year revolving credit facility on October 14,
1998. Questar Pipeline and KN Energy have guaranteed the repayment of
their 50% proportionate share of the loan. Proceeds from this debt
will be used to finance the construction of the TransColorado
pipeline. The partnership had borrowed $75 million under this
arrangement as of October 31, 1998.
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
QUESTAR PIPELINE COMPANY AND SUBSIDIARIES
September 30, 1998
(Unaudited)
Operating Results
Following is a summary of financial and operating information for the
Company:
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $9,578 $9,238 $27,731 $27,101 $36,973 $36,952
From affiliates 17,655 16,651 53,350 51,416 71,028 67,755
Total revenues $27,233 $25,889 $81,081 $78,517 $108,001 $104,707
Operating income $12,251 $12,445 $39,103 $37,902 $51,691 $49,502
Net income 5,971 8,562 19,585 20,344 25,809 26,081
OPERATING STATISTICS
Natural gas transportation volumes (in
thousands of decatherms)
For unaffiliated customers 33,052 30,912 97,119 91,848 121,486 120,210
For Questar Gas 15,001 13,217 80,383 81,492 109,202 114,036
For other affiliated customers 7,227 9,753 19,634 27,562 29,869 43,522
Total transportation 55,280 53,882 197,136 200,902 260,557 277,768
Transportation revenue
(per decatherm) $0.32 $0.32 $0.27 $0.25 $0.28 $0.24
Revenues were higher in the 3-, 9- and 12-month periods of 1998 due
primarily to increased firm-transportation and firm-storage
reservation charges. Firm-transportation revenues were approximately
$400,000 higher in the third quarter of 1998 and $1.8 million higher
in the first nine months of 1998. The Company's firm-transportation
capacity has increased in the past year. Questar Pipeline's expanded
working gas capacity at Clay Basin was placed into service in the
second quarter of 1998. The expansion adds approximately $3 million
of revenues per year.
Operating and maintenance (O & M) expenses were higher in the 1998
periods presented when compared with the 1997 periods. The increase
in 1998 O & M expenses was primarily the result of charges associated
with compressor station maintenance particularly during the third
quarter of 1998 and more than offset the labor-cost reductions from
an early retirement program. Other activities incurring higher
charges in 1998 include telecommunications and data processing for
network and Year 2000 related activities. The higher charges for
these activities occurred despite capitalizing labor costs associated
with developing computer systems in the second quarter of 1998.
Questar Gas Company and Questar Pipeline share the costs of certain
administrative, accounting, legal, engineering and related services
provided by Questar Regulated Services. The Regulated Services group
completed a voluntary early retirement program that was effective
July 31, 1998. The program reduced the regulated services work force
by more than 10% or 177 employees. Questar Pipeline expects a $2 to
$3 million per year reduction of O & M expenses as a result of this
program.
Increased investment in capital projects has resulted in higher
depreciation charges in 1998. However, the full impact of increased
investment was partially offset by a downward adjustment of
depreciation expense in the second quarter of 1998. Other taxes were
lower in the 3- and 9-month periods ended September 30, 1998 when
compared with the same periods of 1997 as a result of property tax
refunds.
Income from unconsolidated affiliates in the 1998 periods include the
Company's share of earnings reported by TransColorado Gas
Transmission Co. The noncash earnings reflect capitalization of
interest and equity costs (AFUDC) associated with the construction of
the TransColorado pipeline amounting to $1,369,000 in the 9-month
period of 1998 compared with $4,042,000 in the corresponding 1997
period. An adjustment of a regulatory liability in the third quarter
of 1997 increased other income by $642,000 and net income by
approximately $400,000.
The effective income tax rate was 35.9% in the first nine months of
1998 compared with 38.2% for the same period in 1997 due to
adjustments that reduced 1998 tax expenses.
Liquidity and Capital Resources
Operating Activities
Net cash provided from operating activities of $26,496,000 in the
first nine months of 1998 was $6,328,000 less than the reported for
the same period in 1997 due primarily to changes in operating assets
and liabilities associated with a timing difference in collecting
receivables and a premium paid to redeem long-term debt.
Investing Activities
Capital expenditures were $59,812,000 in the first nine months of
1998 compared with $16,597,000 in the corresponding 1997 period.
Capital expenditures for calendar year 1998 are estimated to be
$121.5 million which includes $23.7 million for the Company's share
of equity investments in TransColorado Gas Transmission and $38
million for purchase of an oil pipeline. Construction of the
270-mileTransColorado pipeline began in late July and Phase II is
expected to be completed in the fourth quarter of 1998. Questar
Pipeline has invested $50.3 million in TransColorado to date
including $37.5 million in 1998. Questar Pipeline expects a return of
capital from TransColorado now that financing is in place.
Financing Activities
Questar Corporation loans funds to the Company under a short-term
arrangement. As of September 30, amounts borrowed from Questar were
$92.9 million in 1998 and $10.6 million in 1997. The Company
retired $20 million of its 9 7/8% debt in May of 1998 for a cash
payment of $23,386,000, which included a premium payment and interest
due. In October 1998, the Company borrowed $60.1 million under its
medium-term note program with a weighted average coupon rate of 6.15%
and a weighted average maturity of 13 years. Capital expenditures
for 1998 are expected to be financed with net cash provided from
operating activities and short- and long-term debt including
borrowings from Questar. Also in October 1998, TransColorado Gas
Transmission Co., a partnership, secured a $200 million
revolving-credit facility. Future construction funding for the
TransColorado pipeline should be provided by the revolving-credit
facility. The loan is guaranteed by Questar Pipeline and KN Energy.
Year 2000 Issues
Introduction
Questar (the Company) 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 basic approach has been to provide corporate-wide management and
coordination combined with distributed compliance responsibility at
the various business units. The Y2K team is responsible for fostering
awareness, establishing corporate-level, corporate-wide, strategy;
coordinating Questar action items and information; and providing
periodic internal status reports. The composition of the team includes
representation from each major Questar business unit. The effort is
designed to be consistent with the prudent efforts of publicly traded
companies of similar size, business, and complexity.
Questar InfoComm, Inc. (an affiliate which provides information
technology services to other Questar affiliates) is responsible for
Y2K compatibility of all communications systems, networks (LANs and
WANs), corporate-wide applications and operating systems, mainframe
commercial off-the-shelf products, and for developing, implementing
and coordinating testing procedures.
General
Questar's Y2K team developed a written plan (the Plan) addressing
infrastructure, applications software (infrastructure and applications
software are sometimes collectively referred to as "IT systems"),
outside suppliers and customers, and process control and
instrumentation containing embedded chips (non-IT systems). The
Company's in-house programmers and systems analysts are primarily
responsible for the conversion and testing of certain non-compliant
application software code. In addition, the services of outside
consultants and programmers were engaged to assist program management
completion of coding for certain software programs. The general phases
common to all business units are: (1) an inventory of Y2K items (both
IT and non-IT systems); (2) assignment of priorities to identified
items; (3) assessment of the Y2K compliance of items determined to be
material to the company; (4) repair or replacement of material items
that are determined not to be Y2K compliant; (5) test material items;
and (6) design and implementation of contingency and business
continuation plans for each organization and company location.
Implementation of the Plan is generally proceeding on schedule.
Status
On September 30, 1998, the inventory and priority assessment phases
for each business unit had been completed, but they will continue to
be monitored. Material items are those the Company believes to
involve a risk to the safety of individuals; or may cause damage to
property or the environment; or affect the Company's ability to
provide gas production, transportation, and delivery.
The testing phases of the Plan are underway. The Company has
developed a testing procedure and guidelines to help system users
develop their own specific test procedures and to ensure consistency
in testing. The Company has assembled a test facility which
duplicates, in essential details, the production environment. The
test facility is now in operation and the first systems are being
tested. Responsible system users are now in the process of developing
their test plans and scheduling testing.
The infrastructure section of the Plan addresses hardware and systems
software other than applications software. This effort is on
schedule, and the Company estimates that approximately 50% of the
activities related to the section had been completed as of September
30, 1998. The testing phase has commenced and will be ongoing as
hardware or system software is remediated, upgraded or replaced.
Contingency planning for this section commenced in the third quarter
of 1998. All infrastructure activities are expected to be completed
by mid-1999.
The applications software section of the Plan addresses both the
conversion of applications software that is not Y2K compliant and,
where available from the supplier, the replacement of such software.
The Company estimates that the software conversion and replacement
phase was more than 70% complete on September 30, 1998, and the
remaining conversions and replacements are on schedule to be completed
by July 1, 1999. The testing phase of this section, is scheduled for
completion by the third quarter of 1999. The testing phase is conducted
as the software is remediated or replaced. Contingency planning for this
section began in the third quarter of 1998 and is scheduled to be
completed by mid-1999.
The outside vendors and customers section of the Plan includes the
process of identifying and prioritizing critical suppliers and
customers and communicating with them about their plans and progress
in addressing their Y2K problems. The various business units have
formed Project teams to begin the detailed evaluations of the most
critical third parties and to elicit the required information. The
process of evaluating these external agents commenced in the third
quarter of 1998 and is scheduled for completion by mid-1999, with
follow-up reviews scheduled through the remainder of 1999. This
procedure will include the development of contingency plans, scheduled
for the second quarter of 1999, with completion by late 1999. The
Company estimates that this section was behind schedule at September
30, 1998.
Inventory and assessment phases are in progress for non-IT systems.
This section of the Plan addresses the hardware, software and
associated embedded computer chips that are used in the operation of
all facilities operated by the Company. This section presents unique
problems in that it is often difficult to determine whether embedded
chips have a date function that will present a Y2K problem. It is
also difficult to take certain critical systems, such as compressors
and pipeline valves, off-line for testing. Despite these
difficulties, the Company believes the replacement, repair and testing
of non-IT systems equipment is on schedule to be completed by year-end
1999. Contingency planning for this section began in the third
quarter of 1998 and will be completed by year-end 1999.
Costs
The total cost associated with required modifications to become Y2K
compliant is not expected to be material to the Company's financial
position. The current expense estimate of the Year 2000 Project is
approximately $4.5 million, with $2.3 million attributable to Questar
Gas Company and $.8 million attributable to Questar Pipeline Company.
This estimate does not include Questar's potential share of Y2K costs
that may be incurred by partnerships and joint ventures in which the
Company participates but is not the operator. This expense estimate is
expected to change as the Project progresses. Funds for the Project
are included in existing operating budgets.
Risks
Failure to correct a material Y2K problem could result in an
interruption in, or a failure of, certain normal business activities
or operations. Such failures could materially and adversely affect
the Company's results of operations, liquidity and financial
condition. Due to the general uncertainty inherent in the Y2K
problem, resulting in part from the uncertainty of the Y2K readiness
of outside suppliers and customers and the embedded chip problems, the
Company is unable to determine at this time whether the consequences
of Y2K failures will have a material impact on the Company's results
of operations, liquidity or financial condition. The Y2K Project has
reduced and is expected to continue to significantly reduce the
Company's level of uncertainty about the Y2K problem and, in
particular, about the Y2K compliance and readiness of its material
outside vendors and customers. The Company believes that the
possibility of significant interruptions of normal operations is not
great.
The 10-Q contains forward-looking statements about the future
operations and expectations of Questar Pipeline Company. According to
management, these statements are made in good faith and are reasonable
representations of Questar Pipeline's expected performance at the time.
Actual results may vary from management's stated expectations and
projections due to a variety of factors.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits have been filed as part of this
report:
Exhibit No. Exhibits
10.4. Guaranty Agreement dated as of October 14, 1998, by
Questar Pipeline Company in favor of Bank of America
National Trust and Savings Association.
10.5. Asset Purchase Agreement dated October 23, 1998,
between Questar Line 90 Company, a wholly owned
subsidiary, and ARCO Pipeline Company.
12. Ratio of earnings to fixed charges.
(b) The Company filed a Current Report on Form 8-K, dated August
31, 1998, during the third quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
QUESTAR PIPELINE COMPANY
(Registrant)
November 13, 1998 /s/ D. N. Rose
D. N. Rose
President and Chief Executive
Officer
November 13, 1998 /s/ S. E. Parks
S. E. Parks
Vice President, Treasurer, and
Chief Financial Officer
</TABLE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is dated as of October
14, 1998 and is by QUESTAR PIPELINE CO., a Utah corporation (the
"Guarantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent (in such capacity, the "Administrative Agent")
for its benefit and for the ratable benefit of the financial
institutions (the "Banks") now or hereafter party to that certain
Credit Agreement dated as of October 14, 1998 (as the same may be
amended, modified or restated from time to time and at any time, the
"Credit Agreement"), among TransColorado Gas Transmission Company (the
"Borrower"), the Banks, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Banks
have agreed to extend credit to the Borrower;
WHEREAS, the obligation of the Banks to extend credit is
conditioned upon, among other things, the execution and delivery by
the Guarantor of this Guaranty;
WHEREAS, Questar TransColorado, Inc., a wholly-owned subsidiary
of Guarantor, owns a fifty percent (50%) partnership equity interest
in Borrower, and the Guarantor will derive substantial direct and
indirect economic benefit from the extensions of credit pursuant to
the Credit Agreement;
NOW, THEREFORE, (i) in consideration of the premises and to
induce the Banks to enter into the Credit Agreement and to extend
credit, (ii) at the special insistence and request of the
Administrative Agent and the Banks, and (iii) for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor, for the benefit of the
Administrative Agent and the Banks, hereby agrees as follows:
Section 1.Defined Terms. All capitalized terms used but not
defined herein shall have the meanings set forth in Schedule 1 hereto,
except that capitalized terms used herein but not defined herein or in
Schedule 1 shall have the meanings set forth in the Credit Agreement.
Section 2.Guaranty. (a) The Guarantor hereby,
unconditionally and irrevocably, severally with the Other Guarantors
(as such term is defined in Section 17 hereof) and not jointly or
jointly and severally, guarantees the prompt performance and payment
in full in Dollars when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations (including, without
limitation, all costs, fees and expenses incurred by the
Administrative Agent or any Bank in enforcing any rights under this
Guaranty and reasonable counsel fees of outside counsel, and the
allocated cost of in-house counsel).
(b) Notwithstanding anything herein or in any other Loan
Document to the contrary, the maximum liability of the Guarantor under
this Guaranty at any time shall not exceed an amount equal to fifty
percent (50.00%) of the dollar amount of the Obligations then
outstanding. The amount of the Obligations for which Guarantor is
liable hereunder shall be reduced by the amount of any principal
payments made by the Guarantor (but not by the amount of payments made
by any Other Guarantor) on behalf of the Borrower but only if (i) such
payments are clearly identified as such in a written notice delivered
to the Administrative Agent and (ii) the amount of the Commitments is
permanently reduced by the amount of such payment.
Section 3.Guaranty Absolute.
(a) The obligations of the Guarantor hereunder are those of
a primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the
Guarantor whether or not an action is brought against the Borrower,
any other guarantor or other obligor in respect of the Obligations or
whether the Borrower, any other guarantor or any other obligor in
respect of the Obligations are joined in any such action or actions.
(b) The Guarantor guarantees that the Obligations will be
paid and performed strictly in accordance with the terms of the Credit
Agreement and the other Loan Documents regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Administrative Agent
or the Banks with respect thereto. Guarantor agrees that its
guarantee constitutes a guarantee of payment when due and not of
collection. The liability of the Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of the Credit Agreement, any other Loan Document or any
other document, agreement or instrument relating thereto or any
assignment or transfer of any thereof;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations (including,
without limitation, the possible extension of the Maturity Date
(except as expressly provided in Section 16 hereof) and increase of
the amount of the Commitments all on the terms and conditions set
forth in the Credit Agreement), or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition, consent,
supplement to, or consent to departure from, or any other action or
inaction under or in respect of, the Credit Agreement or any other
Loan Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to therein
or any assignment or transfer of any thereof;
(iii)any release or partial release of any other guarantor
or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of any
collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any guaranty or
security, for all or any of the Obligations;
(v) any furnishing of any security for any of the
Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of the Borrower, any other guarantor or other obligor
in respect of the Obligations or any action taken with respect to this
Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(vii)any modification or termination of any intercreditor or
subordination agreement pursuant to which the claims of other
creditors of the Borrower or the Guarantor are subordinated to those
of the Banks; or
(viii)any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance
of the Obligations, or any part thereof, is, upon the insolvency,
bankruptcy or reorganization of the Borrower or the Guarantor or
otherwise pursuant to applicable law, rescinded or reduced in amount
or must otherwise be restored or returned by the Administrative Agent
or any Bank, all as though such payment or performance had not been
made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency
against the Borrower of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, the Obligations shall be
deemed to have been accelerated and the Guarantor shall forthwith pay
such Obligations (including, without limitation, interest which but
for the filing of a petition in bankruptcy with respect to the
Borrower, would accrue on such Obligations), and the other obligations
hereunder, without any further notice or demand.
Section 4.Waivers. The Guarantor hereby waives promptness,
diligence, notice of intention to accelerate, notice of acceleration,
notice of acceptance and any and all other notices with respect to any
of the Obligations and this Guaranty and any requirement that the
Administrative Agent or any Bank protect, secure, perfect or insure
any security interest in or any Lien on any property subject thereto
or exhaust any right or take any action against the Borrower, any
other guarantor or any other Person or any collateral or security or
to any balance of any deposit accounts or credit on the books of any
Bank in favor of the Borrower or the Guarantor.
Section 5.Subrogation. The Guarantor will not exercise any
rights of subrogation, reimbursement or contribution, contractual
statutory or otherwise which it may acquire by way of subrogation
under this Guaranty, by any payment hereunder or otherwise, until all
of the Obligations have been paid in full in cash and all Commitments
have terminated.
Section 6.Representations and Warranties. The Guarantor
represents and warrants to the Administrative Agent and the Banks the
following:
(a) Corporate Existence and Power. The Guarantor and each
of its Material Subsidiaries: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has the power and authority
and all governmental licenses, authorizations, consents and approvals
to own its assets, carry on its business and to execute, deliver, and
perform its obligations under the Loan Documents; (iii) is duly
qualified as a foreign corporation and is licensed and in good
standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification or license, except as set forth in Schedule 6(a)
hereto; and (iv) is in compliance with all Requirements of Law.
(b) Corporate Authorization; No Contravention. The
execution, delivery and performance by the Guarantor of this Guaranty
and each other Loan Document to which the Guarantor is party have been
duly authorized by all necessary corporate action, and do not: (i)
contravene the terms of any of the Guarantor's Organization Documents;
(ii) a conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual
Obligation to which the Guarantor is a party or any order, injunction,
writ or decree of any Governmental Authority to which the Guarantor or
its property is subject; or (iii) violate any Requirement of Law.
(c) Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority is necessary or required in
connection with the execution, delivery or performance by, or
enforcement against, the Guarantor of this Guaranty or any other Loan
Document.
(d) Binding Effect. This Guaranty and each other Loan
Document to which the Guarantor is a party constitute the legal, valid
and binding obligations of the Guarantor, enforceable against the
Guarantor in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally
or by equitable principles relating to enforceability.
(e) Litigation. Except as set forth on the Guarantor's
Form 10Q dated as of June 30, 1998 and Guarantor's Form 8K dated
August 31, 1998, filed with the SEC, there are no actions, suits,
proceedings, claims or disputes pending, or to the best knowledge of
the Guarantor, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the
Guarantor, or its Material Subsidiaries or any of their respective
properties which: (i) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated
hereby or thereby; or (ii) if determined adversely to the Guarantor or
its Material Subsidiaries, would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not
be consummated as herein or therein provided.
(f) No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Guarantor.
As of the Closing Date, neither the Guarantor nor any Material
Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under subsection 8(d).
(g) ERISA Compliance. (i) Each Plan is in compliance in
all material respects with the applicable provisions of ERISA, the
Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of the
Guarantor, nothing has occurred which would cause the loss of such
qualification. The Guarantor and each ERISA Affiliate has made all
required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(ii) There are no pending or, to the best knowledge of
Guarantor, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(iii)(A) No ERISA Event has occurred or is reasonably
expected to occur; (B) no Pension Plan has any Unfunded Pension
Liability; (C) neither the Guarantor nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (D) neither the Guarantor
nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (E) neither the Guarantor nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
(h) Title to Properties. The Guarantor and each Material
Subsidiary have good record and marketable title in fee simple to, or
valid leasehold interests in, all real property necessary or used in
the ordinary conduct of their respective businesses, except for such
defects in title as could not, individually or in the aggregate, have
a Material Adverse Effect. As of the Closing Date, the property of the
Guarantor and its Material Subsidiaries is subject to no Liens, other
than Permitted Liens.
(i) Taxes. The Guarantor and its Material Subsidiaries
have filed all Federal and other material tax returns and reports
required to be filed, and have paid all Federal and other material
taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment
against the Guarantor or any Material Subsidiary that would, if made,
have a Material Adverse Effect.
(j) Financial Condition. (i) The audited consolidated
balance sheet of the Guarantor and its Subsidiaries as of December 31,
1997 and the related consolidated statements of income, operations,
shareholders' equity and cash flows for the fiscal year then ended, a
copy of which has been delivered to each of the Banks: (A) were
prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein,
subject to ordinary, good faith year end audit adjustments; (B) fairly
present the financial condition of the Guarantor and its Subsidiaries
as of the date thereof and results of operations for the period
covered thereby; and (C) include all material indebtedness and other
liabilities, direct or contingent, of the Guarantor and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations.
(ii) The unaudited consolidated financial statements of the
Guarantor and its Subsidiaries dated June 30, 1998, and the related
consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on that date, a copy of
which has been delivered to each of the Banks: (A) were prepared in
accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, subject
to ordinary, good faith year end audit adjustments; (B) fairly present
the financial condition of the Guarantor and its Subsidiaries as of
the date thereof and results of operations for the period covered
thereby; and (C) include all material indebtedness and other
liabilities, direct or contingent, of the Guarantor and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations.
(iii)Since December 31, 1997, there has been no Material
Adverse Effect.
(k) Environmental Matters. The Guarantor conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business,
operations and properties, and as a result thereof the Guarantor has
reasonably concluded that such Environmental Laws and Environmental
Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(l) Regulated Entities. None of the Guarantor, any Person
controlling the Guarantor, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. The
Guarantor is not subject to regulation, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness. Guarantor is a Wholly-Owned Subsidiary of Questar
Corporation and Questar Corporation is a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended
("PUHCA"), which claims an exemption under 3(a)(1) of PUHCA. Each
of the Subsidiaries of Questar Corporation (including, without
limitation, the Guarantor) is a "subsidiary company" of a "holding
company" within the meaning of PUHCA. No consent or filing or any
other action under PUHCA is necessary for the valid execution and
delivery of this Guaranty or any other Loan Document or for the
performance by the Guarantor or its Subsidiaries of their respective
obligations thereunder.
(m) No Burdensome Restrictions. Neither the Guarantor nor
any Material Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
(n) Copyrights, Patents, Trademarks and Licenses etc. The
Guarantor or its Material Subsidiaries own or are licensed or
otherwise have the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the
operation of their respective businesses, without conflict with the
rights of any other Person. To the best legal knowledge of the
Guarantor, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now
contemplated to be employed, by the Guarantor or any Material
Subsidiary infringes upon any rights held by any other Person. No
claim or litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or,
to the knowledge of the Guarantor, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
(o) Subsidiaries. The Guarantor has no Subsidiaries other
than those specifically disclosed in part (a) of Schedule 6(o) hereto
and has no equity investments in any other corporation or entity other
than those specifically disclosed in part (b) of Schedule 6(o).
(p) Insurance. The properties of the Guarantor and its
Material Subsidiaries are insured with financially sound and reputable
insurance companies not Affiliates of the Guarantor, or through
self-insurance conforming to the requirements of Section 7(f) of this
Guaranty, in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the
Guarantor or such Material Subsidiary operates.
(q) Full Disclosure. None of the representations or
warranties made by the Guarantor in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of the Guarantor in connection
with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of the Guarantor to the Banks
prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time
when made or delivered.
(r) Year 2000.On the basis of a review and assessment of
the Guarantor's mission critical systems and equipment, and reasonable
inquiry made of the Guarantor's material suppliers, vendors and
customers, the Guarantor reasonably believes that the "Year 2000
problem", including costs of remediation, will not result in a
Material Adverse Effect with respect to the Guarantor. The Guarantor
is currently taking commercially reasonable steps to develop
contingency plans in the event of the failure of its own or a third
party's systems or equipment due to the Year 2000 problem.
(s) Benefit to Guarantor. Guarantor has determined that
its liability and obligation under this Guaranty will substantially
benefit it directly and indirectly, and its board of directors has
made that determination.
Section 7.Covenants. The Guarantor agrees that, until the
payment (after termination of the Commitments) in full (subject to
Section 2(b) above) of the Obligations and all other amounts payable
under this Guaranty, unless the Majority Banks waive compliance in
writing:
(a) Financial Statements. The Guarantor shall deliver to
the Administrative Agent, with sufficient copies for each Bank, in
form and detail satisfactory to the Administrative Agent and the
Majority Banks:
(i) as soon as available, but not later than 120 days after
the end of each fiscal year, a copy of the audited consolidated
balance sheet of the Guarantor and its Subsidiaries, and the related
consolidated statements of income or operations, shareholders' equity
and cash flows, as of the end of such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal
year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm (the "Independent Auditor") which
report shall state that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion
shall not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of the
Guarantor's or any Subsidiary's records; and
(ii) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters of each fiscal
year, a copy of the unaudited consolidated balance sheet of the
Guarantor and its Subsidiaries, and the related consolidated
statements of income, shareholders' equity and cash flows, as of the
end of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith
year-end audit adjustments), the financial position and the results of
operations of the Guarantor and the Subsidiaries.
(b) Certificates: Other Information. The Guarantor shall
furnish to the Administrative Agent: (i) concurrently with the
delivery of the financial statements referred to in subsections
7(a)(i) and (ii), a Compliance Certificate executed by a Responsible
Officer; and (ii) promptly, copies of all financial statements and
reports that the Guarantor sends to its shareholders and, within 15
days of the filing thereof, copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and
8K) that the Guarantor may make to, or file with, the SEC.
(c) Notices. The Guarantor shall promptly notify the
Administrative Agent:
(i) after acquiring knowledge thereof, of the occurrence of
any Default or Event of Default, and of the occurrence or existence of
any event or circumstance that foreseeably will become a Default or
Event of Default;
(ii) of any matter that has resulted or may result in a
Material Adverse Effect, including (A) breach or non-performance of,
or any default under, a Contractual Obligation of the Guarantor or any
Material Subsidiary; (B) any dispute, litigation, investigation,
proceeding or suspension between the Guarantor or any Material
Subsidiary and any Governmental Authority; or (C) the commencement of,
or any material development in, any litigation or proceeding affecting
the Guarantor or any Material Subsidiary; including pursuant to any
applicable Environmental Laws; and
(iii)after acquiring knowledge thereof, of the occurrence of
any of the following events affecting the Guarantor or any ERISA
Affiliate (but in no event more than 10 days after such event), and
deliver to the Administrative Agent a copy of any notice with respect
to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Guarantor or any
ERISA Affiliate with respect to such event: (A) an ERISA Event; (B) a
material increase in the Unfunded Pension Liability of any Pension
Plan; (C) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Guarantor or any
ERISA Affiliate; or (D) the adoption of any amendment to a Plan
subject to Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension Liability.
Each notice under this subsection shall be accompanied by a
written statement by a Responsible Officer setting forth details of
the occurrence referred to therein, and stating what action the
Guarantor or any affected Material Subsidiary proposes to take with
respect thereto and at what time. Each notice under subsection 6(c)(i)
shall describe with particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been (or foreseeably
will be) breached or violated.
(d) Preservation of Corporate Existence. Etc. The
Guarantor shall, and shall cause each Material Subsidiary to: (i)
preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of
incorporation; (ii) preserve and maintain in full force and effect all
material governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct
of its business except in connection with transactions permitted by
Section 7(m) and Section 7(n); (iii) use reasonable efforts, in the
ordinary course of business, to preserve its business organization and
goodwill; and (iv) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.
(e) Maintenance of Property. The Guarantor shall maintain,
and shall cause each Material Subsidiary to maintain, and preserve all
its property which is used in its ordinary course of business in good
working order and condition, ordinary wear and tear excepted.
(f) Insurance. The Guarantor shall maintain, and shall
cause each Material Subsidiary to maintain, with financially sound and
reputable independent insurers, or through self-insurance, insurance
with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons.
Such insurance may include self-insurance or be subject to
co-insurance, deductibility or similar clauses which, in effect,
result in self-insurance of certain losses, provided that such
self-insurance is in accord with the approved practices of
corporations similarly situated and adequate insurance reserves are
maintained in connection with such self-insurance, and,
notwithstanding the foregoing provisions of this Section 7(f) the
Guarantor or any Subsidiary may effect workers' compensation or
similar insurance in respect of operations in any state or other
jurisdiction either through an insurance fund operated by such state
or other jurisdiction or by causing to be maintained a system or
systems of self-insurance in accord with applicable laws.
(g) Payment of Obligations. The Guarantor shall, and shall
cause each Material Subsidiary to, pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including: (i) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets,
unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being
maintained by the Guarantor or such Material Subsidiary; (ii) all
lawful claims which, if unpaid, would by law become a Lien upon its
property; and (iii) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
(h) Compliance with Laws. The Guarantor shall comply, and
shall cause each Material Subsidiary to comply, in all material
respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
(i) Compliance with ERISA. The Guarantor shall, and shall
cause each of its ERISA Affiliates to: (i) maintain each Plan in
compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law; (ii) cause each Plan
which is qualified under Section 401(a) of the Code to maintain such
qualification; and (iii) make all required contributions to any Plan
subject to Section 412 of the Code.
(j) Inspection of Property and Books and Records. The
Guarantor shall maintain and shall cause each Material Subsidiary to
maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be
made of all financial transactions and matters involving the assets
and business of the Guarantor and such Material Subsidiary. The
Guarantor shall permit, and shall cause each Material Subsidiary to
permit, representatives and independent contractors of the
Administrative Agent and the Banks to visit and inspect any of their
respective properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Administrative Agent and
the Banks and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance
notice to the Guarantor; provided, however, when an Event of Default
exists the Administrative Agent and the Banks may do any of the
foregoing at the expense of the Guarantor at any reasonable time
during normal business hours and without advance notice.
(k) Environmental Laws. The Guarantor shall, and shall
cause each Material Subsidiary to, conduct its operations and keep and
maintain its property in compliance with all Environmental Laws in all
material respects.
(l) Limitation on Liens. Except as hereinafter in this
Section 7(l) expressly permitted and as permitted by Section 7(n), so
long as any Bank shall have any Commitment under the Credit Agreement
or any of the Obligations remain outstanding, the Guarantor will not
at any time directly or indirectly create, assume or suffer to exist,
and will not cause, suffer or permit any Subsidiary to create, assume
or suffer to exist, otherwise than in favor of the Guarantor or a
Subsidiary, any Liens upon any of its properties or assets, real,
personal or mixed, whether owned at the date of this Guaranty or
thereafter acquired, or of or upon, any income or profits therefrom,
without making effective provision, and the Guarantor covenants that
in any such case it will make or cause to be made effective provision,
whereby the Obligations then or thereafter outstanding shall be
secured by such Liens equally and ratably with any and all other
obligations and indebtedness thereby secured, so long as any such
other obligations or indebtedness shall be so secured.Nothing in this
Section 7(l) shall be construed to prevent the Guarantor or any
Subsidiary from creating, assuming or suffering to exist Liens of the
following character ("Permitted Liens"), to all of which the
provisions of the first sentence of this Section 7(l) shall not be
applicable:
(i) Liens existing as of the date of this Guaranty;
(ii) Any purchase money mortgage or Lien created to secure
all or part of the purchase price of any property (or to secure a loan
made to the Guarantor or any Subsidiary to enable it to acquire the
property described in such mortgage or in any applicable security
agreement); provided that such Lien shall extend only to the property
so acquired, improvements thereon, replacements thereof and the income
or profits therefrom;
(iii)Liens on any property at the time of the acquisition
thereof, whether or not assumed by the Guarantor or a Subsidiary;
provided that such Lien shall extend only to the property so acquired,
improvements thereon, replacements thereof and the income or profits
therefrom;
(iv) Liens on any property or any contract for the sale of
any product or service, or any rights thereunder or any proceeds
therefrom, acquired or constructed by the Guarantor or a Subsidiary,
and created not later than twelve months after (A) such acquisition or
completion of such construction, or (B) commencement of operation of
such property, whichever is later; provided that such Lien shall
extend only to the property so acquired or constructed, improvements
thereon, replacements thereof and the income or profits therefrom;
(v) Liens on the properties or assets, real, personal or
mixed, of a Subsidiary, or of or upon or in any income or profits
therefrom, which is outstanding at the time such Subsidiary becomes a
Subsidiary;
(vi) Liens created or assumed by the Guarantor or a
Subsidiary on coal, geothermal, oil, natural gas, inert gas, other
hydrocarbon or mineral properties owned or leased by the Guarantor or
a Subsidiary to secure loans to the Guarantor or a Subsidiary for the
purpose of developing such properties;
(vii)Liens on any investment of the Guarantor or a
Subsidiary in any Person other than a Subsidiary or any security
representing any investment of the Guarantor or a Subsidiary; for the
purposes of this subsection (vii), "investment" means any equity
investment in any Person, any obligation of any Person for money
borrowed or for the deferred purchase price of property which is owed
to the Guarantor or a Subsidiary, as the case may be, and any amount
advanced to any person by the Guarantor or any Subsidiary, excluding,
however, current accounts payable other than for cash advances;
(viii)Any Lien not otherwise permitted by this Section 7(l)
if, after giving effect to the creation or assumption of the proposed
mortgage, pledge, lien, encumbrance or security interest the sum of
(A) all indebtedness of the Guarantor and its Subsidiaries secured by
Liens not otherwise permitted by this Section 7(l), and (B) to the
extent not included in (A) above, all Attributable Debt of the
Guarantor and its Subsidiaries does not exceed 10% of Consolidated
Capitalization;
(ix) Any refunding or extension of maturity, in whole or in
part, of any obligation or indebtedness secured by any Lien created,
existing or assumed in accordance with the provisions of subsections
(i) through (viii) above, inclusive, provided that the principal
amount of the obligation or indebtedness secured by such refunding or
extended Liens shall not exceed the principal amount of the obligation
or indebtedness to be refunded or extended outstanding at the time of
such refunding or extension, together with related financing costs,
and that such refunding or extended Liens shall be limited in lien to
the same property that secured the obligation or indebtedness refunded
or extended, and property substituted therefor and property acquired
after the date thereof and subject to the lien thereof, in accordance
with the provisions of such refunding or extension;
(x) Liens on any office equipment or data processing
equipment (including, without limitation, computer and computer
peripheral equipment) or any motor vehicles, tractors or trailers;
(xi) Liens of or upon or in current assets of the Guarantor
or a Subsidiary, determined in accordance with GAAP, created or
assumed to secure indebtedness incurred in the ordinary course of
business;
(xii)Mechanics' or materialmen's liens; any Lien or charge
arising by reason of pledges or deposits to secure payment of or to
permit participation in workmen's compensation, unemployment
insurance, old age pensions or other Social Security or other
insurance or to permit self-insurance; good faith deposits in
connection with tenders or leases of real estate, bids or contracts or
in connection with the financing of the acquisition or construction of
property to be used in the business of the Guarantor or a Subsidiary;
deposits to secure public or statutory obligations; deposits to secure
or in lieu of surety, stay or appeal bonds; deposits as security for
the payment of taxes or assessments or other similar charges; judgment
liens against the Guarantor or any Subsidiary thereof in an aggregate
amount not in excess $5,000,000, or any such judgment lien so long as
the finality of such judgment is being contested and execution thereon
is stayed and which has been appealed and secured, if necessary, by
the filing of an appeal bond; and liens for taxes or assessments for
the current year or which are not due or which remain payable without
penalty or which are being contested in good faith and against which
an adequate reserve has been established;
(xiii)Any lien arising by reason of deposits with or the
giving of any form of security to any governmental agency or any body
created or approved by law or governmental regulation for any purpose
at any time in connection with the financing of the acquisition or
construction of property to be used in the business of the Guarantor
or a Subsidiary, or as required by law or governmental regulation as a
condition to the transaction of any business or the exercise of any
privilege or license, or to permit the maintenance of self-insurance
or participation in any fund for liability on any insurance risks or
in connection with workmen's compensation, unemployment insurance, old
age pensions or other social security or to share in the privileges or
benefits required for companies participating in such arrangements;
(xiv)Liens which are payable, both with respect to principal
and interest, solely out of the proceeds of natural gas, oil, coal,
geothermal resources, inert gas, hydrocarbons or minerals to be
produced from the property subject thereto and to be sold or delivered
by the Guarantor or a Subsidiary;
(xv) Liens to secure indebtedness incurred to finance
advances made by the Guarantor or any Subsidiary to any third party
for the purpose of financing oil, natural gas, hydrocarbon, inert gas
or other mineral exploration or development, provided that such liens
shall extend only to the receivables of the Guarantor or such
Subsidiary in respect of such advances;
(xvi)Any rights reserved in others to take or reserve any
part of the natural gas, oil, coal, geothermal resources, inert gas,
other hydrocarbons or mineral produced at any time on any property of
the Guarantor or a Subsidiary;
(xvii)Any rights reserved to or vested in, or any
obligations or duties to, any person, firm, corporation or
governmental authority by the terms of any franchise, grant, lease,
license, easement or permit or by any provision of law with respect to
any property of the Guarantor or a Subsidiary;
(xviii)Leases (whether pursuant to Sale and Leaseback
Transactions or otherwise) now or hereafter existing and any renewals
or extensions thereof;
(xix)Liens upon the underlying interests in property covered
by any lease, contract, easement or right-of-way existing at the time
of the acquisition thereof; easements or similar encumbrances, the
existence of which does not materially impair the use of the property
subject thereto for the purposes for which it was acquired; liens upon
rights-of-way for pipeline or distribution plant purposes and
undetermined liens and charges incidental to construction or
maintenance; or defects and irregularities in the titles to any
property (including right-of-way) which are not material to the
business of the Guarantor and its Subsidiaries considered as a whole;
(xx) The lien reserved in leases for rent and for compliance
with the terms of the lease in the case of leasehold estates;
(xxi)Zoning laws and ordinances; and
(xxii)Liens which secure indebtedness of a Subsidiary to the
Guarantor or another Subsidiary.
If at anytime the Guarantor or any Subsidiary shall create or assume
any Lien to which the covenant in the first sentence of this Section
7(l) is applicable, the Guarantor will promptly deliver to the
Administrative Agent a certificate of a Responsible Officer, stating
that such covenant has been complied with, and an opinion of counsel
to the Guarantor, stating that in their opinion such covenant has been
complied with and that any instruments executed by the Guarantor or
any Subsidiary in the performance of such covenant complied with the
requirements thereof. The Administrative Agent may accept a
certificate of a Responsible Officer and an opinion of counsel as
conclusive evidence that any such steps taken to secure the
Obligations equally and ratably comply with the provisions of this
Section 7(l).
(m) Limitation on Sale and Leaseback Transactions. The
Guarantor shall not, and shall not permit any Subsidiary to, enter
into a Sale and Leaseback Transaction unless:
(i) the term of the lease is for 60 months or less; or
(ii) the lease is between the Guarantor and a Subsidiary or between
Subsidiaries; or
(iii)on the effective date of the lease the sum of (A) all
Indebtedness of the Guarantor and its Subsidiaries secured by Liens
not permitted by Section 7(l) (other than Section 7(l)(viii)), and (B)
to the extent not included in (A) above, all Attributable Debt of the
Guarantor and its subsidiaries, does not exceed 10% of Consolidated
Capitalization; or
(iv) the Guarantor or such Subsidiary within 120 days after the
effective date of the lease, applies an amount equal to the greater of
(A) the net proceeds of the sale of the property leased in such Sale
and Leaseback Transaction or (B) the fair market value (as determined
in good faith by the Board of Directors) of such property on any date
within 90 days prior to the effective date of the lease, to the
retirement of Funded Debt of the Guarantor or any Subsidiary.
(n) Consolidation, Merger or Sale.Nothing contained in this
Guaranty shall prevent any consolidation or merger of the Guarantor
with or into any other Person or Persons (whether or not affiliated
with the Guarantor), or successive consolidations or mergers in which
the Guarantor or its successor or successors shall be a party or
parties, or shall prevent any conveyance, transfer or lease of the
property of the Guarantor as an entirety or substantially as an
entirety, to any other Person (whether or not affiliated with the
Guarantor); provided, however, that:
(i) in case the Guarantor shall consolidate with or merge
into another Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, the entity formed
by such consolidation or into which the Guarantor is merged or the
Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Guarantor substantially as an entirety
shall be a corporation organized and existing under the laws of the
United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an instrument supplemental
hereto, executed and delivered by the successor Person to the
Administrative Agent for the benefit of the Administrative Agent and
the Banks, in form satisfactory to the Administrative Agent and the
Banks, the due and punctual payment and performance of each and every
covenant of this Guaranty on the part of the Guarantor to be performed
or observed;
(ii) immediately after giving effect to such transaction, no
event which, after notice or lapse of time, would become an Event of
Default, shall have occurred and be continuing; and
(iii)each of the Guarantor and the successor Person shall
have delivered to the Administrative Agent a certificate of a
Responsible Officer and an opinion of counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental instrument comply with this Section 7(n) and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
Upon any consolidation by the Guarantor with or merger by the
Guarantor into any other Person or any conveyance, transfer or lease
of the properties and assets of the Guarantor substantially as an
entirety in accordance with this Section 7(n), the successor Person
formed by such consolidation or into which the Guarantor is merged or
to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for and be liable for, the Guarantor under this
Guaranty with the same effect as if such successor Person had been
named as the Guarantor herein.
(o) Transactions with Affiliates. The Guarantor shall not,
and shall not suffer or permit any Material Subsidiary to, enter into
any transaction with any Affiliate of the Guarantor, except in
compliance with all Requirements of Law.
(p) ERISA. The Guarantor shall not, and shall not suffer
or permit any of its ERISA Affiliates to: (i) engage in a prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably expected to
result in liability of the Guarantor in an aggregate amount in excess
of $10,000,000; or (ii) engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
(q) Change in Business. The Guarantor shall not, and shall
not suffer or permit any Material Subsidiary to, engage in any
material line of business substantially different from those lines of
business carried on by the Guarantor and its Material Subsidiaries on
the date hereof.
Section 8.Event of Default. The occurrence of any of the
following events shall constitute an Event of Default hereunder
(sometimes called a "Event of Default"):
(a) Representation or Warranty. Any representation or
warranty by the Guarantor made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or
financial or other statement by the Guarantor or any Responsible
Officer, furnished at any time under this Agreement, or in or under
any other Loan Document, is incorrect in any material respect on or as
of the date made or deemed made; or
(b) Specific Defaults. The Guarantor fails to perform or
observe any term, covenant or agreement contained in any of Section
7(c), 7(i), 7(l), 7(m), 7(n), 7(o), 7(p) or 7(q); or
(c) Defaults - Deliveries. The Guarantor fails to perform
or observe any term or covenant contained in any of Section 7(a) or
7(b) this Agreement, and such default shall continue unremedied for a
period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such
failure and (ii) the date upon which written notice thereof is given
to the Guarantor by the Administrative Agent; or
(d) Other Defaults. The Guarantor fails to perform or
observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a
period of 60 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such
failure and (ii) the date upon which written notice thereof is given
to the Guarantor by the Administrative Agent; or
(e) Cross-Default. The Guarantor or any Material
Subsidiary (i) fails to make any payment in respect of any
indebtedness or Contingent Obligation having an aggregate principal
amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and
such failure continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such failure;
or (ii) fails to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement
or instrument relating to any such indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date
of such failure if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a trustee or
agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such indebtedness to be declared to be due and
payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded;
or
(f) Insolvency; Voluntary Proceedings. The Guarantor or
any Material Subsidiary (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action
to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding Is commenced or filed against the Guarantor or
any Material Subsidiary, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a
substantial part of the Guarantor's or any Material Subsidiary's
properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within
60 days after commencement, filing or levy; (ii) the Guarantor or any
Material Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Guarantor or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to
a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Guarantor under
Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of $10,000,000; (ii) the aggregate
amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $10,000,000; or (iii) the Guarantor or any ERISA
Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $10,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is
entered against the Guarantor of any Material Subsidiary involving in
the aggregate a liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions,
incidents or conditions, of $5,000,000 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period
of 60 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against the Guarantor or any Material
Subsidiary which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 60
consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control (Guarantor). There occurs any Change
of Control; or
(l) Subsidiaries. The Guarantor shall at any time fail to
own and control, directly or indirectly, 80% of the voting capital
stock of a Material Subsidiary; or
(m) Loss of Licenses. The Federal Energy Regulatory
Commission or any other Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Guarantor or
any Material Subsidiary, or the Guarantor or any Material Subsidiary
for any reason loses any material license, permit or franchise, or the
Company or any Material Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with
respect to any material license, permit or franchise, the effect of
which has or would reasonably be expected to have a Material Adverse
Effect.
Section 9.Further Assurances. The Guarantor agrees that at any
time and from time to time, at the expense of the Guarantor, the
Guarantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, to
enable the Administrative Agent to protect and to exercise and enforce
its rights and remedies hereunder.
Section 10.Application of Payments. Any payment received by the
Administrative Agent from the Guarantor (or from any Bank pursuant to
Section 15 below), shall be applied by the Administrative Agent as
follows:
First, to the payment of costs and expenses of collection
and all expenses (including without limitation Attorney Costs),
liabilities and advances made or incurred by the Administrative Agent
in connection therewith;
Next, to the Banks pro rata, based on the then outstanding
amount of the Obligations owed to each in payment in full of the
Obligations; and
Finally, after payment in full of all Obligations and the
termination of the Commitments, the payment to the Guarantor, or its
successors and assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
Section 11.Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, the
Administrative Agent may exercise, and at the request of the Majority
Banks shall exercise or refrain from exercising, all rights and
remedies provided for herein and provided by law.
Section 12.No Waiver. No failure on the part of the
Administrative Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
Section 13.Amendments, Etc. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by the
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed, in the case of amendments, by the
Guarantor and by the Administrative Agent and, in the case of consent
or waivers, by the Administrative Agent and then such amendment,
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which made or given.
Section 14.Notices. All notices, requests and other
communications provided for hereunder shall be in writing and given as
provided in Section 10.02 of the Credit Agreement. The address for
notices to Guarantor shall be the address set forth below its
signature to this Guaranty, or such other address as shall be
designated by Guarantor in a written notice to the Administrative
Agent
Section 15.Right to Set-off.
(a) Upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, each Bank is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the
Obligations, irrespective of whether or not such Bank shall have made
any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant to this
Section 15(a) shall give prompt notice to the Guarantor and the
Administrative Agent following the occurrence thereof; provided that
the failure to give such notice shall not affect the validity of the
set-off.
(b) Any payment obtained pursuant to Section 15(a) above
(or in any other manner directly from the Guarantor) by any Bank shall
be remitted to the Administrative Agent and distributed among the
Banks in accordance with the provisions of Section 10 above.
Section 16.Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the
indefeasible payment in full (after the termination of the
Commitments) of the Obligations and all other amounts payable under
this Guaranty; (b) be binding upon the Guarantor, its successors and
assigns; and (c) inure to the benefit of the Administrative Agent, the
Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank
may assign or otherwise transfer its rights and obligations under the
Credit Agreement to any other Person or entity, and such other Person
or entity shall thereupon become vested with all the benefits in
respect thereof granted to the Banks herein or otherwise, all as
provided in, and to the extent set forth in, Sections 10.07 and 10.08
of the Credit Agreement. Notwithstanding anything in this Guaranty to
the contrary, this Guaranty shall terminate as to any principal
advances made after the last Maturity Date for Committed Loans
consented to in writing by the Guarantor in the event that (i) the
Guarantor is not a partner in the Borrower on such Maturity Date, (ii)
Guarantor shall have given written notice to the Administrative Agent
and the Banks at least 30 days prior to the Maturity Date of
Guarantor's ceasing to be a partner in the Borrower, and (iii) the
Commitments shall have been extended beyond the Maturity Date by
written extension agreement entered into between the Borrower and the
Banks without Guarantor's written consent to such extension; provided,
that this Guaranty shall continue in full force and effect as to all
other Obligations guaranteed hereunder.
Section 17.Subordination of the Credit Parties' Obligations to
the Guarantor. The Guarantor hereby expressly covenants and agrees
for the benefit of the Administrative Agent and the Banks that all
obligations and liabilities of the Borrower and all obligations and
liabilities of all other guarantors of the Obligations (or any part
thereof) ("Other Guarantors") to the Guarantor of whatsoever
description (including, without limitation, all rights of contribution
(the "Subordinated Obligations") shall be subordinated and junior in
right of payment to the prior payment in full in cash of the
Obligations (including, without limitation, interest on the
Obligations accrued subsequent to the commencement of an Insolvency
Proceeding and all interest that would have accrued but for the
commencement of such Insolvency Proceeding). In the case of any
Insolvency Proceeding wherein the obligor of Subordinated Obligations
(an "Obligor") is debtor, the Obligor and any assignee, trustee in
bankruptcy, receiver or other similar Person, debtor in possession or
other Person(s) in charge are hereby directed to pay to the
Administrative Agent (for the benefit of the Banks) the full amount of
the Obligations (including interest to date of payment and including
without limitation interest after the filing of a petition initiating
an Insolvency Proceeding) before making any payment in respect of the
Subordinated Obligations to the Guarantor, and insofar as may be
necessary for that purpose, the Guarantor hereby assigns and transfers
to the Administrative Agent all rights to such payments.
Notwithstanding the foregoing provisions of this Section 17:
(a) with respect to obligations and liabilities of the
Borrower to the Guarantor ("Borrower/Guarantor Obligations"), the
Guarantor may receive payments in respect of Borrower/Guarantor
Obligations so long as there has not occurred a Default or Event of
Default;
(b) with respect to obligations and liabilities of one or
more of the Other Guarantors which obligations or liabilities are
related to the Borrower or the Guarantor's interest in the Borrower
("Borrower Related Inter-Guarantor Obligations") the Guarantor may
receive scheduled payments in respect of Borrower Related
Inter-Guarantor Obligations in accordance with the terms thereof so
long as there has been no acceleration of the Obligations under the
Credit Agreement and there is not pending any Insolvency Proceeding
involving as debtor the Borrower or the Obligor of the Borrower
Related Inter-Guarantor Obligations; and
(c) with respect to obligations and liabilities of one or
more of the Other Guarantors which obligations or liabilities are
unrelated to the Borrower or the Guarantor's interest in the Borrower
("Unrelated Inter-Guarantor Obligations"), the Guarantor may receive
payments in respect of the Unrelated Inter-Guarantor Obligations so
long as there is not pending any Insolvency Proceeding involving as
debtor the Obligor of the Unrelated Inter-Guarantor Obligations.
If the Guarantor shall receive any payment in respect of the
Subordinated Obligations in contravention of the terms of this
Section, such payments shall be collected and received by the
Guarantor as trustee for the Administrative Agent and the Banks and
paid over to the Administrative Agent and the Banks on account of the
Obligations.
Section 18.Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any
existing or future law, such invalidity shall not impair the operation
of or affect those portions of this Guaranty which are valid.
Section 19.Taxes.
(a) Any and all payments by the Guarantor to each Bank or
the Administrative Agent under this Guaranty and any other Loan
Document shall be made free and clear of, and without deduction or
withholding for, any Taxes. In addition, the Guarantor shall pay all
Other Taxes.
(b) If Guarantor shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of
any sum payable hereunder to any Bank or the Administrative Agent,
then: (i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section) such Bank or the Administrative Agent, as the case
may be, receives an amount equal to the sum it would have received had
no such deductions or withholdings been made; (ii) the Guarantor shall
make such deductions and withholdings; (iii) the Guarantor shall pay
the full amount deducted or withheld to the relevant taxing authority
or other authority in accordance with applicable law; and (iv) the
Guarantor shall also pay to each Bank or the Administrative Agent for
the account of such Bank, at the time interest is paid, all additional
reasonable amounts which the respective Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Guarantor agrees to indemnify and hold harmless
each Bank and the Administrative Agent for the full amount of Taxes,
Other Taxes and Further Taxes in the amount that the respective Bank
specifies as necessary to preserve the after-tax yield the Bank would
have received if such Taxes, Other Taxes or Further Taxes had not been
imposed, and any liability (including penalties, interest, additions
to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made
within 30 days after the date the Bank or the Administrative Agent
makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Guarantor of Taxes, Other Taxes or Further Taxes, the Guarantor shall
furnish to the Administrative Agent and each Bank the original or a
certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Administrative
Agent.
SECTION 20. No Bankruptcy Proceedings. Guarantor agrees that
it will not institute against any Committed Loan Designated Lender or
join any other Person in instituting against any Committed Loan
Designated Lender any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding under any federal or state
bankruptcy or similar law, for one year and one day after the payment
in full of the latest maturing commercial paper note issued by such
Committed Loan Designated Lender; provided, that the respective
Committed Loan Designating Lender hereby agrees to indemnify, save and
hold harmless the Guarantor for any loss, cost, damage and expense
arising out of their inability to institute any such proceeding
against its Committed Loan Designated Lender.
SECTION 21. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED THAT THE ADMINISTRATIVE
AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY,
THE GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK
10019, AS ITS DESIGNEE, APPOINTEE AND REGISTERED AGENT TO RECEIVE,
ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF
FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND REGISTERED AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND REGISTERED AGENT IN NEW YORK
ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO
THE ADMINISTRATIVE AGENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH BELOW ITS
SIGNATURE TO THIS GUARANTY. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK
LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO.
SECTION 22. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES THAT ITS
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR
IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
Section 23.ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, 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 SIGNATURE IS ON THE NEXT PAGE]
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BOA #197 127141-283
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.
QUESTAR PIPELINE CO.
By
Name:
Title:
Address for Notices:
[THIS IS THE SIGNATURE PAGE
TO THE GUARANTY AGREEMENT]
SCHEDULE 1
To Guaranty Agreement
Definitions
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Attributable Debt" means, as of the date of determination, the
present value of net rent for the remaining term of a capital lease,
determined in accordance with GAAP, which is part of a Sale and
Leaseback Transaction, including any periods for which the lessee has
the right to renew or extend the lease. For purposes of the
foregoing, "net rent" means the sum of capitalized rental payments
required to be paid by the lessee, other than amounts required to be
paid by the lessee for maintenance, repairs, insurance, taxes,
assessments, energy, fuel, utilities and similar charges. In the case
of a capital lease which is terminable by the lessee upon the payment
of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered to be required to be paid
under such lease subsequent to the first date upon which it may be so
terminated.
"Change of Control" means (i) any person or two or more persons
acting in concert shall acquire beneficial ownership, directly or
indirectly, of securities of the Guarantor (or other securities
convertible into such securities) representing 30% or more of the
combined voting power of all securities of the Guarantor entitled to
vote in the election of directors; or (ii) during any period of up to
12 consecutive months, commencing after the Closing Date, individuals
who at the beginning of such 12-month period were directors of the
Guarantor shall cease for any reason to constitute a majority of the
Board of Directors of the Guarantor unless the persons replacing such
individuals were nominated by the Board of Directors of the Guarantor;
or (iii) any person or two or more persons acting in concert acquiring
by contract or otherwise, or entering into a contract or arrangement
which upon consummation will result in its or their acquisition of, or
control over, securities of the Guarantor (or other securities
convertible into such securities) representing 30% or more of the
combined voting power of all securities of the Guarantor entitled to
vote in the election of directors.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit A.
"Consolidated Capitalization" means, without duplication, the sum
of (a) the principal amount of Consolidated Funded Debt of the
Guarantor and its Subsidiaries at the time outstanding, (b) the total
capital represented by the capital stock of the Guarantor and its
Subsidiaries at the time outstanding, based, in the case of stock
having par value, upon its par value, and in the case of stock having
no par value, upon the value stated on the books of the Guarantor, (c)
the total amount of (or less the amount of any deficit in) retained
earnings and paid-in capital of the Guarantor and its Subsidiaries,
(d) reserves for deferred federal and state income taxes arising from
timing differences, and (e) Attributable Debt, all as shown on a
consolidated balance sheet of the Guarantor and its Subsidiaries
prepared in accordance with GAAP; provided that in determining the
consolidated retained earnings and paid-in capital of the Guarantor
and its Subsidiaries no effect shall be given to any unrealized
write-up or write-down in the value of assets or any amortization
thereof, except for accumulated provisions for depreciation,
depletion, amortization and property retirement which shall have been
created by charges made by the Guarantor or any of its Subsidiaries on
its books.
"Consolidated Funded Debt" means the Funded Debt of the Guarantor
and its Subsidiaries, consolidated in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital
of the primary obliger or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial
condition of the primary obliger, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to
assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b)
with respect to any Surety Instrument issued for the account of that
Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another
Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release
or injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Guarantor within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of
the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Guarantor or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances
specified in Section 8.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Funded Debt" means all Indebtedness that will mature, pursuant
to a mandatory sinking fund or prepayment provision or otherwise, and
all installments of Indebtedness that will fall due, more than one
year from the date of determination. In calculating the maturity of
any Indebtedness, there shall be included the term of any unexercised
right of the debtor to renew or extend such Indebtedness existing at
the time of determination.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation. "
"Indebtedness" means all items of indebtedness for borrowed money
(other than unamortized debt discount and premium) which would be
included in determining total liabilities as shown on the liability
side of a balance sheet prepared in accordance with GAAP as of the
date as of which Indebtedness is to be determined, and shall include
indebtedness for borrowed money (other than unamortized debt discount
and premium) with respect to which the Guarantor or any Subsidiary
customarily pays interest secured by any mortgage, pledge, or other
lien or encumbrance of or upon, or any security interest in , any
properties or assets owned by the Guarantor or any Subsidiary, whether
or not the Indebtedness secured thereby shall have been assumed, and
shall also include guarantees of Indebtedness of others; provided,
that in determining Indebtedness of the Guarantor or any Subsidiary
there shall be included the aggregate liquidation preference of all
outstanding securities of any subsidiary senior to its Common Stock
that are not owned by the Guarantor or Subsidiary, and provided,
further, that Indebtedness of any Person shall not include the
following:
(a) any indebtedness evidence of which is held in treasury (but
the subsequent resale of such indebtedness shall be deemed to
constitute the creation thereof); or
(b) any particular indebtedness if, upon or prior to the
maturity thereof, there shall have been deposited with a depository
(or set aside and segregated, if permitted by the instrument creating
such indebtedness), in trust, money (or evidence of such indebtedness
as permitted by the instrument creating such indebtedness) in the
necessary amount to pay, redeem or satisfy such indebtedness; or
(c) any indebtedness incurred to finance oil, natural gas,
hydrocarbon, inert gas or other mineral exploration or development to
the extent that the issuer thereof has outstanding advances to finance
oil, natural gas, hydrocarbon, inert gas or other mineral exploration
or development, but only to the extent such advances are not in
default; or
(d) any indebtedness incurred without recourse to the
Guarantor or any Subsidiary; or
(e) any indebtedness incurred to finance advance payments for
gas (pursuant to take-or-pay provisions or otherwise), but only to the
extent that such advance payments are pursuant to gas purchase
contracts entered into in the normal course of business; or
(f) any amount (whether or not included in determining
total liabilities as shown on the liability side of a balance sheet
prepared in accordance with GAAP) representing capitalized rent under
any lease; or
(g) any indirect guarantees or other contingent obligations in
respect of indebtedness of other Persons, including agreements,
contingent or otherwise, with such other Persons or with third parties
with respect to, or to permit or assure the payment of, obligations of
such other Persons including, without limitation, agreements to
purchase or repurchase obligations of such other Persons, to advance
or supply funds to, or to invest in, such other Persons, or to pay for
property, products or services of such other Persons (whether or not
conveyed, delivered or rendered); demand charge contracts,
through-put, take-or-pay, keep-well, make-whole or maintenance of
working capital or similar agreements; or guarantees with respect to
rental or similar periodic payments to be made by such other Persons.
"Independent Auditor" has the meaning specified in subsection
7(a)(i).
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an
operating lease.
"Material Subsidiary" means (i) Questar TransColorado, Inc., a
Utah corporation, and (ii) any Subsidiary the consolidated assets of
which constitute 10% or more of the consolidated assets of the
Guarantor and its Subsidiaries, and, in each instance, their
respective successors and assigns.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Guarantor or any
ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made.
or been obligated to make, contributions.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Guarantor sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7(l).
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Guarantor sponsors or maintains or to which the
Guarantor makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Reportable Event'' means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to
or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" the chief executive officer or the
president of the Guarantor, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the treasurer
of the Guarantor, or any other officer having substantially the same
authority and responsibility.
"Sale and Leaseback Transaction" means an arrangement in which
the Guarantor or a Subsidiary sells any of its property which was
placed into service more than 120 days prior to such sale to a Person
and leases it back from that Person within 180 days of the sale.
"SEC" means the Securities and Exchange Commission, and any
Governmental Authority succeeding to any of its principal functions.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
50% of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of
the Guarantor.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, surety
bonds and similar instruments.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to
any single transaction) that is an interest rate swap agreement, basis
swap, forward rate agreement, commodity swap, commodity option, equity
or equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor
agreement, currency swap agreement, cross-currency rate swap
agreement, swap option, currency option or any other, similar
agreement (including any option to enter into any of the foregoing).
"Tangible Net Worth" means the gross book value of the assets of
the Guarantor and its Subsidiaries on a consolidated basis (exclusive
of goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred
charges, and other like intangibles) less (a) reserve applicable
thereto, and (b) all liabilities (including accrued and deferred
income taxes).
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code
for the applicable plan year.
Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined
terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Guaranty as a whole and not to any particular
provision of this Guaranty; and subsection, Section, Schedule and
Exhibit references are to this Guaranty unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced; (ii) the term "including" is
not limiting and means "including without limitation"; and (iii) in
the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding, and the word "through"
means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Guaranty) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Guaranty are for
convenience of reference only and shall not affect the interpretation
of this Guaranty.
(f) This Guaranty and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(g) This Guaranty and the other Loan Documents are the
result of negotiations between and have been reviewed by the
respective counsel to the Administrative Agent, the Banks and the
Company, and are the products of both parties. Accordingly, they shall
not be construed against the Administrative Agent or any Bank merely
because of their involvement in their preparation.
Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Guaranty
shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Guarantor.
SCHEDULE 6(o)
To Guaranty Agreement
(a) Subsidiaries
1. Questar TransColorado, Inc.
2. Questar Line 90 Company
(b) Investments
Questar Pipeline Company, Guarantor, owns a 54% interest in the
Overthrust Pipeline Partnership.
SCHEDULE 6(a)
To Guaranty Agreement
Qualification to do Business as a Foreign Corporation
Questar TransColorado, Inc., a Wholly-Owned Subsidiary of Guarantor,
will file its Application for Certificate of Authority to do business
as a foreign corporation in New Mexico on or before October 15, 1998
and will ask for expedited treatment of its application. It expects
to have its application approved prior to November 15, 1998.
Guarantor represents and warrants that the failure of Questar
Transcolorado, Inc. to qualify to do business as a foreign corporation
in New Mexico can not reasonably be expected to have a Material
Adverse Effect.
SCHEDULE 7(l)
To Guaranty Agreement
Liens
None
L:\FIN\BOA\TRANSCOL\QU-GTY10.DOC
BOA #197 127141-283
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (Agreement), dated as of October
23, 1998, between Questar Line 90 Company, a Utah corporation (Buyer),
and ARCO Pipe Line Company, a Delaware corporation (Seller).
WITNESSETH :
WHEREAS, Seller is in the oil pipeline business in the United
States and wishes to sell certain Assets, as hereinafter defined, to
Buyer by this Agreement; and
WHEREAS, Buyer wishes to purchase from Seller all of the assets
and properties necessary for, or material to, the operation of
Seller's Lines 90, 91 and 92 for the purchase price and upon the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made in this Agreement, and of the
mutual benefits to be derived by such, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definition of Certain Terms. The terms defined in this
Section 1.1, whenever used in this Agreement (including in the
Schedules and Exhibits), shall have the respective meanings indicated
below for all purposes of this Agreement. All references to a
Section, Article or Schedule are to a Section, Article or Schedule to
this Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person.
"Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: this Asset Purchase Agreement, including its
Schedules and Exhibits.
Applicable Laws: all applicable provisions in effect as of the
Closing Date, except for Environmental Laws which can be in effect at
any time, of all (i) constitutions, treaties, statutes, laws, rules,
regulations, ordinances, codes or orders of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority.
Assets: as defined in Section 2.1.
Assumed Liabilities: as defined in Section 3.3.
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Los Angeles, California, are
authorized or required to close.
Buyer: as defined in the first paragraph of this Agreement.
Buyer Indemnitees: as defined in Section 10.1.
Closing: the closing of the transaction contemplated by this
Agreement.
Closing Date: as defined in Section 3.1.
Code: the Internal Revenue Code of 1986, as amended.
Collateral Agreements: the agreements, documents and instruments
on the Collateral Agreement Exhibit List to which Seller and Buyer are
Parties.
Consent: any consent, approval, authorization or waiver.
Contract: as identified in Section 4.11 and as set forth in
Schedule 4.11.
$ or dollars: lawful money of the United States.
Environmental Laws: All Applicable Laws relating to the
protection of the environment, without limitation, any laws relating
to (i) emissions, discharges, Releases or threatened Releases of
Hazardous Substances into the environment (including, without
limitation, air, surface water, sediment, groundwater and land) or
(ii) the presence, manufacturing, generating, refining, processing,
distribution, use, sale, treatment, recycling, receipt, storage,
disposal, transport, arranging for transportation, or handling of
Hazardous Substances. Environmental Laws shall include, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended; the Resource
Conservation and Recovery Act ("RCRA"), as amended; the Federal Water
Pollution Control Act ("FWPCA"), as amended; the Safe Drinking Water
Act ("SDWA"), as amended; the Clean Air Act ("CAA"), as amended; the
Toxic Substances Control Act ("TSCA"), as amended; the Hazardous
Materials Transportation Act ("HMTA"), as amended; the Occupational
Safety and Health Act of 1970 ("OSHA"), as amended; and all analogous
laws and regulations promulgated or issued by any state or other
governmental authority.
Environmental Liabilities: All claims, actions, causes of
action, damages, losses, liabilities, obligations, penalties, fines,
notices of violation, notices of potential liability, administrative
or judicial orders and decrees, litigation, demands, judgments,
amounts paid in settlement, suits, proceedings, costs, or expenses
(including, without limitation, attorneys' fees and costs,
accountants' fees and costs, experts' fees and costs, and consultants'
fees and costs) of any kind or nature whatsoever arising out of, or
related to, any person or entity alleging liability (including,
without limitation, liability for study, testing or investigatory
costs, cleanup costs, response costs, removal costs, remediation
costs, containment costs, restoration costs, corrective action costs,
closure costs, natural resource damages, property damages, business
losses, personal injuries, penalties or fines) based on or resulting
from (i) the presence, discharge, emission, Release or threatened
Release into the environment of Hazardous Substances existing on,
beneath, above, or emanating or migrating from, or threatening to
emanate or migrate from, the Seller's Business, the Property or the
Assets or (ii) the violation or alleged violation by Seller's
Business of any Environmental Laws, including, without limitation, all
Environmental Permits issued under or pursuant to such Environmental
Law.
Environmental Permits: Any federal, state, Native American
Nation or local permit, license, registration, consent, order,
administrative consent order, certificate, approval, bond, or other
authorization necessary for the conduct of Seller's Business as
currently conducted, or previously conducted under any Environmental
Law or regulation, or related to the Property or to the ownership,
operation and maintenance of the Assets.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Excluded Assets: as defined in Section 2.2.
Expected Closing Date: November 17, 1998.
Governmental Approval: any Consent of any Governmental
Authority.
Governmental Authority: any nation or government, including
Native American Nations, any state or political subdivision thereof,
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any government authority, agency, department,
board, council, commission or instrumentality of the United States,
any Native American Nation, any State of the United States or any
political subdivision thereof, and any tribunal or arbitrator(s) of
competent jurisdiction.
Hazardous Substances: Any substance including, without
limitation, (i) any "hazardous substances" as defined by CERCLA, as
amended, and rules and regulations promulgated thereunder; (ii) any
"hazardous waste" as defined by RCRA, as amended, and rules and
regulations promulgated thereunder; (iii) "pollutant" or "toxic
pollutant" under the FWPCA, as amended, and rules and regulations
promulgated thereunder; (iv) any "hazardous air pollutants" under the
CAA, as amended, and rules and regulations promulgated thereunder; (v)
any substance regulated by the TSCA, as amended, and rules and
regulations promulgated thereunder; (vi) any "hazardous materials"
under the HMTA, as amended, and rules and regulations promulgated
thereunder; (vii) asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived substances
or wastes, radon gas or related materials; (viii) any substances
regulated under the underground storage tank provisions of Subtitle I
of RCRA, as amended, and rules and regulations promulgated thereunder;
or (ix) any other substance, including, without limitation, toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic
or mutagenic substances, which is regulated by any Governmental
Authority or under any Environmental Laws.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Indemnified Party: as defined in Section 10.4.
Indemnifying Party: as defined in Section 10.4.
Intellectual Property: the United States copyrights and trade
secrets used solely in the United States listed in Schedule 4.12
attached hereto ("U.S. Trade Secrets"), that are owned and/or used by
Seller as of the Closing Date that relate in any way, directly or
indirectly, to the Assets and were utilized by Seller as of the
Closing Date to operate, maintain and/or monitor the Assets.
Intellectual Property specifically excludes all trademarks, trade
names, or symbols of Seller, including by way of example, but not
limitation, "ARCO", "ARCO Pipe Line Company", and the ARCO "Spark"
design.
IRS: the Internal Revenue Service.
Knowledge: when used with reference to Seller means the actual
knowledge, or what knowledge a reasonable Person would have had in
performance of their ordinary duties and obligations, of any executive
officer or director of Seller or of any Person who reports directly to
any such executive officer or director of Seller.
Leases: means the real property leases and subleases as set
forth in Schedule 4.14(ii).
Lien: any mortgage, pledge, security interest, charge,
encroachment, judgment, lease, sublease, or encumbrance of any kind,
including any property interest or title of any vendor, lessor, lender
or other secured party under any conditional sale or contract or title
retention contract, that secures or is intended to secure an
obligation of any Person.
Lines 90, 91 and 92: as defined in Schedule 2.1
Losses: as defined in Sections 10.1 and 10.2.
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is materially adverse to the business,
operations, prospects, results of operations, condition (financial or
otherwise), properties (including intangible properties), assets
(including intangible assets) or liabilities of the Assets.
Native American Nations: Native American Indian tribes that have
been granted sovereign nation status by the United States Government,
including the Navajo Nation, the Hopi Indian Tribe, the Fort Mojave
Indian Tribe and the Morongo Band of Mission Indians.
Permitted Liens: (i) liens for taxes, assessments and other
governmental charges, not yet due and payable, (ii) mechanics',
carriers', workmen, repairmen, or other like liens (inchoate or
otherwise) arising or incurred in the ordinary course of business in
respect of obligations which are not overdue, or which are being
contested by or on behalf of the Seller in good faith, (iii) rights
reserved to or vested in any Governmental Authority to control or
regulate any interest in any manner; (iv) all other Liens, contracts,
agreements, instruments, obligations, defects and irregularities that
are not such as to interfere materially with the use or operation of
the applicable Asset.
Person: any natural person, firm, Native American Nation,
partnership, association, corporation, company, trust, business trust,
Governmental Authority or other entity.
Personal Property: the personal property set forth in Schedule
4.14(iv)
Property: the Real Property, the real property Leases, the
Rights-of-Way and the Personal Property.
Purchase Price: as defined in Section 3.2.
Property Laws: as defined in Section 4.14(vii).
Real Property: all property owned in fee simple by Seller
necessary to operate the Seller's Business as set forth in Schedule
4.14(i).
Release: Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping, disposing,
leaching, transporting, seeping, dispersal or migration into the
environment (including, without limitation, air, surface water,
sediment, groundwater and land).
Remedial Action: all actions required by a supervisory
governmental agency or any commercially reasonable voluntary actions
commenced by Buyer to (i) clean up, remove, treat or in any other way
remediate any Hazardous Substances; (ii) prevent the Release or
threatened Release of Hazardous Substances so that they do not migrate
or endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform studies or investigations related to any
remediation or prevention associated with Hazardous Substances.
Returns: as defined in Section 4.5.
Rights-of-Way: the rights-of-way set forth in Schedule 4.14(iii)
and such other property rights to which Seller may be legally entitled
with respect to the location of the Property and the Assets.
Seller: as defined in the first paragraph of this Agreement.
Seller Indemnitees: as defined in Section 10.2.
Seller's Business: the business conducted by Seller and its
predecessors solely with respect to the transportation of oil in Lines
90, 91 and 92 and the ownership, operation and maintenance of the
Assets.
Tax or Taxes: any federal, state, provincial, Native American
Nation, local, foreign or other income, alternative, minimum,
accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, gross receipts, value added,
sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, special
assessment, recording, premium, severance, environmental, real
property, personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care,
withholding, estimated or other tax, duty or other governmental charge
or assessment or deficiencies thereof (including all interest and
penalties thereon and additions thereto whether disputed or not).
Tax Return: any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment
thereof.
Technology: shall mean the information, data, software,
know-how, methods, techniques, systems and the like, listed in
Schedule 4.12, owned or controlled by Seller as of the Closing Date
that relate in any way, directly or indirectly, to the Assets and were
utilized by Seller as of the Closing Date to operate, maintain and/or
monitor the Assets.
Third-Party Obligations: shall mean any legal, contractual,
regulatory, statutory or other requirement or limit imposed on Seller
in respect of either the Technology or Intellectual Property, whenever
effective.
Third-Party Technology: shall mean the information, data,
software, know-how, methods, techniques, systems and the like, listed
in Schedule 4.12 and Intellectual Property rights relating to the same
which were licensed to Seller by a third party as of the Closing Date
and relate in any way, directly or indirectly, to the Assets and were
utilized by Seller as of the Closing Date to operate, maintain and/or
monitor the Assets.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
2.1. Assets. Subject to and upon the terms and conditions set
forth in this Agreement, at Closing, Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and Buyer shall purchase,
receive and pay for, all right, title and interest of Seller in and to
the Property, as set forth in Schedules 4.14(i), 4.14(ii), 4.14(iii)
and 4.14(iv), and Assets as set forth in Schedule 2.1 and the
associated rights of every nature, kind and description, tangible and
intangible, whether real, personal or mixed, whether accrued,
contingent or otherwise and whether now existing or hereinafter
acquired (other than the Excluded Assets as set forth in Schedule 2.2)
used or held for use exclusively in connection with the ownership,
operation and maintenance of Lines 90, 91 and 92, as the same may
exist on the Closing Date subject to changes in the ordinary course of
business (Assets).
2.2. Excluded Assets. Seller is not selling and Buyer is not
purchasing the assets listed on Schedule 2.2 (collectively, the
"Excluded Assets").
ARTICLE 3
THE CLOSING
3.1. Place and Date. The closing of the sale and purchase of the
Assets shall take place at 9:00 A.M. local time on the 17th day of
November, 1998 (the "Expected Closing Date"), at the offices of ARCO
Pipe Line Company, Long Beach, California, or such other time and
place upon which the parties may agree. The day on which the Closing
actually occurs is referred to as the "Closing Date.
3.2. Purchase Price. On the terms and subject to the conditions
set forth in this Agreement, Buyer agrees to pay or cause to be paid
at the Closing Date to Seller $38,000,000 (the "Purchase Price"), by
wire transfer in immediately available funds to the ARCO Pipe Line
Company, Account 00100285056 (ABA #113000609), at Chase Texas, Dallas
Texas.
3.3. Assumption of Liabilities. Buyer shall not assume or be
liable or obligated to pay any debts, liabilities, or obligations of
any kind related to the Assets, the Property or Seller's Business,
except the following (Assumed Liabilities):
(i) any and all liabilities, obligations and commitments
relating to the Assets that arise, accrue or are incurred after the
Closing by Buyer, except for the following category of liabilities
related to Seller's ownership of the Assets that arise, accrue or are
incurred after the Closing Date: (a) Environmental Liabilities for
periods prior to Buyer's ownership of the Assets whether arising
before or after the Closing Date, to the extent such Environmental
Liabilities are subject to Seller's indemnity under Section 10.1(vi);
(b) liabilities for Taxes relating to or arising out of the Seller's
Business or related to the Assets accruing, or with respect to any
event or time period occurring, at or prior to Closing; (c)
liabilities in respect of Seller's employees or employee plans; and
(d) intercompany accounts payable by Seller.
(ii) any and all liabilities, obligations and commitments arising
out of the agreements, Contracts and commitments set forth on Schedule
4.11.
(iii)any and all liabilities, obligations, and commitments
associated with any contract, agreement or instrument to which Seller
is a party, related to or arising out of the Real Property, Leases,
Rights-of-Way and Personal Property set forth in Schedules 4.14(i),
4.14(ii), 4.14(iii) and 4.14(iv).
Notwithstanding anything to the contrary in this Section 3.3,
Seller shall have the obligation to indemnify Buyer as provided for in
Section 10.1.
3.4. Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any Governmental Approval, instrument,
contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting from such, if
an assignment or transfer or an attempt to make such an assignment or
transfer, without the consent of a third party, would constitute a
breach or violation of such or affect adversely the rights of Buyer or
Seller thereunder; and any transfer or assignment to Buyer by Seller
of any interest under any such instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third
party shall be made subject to such consent or approval being
obtained. In the event any such consent or approval is not obtained
on or prior to the Closing Date, Seller and Buyer shall cooperate and
shall continue to use all reasonable efforts to obtain any such
approval or consent after the Closing Date until such time as such
consent or approval has been obtained, and Seller will cooperate with
Buyer in any lawful arrangement to provide that Buyer shall receive
the interest of Seller, as the case may be, in the benefits under any
such instrument, contract, certificate, lease or permit or other
agreement or arrangement, including performance by Seller, as the case
may be, as agent, provided that Buyer shall undertake to pay or
satisfy the corresponding liabilities for the enjoyment of such
benefit to the extent Buyer would have been responsible therefor if
such consent or approval had been obtained. Seller shall have no
obligation to pay or discharge, and shall have no obligation to
indemnify and hold Buyer harmless from and against, any and all costs
of seeking to obtain or obtaining any such Consent or Governmental
Approval whether before or after the Closing Date, except as provided
for in Article 10 Indemnification.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1. Authorization. Seller has the corporate power and authority
to execute and deliver this Agreement and each of the Collateral
Agreements to which it will be a party, to perform fully its
obligations hereunder and thereunder, and to consummate the
transactions contemplated by this Agreement. The execution and
delivery by Seller of this Agreement, and the consummation of the
transactions contemplated hereby, have been, and on the Closing Date
will have been, duly authorized by all requisite corporate action of
Seller. Seller has duly executed and delivered this Agreement and on
the Closing Date will have duly executed and delivered each of the
Collateral Agreements. This Agreement is, and on the Closing Date
each of the Collateral Agreements will be, legal, valid and binding
obligations of Seller, enforceable against it in accordance with their
respective terms.
4.2. Corporate Status.
(i) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to carry on its
business and to own or lease and to operate its properties as and in
the places where such business is conducted and such properties are
owned, leased or operated.
(ii) Seller is duly qualified or licensed to do business and is
in good standing in each jurisdiction where it operates.
(iii)Seller has delivered to Buyer complete and correct copies of
its certificate of incorporation and bylaws or other organizational
documents, in each case, as amended and in effect on the date of this
Agreement. Seller is not in violation of any of the provisions of its
certificate of incorporation or bylaws or other organizational
documents.
4.3. No Conflicts, etc. Except as specified in Schedule 4.3, and
subject to the provisions of Section 3.4, (i) no Governmental Approval
is required to be obtained or made by Seller in connection with the
execution and delivery of this Agreement and the Collateral Agreements
and the consummation of the transactions contemplated by such and (ii)
the execution, delivery and performance by Seller of this Agreement
and each of the Collateral Agreements and the consummation of the
transactions contemplated in these Agreements, do not and will not
conflict with or result in a violation of or a default under (with or
without the giving of notice or the lapse of time or both) (a) any
Applicable Laws related to Seller or applicable to any of the
properties or assets of Seller (including but not limited to the
Assets), (b) the certificate of incorporation or bylaws or other
organizational documents of Seller or (c) any Contract or other
contract, agreement or other instrument to which Seller is a party or
by which Seller or any of its properties or assets, including but not
limited to the Assets, may be bound or affected.
4.4. Absence of Undisclosed Liabilities. To Seller's Knowledge,
Seller has no liabilities or obligations of any nature, whether
absolute, accrued, or contingent and whether due or to become due,
arising out of or relating to the Assets, except (i) as set forth in
Schedule 4.4, (ii) those incurred in the ordinary course of business
consistent with prior practice, or (iii) that are acquired by Buyer
pursuant to this Agreement.
4.5. Taxes.
(i) Seller has (or by the Closing will have) duly and timely
filed all Tax Returns relating to the Seller's Business with respect
to Taxes required to be filed on or before the Closing Date
("Returns"). Except for Taxes set forth on Schedule 4.5, which are
being contested in good faith and by appropriate proceedings, the
following Taxes have (or by the Closing Date will have) been duly and
timely paid or will be paid by Seller: (a) all Taxes shown to be due
on the Returns, (b) all deficiencies and assessments of Taxes of which
notice has (or by the Closing Date will have) been received by Seller
that are or may be chargeable as a lien upon the Assets and (c) all
other Taxes due and payable on or before the Closing Date for which
neither filing of Returns nor notice of deficiency or assessment is
required of which Seller is, or reasonably should be (or by the
Closing Date will be or reasonably should be) aware that are or may
become payable by Buyer or chargeable as a Lien upon the Assets. All
Taxes required to be withheld by or on behalf of Seller in connection
with amounts paid or owing to any employee, independent contractor,
creditor or other party with respect to Seller's Business or the
operation, ownership and maintenance of the Assets ("Withholding
Taxes") have been withheld, and such withheld Taxes have either been
duly and timely paid to the proper Governmental Authorities or set
aside in accounts for such purpose.
(ii) With respect to the Assets, except as set forth on Schedule
4.5, no agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any Taxes, and no
power of attorney with respect to any such Taxes, has been filed with
the IRS or any other Governmental Authority.
(iii)With respect to the Assets, except as set forth on Schedule
4.5, (a) there are no Taxes asserted in writing by any Governmental
Authority to be due and (b) no issue has been raised in writing,
within the last three years, by any Governmental Authority in the
course of any audit with respect to Taxes. Except as set forth on
Schedule 4.5, no Taxes are currently under audit by any Governmental
Authority. Except as set forth on Schedule 4.5, neither the IRS nor
any other Governmental Authority is now asserting or, to Seller's
Knowledge, threatening to assert against Seller any deficiency or
claim for additional Taxes or any adjustment of Taxes that would, if
paid by Buyer, have a Material Adverse Effect on the ownership,
operation or maintenance of the Assets, and there is no reasonable
basis for any such assertion of which Seller is or reasonably should
be aware.
(iv) With respect to the Assets, except as set forth on Schedule
4.5, there is no litigation or administrative appeal pending or, to
Seller's Knowledge, threatened against or relating to Seller in
connection with Taxes.
4.6. Absence of Changes. Except as set forth in Schedule 4.6,
since January 1, 1998, Seller's Business has been conducted only in
the ordinary course consistent with prior practice and has not, on
behalf of, in connection with or relating to the Assets:
(i) suffered any Material Adverse Effect;
(ii) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(iii)mortgaged, pledged or subjected to Lien, any Property,
business or assets, tangible or intangible, held in connection with
the ownership, operation or maintenance of the Assets;
(iv) sold, transferred, leased to others or otherwise disposed of
any of the Assets, or canceled or compromised any claim, or waived or
released any right of substantial value, which, in any case or in the
aggregate, has had a Material Adverse Effect;
(v) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss with
respect to the Assets (whether or not covered by insurance) which, in
any case or in the aggregate, has had a Material Adverse Effect;
(vi) entered into any transaction, contract or commitment other
than in the ordinary course of business or paid or agreed to pay any
legal, accounting, brokerage, finder's fee, Taxes or other expenses in
connection with this Agreement or the transactions contemplated by
this Agreement; or
(vii)taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
4.7. Litigation. Except as set forth on Schedule 4.7, there is
no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, to
Seller's knowledge, pending or threatened against or relating to
Seller in connection with the Assets or Seller's Business or against
or relating to the transactions contemplated by this Agreement, and
Seller does not know or have reason to be aware of any basis for the
same. Except as set forth in such Schedule 4.7, no citations, fines
or penalties have been asserted against Seller with respect to
Seller's Business or the Assets since January 1, 1998, under any
Environmental Law or any foreign, federal, state, Native American
Nation or local law relating to occupational health or safety.
4.8. Compliance with Laws, Governmental Approvals and Consents.
(i) To Seller's Knowledge, except as disclosed in Schedule 4.8,
and except with respect to environmental matters as set forth in
Section 4.15, since January 1, 1998, Seller has complied in all
material respects with all Applicable Laws related to Seller's
Business and the Assets. Seller has not received any notice alleging
any violation, breach or default.
(ii) Except with respect to Property matters set forth in
Schedules 4.14(i), (ii) and (iii), and environmental matters set
forth in Schedule 4.15, Schedule 4.8 sets forth all Governmental
Approvals necessary for, or otherwise incident to, the ownership,
operation and maintenance of the Assets. Except as set forth in
Schedule 4.8, all such Governmental Approvals have been duly obtained
and are in full force and effect, and to Seller's Knowledge, Seller is
in compliance with each of such Governmental Approvals held by it with
respect to the Assets and to the Seller's Business.
(iii)Except with respect to Property matters set forth in
Schedules 4.14(i), (ii) and (iii), and environmental matters set forth
in Schedule 4.15, Schedule 4.8 sets forth all contracts with any
Governmental Authority.
(iv) To Seller's Knowledge, (a) there are no proposed laws,
rules, regulations or ordinances that would be applicable to the
ownership, operation or maintenance of the Assets and which might
adversely affect the properties, assets, liabilities, operations or
prospects of the Assets, as they may relate to the manner in which the
Assets are currently operated, before the Closing Date and (b) there
are no orders, judgments, decrees, governmental takings,
condemnations, or other proceedings that would be applicable to the
ownership, operation or maintenance of the Assets that might adversely
affect the Properties, Assets, operations or prospects of the Assets
before the Closing Date.
4.9. Operation of the Business. Except as set forth in Schedule
4.9, since September 1, 1976, (i) Seller has conducted Seller's
Business and owned, operated and maintained the Assets only through
Seller and not through any other divisions or any direct or indirect
subsidiary or Affiliate of Seller and (ii) no part of Seller's
Business has been operated by Seller through any entity other than
Seller.
4.10.Assets. Except as disclosed in Schedule 4.10 and Schedule
10.1(ix), Seller has good title to all Assets free and clear of any
and all Liens, debts, liabilities, obligations and guarantees, other
than Permitted Liens and liabilities, obligations and guarantees that
are set forth in any Governmental Approvals, instruments, contracts,
permits or other agreements or arrangements that are set forth in the
Schedules to this Agreement and that are assumed by Buyer. The Assets
are in all respects adequate for the purposes for which they are
currently used and, to Seller's Knowledge, are in reasonably good
repair and operating condition (subject to normal wear and tear) and,
to Seller's Knowledge, there are no facts or conditions affecting the
Assets that could, individually or in the aggregate, interfere in any
respect with the use, occupancy or operation of such as they are
currently used, occupied or operated. EXCEPT AS SET FORTH HEREIN:
ALL PROPERTY AND ASSETS TO BE CONVEYED HEREUNDER WILL BE CONVEYED ON
AN 'AS IS,' 'WHERE IS' AND 'WITH ALL FAULTS' BASIS AT CLOSING, AND
SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE UTILITY
OR OPERABILITY OF THE ASSETS FOR GASEOUS HYDROCARBON TRANSPORTATION,
OR THAT RIGHTS-OF-WAY CAN BE AMENDED OR OBTAINED TO PERMIT THE
TRANSPORTATION OF GASEOUS HYDROCARBONS.
4.11.Contracts.
(i) Schedule 4.11 contains a complete and correct list of all
agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) other than those involving
Rights-of-Way, Real Property and Leases to be conveyed to Buyer at
Closing.
(ii) Seller will make available to Buyer complete and correct
copies of all written contracts, together with all amendments thereto,
and accurate descriptions of all material terms of all oral contracts,
as are set forth in Schedule 4.11, and will provide complete and
correct copies of specific contracts as Buyer may request.
(iii)To Seller's Knowledge, except as set forth in Schedule 4.11,
all contracts are in full force and effect and enforceable against
each party to each such contract set forth in Schedule 4.11, there
does not exist under any such contract any event of default or event
or condition that, after notice or lapse of time or both, would
constitute a violation, breach or event of default thereunder on the
part of Seller or any other party and except for such events or
conditions that, individually and in the aggregate, (a) have not had
or resulted in, and will not have or result in, a Material Adverse
Effect on Buyer's ownership, operation and maintenance of the Assets
and (b) have not and will not materially impair the ability of Seller
to perform its obligations under this Agreement and under the
Collateral Agreements. Except as set forth in Schedule 4.11, no
consent of any third party is required under any contract set forth in
Schedule 4.11 as a result of or in connection with, and the
enforceability of any such contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement, any of
the Collateral Agreements or the consummation of the transactions
contemplated by such agreements.
(iv) Except as set forth in Schedule 4.11, Seller has no
outstanding power of attorney relating to the ownership, operation or
maintenance of the Assets.
4.12.Intellectual Property.
(i) Title. Schedule 4.12 contains a complete and correct list
of all Intellectual Property, Technology and Third-Party Technology to
be licensed by Buyer at closing.
(ii) Technology License. To the extent Seller is legally
authorized to do so without accounting to any third party, and subject
always to any and all Third Party Obligations, Seller agrees to grant
and does hereby grant to Buyer an irrevocable, paid up, transferable,
nonexclusive, limited to the United States only, license to make, have
made, use, or have used under the Technology, or otherwise employ
Technology for the benefit of Buyer, and the nonexclusive right to
grant nonexclusive sublicenses, directly or indirectly, to third
parties without accounting in any way to Seller.
(iii)Intellectual Property License. To the extent Seller is
legally authorized to do so without accounting to any third party, and
subject always to any and all Third Party Obligations, Seller agrees
to grant and does hereby grant to Buyer an irrevocable, paid up,
transferable, nonexclusive immunity from suit under the Intellectual
Property, together with the nonexclusive right to grant nonexclusive
sublicenses, directly or indirectly, to third parties without
accounting in any way to Seller.
(iv) Confidentiality. To the extent Technology or any part
thereof was protected on the Closing Date as a trade secret, each
party agrees to continue such trade secret protection in its sole
discretion without accounting to the other, each party in so doing
using the same standard of care such party normally uses to protect
its own confidential information and data of like nature. The parties
hereby agree that protection as a trade secret shall not extend to
Technology which is:
(a) as of the Closing Date, or subsequently becomes part of
the public knowledge, or
(b) after the Closing Date, received without binder of
secrecy from a third party who did not derive same from a party
hereto.
(v) Transfer of Third Party Technology. Upon the request of the
Buyer, to the extent and only to the extent Seller is legally
authorized to do so without accounting to any third party, and subject
always to any and all Third Party Obligations, Seller agrees to
transfer to Buyer the right to use Third Party Technology; provided,
however, in carrying out its obligation in this Section 4.12, Seller
agrees to use reasonable effort (other than acquisition of a new
license or payment of a fee or other value on behalf of or for the
benefit of Buyer) to obtain for Buyer the right to use Third Party
Technology.
Buyer agrees to abide by all the terms and conditions of any
third party license agreement(s), including all confidentiality
obligations therein, which relate to any rights transferred pursuant
to this Section 4.12.
(vi) Export of Technical Information. Buyer shall comply with
all governmental laws, rules and regulations in respect of the export
from the United States of any technical information or data
transferred hereunder.
(vii)Additional Warranties. Seller warrants that it has good and
sufficient rights in the Technology and Intellectual Property to make
the license grants expressly set forth herein. EXCEPT AS EXPRESSLY
SET FORTH IN THIS SECTION 4.12, SELLER DISCLAIMS AND MAKES NO OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, INFRINGEMENT, ACCURACY, REPRODUCIBILITY, CORRECTNESS OF DATA
PRODUCED BY THE TECHNOLOGY OR THIRD PARTY TECHNOLOGY, COMPLETENESS, OR
THE LIKE. IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL,
CONSEQUENTIAL OR INDIRECT DAMAGES INCLUDING BUT NOT LIMITED TO LOSS OF
PROFITS, OR RELATED EXPENSES, EVEN IF SELLER HAS BEEN NOTIFIED OF THE
PROBABILITY OF SUCH DAMAGES, ARISING OUT OF, OR IN CONNECTION WITH THE
USE, TRANSFER, ASSIGNMENT, LICENSE, RELIANCE OR OTHER EXPLOITATION OF
THE TECHNOLOGY, THIRD PARTY TECHNOLOGY, OR INTELLECTUAL PROPERTY.
Seller makes no representation or warranty and undertakes no
obligation to Buyer or its successors or assigns (i) to obtain or
maintain Technology, Intellectual Property or Third Party Technology
or (ii) police the use by third parties of Technology, or Intellectual
Property or any parts thereof, all of which functions Seller hereby
reserves in their entirety to Seller's sole discretion, cost and
risks. Buyer agrees that Seller, at its sole discretion, may
terminate or fail to renew third party agreements which relate in any
way, directly or indirectly, to Third Party Technology.
Nothing in this Agreement shall be construed as granting to Buyer
any rights or licenses under any patents, patent applications,
copyrights, trade secrets, or other intellectual property rights
except as expressly provided for herein.
4.13 Trademarks. In order to provide for a reasonable transition
period, Buyer may for a period of nine months after the Closing Date
use the "ARCO" and "ARCO Pipe Line Company" trademark, and trade name
and the ARCO "Spark" symbol in order to complete the removal of such
trademark, trade name and symbol from all of the Assets including but
not limited to pipeline signs and markers. Buyer shall not adopt any
name, mark or symbol that would be confusingly similar to such
trademark, trade name or symbol.
4.14.Property.
(i) Real Property. Schedule 4.14(i) contains a complete and
correct list of all Real Property to be conveyed to Buyer at Closing.
Except as set forth in Schedule 4.14(i), Seller has, or on the Closing
Date will have, good, valid and marketable title to, or the right to
use, the Real Property indicated on Schedule 4.14(i), free and clear
of all Liens except for (a) Permitted Liens, (b) easements,
encumbrances and reservations and restrictions of record, or those not
arising pursuant to an instrument of record, but that would be
disclosed by an accurate survey and (c) liabilities and obligations
that are assumed by Buyer as Assumed Liabilities. There are no
outstanding options or rights of first refusal to purchase any Real
Property.
(ii) Leases. Schedule 4.14(ii) contains a complete and correct
list of all Leases to be assigned to Buyer at Closing. Seller has
delivered to Buyer correct and complete copies of the Leases. Each
Lease is legal, valid, binding, enforceable, and in full force and
effect. To Seller's Knowledge, neither Seller nor any other party is
in default, violation or breach in any respect under any Lease, and no
event has occurred and is continuing that constitutes or, with notice
or the passage of time or both, would constitute a default, violation
or breach in any respect under any Lease. Each Lease grants the
tenant under the Lease the right to use and occupy the demised
premises. Except as set forth in Schedule 4.14(ii), Seller has good
and valid title to the leasehold estate under each Lease free and
clear of all Liens except for (a) Permitted Liens and (b) liabilities
and obligations that are assumed by Buyer as Assumed Liabilities.
Seller enjoys peaceful and undisturbed possession under its respective
Leases.
(iii)Rights-of-Way. Schedule 4.14(iii) contains a complete and
correct list of all rights-of-way to be assigned to Buyer at Closing.
Buyer has, or by the Closing Date will have, reviewed the books and
records pertaining to Seller's right, title and interest to the
easements, rights-of-way, permits, licenses and other grants granted
by such instruments (Rights-of-Way). Seller makes no representation
or warranty with respect to Seller's right, title and interest in and
to the Rights-of-Way, granted by such instruments other than to
represent and warrant that, except as set forth in Schedule 4.14(iii)
and Schedule 10.1(ix), Seller has, or on the Closing Date will have
the right to use the Rights-of-Way indicated on Schedule 4.14(iii),
free and clear of all Liens except for (a) Permitted Liens and (b)
liabilities and obligations that are assumed by Buyer as Assumed
Liabilities. There are no outstanding options or rights of first
refusal to purchase any Rights-of-Way. To Seller's Knowledge, except
as set forth in Schedule 4.14(iii) and Schedule 10.1(ix), Seller has
substantially continuous Rights-of-Way for the pipeline assets,
however Seller does not represent or warrant that it has a continuous
right-of-way therefor. Seller specifically warrants and agrees to
defend title, except as set forth in Schedule 4.14(iii) and Schedule
10.1 (ix), (x) to the Rights-of-Way against lawful claims of all
Persons claiming by, through or under Seller, and further, (y) agrees
to defend title to Rights-of-Way against lawful claims of all Persons
claiming against Seller or Buyer which such claims relate to the
Seller's ownership, operation and maintenance of the Assets after
September 1, 1976.
(iv) Personal Property. Schedule 4.14(iv) contains a true and
correct list of the Personal Property to be conveyed to Buyer at the
Closing Date. Such Personal Property is free and clear of all Liens,
of any nature whatsoever, except for (a) Permitted Liens and (b)
liabilities and obligations that are assumed by Buyer as Assumed
Liabilities.
(v) No Proceedings. To Seller's Knowledge, except as set forth
in Schedule 4.7, (a) there are no eminent domain or other similar
proceedings pending or threatened affecting any portion of the
Property, and (b) there is no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding,
pending or threatened, relating to the ownership, lease, use,
occupancy or operation by any Person of any Property.
(vi) Current Use. To Seller's Knowledge, except as set forth in
Schedule 4.7, (a) the use and operation of the Property in the conduct
of Seller's Business does not violate in any material respect any
instrument of record or agreement affecting the Property, and (b) no
damage or destruction has occurred with respect to any of the Property
that would, individually or in the aggregate, have a Material Adverse
Effect on Buyer's ownership, operation or maintenance of the Assets.
(vii)Compliance with Property Laws. To Seller's Knowledge,
except as set forth in Schedule 4.7, Schedule 4.14(iii) and Schedule
10.1(ix), and except with respect to environmental matters as set
forth in Section 4.15, the Property is in full compliance with all
applicable building, zoning, subdivision and other land use and
similar Applicable Laws affecting the Property (collectively, the
"Property Laws"), and Seller has not received any notice of violation
or claimed violation of any Property Law. To Seller's Knowledge,
except as set in Schedule 4.14(iii) and Schedule 10.1(ix), no current
use by Seller of the Property is dependent on a nonconforming use or
other Governmental Approval, the absence of which would materially
limit the use of such properties or Assets necessary for the conduct
of, or otherwise material to, the ownership, operation or maintenance
of the Assets as currently utilized by Seller.
4.15 Environmental Matters.
(i) Permits. All Environmental Permits currently in use are
identified in Schedule 4.15, and, to Seller's Knowledge, Seller
currently holds, and at all times has held, all such Environmental
Permits necessary for Seller's Business, the Property and for the
ownership, operation and maintenance of the Assets and all such
Environmental Permits, subject to the provisions of Section 3.4 and
except as provided in Schedule 4.15, shall be validly transferred to
Buyer on the Closing Date, to the extent such Environmental Permits
legally may be transferred. Seller has not been notified by any
relevant Governmental Authority that any Environmental Permit will be
modified, suspended, canceled or revoked, or cannot be renewed in the
ordinary course of business.
(ii) No Material Violations. To Seller's Knowledge, Seller has
complied in all material respects, and is in compliance in all
material respects, with all Environmental Permits and all applicable
Environmental Laws pertaining to Seller's Business, the Property and
the Assets. No Person has made an allegation that has not been
completely resolved regarding any violation by Seller of any
Environmental Permits or any applicable Environmental Law relating to
the conduct of Seller's Business, the Property, or the ownership,
operation or maintenance of the Assets, except as set forth in
Schedule 4.15.
(iii)No Environmental Liabilities. Except as set forth in
Schedule 4.15, to Seller's Knowledge, Seller has not used, generated,
treated, stored, disposed of or otherwise handled, nor to its
Knowledge has any of its lessees, sublessees, contractors or other
third parties used, generated, treated, stored, disposed of or
otherwise handled, Hazardous Substances in any manner that has caused
or contributed to the Release or threatened Release of any Hazardous
Substances, on the Property, the Assets, or other properties or
assets owned, leased or used by Seller in connection with, or
necessary for the conduct of, or otherwise material to Seller's
Business, the Property or the ownership, operation, and maintenance of
the Assets.
(iv) No Underground Storage Tanks. Except as set forth in
Schedule 4.15, to Seller's Knowledge, no underground storage tank or
sump for Hazardous Substances is currently located on, and there have
been no Releases of Hazardous Substances from any underground tank or
sump or piping related to any such underground tank or sump, on or
beneath the Property, the Assets, or other properties or assets owned,
leased or used by Seller in connection with, or necessary for the
conduct of, or otherwise material to Seller's Business, the Property
or the ownership, operation, and maintenance of the Assets.
(v) No Notice of Claims. Except as set forth in Schedule 4.15:
(a), Seller is not a party to any environmental claims, and (b) Seller
has not received any written notification nor has Knowledge of
alleged, actual or potential responsibility for, or any inquiry or
investigation regarding any Release or threatened Release of any
Hazardous Substances existing or arising beneath, above, emanating or
migrating, or threatening to emanate or migrate, from the Property,
the Assets, or other properties or assets owned, leased or used by
Seller in connection with or otherwise material to Seller's Business,
the Property or the ownership, operation, or the maintenance of the
Assets.
(vi) Other. Except as set forth in Schedule 4.15:
(a) With respect to the Property and Assets, Seller is not
subject to any outstanding order, judgment, injunction, decree or writ
from, or contractual or other obligation to or with, any Governmental
Authority or other Person in respect of which Buyer may be required to
incur any Environmental Liabilities arising from the Release or
threatened Release of a Hazardous Substance.
(b) To Seller's Knowledge, none of the Assets or Property
is, and neither Seller nor any of its Affiliates have transported or
arranged for transportation (directly or indirectly) of any Hazardous
Substances relating to Seller's Business, the Property or the Assets
to any location that is listed or proposed for listing, under CERCLA,
or on any similar list issued by any Governmental Authority, or the
subject of governmental enforcement actions or investigations.
(c) No work, repair, construction or capital expenditure is
required or planned in respect of the Property or the Assets pursuant
to or to comply with any Environmental Law, nor has Seller received
any notice of any such requirement.
(d) Seller has no Knowledge of any pending or contemplated
property damage, bodily injury, toxic tort, wrongful death or business
interference claims against Seller arising from its Release or
threatened Release of Hazardous Substances, relating to Seller's
Business, the Property or to the ownership, operation or maintenance
of the Assets.
(vii)Full Disclosure. To Seller's Knowledge, for the time period
beginning June 30, 1983, Seller has made available to Buyer all
information, including, without limitation, all studies, analyses and
test results, in the possession, custody or control of Seller relating
to the matters set forth in this Section 4.15, including without
limitation, (a) the Release or threatened Release of Hazardous
Substances on, under or about the Property or the Assets, and (b)
Hazardous Substances used, generated, treated, stored, disposed of,
released or otherwise handled by Seller or any other Person (including
any of Seller's lessees, sublessees, contractors or other similar
third-parties) on Seller's Business, the Property, the Assets, or
otherwise in connection with the use or operation of the properties or
assets used in or held for use in connection with the Seller's
Business, the Property or the ownership, operation or maintenance of
the Assets.
4.16.Employee and Employer Plans. None of the Assets are subject
to any liability, judgment, order, obligation, Lien or encumbrance in
connection with employee matters, labor matters, labor agreements, or
employee plans, as defined in Section 3(3) of ERISA, or any other
related matters. No employees of Seller are being transferred to
Buyer as part of the transactions contemplated by this Agreement and
the Collateral Agreements.
4.17.Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Agreements, and the transactions
contemplated thereby, have been carried on without the participation
of any Person acting on behalf of Seller in such manner as to give
rise to any valid claim against Buyer for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to
any officer, director, employee, agent or sales representative of or
consultant to Seller upon consummation of the transactions
contemplated by this Agreement or the Collateral Agreements.
4.18.Disclosure. No representation or warranty by Seller
contained in this Agreement nor any statement or certificate furnished
or to be furnished by or on behalf of Seller to Buyer or its
representatives in connection with the transactions contemplated by
this Agreement and the Collateral Agreements, contains or will contain
any untrue statement of a material fact, or omits or will omit to
state any material fact required to make such statements not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Corporate Status; Authorization. Buyer is a corporation
duly organized, validly existing and in good standing, under the laws
of the State of Utah with full corporate power and authority to
execute and deliver this Agreement and the Collateral Agreements, to
perform its obligations thereunder and to consummate the transactions
contemplated thereby. The execution and delivery by Buyer of this
Agreement, and the consummation of the transactions contemplated
hereby, have been, and on the Closing Date the execution and delivery
will have been, duly authorized by all requisite corporate action of
Buyer. This Agreement is, and on the Closing Date each of the
Collateral Agreements will be, valid and legally binding obligations
of the Buyer, enforceable against Buyer in accordance with their
respective terms.
5.2. No Conflicts, etc. The execution, delivery and performance
by Buyer of this Agreement and each of the Collateral Agreements and
the consummation of the transactions contemplated thereby, do not and
will not conflict with or result in a violation of or under (with or
without the giving of notice or the lapse of time, or both) (i) the
certificate of incorporation or bylaws or other organizational
documents of Buyer, (ii) any Applicable Laws related to Buyer or any
of its properties or assets or (iii) any contract, agreement or other
instrument applicable to Buyer or any of its properties or assets,
except, in the case of clause (iii), for violations and defaults that,
individually and in the aggregate, have not and will not materially
impair the ability of Buyer to perform its obligations under this
Agreement or under any of the Collateral Agreements. Except as
specified in Schedule 5.2, no Governmental Approval or other Consent
is required to be obtained or made by Buyer in connection with the
execution and delivery of this Agreement or the Collateral Agreements
or the consummation of the transactions contemplated thereby.
5.3. Litigation. There is no action, claim, suit or proceeding
pending, or to Buyer's Knowledge threatened, by or against or
affecting Buyer in connection with or relating to the transactions
contemplated by this Agreement or of any action taken or to be taken
in connection herewith or the consummation of the transactions
contemplated hereby.
5.4. Brokers, Finders, etc. All negotiations relating to this
Agreement the Collateral Agreements, and the transactions contemplated
thereby have been carried on without the participation of any Person
acting on behalf of Buyer in such manner as to give rise to any valid
claim against Seller for any brokerage or finder's commissions, fee or
similar compensation, or for any bonus payable to any officer,
director, employee, agent or sales representative of or consultant to
Buyer upon consummation of the transaction contemplated by this
Agreement or the Collateral Agreements.
5.5. Investigation of Environmental Condition. Buyer
acknowledges that: (i) prior to the Closing Date it has had access to,
and an opportunity to inspect, the Assets; (ii) Seller has represented
to Buyer that it believes it has provided Buyer with all material
documents related to environmental issues related to the Assets; and
(iii) Buyer has been permitted to retain consultants to come upon the
Property and to review the Assets for the purposes of making various
environmental assessments. Notwithstanding any of the foregoing,
Buyer is relying on Seller's indemnity in Section 10.1(vi) related to
Environmental Liabilities for indemnification for matters associated
with Seller's Business and for the time period that Seller's Business
owned, operated and maintained the Assets and the Property.
ARTICLE 6
COVENANTS OF SELLER
Seller covenants to Buyer as follows:
6.1. Conduct of Business. From the date of this Agreement to the
Closing Date, except as provided in Schedule 6.1 or as expressly
permitted or required by this Agreement or as otherwise consented to
by Buyer in writing, Seller will use its best efforts to preserve the
Assets and to do no act to impair the Assets and will:
(i) carry on Seller's Business in, and only in, the
ordinary course, in substantially the same manner as heretofore
conducted, and use all reasonable efforts to maintain the Assets in
good operating condition and repair;
(ii) pay accounts payable and other obligations of the
Seller's Business when they become due and payable in the ordinary
course of business consistent with prior practice;
(iii)perform in all material respects all of its obligations
under all contracts and other agreements and instruments, including
renewing such material agreements relating to the Property or related
to the ownership, operation and maintenance of the Assets; and will
comply in all material respects with all Applicable Laws related to
the ownership, operation and maintenance of the Assets, the Property
and in operating Seller's Business;
(iv) not enter into or assume any material agreement,
contract or instrument relating to Seller's Business or relating to
the ownership, operation or maintenance of the Assets, or enter into
or permit any material amendment, supplement, waiver or other
modification in respect thereof;
(v) not take any action or omit to take any action, which
action or omission would result in a breach of any of the
representations and warranties set forth in Article 4;
(vi) as it relates to the ownership, operation and
maintenance of the Assets not (a) enter into or terminate any lease of
real estate, (b) create any subsidiary or (c) create any Liens other
than Permitted Liens;
(vii)not make any sale, assignment, transfer or other
conveyance or otherwise dispose of any of the Assets without replacing
them;
(viii)notify Buyer, and provide Buyer an opportunity to
comment, before filing motions, orders, briefs, settlement agreements
or other papers in any proceeding before any Governmental Authority or
any arbitrator (a) with respect to pending proceedings where positions
advanced are substantially inconsistent with previous positions or (b)
that would have the possibility of a Material Adverse Effect on the
business, financial condition or results of the ownership, operation
or maintenance of the Assets;
(ix) not incur any obligation or liability, absolute,
accrued, contingent or otherwise, with respect to the Assets, except
liabilities for taxes and current liabilities for trade or business
obligations incurred in connection with the purchase of goods or
services in the ordinary course of business consistent with prior
practice, none of which liabilities, in any case could have a Material
Adverse Effect on the ownership, operation and maintenance of the
Assets;
(x) as it relates to the Assets not institute, settle or
agree to settle any litigation action or proceeding before any court
or governmental body, other than in the ordinary course of business.
6.2. No Solicitation. Until December 31, 1998, neither Seller
nor any Person acting on its behalf, shall (i) solicit or encourage
any inquiries or proposals for, or enter into any discussions with
respect to, the acquisition of the Assets or (ii) furnish or cause to
be furnished any non-public information concerning the ownership,
operation and maintenance of the Assets to any Person (other than
Buyer and its agents and representatives), other than in the ordinary
course of business or pursuant to Applicable Laws. Seller shall not
sell, transfer or otherwise dispose of, grant any option or proxy to
any Person with respect to, create any Lien upon, or transfer any
interest in, any Asset, other than in the ordinary course of business
and consistent with this Agreement.
6.3. Access and Information.
(i) So long as this Agreement remains in effect, Seller will
give Buyer, the Buyer's prospective lenders and investors, if any, and
their respective accountants, counsel, consultants, employees and
agents, full access during normal business hours to, and furnish them
with all documents, records, work papers and information with respect
to, the properties, assets, books, contracts, commitments, reports and
records relating to the ownership, operation and maintenance of the
Assets, as Buyer shall from time to time reasonably request. In
addition, Seller will permit Buyer, the Buyer's prospective lenders
and investors, if any, and their respective accountants, counsel,
consultants, employees and agents, reasonable access to such personnel
of Seller during normal business hours as may be necessary or useful
to Buyer in its review of the Assets and the above-mentioned
documents, records and information. Seller will keep Buyer generally
informed as to the affairs of the ownership, operation and maintenance
of the Assets.
(ii) Seller will retain all books and records relating to the
ownership, operation and maintenance of the Assets in accordance with
Seller's record retention policies as presently in effect. During the
seven-year period beginning on the Closing Date, Seller shall not
dispose of or permit the disposal of any such books and records not
required to be retained under such policies without first giving 60
days' prior written notice to Buyer offering to surrender the same to
Buyer at Buyer's expense.
6.4. Public Announcements. Except as required by Applicable
Laws, or stock exchange requirements, Seller shall not make any public
announcement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of Buyer.
6.5. Further Actions.
(i) Seller agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable,
to consummate the transactions contemplated by this Agreement and the
Collateral Agreements by the Expected Closing Date.
(ii) Seller will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Seller pursuant to
Applicable Laws in connection with this Agreement and the Collateral
Agreements, including but not limited to, filings pursuant to the HSR
Act.
(iii)Seller will cooperate with Buyer in obtaining all Consents
(including, without limitation, all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained in
order to consummate the sale and transfer of the Assets pursuant to
this Agreement and the consummation of the other transactions
contemplated thereby.
(iv) Seller will cooperate with Buyer in exchanging such
information and supplying such assistance as may be reasonably
requested by Buyer in connection with the filings and other actions
contemplated by this Agreement.
(v) Seller will assist Buyer in negotiations with all Native
American Nations on various issues including, but not limited to,
rights-of-way issues, prior to the Closing Date and will assist Buyer
to come to a resolution with Native American Nations on issues related
to the pipeline.
(vi) Seller will cooperate with Buyer with respect to regulatory
filings with Governmental Authorities related to the Closing of the
transaction.
6.6. Further Assurances. Following the Closing, Seller shall,
from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by the Buyer, to
confirm and assure the rights and obligations provided for in this
Agreement, and in the Collateral Agreements and render effective the
consummation of the transactions contemplated thereby.
6.7. Taxes. Except for sales taxes and transfer, conveyance,
recording and other similar taxes and fees related to this
transaction, for all periods up to the Closing Date Seller shall be
responsible for the timely payment of, and shall indemnify and hold
Buyer harmless against, all Taxes that Seller is legally obligated to
pay related to the transaction contemplated by this Agreement and by
the Collateral Agreements. Seller shall prepare and timely file all
tax returns required in respect to Taxes referred to in this Section
6.7, provided that Buyer shall be permitted to prepare any such Tax
Returns that are the primary responsibility of Buyer under the
Applicable Laws. The Buyer's preparation of any such Tax Returns
shall be subject to Seller approval, which approval shall not be
withheld unreasonably.
6.8. Purging of Pipeline Assets. Prior to Closing, Seller will
remove, to the extent practicable, crude oil from the pipeline portion
of the Assets and all other appurtenant facilities. After the
pipeline portions of the assets are purged of crude oil the pipeline
will be filled with nitrogen at a minimum pressure of 45 psi (crude
oil residue will remain in the pipeline). Buyer acknowledges that it
has been provided with a copy of the detailed purge plan prior to the
beginning of such process. Buyer will be permitted to have a
designated representative onsite during the purge operations.
6.9. Access Agreements. Seller shall execute with Buyer before
the Closing Date a License for Property Access Agreement to provide
Buyer with access to facilities and properties owned by Seller for
Buyer's access prior to the Closing of this transaction. Exhibit A is
the License for Property Access Agreement for such access. Seller
agrees to provide Buyer with a right-of-way on Seller owned or
controlled property, in Long Beach, California, as provided in the
Pipeline Easement Agreement attached as Exhibit B to this Agreement.
6.10.Payments Due Native American Nations. Seller shall be
responsible for all amounts due and payable to Native American
Nations, whether made on an annual, quarterly, monthly or some other
basis, up to the Closing Date. Buyer shall be responsible for all
payments due Native American Nations after the Closing Date. Payments
made by Seller for periods after the Closing Date will be refunded to
Seller by Buyer for periods after the Closing Date. Payments made by
Buyer for periods prior to the Closing Date will be refunded to Buyer
by Seller for periods prior to the Closing Date.
6.11.Removal of PCB-Laden Transformers. Seller shall be
responsible for the removal of all transformers containing PCBs
(polychlorinated biphenyls), in excess of 49 parts per million,
included in the Assets, whether owned by Seller or a third-party at a
time agreed to between Buyer and Seller. The activities to be
undertaken prior to the Closing Date are set forth in Schedule 6.11.
Seller has no obligation to replace transformers that have been
removed pursuant to this Section. Buyer acknowledges that the removal
of such transformers will cause cathodic protection to cease on the
Assets.
6.12.Cooperation on Reports. After the Closing Date, Seller
agrees to assist Buyer and to cooperate in making any reports to any
Governmental Authorities and to pay fees related to those reports
incident to the ownership, operation and maintenance of the Assets, to
the Property or to Seller's Business, for periods prior to the
Closing, and will cooperate in filing any reports that must be made on
a pro rata basis for any time period in which the Buyer and Seller
have reporting obligations.
6.13.Morongo Tribal Lands. Seller agrees that if Buyer does not
utilize the right of way and pipeline that crosses the Morongo Band of
Mission Indians (Morongo) tribal lands, Seller will pay for 50% of the
removal costs of any Assets that the Morongo require Buyer to remove
from tribal lands.
ARTICLE 7
COVENANTS OF BUYER
Buyer covenants to Seller as follows:
7.1. Public Announcements. Prior to the Closing, except as
required by Applicable Laws, or stock exchange requirements, Buyer
shall not make any public announcement with respect to this Agreement
or the transactions contemplated hereby without the prior consent of
Seller.
7.2. Taxes. For all periods after the Closing Date, Buyer shall
be responsible for the timely payment of, and shall indemnify and hold
Seller harmless against, all Taxes Buyer is legally obligated to pay
related to the transaction contemplated by this Agreement. Buyer
shall prepare and timely file all Tax Returns required in respect to
Taxes referred to in this Section 7.2, provided that Seller shall be
permitted to prepare any such Tax Returns that are the primary
responsibility of Seller under the Applicable Laws. Seller's
preparation of any such Tax Returns shall be subject to Buyer's
approval, which approval shall not be withheld unreasonably. Buyer
shall be responsible for the payment of all sales taxes, and transfer,
conveyance, recording and other similar taxes and fees related to this
transaction.
7.3. Further Actions.
(i) Buyer agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement and the
Collateral Agreements by the Expected Closing Date.
(ii) Buyer will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Buyer pursuant to
Applicable Laws in connection with this Agreement, and the Collateral
Agreements, including but not limited to filings pursuant to the HSR
Act.
(iii)Buyer will coordinate and cooperate with Seller in
exchanging such information and supplying such reasonable assistance
as may be reasonably requested by Seller in connection with the
filings and other actions contemplated by this Agreement.
(iv) After the Closing Date, Buyer shall inform Seller of any
proposed Remedial Action and shall cooperate with Seller in any
Remedial Action required, which cooperation includes, without
limitation, (a) providing reasonable access, upon reasonable notice,
to the Property and Assets to Seller and Seller's contractors and
agents, pursuant to the License for Property Access Agreement attached
as Exhibit C, and (b) cooperation in obtaining approval from any
governmental agency with jurisdiction for any Remedial Action plan
proposed by Seller, it being agreed that Seller may pursue the most
cost effective Remedial Action, so long as it uses reasonable efforts
to obtain any necessary Governmental Approval for such plan, including
without limitation risk based corrective action and natural
attenuation where applicable. However, nothing in this Section 7.3
will prevent Buyer from pursuing its indemnification from Seller set
forth in Section 10.1(vi) if Buyer is subjected to any Environmental
Liabilities.
7.4. Further Assurances. Following the Closing, Buyer shall,
from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by Seller, to
confirm and assure the rights and obligations provided for in this
Agreement and in the Collateral Agreements and render effective the
consummation of the transactions contemplated thereby.
7.5. Cooperation on Reports. After the Closing Date, Buyer
agrees to assist Seller and to cooperate in making any reports to any
Governmental Authorities and to pay fees related to those reports
incident to the ownership, operation and maintenance of the Assets or
to the Property, for periods after the Closing and will cooperate in
filing any reports that must be made on a pro-rata basis for any time
period in which the Buyer and Seller have reporting obligations.
ARTICLE 8
CONDITIONS PRECEDENT
8.1. Conditions to Obligations of Each Party. The obligations of
the parties to consummate the transactions contemplated hereby shall
be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(i) HSR Act Notification. In respect of the notifications of
Buyer and Seller pursuant to the HSR Act, the applicable waiting
period and any extensions of such shall have expired or been
terminated.
(ii) No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Laws, including any order,
injunction, decree or judgment of any court or other Governmental
Authority. No court or other Governmental Authority shall have
determined any Applicable Laws to make illegal the consummation of the
transactions contemplated in this Agreement or by the Collateral
Agreements, and no proceeding with respect to the application of any
such Applicable Laws to such effect shall be pending or threatened.
(iii)Schedules and Collateral Agreements. Seller and Buyer shall
have approved any amendments to the Collateral Agreements, Schedules
and other closing documents referred to in this Agreement.
8.2. Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by the Buyer), on or prior to
the Closing Date, of the following additional conditions, which Seller
agrees to use reasonable good faith efforts to cause to be fulfilled:
(i) Representations, Performance. The representations and
warranties of Seller contained in this Agreement and in the Collateral
Agreements shall be true and correct in all material respects at and
as of the date hereof and shall be repeated and restated and shall be
true and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing
Date. Seller shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by
this Agreement and each of the Collateral Agreements to be performed
or complied with by it prior to or on the Closing Date. Seller shall
have delivered to Buyer a certificate, dated on the Closing Date and
signed by its duly authorized officers, to the foregoing effect.
(ii) Governmental Approvals. Buyer shall have obtained
permission to receive assignments of rights-of-way as set forth in
Schedule 8.2(ii).
(iii)No Material Adverse Effect. Except as set forth in Schedule
8.2(iii), no event, occurrence, fact, condition, change, development
or effect shall have occurred, exist or come to exist since January 1,
1998, that, individually or in the aggregate, has constituted or
resulted in, or could reasonably be expected to constitute or result
in, a Material Adverse Effect.
(iv) Collateral Agreements. Seller shall have entered into each
of the following agreements with the Buyer:
(a) a Pipeline Easement Agreement, in a form attached
hereto as Exhibit B, pursuant to which Seller will provide to Buyer
access to facilities and properties owned by Seller that are not
conveyed to Buyer as part of this transaction, which are necessary for
the ownership, operation and maintenance of the Assets;.
(b) a Transitional Services Agreement to be attached as
Exhibit D, pursuant to which Seller will provide to Buyer, for a
period of up to twelve months following the Closing Date, those rights
and services specified therein. Such Transitional Services Agreement
shall be approved by both parties five days prior to Closing.
(v) Opinion of Counsel. Buyer shall have received an opinion,
addressed to it and dated the Closing Date, from counsel to Seller,
Herbert A. Birenbaum, in substance and form reasonably satisfactory to
Buyer.
(vi) Corporate Proceedings. All corporate and other proceedings
of Seller in connection with this Agreement and the Collateral
Agreements and the transactions contemplated thereby, and all
documents and instruments incident thereto, shall be reasonably
satisfactory in substance and form to Buyer and its counsel, and Buyer
and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be
reasonably requested.
(vii)Transfer Documents. Seller shall have delivered to Buyer at
the Closing all documents, certificates and agreements, except for
Consents and Governmental Approvals, necessary to transfer to Buyer
good and marketable title to the Assets, free and clear of any and all
Liens thereon, other than Permitted Liens and subject to any
liabilities and obligations accepted by Buyer as Assumed Liabilities,
and subject to liabilities, obligations and guarantees that are set
forth in any Governmental Approval, instrument, Contract, Lease,
permit or other agreement or arrangement that are set forth in the
Schedules to this Agreement and are assumed by Buyer, including
without limitation:
(a) a bill of sale, assignment and general conveyance, in
form and substance reasonably satisfactory to the Buyer, dated the
Closing Date, with respect to the Assets, (other than any Asset to be
transferred pursuant to any of the instruments referred to in any
other clause of this Section 8.2(vii));
(b) assignments of all Contracts, and Rights-of-Way, dated
the Closing Date, assigning to Buyer all of Seller's right, title and
interest therein and thereto;
(c) Grant deeds, dated as of the Closing Date, with respect
to each parcel of Real Property transferable by deed in the form
attached as Exhibit E, together with any necessary transfer
declarations or other filings;
(d) an Assignment of Lease, dated as of the Closing Date,
with respect to each Lease in the form attached as Exhibit F, together
with any necessary transfer declarations or other filings.
(viii)Consents. Buyer shall have received Consents from the
lessor of each material Lease listed on Schedule 4.14(ii) to the
assignment of such Lease to Buyer and from all Persons from whom a
Consent is required to transfer all Real Property to Seller as listed
in Schedule 4.14(i).
(ix) FIRPTA Certificate. Buyer shall have received a certificate
of Seller, dated the Closing Date and sworn to under penalty of
perjury, setting forth the name, address and federal tax
identification number of Seller and stating that Seller is not a
"foreign person" within the meaning of Section 1445 of the Code, such
certificate to be in the form set forth in the Treasury Regulations
thereunder.
(x) Purge Operation. Seller shall have completed, to the
reasonable satisfaction of Buyer, the purging of the pipeline portion
of the Assets and other facilities as referenced in Section 6.8
pursuant to the July 28, 1998, purge plan.
8.3. Conditions to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by Seller), on or prior to the
Closing Date, of the following additional conditions, which Buyer
agrees to use reasonable good faith efforts to cause to be fulfilled.
(i) Representations, Performance, etc. The representations and
warranties of Buyer contained in this Agreement and the Collateral
Agreements shall be true and correct in all material respects at and
as of the date hereof and shall be repeated and shall be true and
correct in all material respects as of the Closing Date with the same
effect as though made at and as of such time. Buyer shall have duly
performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement and the Collateral
Agreements to be performed or complied with by it prior to or on the
Closing Date. Buyer shall have delivered to Seller a certificate,
dated the Closing Date and signed by its duly authorized officer, to
the foregoing effect.
(ii) Opinion of Counsel. Seller shall have received an opinion,
addressed to it and dated the Closing Date, of Charles E. Greenhawt,
counsel to Buyer, in form and substance reasonably satisfactory to
Seller.
(iii)Corporate Proceedings. All corporate proceedings of Buyer
in connection with this Agreement and the Collateral Agreements and
the transactions contemplated thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in
substance and form to Seller and its counsel, and Seller and its
counsel shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably
requested.
(iv) Governmental Approvals. Buyer shall have obtained all
Governmental Approvals necessary to consummate the transactions
contemplated hereby.
(v) Collateral Agreements. Buyer shall have entered into each
of the Collateral Agreements including a License for Property Access
Agreement, in the form attached hereto as Exhibit C pursuant to which
Buyer shall provide access to the Property to Seller after the Closing
Date, a Lease of a portion of the Farmington office in a form
attached hereto as Exhibit G pursuant to which Buyer shall lease to
Seller a portion of such office after Closing Date and the Guarantee
referenced in Section 11.13 of this Agreement.
ARTICLE 9
TERMINATION
9.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(i) by the written agreement of both Buyer and Seller;
(ii) by either Seller or Buyer by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. Long Beach, California time
on December 31, 1998, unless such date shall be extended by the mutual
written consent of Seller and Buyer;
(iii)by Buyer by written notice to Seller if (a) the
representations and warranties of Seller shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made and as restated upon the
Closing Date or (b) if any of the conditions set forth in Sections 8.1
or 8.2 shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. Long Beach, California
time on December 31, 1998, unless such failure shall be due to the
failure of Buyer to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it
prior to the Closing; or
(iv) by Seller by written notice to Buyer if (a) the
representations and warranties of Buyer shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made and as restated upon the
Closing Date or (b) if any of the conditions set forth in Sections 8.1
or 8.3 shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. Long Beach, California
time on December 31, 1998, unless such failure shall be due to the
failure of Seller to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it
prior to the Closing.
9.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 9.1, this
Agreement shall become void and have no effect, without any liability
to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors,
officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except for any liability resulting from
any such party's breach of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1.By Seller. Seller covenants and agrees to defend, indemnify
and hold harmless Buyer, its officers, directors, employees, agents,
advisers, representatives, any wholly-owned subsidiary and any
Affiliate of Buyer to which the Assets are ultimately conveyed
(collectively, the "Buyer Indemnitees") from and against, and pay or
reimburse Buyer Indemnitees for, any and all claims, liabilities,
debts, obligations, judgments, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute, accrued,
consequential, conditional or otherwise and whether or not resulting
from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the
investigation or defense of any of the same or in asserting any of
their respective rights hereunder (collectively, "Losses"), resulting
from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Seller herein or in the Collateral Agreements or in connection
herewith or therewith;
(ii) any failure of Seller to perform any covenant or agreement
hereunder or under any Collateral Agreement or fulfill any other
obligation in respect hereof or of any Collateral Agreement;
(iii) any Excluded Assets;
(iv) any and all Taxes of Seller, which Seller was legally
obligated to pay, relating to or arising out of the ownership,
operation and maintenance of the Assets, the Property or for
ownership of Seller's Business for periods prior to the Closing Date
on a pro-rata basis based on the time Buyer and Seller each actually
owned the Assets;
(v) any and all Losses in respect of Seller's employees,
related to Seller's employee benefit plans as defined in ERISA or
related to Seller's labor agreements;
(vi) all Environmental Liabilities (excluding (1) the presence
of crude oil within the pipeline portion of the Assets and the
associated piping and equipment in the pump stations and the removal
or release of crude oil from the pipeline portion of the Assets and
the associated piping and equipment in the pump stations, after the
Closing Date, and (2) asbestos that is part of the pipeline coating
except for that portion of the pipeline Assets on Morongo tribal
lands, which remediation is provided for in Section 6.13) relating to
the operation of Seller's Business prior to the Closing Date, the
Property or to the ownership, operation and maintenance of the Assets,
whether claims for such Environmental Liabilities arise prior to or
after the Closing Date. This indemnity operates as follows: (a) if
the Buyer, or any subsidiary or Affiliate of Buyer or any entity in
which Buyer retains an ownership interest, converts the Assets to the
transportation of liquid hydrocarbons this indemnity is no longer in
force and effect, but such indemnity does not terminate as to the
portion of the Assets that are continued to be used for the
transportation of gaseous hydrocarbons; (b) if Buyer elects to sell
all or any portion of the Assets to another Person to be used to
transport liquid hydrocarbons and Seller elects not to exercise its
right of first refusal set forth in Section 11.12 of this Agreement,
then Buyer continues to be indemnified under this provision without
any time limitation; (c) if Seller exercises its right of first
refusal to purchase the Assets pursuant to Section 11.12 of this
Agreement, this indemnification survives without any time limitation;
and (d) if Buyer operates this line for purposes of gaseous
hydrocarbon transportation, this indemnity survives without any time
limitation;
(vii) any failure of Seller to comply with applicable bulk sales
laws (in consideration of which indemnification obligation Buyer
hereby waives compliance by Seller with any applicable bulk sales
laws);
(viii) for Losses related solely to the following:
(a) for all mechanics, carriers, workmen, repairmen, or other
like liens (inchoate or otherwise); liabilities; obligations; charges;
encumbrances; contracts, agreements, or instruments, other than the
contracts, agreements and instruments, and liabilities, obligations,
charges and encumbrances related thereto, in Schedules 4.11, 4.14(i),
4.14(ii) and 4.14(iii); defects and irregularities in title;
mortgages; pledges; security interests; judgments; leases or
subleases; for or related to the ownership, operation or maintenance
of the Assets, the Property and for Seller's Business from September
1, 1976, to the Closing Date, whether a claim is made before or after
the Closing Date, when such Losses exceed, $10,000 individually and
$250,000 in the aggregate, but in no event for any individual claims
less than $10,000.
(b) for all mechanics, carriers, workmen, repairmen, or other
like liens (inchoate or otherwise); liabilities; obligations; charges;
encumbrances; contracts, agreements or instruments, other than the
contracts, agreements and instruments, and liabilities, obligations,
charges and encumbrances related thereto, in Schedules 4.11, 4.14(i),
4.14(ii) and 4.14(iii); defects and irregularities in title;
mortgages; pledges; security interests; judgments; leases or
subleases, for or related to the ownership, operation or maintenance
of the Assets, the Property and for Seller's Business prior to
September 1, 1976, whether a claim is made before or after the Closing
Date, when such Losses exceed $100,000 individually and $500,000 in
the aggregate, but in no event for any individual claims less than
$100,000.
(c) for all encroachments, gaps in Rights-of-Way, title defects
and irregularities in title, but excluding items listed as
miscellaneous issues, set forth in Schedule 10.1(ix), Seller shall
reimburse Buyer for the first $1,000,000 incurred by Buyer for Losses,
or for rerouting of the Assets related to such items. Such
application for reimbursement shall be made by using the same
mechanism provided for indemnification as set forth in this Article
10. Notwithstanding anything to the contrary in this Agreement,
indemnification for all items pursuant to this Section 10.1 (ix),
excluding items listed as miscellaneous issues, shall be limited to
$1,000,000.
Except for inaccuracies in the representations and warranties
contained in Sections 4.1, 4.2, 4.5 and 4.15, Seller shall not be
required to indemnify Buyer Indemnitees until the aggregate amount of
all claims against Seller exceeds $250,000, except as provided for in
Section 10.1(vi) for Environmental Liabilities, Section 10.1(viii) and
Section 10.1(ix).
10.2.By Buyer. Buyer covenants and agrees to defend, indemnify
and hold harmless Seller, its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Seller
Indemnitees") from and against, and pay or reimburse Seller
Indemnitees for, any and all claims, liabilities, debts, obligations,
judgments, losses, fines, costs, royalties, proceedings, deficiencies
or damages (whether absolute, accrued, consequential, conditional or
otherwise and whether or not resulting from third party claims),
including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of
the same or in asserting any of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by
Buyer made or contained in this Agreement or any Collateral Agreement
or in connection therewith;
(ii) any failure of Buyer to perform any covenant or
agreement made or contained in this Agreement or any Collateral
Agreement or fulfill any other obligation in respect thereof;
(iii)the Assumed Liabilities;
(iv) the use by Buyer of Seller's trade names or trademarks
after the Closing Date, except as permitted by this Agreement;
(v) the ownership, operation or maintenance of the Assets
by Buyer after the Closing Date, except, to the extent of such Losses
for which Seller is required to indemnify Buyer Indemnitees under this
Agreement or are not Assumed Liabilities in Section 3.3; and
(vi) any and all Taxes of Buyer, which Buyer was legally
obligated to pay, relating to or arising out of the ownership,
operation and maintenance of the Assets by Buyer for periods after the
Closing Date on a pro-rata basis based on the time Seller and Buyer
each actually owned the Assets.
10.3.Adjustments to Indemnification Payments. Any payment made
by Seller to Buyer Indemnitees, on the one hand, or by Buyer to
Seller, on the other hand, pursuant to this Article 10 in respect of
any claim (i) shall be net of any insurance proceeds realized by and
paid to the Indemnified Party in respect of such claim, (ii) shall be
reduced by an amount equal to any Tax benefits attributable to such
claim and (iii) shall be increased by an amount equal to any Taxes
attributable to the receipt of such payment, but only to the extent
that such Tax benefits are actually realized, or such Taxes are
actually paid, as the case may be, by Seller or by Buyer or by any
consolidated, combined or unitary group of which Buyer or Seller is a
member. However, any taxes paid, as an adjustment pursuant to this
Article 10 shall not be deemed a payment for purposes of this Section
10.3. The Indemnified Party shall use its reasonable efforts to make
insurance claims relating to any claim for which it is seeking
indemnification pursuant to Section 10.3 provided that the Indemnified Party
shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance
premiums or other charge backs to the Indemnified Party, as the case
may be, would exceed the value of the claim for which the Indemnified
Party is seeking indemnification.
10.4.Indemnification Procedures. In the case of any claim
asserted by a third-party against a party entitled to indemnification
under this Agreement (the "Indemnified Party"), notice shall be given
by the Indemnified Party to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to
assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified Party may
participate in such defense at such Indemnified Party's expense and
(iii) the omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying
Party and such Indemnifying Party is prejudiced as a result of such
failure to give notice. Except with the prior written consent of the
Indemnified Party, no Indemnifying Party, in the defense of any such
claim or litigation, shall consent to entry of any judgment or enter
into any settlement that provides for injunctive or other nonmonetary
relief affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to
such Indemnified Party of a release from all liability with respect to
such claim or litigation. In the event that the Indemnifying Party
does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such
claim or demand and shall be entitled to settle or agree to pay in
full such claim or demand. In any event, the Indemnifying Party and
the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to Section 10.4 and the records of each shall be
available to the other with respect to such defense.
10.5.Time Limitation. All claims for indemnification under
Sections 10.1 and 10.2 must be asserted no later than 30 days after
the termination of the respective survival periods set forth in
Section 10.6.
10.6.Survival of Representations, and Warranties, etc. The
representations, warranties, covenants and agreements contained in
this Agreement and the Collateral Agreements shall survive the
execution and delivery of this Agreement as follows:
(i) except as set forth in clauses (ii), (iii) and (iv)
below, the representations and warranties contained in Articles 4 and
5 and all covenants and agreements in this Agreement shall survive for
a period of three years following the Closing Date;
(ii) the representations and warranties contained in
Sections 4.1 and 4.2 shall survive without limitation;
(iii)the representations and warranties contained in Section
4.15 shall survive for a period of 10 years following the Closing
Date or at such time as the Assets or any portion thereof are used for
the transportation of any liquid (except water) including but not by
way of limitation, oil, petroleum, crude oil, or other non-gaseous
hydrocarbon substances, whichever shall first occur. The
indemnifications, covenants and agreements for Environmental
Liabilities shall survive for the periods set forth in Section
10.1(vi);
(iv) the representations and warranties of Seller contained
in Section 4.5 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
without limitation by reason of waiver of such statute of limitations.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1.Expenses. Seller, on the one hand, and Buyer, on the other
hand, shall bear their respective expenses, costs and fees (including
attorneys', auditors' and financing commitment fees) in connection
with the transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith (the
"Transaction Expenses"), and for all expenses, costs and fees for
obligations specifically agreed to be performed by either Seller or
Buyer pursuant to this Agreement whether or not the transactions
contemplated hereby shall be consummated.
11.2.Severability. If any provision of this Agreement, including
any phrase, sentence, clause, Article, Section or subsection is
inoperative or unenforceable for any reason, such circumstances shall
not have the effect of rendering the provision in question inoperative
or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.
11.3.Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i)
delivered personally, (ii) mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, (iii) sent
by next-day or overnight mail or delivery or (iv) sent by facsimile
(a) if to Buyer to,
Questar Line 90 Company with a copy to: Questar Line 90 Company
180 East 100 South 180 East 100 South
P.O. Box 45360 P.O. Box 45360
Salt Lake City, Utah 84145-0360 Salt Lake City, Utah 84145-0360
Attention: President Attention: Division Counsel
(b) if to Seller:
ARCO Pipe Line Company with a copy to: ARCO Pipe Line Company
15600 JFK Blvd., Suite 300 15600 JFK Blvd., Suite 300
Houston, Texas 77032 Houston, Texas 77032
Attention: President Attention: Legal Department
or, in each case, at such other address as may be specified in writing
to the other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (i) if by
personal delivery on the day after such delivery, (ii) if by certified
or registered mail, on the seventh business day after the mailing
thereof, (iii) if by next-day or overnight mail or delivery, on the
day delivered or (iv) if by facsimile shall be effective upon actual
receipt if received and confirmed by return transmission, provided
that a copy is also sent by certified or registered mail.
11.4.Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
11.5.Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and the Collateral Agreements (when executed and
delivered) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
11.6.Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
11.7.Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the
internal laws of the State of California without giving effect to its
conflict of laws rules. Buyer and Seller hereby irrevocably submit to
the jurisdiction of the courts of the State of California and the
Federal courts of the United States of America located in California
solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this
Agreement, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement
hereof or of any such document, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such document may not be
enforced in or by said courts, and the parties hereto irrevocably
agree that all claims with respect to such action or proceeding shall
be heard and determined in such California State or Federal court.
Buyer and Seller hereby consent to and grant any such court
jurisdiction over the Person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner
provided in Section 11.3, or in such other manner as may be permitted
by law, shall be valid and sufficient service thereof.
11.8.Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
11.9.Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written
consent of the other party hereto, provided that Buyer may assign this
Agreement to any Subsidiary or Affiliate of the Buyer.
11.10. No Third Party Beneficiaries. Except as provided in
Article 10 with respect to indemnification of Indemnified Parties
hereunder, nothing in this Agreement shall confer any rights upon any
Person or entity other than the parties hereto and their respective
heirs, successors and permitted assigns.
11.11. Amendment, Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid
or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in
no way impair the rights of the party granting such waiver in any
other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions
of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder, shall be construed as a
waiver of any other breach or default of a similar nature, or as a
waiver of any of such provisions, rights or privileges hereunder. The
rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have
at law or in equity. The rights and remedies of any party based upon,
arising out of or otherwise in respect of any inaccuracy or breach of
any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, or agreement
as to which there is no inaccuracy or breach. The representations and
warranties of Seller shall not be affected or deemed waived by reason
of any investigation made by or on behalf of Buyer (including but not
limited to by any of its advisors, consultants or representatives) or
by reason of the fact that Buyer or any of such advisors, consultants
or representatives knew or should have known that any such
representation or warranty is or might be inaccurate. Provided,
however, Buyer shall inform Seller if it knows of or believes any
representation or warranty of Seller is inaccurate.
11.12. Seller's Right of First Refusal. If Buyer desires to
sell, lease or otherwise dispose of the Property or Assets to any
Person for purposes involving the transportation of primarily liquid
hydrocarbons, whether in whole or in part, Buyer shall give notice to
Seller and shall provide the proposed purchase price, the material
terms and conditions of sale, the name and address of the proposed
purchaser and shall certify that the purchase is in good faith and at
arm's length. Seller shall thereupon have the irrevocable right and
option to purchase the Property and Assets at the purchase price set
forth in such notice. Notice by Seller to Buyer of Seller's election
to exercise its option shall be provided to Buyer within 30 days of
Seller's receipt of the notice of sale from Buyer.
11.13. Parental Guarantee of Questar Pipeline Company. An
Affiliate of Buyer, Questar Pipeline Company, shall execute at closing
a guarantee substantially in form to that set forth in Exhibit H.
11.14. Parental Guarantee of Atlantic Richfield Company. An
Affiliate of Seller, Atlantic Richfield Company, shall execute at
closing a guarantee substantially in form to that set forth in Exhibit
I.
11.15. Title Policies. Buyer shall have the right to obtain at
its sole cost and expense from a nationally recognized title insurance
company (the "Title Company") satisfactory to Buyer (a) a fee owner's
title insurance policy issued to Buyer, with respect to Real Property
and (b) a leasehold title insurance policy issued to Buyer, with
respect to each Lease, in each case in form and substance satisfactory
to Buyer, together with endorsements reasonably requested by Buyer,
including, without limitation, access, zoning, full survey,
comprehensive, non-imputation and contiguity endorsements, in an
amount determined by Buyer, insuring Buyer and issued as of the
Closing Date by the Title Company, showing Buyer to have a fee simple
title to each parcel of Real Property held in fee simple, and a valid
leasehold estate in each Lease. Seller will use reasonable efforts
both pre-Closing and post-Closing to resolve any curable defects in
Title appearing of record, and Buyer shall cooperate in such efforts.
11.16. Surveys. Buyer shall have the right to obtain at its
sole cost and expense a survey of each parcel of Real Property held by
Seller in fee simple, dated within 30 days prior to the Closing Date,
prepared by a certified or registered surveyor reasonably acceptable
to Buyer and the Title Company and certified to the Buyer, the Title
Company and the Buyer's lenders, in form and substance satisfactory to
the Buyer, the Title Company and the Buyer's lenders, if any,
complying with the current Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys and (a) setting forth an accurate
description of each parcel of Real Property, (b) locating all
improvements, Liens (setting forth the recording information of any
recorded instruments), setback lines, alleys, streets and roads, (c)
showing any encroachments upon or by any improvements on the
Designated Property and (d) showing all dedicated public streets
providing access to the Real Property and the municipal address of any
improvements located on the Real Property.
11.17. Access to Records. After the Closing Date, Buyer shall
make available to Seller all books and records that were in existence
as of and on the Closing Date involving the Property and Assets, and
which were delivered to Buyer, upon reasonable request of Seller for a
period of 20 years (or such longer period as may be required by
applicable laws or governmental regulation) or until such time as
Seller's indemnity obligation terminates, whichever shall first occur.
For a period of 20 years after the Closing Date (or such longer
period as may be required by applicable laws or governmental
regulation) or until such time as Seller's indemnity obligation
terminates, whichever shall first occur, Buyer shall not destroy or
give up possession of any original or final copy of any of the books
and records that were in existence as of and on the Closing Date
involving the Property and Assets and which were delivered to Buyer,
without first offering the Seller the opportunity, at Seller's expense
(without any payment to Buyer), to obtain such original or copy
thereof. After the conclusion of such 20 year period or until such
time as Seller's indemnity obligation terminates, whichever shall
first occur, Buyer shall offer or deliver to Seller at Seller's
expense (without any payment to Buyer) all such books and records
prior to destroying same.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
QUESTAR LINE 90 COMPANY
By:___________________________________________
D. N. Rose
President & CEO
ARCO PIPE LINE COMPANY
By:___________________________________________
Larry E. Shakley
President
Exhibit No. 12.
Questar Pipeline Company
Ratio of Earnings to Fixed Charges
12 Months Ended
September 30,
1997 1998
(Dollars in Thousands)
Earnings
Income before income taxes $41,743 $40,549
Plus debt expense 13,395 14,062
Plus allowance for borrowed
funds used during construction 174 448
Plus interest portion of rental expense 274 312
$55,586 $55,371
Fixed Charges
Debt expense $13,395 $14,062
Plus allowance for borrowed
funds used during construction 174 448
Plus interest portion of rental expense 274 312
$13,843 $14,822
Ratio of Earnings to Fixed Charges 4.02 3.74
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information
extracted from the Questar Pipeline Company consolidated Statements of Income
and Balance Sheets for the period ended September 30, 1998, and is qualified
in its entirety by reference to such unaudited financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,922
<SECURITIES> 0
<RECEIVABLES> 10,995
<ALLOWANCES> 0
<INVENTORY> 2,217
<CURRENT-ASSETS> 17,724
<PP&E> 603,262
<DEPRECIATION> 211,643
<TOTAL-ASSETS> 488,864
<CURRENT-LIABILITIES> 112,703
<BONDS> 114,577
0
0
<COMMON> 6,551
<OTHER-SE> 187,595
<TOTAL-LIABILITY-AND-EQUITY> 488,864
<SALES> 0
<TOTAL-REVENUES> 81,081
<CGS> 0
<TOTAL-COSTS> 29,984
<OTHER-EXPENSES> 11,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,540
<INCOME-PRETAX> 30,568
<INCOME-TAX> 10,983
<INCOME-CONTINUING> 19,585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,585
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
