Exhibit 10.4
Transcolorado Gas Transmission Company
Partnership Agreement
This Agreement, Effective on the 1st day of July, 1997, is
entered into between KN TransColorado, Inc. (KN) and Questar
TransColorado, Inc. (Questar). This Agreement reflects the withdrawal
of El Paso TransColorado Company from the TransColorado Partnership in
the Agreement Concerning Withdrawal from Partnership and Release and
Indemnification dated June 30, 1997.
1. Parties. The following are Parties to this Agreement and each
shall have a one-half interest in the Partnership.
1.1 KN TransColorado, Inc., a Colorado corporation with its
principal place of business located at X.X. Xxx 000000, 000 Xxx
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000.
1.2 Questar TransColorado, Inc., a Utah corporation with its
principal place of business located at X.X. Xxx 00000, 000 Xxxx
000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000.
2. Definitions. The terms defined in this section shall have the
meanings set out below for purposes of the Agreement.
2.1 Affiliate. An Affiliate is any Person which, directly or
indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with another Person.
2.2 Capital Account. A Capital Account consists of the Capital
Contributions and profits credited to the account of a Partner,
less the distributions and losses debited to the account, in
accordance with section 6. The Capital Accounts are maintained
for purposes of reflecting the economic arrangement among the
Partners and making allocations. The Capital Accounts of the
Partners shall not be, nor have the same meaning as, the "Capital
Account" of the Partnership under Section 12 of the Natural Gas
Act.
2.3 Capital Contribution. A Capital Contribution consists of
the capital contributed to the Partnership by a Partner.
2.4 Construction-Engineering Agreement. The
Construction-Engineering Agreement was entered into between the
Partnership and the Construction Project Manager on January 1,
1991, and amended February 28, 1995, to manage the design and
construction of the Project.
2.5 Construction Project Manager. The Construction Project
Manager is Questar Pipeline Company (Questar Pipeline) and it has
been designated by the Management Committee to perform the duties
described in section 5.
2.6 Default. A Default is a failure by a Partner to make one or
more Capital Contributions required under section 6 on the date
specified for payment by the Management Committee under section
6.5.2(iii).
2.7 Defaulting Partner. A Defaulting Partner is a Partner who
is in Default.
2.8 Expansion. An Expansion is any pipeline, including
appurtenances such as compression facilities, which increases the
capacity of the Project that is owned by the Partnership.
2.9 FERC. The FERC refers to the Federal Energy Regulatory
Commission or any federal commission, agency or other
governmental body succeeding to the powers of the Federal Energy
Regulatory Commission.
2.10 June 27, Agreement. The KN TransColorado, Inc. and Questar
TransColorado, Inc., Agreement of June 27, 1997, attached as
Exhibit A to this Agreement.
2.11 June 30, Agreement. The Agreement concerning Withdrawal
From Partnership and Release and Indemnification of June 30,
1997, between KN TransColorado, Inc., Questar TransColorado, Inc.
and El Paso TransColorado Company, attached as Exhibit B to this
Agreement.
2.12 Management Committee. The Management Committee is the
committee provided for in section 4.
2.13 Operating Agreements. The Operating Agreements are the
agreements that will be entered into between the Partnership,
Affiliates of the partners or other third parties to operate the
Project.
2.14 Operators. The Operators are the companies designated by
the Management Committee in accordance with section 5.
2.15 Out-of-Pocket Costs. Out-of-Pocket Costs are costs paid by
a Partner or its Affiliate to any third party for the benefit of
the Project, but do not include Affiliate employee expenses for
travel, lodging and incidental items.
2.16 Partner. A partner is a company listed in section 1 or any
Person who acquires a Partnership interest in accordance with the
terms of this Agreement.
2.17 Partnership. The Partnership is the entity created by this
Agreement.
2.18 Partner's Percentage. A Partner's Percentage is the
percentage that is determined by dividing a Partner's Capital
Account by the sum total of all Partners' Capital Accounts.
Initially, each Partner's Percentage shall be one-half.
2.19 Person. A Person is an individual, corporation, voluntary
association, joint stock company, business trust, partnership,
proprietorship or other legal entity, however constituted.
2.20 Phase I. The southern-most 22.5 mile, 24-inch diameter
segment of the Project and a 2 1/2 mile, 16-inch diameter residue
lateral connecting the Coyote Gas Treating Ltd. Liability Company
plant with the TransColorado main line segment and related
facilities.
2.21 Phase II. The extension of Phase I of the Project from
Coyote Gulch North to an interconnection with Questar Pipeline.
2.22 Project. The Project is the TransColorado Gas Transmission
System, an interstate natural gas transportation pipeline and
related facilities to be designed, constructed and operated by
the Partnership and extending from a proposed interconnection
with the facilities of Questar Pipeline located in northwestern
Colorado to proposed interconnections with other interstate or
intrastate pipelines located in Colorado and New Mexico.
2.23 Project Agreement. The Project Agreement is the agreement
between Rocky Mountain Natural Gas Company, Western Gas Supply
Company, and Questar Pipeline dated March 19, 1990, that preceded
this Agreement.
2.24 Secondary Facilities. Secondary Facilities are pipelines
and attendant facilities that are connected to the Project.
2.25 Shipper. A Shipper is any Person who has signed a letter of
intent, a precedent agreement or a similar agreement to obtain
transportation service on the Project.
3. Formation, Term and Purpose. The Parties form the
Partnership described below for the indicated purposes.
3.1 Formation. By this Agreement the Parties create a general
partnership under the Uniform Partnership Law as in force
pursuant to C.R.S. Sections 7-60-101 et seq.
3.2 Name. The name of the Partnership is the TransColorado Gas
Transmission Company.
3.3 Partnership Office. The principal office of the Partnership
shall be at the offices of KN TransColorado, Inc. or such other
place as the Management Committee may determine. The Management
Committee may also determine the location for other offices of
the Partnership.
3.4 Purpose. The Partnership shall design, construct, own and
operate the Project.
3.5 Term. The initial term of the Agreement shall commence on
its execution and shall terminate 25 years after the in-service
date of Phase II.
3.6 Regulatory Approvals. The Partners have and will continue
to cooperate in seeking authority to construct and operate the
Project under the FERC's optional certificate procedures or any
successor or alternate authority that is determined to be
appropriate by the Management Committee. The Partners will
cooperate in seeking any additional authorizations, rulings,
permits and approvals from other governmental authorities having
jurisdiction that may be required to construct or to own and
operate the Project.
3.7 Secondary Facilities. The right of the Partners or the
Partnership to acquire, construct, own or operate Secondary
Facilities interconnecting with the Project shall be governed by
this section.
3.7.1 Any Partner or its Affiliate shall have the right to
purchase, construct or acquire and may own any secondary
facility, which will not be considered to be part of the
Project and will not be credited to the Capital Account of
the Partner.
3.7.2 If any Partner or its Affiliate would like the
Partnership to purchase, construct, acquire or own any
secondary facility, the Partner may submit a written request
to the Partnership. The Partner shall notify each member of
the Management Committee of the proposed location of the
line, facility or extension, its estimated cost, appropriate
engineering data, flow diagrams and maps and the proposed
completion date. If any FERC application is required, any
additional information needed for the filing should also be
identified.
3.7.3 Within 30 days after the information described in
section 3.7.2 has been provided to the Management Committee,
it shall either unanimously approve the proposal or advise
the Partner requesting approval that it does not approve the
proposal. If the proposal is approved, the Partners agree
to have applications prepared for any necessary regulatory
authorizations or other approvals and to contribute to the
Partnership the appropriate portion of the cost of the
proposed line, facility or extension.
3.8 Expansion of the Project. The rights and obligations of the
Partners to expand the Project shall be governed by the
provisions of this section.
3.8.1 Any Partner that requests the Partnership to
construct an Expansion shall notify the Management Committee
of the amount of additional transportation requested, the
proposed potential Shippers who would use the additional
capacity, the likely receipt and delivery points for the
additional gas, the intended completion date for the
Expansion and such other information as is requested by the
Management Committee.
3.8.2 As soon as possible after receiving the proposal, the
Management Committee shall cause the preparation of cost
estimates of the Expansion and shall send them to the
Partners together with appropriate engineering data, flow
diagrams and maps describing the Expansion and such other
information as is reasonably necessary to evaluate the
proposal.
3.8.3 Within 60 days after the information described in
section 3.8.2 has been sent to each Partner, the Management
Committee shall either unanimously approve the Expansion
proposed as set forth or as modified by the Management
Committee or inform the Partner making the proposal that it
will not accept the proposal. If the Management Committee
accepts the proposal, it shall direct that any necessary
applications for Regulatory approvals be prepared and shall
direct the Partners to contribute to the Partnership the
appropriate portion of the cost of the Expansion or shall
arrange for such other financing as the Management Committee
unanimously approves.
4. Management Committee. The business of the Partnership shall be
managed by the Management Committee, which shall have exclusive
authority and full discretion to manage the affairs of the
Partnership. Unless otherwise expressly provided for in this
Agreement, no Partner shall have the authority to act for or to assume
any obligation or responsibility on behalf of the Partnership without
the prior approval of the Management Committee. The Management
Committee shall not have authority to take any action inconsistent
with the terms of this Agreement, as it may be amended from time to
time.
4.1 Management Committee Members. Each of the Partners shall
appoint in writing one member of the Management Committee and up
to two alternates, either of whom may serve in the absence of the
member. Any action that a member may perform under this
Agreement may be performed, in that member's absence, by the
alternate, and the member may delegate to the alternate as many
of that member's powers and duties as that member determines to
be appropriate. The member and alternates shall be officers of
the Partner that appointed them or of an Affiliate of the
Partner. Members and alternates shall serve until replaced by
the Partner that appointed them.
4.2 Powers of the Management Committee. Without limiting the
general powers of the Management Committee described in this
section, the Management Committee is specifically empowered to do
the following:
4.2.1 Designate a Construction Project Manager for the
Project to serve for the time and perform the duties
specified in the Construction-Engineering Agreement.
4.2.2 Appoint such agents as are necessary to assist the
Construction Project Manager or the Operators. Appoint such
technical and other committees and individuals as necessary
and direct them to undertake all activities needed for the
planning, construction, and operation of the Project.
4.2.3 Determine what FERC or other regulatory approvals or
certificates are required to construct and operate the
Project and direct the preparation and filing of any needed
applications.
4.2.4 Except as otherwise provided in this Agreement or as
delegated in the Construction-Engineering Agreement or the
Operating Agreements, authorize all agreements needed for
the Project, including but not limited to agreements with
consultants and third parties to undertake activities or
studies for the benefit of the Project, financing
arrangements, and commitments for transportation services
for Shippers.
4.2.5 Determine all policy or other matters for the Project.
4.2.6 Adopt Partnership rules and amendments concerning the
conduct of the affairs of the Partnership and the Management
Committee, including procedures for determining the rates to
be charged when the applicable FERC tariff allows discretion
in setting rates. Adopt rules for such other matters as the
Management Committee determines to be appropriate that are
not inconsistent with this Agreement.
4.2.7 Have prepared and adopt, amend or reject capital and
operating budgets.
4.2.8 Initiate litigation or arbitration, approve termination
of litigation, arbitration or settlement of disputes
involving claims against the Partnership; approve all
attorneys or agents representing the Partnership in such
matters.
4.2.9 Adopt an insurance and indemnity program covering the
interest and obligations of the Partnership, and, as
appropriate, the Partners.
4.2.10 Approve all tax policy matters regarding the
Partnership, including, but not limited to, elections
relating to federal income taxes required to be made by the
Partnership under Internal Revenue Code Section 703(b),
state income tax, preparation and filing of Partnership
returns, the handling of and participation in tax audits
conducted by any government entity, and designation of a tax
matters Partner.
4.2.11 Appoint audit committees for the Partnership with such
powers and duties as are specified by the Management
Committee. The audit committees shall report to the
Management Committee.
4.2.12 Have developed accounting and payment procedures
mutually acceptable to the Management Committee and the
Operators.
4.3 Management Committee Meetings. Meetings of the Management
Committee may be held in person, by telephone conference call or
by video conference call. In lieu of a meeting, the members may
act upon written consent, by majority vote if there are three or
more Partners, except for those items specifically set forth in
this Agreement requiring unanimity. Each Partner shall have one
vote equal to its Partner's Percentage at the time of the meeting
on behalf of the member. Minutes of each meeting shall be kept
and shall be approved by each member or alternate acting at the
meeting. Action by unanimous consent shall be placed in writing
and signed by the members. A quorum shall consist of the members
or their alternates representing all nondefaulting Partners.
4.4 Effect of Management Committee Decisions. Any action taken
by the Partnership at the direction of the Management Committee
shall be binding on the Partnership and on each Partner, whether
approved by the regular members of the Management Committee or
their alternates.
4.5 Voting Requirements. If the Partnership has two Partners,
then all matters are to be decided by a unanimous vote of the
Partners. If the Partnership has three or more Partners, then
matters shall be decided by a vote of the members representing
not less than a majority of the Partners' percentages in the
Partnership. The following matters, however, shall require the
unanimous approval of all Partners.
4.5.1 The means of financing the Project.
4.5.2 The form and content of any tariff to be used by the
Project.
4.5.3 Any agreement to purchase, construct, acquire or own
any Secondary Facilities or Expansions of the Project.
4.5.4 Except as provided in sections 12.2.1 and 12.2.2,
consent to the transfer of a Partner's interest.
4.5.5 Except as provided in sections 11, 12 and 13, the
decision to add a new Partner to the Partnership.
4.5.6 Except as otherwise provided in this Agreement, the
decision to dissolve the Partnership.
4.5.7 Any amendment of this Agreement.
4.6 Officials of the Partnership. One of the members of the
Management Committee shall serve as chairman. The chairman as of
the execution of this Agreement shall be the Management Committee
member representing KN with a term ending three years after the
in-service date of Phase II. After KN's term expires, the
chairmanship shall be open to election every two years by a
majority of the Partners with no prohibition upon a chairman
being elected to serve consecutive terms. If there are only two
Partners, the chairmanship shall rotate between Partners if the
Partner who is not Chairman at the end of KN's initial term
desires the chairmanship. A chairman may be removed by a
unanimous vote if there are two Partners or a majority vote if
there are three or more Partners. The chairman shall have the
power and responsibility for the general supervision of the
business and property of the Partnership in accordance with this
Agreement and shall perform other administrative duties commonly
incident to this responsibility. The chairman or his alternate
shall chair meetings of the Management Committee. The Management
Committee shall have the power to appoint officials or agents for
the Partnership to perform such duties as the Management
Committee may direct.
4.7 Removal of Officials. Each Partner may remove an official
that it previously appointed at any time and shall have the right
to fill vacancies occurring in the positions occupied by its
appointees. The Management Committee may remove an official
previously appointed by the Management Committee at any time and
shall fill vacancies occurring in the positions occupied by its
appointees.
4.8. Indemnification. The Partnership shall indemnify and hold
harmless the Partners, the members of the Management Committee
and those officials and agents appointed in writing by the
Management Committee against all actions, claims, demands, costs
and liabilities arising out of the acts or failures to act of any
of the members or officials in good faith within the scope of
their authority in the course of the Partnership's business.
These Persons shall not be liable for any obligations,
liabilities or commitments incurred by or on behalf of the
Partnership as a result of any such acts or failure to act.
5. Construction Project Manager, Operators and Partnership
Assignments.
5.1 Construction Project Manager. The Partnership has entered
into a Construction-Engineering Agreement with the Construction
Project Manager, Questar Pipeline, to serve during the
preconstruction and construction periods. The Construction
Project Manager shall serve until the completion of the Project,
or until it resigns or is removed by the unanimous vote of the
Management Committee.
5.2 Operators. The Partnership may enter into Operating
Agreements with Affiliates of each of the Partners, third parties
or directly employ personnel to operate various discrete
functions related to the Project.
5.3 Partnership Assignments. Attached as Exhibit C to this
Agreement is a current designation of duties related to the
construction and operation of Phase II of the Project and other
duties as related to Phase I of the Project not delegated to El
Paso in the operating agreement with El Paso for Phase I.
6. Capital Accounts and Capital Contributions.
6.1 Capital Accounts. The Capital Account of a Partner consists
of the total Capital Contributions made by the Partner in
accordance with sections 6.3 and 6.4, plus all profits of the
Partnership and less all distributions and all losses of the
Partnership allocated to such account. Capital Contributions
shall be made in money or property acceptable to the Management
Committee, other than a note or other obligation of a Partner.
Profits and losses shall be determined in accordance with the
accounting rules and regulations, if any, prescribed by the
regulatory body or bodies under the jurisdiction of which the
Partnership is then operating, and to the extent of matters not
covered by such rules or regulations, generally accepted
accounting principles prevailing for companies engaged in a
business similar to the Partnership.
6.2 Allocation of Profits and Losses. At the end of each
calendar month, each of the Partners shall share in all net
profits and net losses of the Partnership for that month
(determined in accordance with section 6.1) in proportion to its
Partner's Percentage as of the beginning of the month for which
profits and losses are being allocated, and the amount allocated
to each Partner shall be debited or credited, as the case may be,
to the Capital Account of the Partner, as provided in section
6.1. Except as provided below, all items of income, gain, loss
(including depreciation recapture), deduction or credit for
federal income tax purposes for each month shall be allocated in
accordance with the foregoing allocation of net profits and net
losses and are not subject to any special allocation. However,
income, gain, loss and deduction for federal income tax purposes
that is attributable to any property contributed to the
Partnership by a Partner shall be allocated to the Partners in
the manner provided under Internal Revenue Code Section 704(c) and any
regulations issued under that section.
6.3 Preconstruction and Construction Capital Contributions.
Each Partner agrees to contribute to the capital of the
Partnership in proportion to its Partner's Percentage, the amount
necessary to meet the cash requirements of the Partnership prior
to and during the construction of the Project. These
requirements include, but are not limited to, the costs of
preparing and filing an application for FERC approval, preparing
necessary environmental impact studies, obtaining interests in
land and performing preliminary marketing activities. The
Capital Contributions required by this section 6.3 shall be made
in the amount and at the time specified by the Management
Committee.
6.4 Post Construction Capital Contributions. Each Partner
agrees to contribute to the capital of the Partnership in
proportion to its Partner's Percentage, the amount determined to
be necessary by the Management Committee for the operation and
maintenance of the Project and the purchase or construction of
any Secondary Facilities or Expansions of the Project approved by
the Management Committee.
6.5 Payment of Capital Contributions.
6.5.1. The Management Committee shall cause the Construction
Project Manager, during the construction of Phase II, or the
designated Operator thereafter, to prepare and deliver to
each Partner budgets, cash flow projections and other
financial forecasts with respect to the Partnership as may
be reasonably requested by any Partner. The Management
Committee shall cause to be issued a written request for
payment of each Capital Contribution to be made in
accordance with sections 6.3 and 6.4, at such times and in
such amounts as the Management Committee directs. All
amounts received by the Partnership from a Partner on or
before the date specified in section 6.5.2(iii) shall be
credited to such Partner's Capital Account as of the
specified date and all amounts received from a Partner after
the date specified in section 6.5.2(iii) shall be credited
to such Partner's Capital Account as of the date of its
receipt.
6.5.2 Each written request for payment issued pursuant to
section 6.5.1 shall state: (i) the amount of the Capital
Contribution requested from each Partner; (ii) the purposes
for which the Capital Contributions are to be applied, in
such reasonable detail as the Management Committee shall
direct; and (iii) the date on which the payments shall be
made and the method of payment.
6.5.3 Each Partner will make payment of its Capital
Contributions in accordance with the requests issued under
section 6.5.1. If a Capital Contribution is made 10 or more
days after the date specified for payment by the Management
Committee under section 6.5.2(iii), interest on the
delinquent amount shall accrue daily from the date payment
should have been made until the date payment is received by
the Partnership. Interest shall be calculated on a daily
basis using 365 days for a year at 2% plus the base rate on
corporate loans at large U. S. money center commercial banks
(prime rate) as quoted in The Wall Street Journal under
"Money Rates" for each relevant day. A Partner's payment of
interest shall not be used to increase its Capital Account.
Any interest paid by the Defaulting Partner shall be
allocated as income to the Capital Accounts of the
nondefaulting Partner(s) and distributed immediately. In
addition, if a payment is 10 or more days late, and there
has been a reduction in the allocations made under section
6.2 to the Defaulting Partner, that Partner must make any
necessary payments to bring its Capital Account into balance
with that of the nondefaulting Partner(s), including
additional Capital Contributions to its own Capital Account,
or in the case of a disproportionate allocation of loss,
contributions to increase the Capital Account of the
nondefaulting Partner(s), whichever is appropriate. If a
payment is less than 10 days late and there has been a
reduction in the allocations made to the Defaulting Partner
under section 6.2, such reduction shall be reversed through
an accounting adjustment to the defaulting Partner's Capital
Account.
6.6 Unsolicited Contributions. No Partner shall make any
Capital Contributions to the Partnership except as requested by
the Management Committee pursuant to section 6.5.
7. Distributions of Excess Cash. The Management Committee will
determine the cash requirements of the Partnership at least
semiannually. Distributions of any amount in excess of the cash
requirements shall be made only to all Partners simultaneously in
proportion to their respective Partner's Percentage at the time of
distribution, in such total amounts and at such times as directed by
the Management Committee. However, if section 11.1(c) applies,
distribution of excess cash shall be made to each nondefaulting
Partner in the proportion that its Partner's Percentage bears to the
Partner's Percentage of the nondefaulting Partner(s).
8. Records, Accounting and Taxation.
8.1 Fiscal Year. The fiscal year of the Partnership shall begin
on January 1 and end on the following December 31.
8.2 Location of Records. The books of account and other records
for the Partnership shall be kept and maintained at the principal
office of the Partnership or at such other location as the
Management Committee directs. Any Partner wishing to make copies
of any such records of the Partnership may do so at the expense
of the Partner.
8.3 Books of Account. The books of account for the Partnership
shall be maintained on an accrual basis in accordance with the
accounting rules and regulations, if any, prescribed by the
regulatory body under the jurisdiction of which the Partnership
is operating, and, to the extent of matters not covered by such
rules or regulations, generally accepted accounting principles
prevailing for companies engaged in a business similar to that of
the Partnership. The books of account shall be audited by
certified public accountants selected by the Management Committee
following the end of each fiscal year at the expense of the
Partnership and, if reasonably required by any Partner, at the
end of the Partner's fiscal year at the expense of the Partner.
8.4 Annual Financial Statements and Tax Returns. Within 60 days
following the end of the fiscal year, the Construction Project
Manager, during construction of Phase II or the designated
Operator thereafter, shall prepare and deliver to each Partner
(with footnote disclosure) an income statement, a statement of
cash flows for the fiscal year, a statement of financial position
and a statement of changes in each Partner's Capital Account as
of the end of the fiscal year, together with an auditor's opinion
by the certified public accountants. Within 120 days following
the end of the fiscal year, the tax matters Partner shall cause
to be prepared the federal, state and local income tax returns
and other accounting and tax information and schedules as shall
be necessary for the preparation by each Partner of its income
tax returns for the fiscal year. The tax matters Partner shall
also cause to be prepared and timely filed the federal and any
state and local income tax returns of the Partnership.
8.5 Interim Financial Statements. As soon as practicable after
the end of each calendar month in each fiscal year, the
Construction Project Manager, during construction of Phase II or
the designated Operator thereafter, shall prepare and deliver to
each Partner, together with an appropriate certificate of the
Person preparing the document, an income statement, a statement
of cash flows, a statement of financial position, a tax schedule
and a statement of changes in each Partner's Capital Account for
the month (including sufficient information to permit the
Partners to calculate their tax accruals), and other information
as may be requested by the Management Committee for the portion
of the fiscal year then ended and for the 12 month period then
ended.
8.6. Taxation of Partnership. The Partners intend that the
Partnership shall be treated as a Partnership for federal, state
and local income tax purposes. The Partners will take all
action, including amending this Agreement and executing other
documents, needed to qualify for and receive this tax treatment.
8.7 Government Reports. The Management Committee will direct
the appropriate entity to prepare and file all reports prescribed
by the FERC and any other regulatory or governmental agency
having jurisdiction.
8.8 Inspection of Facilities and Audit by Partners. Each
Partner shall have the right at reasonable times during regular
business hours to inspect the facilities of the Partnership and
to audit and make copies of the books of account and other
records of the Partnership, including Partnership minutes,
resolutions and contracts. This right may be exercised through
any agent or employee of the Partner designated in writing by it
or by an independent public accountant or attorney so designated.
Each Partner shall bear all expenses incurred in any inspection
or audit made at the Partner's request.
8.9 Deposit and Withdrawal of Funds. Funds of the Partnership
shall be deposited in the financial institutions designated by
the Management Committee. All individuals authorized as
signatories for the Partnership shall be designated by the
Management Committee. All withdrawals of funds shall be made
only by checks, wire transfer, debit memorandum or other written
instrument.
8.10 Record Retention. All records that are required by this
Agreement or other agreements of the Partnership shall be
retained by the Partnership for the longer of the period of time
required by the FERC or any other federal or state agency having
jurisdiction or by state law or, the period during which any
state or federal tax audit may occur, or as determined by the
Management Committee, but in no event for less than three years.
8.11 Section 754 Election. At the direction of the Management
Committee, the tax matters Partner shall file an election with
the Internal Revenue Service under Section 754 of the Internal
Revenue Code in the manner prescribed in regulations issued under
Section 754. The election shall provide that the basis of
Partnership property shall be adjusted in the case of a
distribution of property, in the manner provided in Code Section
734, and, in the case of a transfer of a Partnership interest, in
the manner provided in Code Section 743.
8.12 Tax Matters Partner. The Management Committee shall
designate a tax matters Partner within the meaning of Internal
Revenue Code Section 6231(a)(7) in the manner required by
regulations issued under that Section.
9. Reimbursement of Costs. Certain costs incurred by the Partners
or their Affiliates shall be reimbursed by the Partnership as provided
in this section.
9.1 Out-of-Pocket Costs. Out-of-Pocket Costs have been or will
be incurred by the Partners or their Affiliates. After the
execution of this Agreement, but not more often than monthly, the
Partners shall present a detailed accounting of these costs to
the Partnership for reimbursement. If approved by the Management
Committee, the Partnership shall reimburse the appropriate
Partner or Affiliate for Out-of-Pocket Costs.
9.2 In-house Costs. One or more of the Partners or their
Affiliates may have accrued or may accrue in-house costs, as
specified in Exhibit D to this Agreement, to help with the
formation of the Partnership and the design or construction of
the Project. Each Partner that has accumulated in-house costs
shall present a detailed accounting of them to the Partnership
for payment as of each April 1 and October 1. If approved by the
Management Committee, the Partnership shall reimburse the
appropriate Partner or Affiliate for the amount of its accrued
in-house costs.
10. Miscellaneous Agreements between KN and Questar. The Partners
agree upon the following contractual arrangements for ownership of
Phase I and Phase II of the Project, as are set forth in the June 27
Agreement and the June 30 Agreement. These agreements are
incorporated into this Agreement. To the extent that there are
conflicting provisions in the June 27 Agreement, the June 30 Agreement
and this Agreement, this Agreement shall control.
10.1 Purchase of El Paso's Phase II Interest. Notwithstanding
anything to the contrary in this Agreement, the June 27 Agreement
or the June 30 Agreement, on the in-service date of Phase II of
the Project, KN and Questar shall each pay El Paso 50% of the
balance of El Paso's then-remaining net book value of Phase II
that is currently estimated to be approximately $2,026,000.
10.2 Purchase by Questar of El Paso's Phase I Interest in
TransColorado. Notwithstanding anything to the contrary in this
Agreement, the June 27 Agreement or the June 30 Agreement, or any
contrary provisions of the TransColorado Project-Phase I
Construction, Ownership and Operation Agreement dated April 18,
1996, (April 18, 1996, Agreement), on the in-service date of
Phase II of the Project, Questar will pay to El Paso 100% of El
Paso's then net book value of Phase I and will assume 100% of El
Paso's financial obligations in connection with Phase I,
currently estimated to total approximately $8,000,000, El Paso
and El Paso Energy Corporation have agreed to continue to be
responsible for performing their obligations under the Revolving
Credit Agreement between TransColorado Gas Transmission Company
and Credit Lyonnais dated July 19, 1996, until the obligations
are assumed by Questar on the in-service date of Phase II. KN
shall be allocated all net profits from Phase I, paid by cash
disbursements, until the in-service date of Phase II. Upon the
in-service date of Phase II, the assets and operations of Phase I
will be consolidated with those of Phase II. Thereafter, net
profits from Phase I shall be combined with those from Phase II
and allocated in the same manner as is set forth in section 6.2.
10.3 Election to sell. Notwithstanding anything to the contrary
in this Agreement, the June 27 Agreement or the June 30
Agreement, Questar, beginning 24 months after the in-service date
of Phase II of the Project, will have a 12-month period (Purchase
Period) in which it may, on its own election, sell to KN its
Partnership interest in the Project at an amount equal to
Questar's Partnership interest percentage, at that time, of
TransColorado's book equity, including net working capital
(Questar's Equity). KN may negotiate with any other Partner to
allow it to acquire a portion of Questar's Partnership interest.
If no other Partner negotiates successfully with KN to purchase
a portion of Questar's Partnership interest, then KN will be
obligated to purchase all of Questar's Partnership interest.
Further, if Questar elects to sell its interest in the
TransColorado Partnership to KN and any additional Partners
during the Purchase Period, KN and any other Partner who
negotiates successfully to purchase Questar's interest in the
Project will either assume or refinance all TransColorado
Partnership debt within the 90-day time frame established to
purchase Questar's Equity as is set forth in subsection 10.4 of
this Agreement and will be solely liable and obligated for any
TransColorado Partnership debt assumed or refinanced.
10.4 Notice and Payment. Notwithstanding anything to the
contrary in this Agreement, the June 27 Agreement or the June 30
Agreement, Questar may give written notice to the other Partners
to this Agreement beginning 90 days prior to the Purchase Period
up until the final day of the Purchase Period of Questar's
election to sell its interest in TransColorado to KN and any
other Partner who has negotiated successfully to purchase a
portion of Questar's Partnership interest with KN. Upon
receiving written notice from Questar that it elects to sell its
Partnership interest in TransColorado, KN and any other Partner
who has negotiated successfully with KN to acquire a portion of
Questar's Partnership interest (Purchasing Partners), shall
purchase Questar's Partnership interest in TransColorado and pay
to Questar, within 90 days by wire transfer to a bank account
designated by Questar, the value of Questar's Equity in the
Project.
10.5 Permanent Release of Capacity by Questar. If Questar elects
to exercise its option to sell its Partnership interest to KN
and/or the Purchasing Partners pursuant to this Agreement,
Questar or any affiliate, subsidiary or parent holding firm
transportation capacity (Questar Capacity Holder) on the Project
that was acquired to fulfill the terms and conditions of the
November 13, 1997, agreement between TransColorado Gas
Transmission Company and Enron Pipeline Company, attached as
Exhibit E to this Agreement, the Questar Capacity Holder may then
reduce that firm transportation contract demand on TransColorado
by an amount equal to the firm transportation capacity held by it
that is not at that time under capacity release contract to other
shippers without any further liability to TransColorado for any
reservation charges, reservation surcharges, or any other charges
associated with the capacity returned to TransColorado.
Thereafter as each capacity release contract is terminated, the
Questar Capacity Holder may further reduce its firm
transportation contract demand by the amount of the expiring
capacity release contracts without any further liability to
TransColorado for any reservation charges, reservation
surcharges, or any other charges associated with the capacity
returned to TransColorado.
10.6 Indemnification upon election. Notwithstanding anything to
the contrary in this Agreement, the June 27 Agreement or the June
30 Agreement, if during the Purchase Period Questar elects to
sell its Partnership interest in the Project to the Purchasing
Partners, then the Purchasing Partners will defend, indemnify and
hold Questar, Questar Pipeline and their respective officers,
directors, employees, agents, parent companies, Affiliates and
subsidiaries, harmless against all claims, damages (including
consequential damages), judgments, causes of action, legal
liability, attorneys' fees, accountants' fees and court costs and
all costs of debt, including, but not limited to, interest and
principal arising out of, in connection with, or in any way
related to the Project, whether fixed, occurring or coming due,
before or after Questar's notice to Purchasing Partners to sell
its Partnership interest to Purchasing Partners during the
Purchase Period, except for those claims, damages, judgments,
causes of action, legal liability, attorneys' fees, accountants'
fees, court costs and costs of debt, that are due to the gross
negligence, recklessness or intentional misconduct of Questar,
Questar Pipeline and their respective officers, directors,
employees, agents, parent companies, Affiliates and subsidiaries.
Further, this indemnification survives this Agreement and shall
exist until the end of the applicable statute of limitations
period.
10.7 Indemnification for Past Acts of KN and Questar. KN and
Questar agree to indemnify each other for past acts as follows:
10.7.1 Notwithstanding anything to the contrary in this
Agreement, the June 27 Agreement or the June 30 Agreement,
KN will defend, indemnify and hold TransColorado, Questar
and Questar Pipeline and their respective officers,
directors, employees, agents, parent companies, Affiliates
and subsidiaries, harmless against all claims, damages
(including consequential damages), judgments, causes of
action, legal liability, attorneys' fees, accountants' fees
and court costs to any Person arising out of or in
connection with any work performed by KN and its
contractors, agents or Affiliates, prior to the date of this
Agreement, and for any obligations incurred by KN and its
contractors, agents and Affiliates, prior to the date of
this Agreement, on the Project that have not been authorized
by the Management Committee and have not been specifically
ratified or assumed by Questar. Further, this
indemnification survives this Agreement and shall exist
until the end of the applicable statute of limitations
period.
10.7.2 Notwithstanding anything to the contrary in this
Agreement, the June 27 Agreement or the June 30 Agreement,
Questar will defend, indemnify and hold TransColorado and KN
and their respective officers, directors, employees, agents,
parent companies, Affiliates and subsidiaries, harmless
against all claims, damages (including consequential
damages), judgments, causes of action, legal liability,
attorneys' fees, accountants' fees and court costs to any
Person arising out of or in connection with any work
performed by Questar and its contractors, agents or
Affiliates, prior to the date of this Agreement, and for any
obligations incurred by Questar and its contractors, agents
and Affiliates, prior to the date of this Agreement, on the
Project that have not been authorized by the Management
Committee and have not been specifically ratified or assumed
by KN. Further, this indemnification survives this
Agreement and shall exist until the end of the applicable
statute of limitations period.
11. Default.
11.1 Consequences of Default. For as long as a Partner is in
Default, (a) the representative of the Defaulting Partner on the
Management Committee shall not have any vote as a member of the
Management Committee and action by the Management Committee shall
require the unanimous vote of the remaining member(s) during the
period of Default; (b) the Defaulting Partner shall continue to
be liable to make Capital Contributions to the Partnership in
accordance with section 6; and (c) no distributions shall be made
to the Defaulting Partner, except as provided in section 14.3.2.
A Defaulting Partner shall be liable to the Partnership and the
other Partner(s) for all losses, damages and expenses sustained
or incurred by the Partnership or the Partner(s) as a result of
the Default.
11.2 Action by Management Committee. In the event of Default,
the member(s) of the Management Committee representing the
nondefaulting Partner(s) shall promptly vote on a course of
action to be taken, which may include requiring (all of) the
nondefaulting Partner(s) to make Capital Contributions or lend
funds to the Partnership proportionate to each then-existing
Partner' Percentage in a total amount equal to the amount of the
Default.
11.3 Sale of Defaulting Partner's Interest. If any Default
continues for more than 60 consecutive days, the nondefaulting
Partner(s) shall have the right to purchase equal percentages of
the Defaulting Partner's Partnership interest. If the
nondefaulting Partner(s) elect(s) not to purchase equal
percentages of such Partnership interest, upon unanimous approval
of the nondefaulting Partner(s), they may purchase unequal
percentages of the Defaulting Partner's Partnership interest,
including a purchase of the entire Partnership interest by a
single Partner, or they may sell all or part of the Partnership
interest to a third party. If the nondefaulting Partner(s)
cannot reach unanimous agreement on the sale of the Defaulting
Partner's Partnership interest in unequal percentages to the
nondefaulting Partner(s) or to a third party, the Partnership
shall be dissolved. Any sale or assignment of the Defaulting
Partner's Partnership interest may be made without the consent or
other agreement of the Defaulting Partner.
11.4 Price for Nondefaulting Partners. The price payable by the
nondefaulting Partner(s) for the Defaulting Partner's Partnership
interest shall be the lesser of: (a) the fair market value of the
Partnership interest, as determined by an independent third-party
valuation, or (b) the amount reflected in the Defaulting
Partner's Capital Account at the time of the sale. The proceeds
from a sale to one or more of the nondefaulting Partner(s) shall
be paid to the Partnership and applied first in an amount equal
to any losses, damages or expenses, including attorneys' fees,
sustained by the Partnership as a result of the Default. The
proceeds shall next be applied to any nondefaulting Partner in an
amount equal to the losses, damages or expenses, including
attorneys' fees, incurred by such Partner as a result of the
Default. Any remaining proceeds shall be paid to the Defaulting
Partner.
11.5 Price for Third Party. The Management Committee may sell a
Defaulting Partner's Partnership interest to a third party at a
reasonable price, as determined by an independent third-party
valuation. The proceeds from the sale of the Defaulting
Partner's Partnership interest shall be paid to the Partnership,
which shall act as an escrow agent in disbursing such proceeds.
The proceeds shall be disbursed in the following order: (a) to
the Partnership to the extent of any losses, damages or expenses,
including attorneys' fees, sustained or incurred by the
Partnership as a result of the Default; (b) to any nondefaulting
Partner to the extent of any losses, damages or expenses,
including attorneys' fees, sustained or incurred by the Partner
as a result of the Default; (c) to the Partnership up to the
amount of the arrears in the Defaulting Partner's Capital
Account; and (d) to the Defaulting Partner up to the balance in
that Partner's Capital Account to liquidate its interest in the
Partnership. Any proceeds used to satisfy the arrears in the
Defaulting Partner's Capital Account shall be treated as a
Capital Contribution by the new Partner and credited to its
Capital Account. If any proceeds remain after making the payments
described in (a) through (d), the excess proceeds shall be
distributed to each nondefaulting Partner, excluding the new
Partner, in the proportion that its Partner's Percentage bears to
the total of the Partner's Percentage of all the nondefaulting
Partner(s).
11.6 Additional Remedies. Nothing in section 11 shall prevent
the Partnership or any Partner from recovering from a Defaulting
Partner the amount of any losses, damages or expenses incurred or
sustained as a result of such Default and not recovered pursuant
to section 11, or from pursuing any other remedies that may be
available in law or equity. The nondefaulting Partner(s) may
place a lien on the future cash distributions to a Partner who
was in Default to recover their losses, damages and expenses.
11.7 Continuation of Partnership. If a Defaulting Partner's
interest in the Partnership is assigned to a third Person or
purchased by the nondefaulting Partner(s), the Partnership shall
not be dissolved and shall continue to carry out the business of
the Partnership. If the nondefaulting Partner(s) purchase(s) the
interest of a Defaulting Partner, the obligation to make Capital
Contributions pursuant to section 6, the Capital Accounts, the
Partners' percentages, and voting rights on the Management
Committee shall be appropriately adjusted to reflect the
reduction in the number of Partners.
11.8 Cure of Default. A Defaulting Partner shall have a right to
cure one or more Defaults at any time prior to the time its
interest in the Partnership is sold as provided in this section
11. A Defaulting Partner can cure a Default by doing all of the
following: (a) paying to the Partnership the amount of the
Capital Contributions it failed to make. These Capital
Contributions shall be paid in the manner specified by the
Management Committee and shall be credited to the Defaulting
Partner's Capital Account. If the nondefaulting Partner(s) was
(were) required to make additional Capital Contributions due to a
Default, the Partnership shall make cash distributions to them in
the amount of such additional Capital Contributions; (b) making
all payments required under section 6.5.3; (c) paying to the
Partnership the amount of any losses, damages or expenses,
including attorneys' fees, sustained or incurred by the
Partnership as a result of the Default, excluding any amounts
described in (a) and (b); and (d) paying to any Partner the
amount of any losses, damages or expenses, including attorneys'
fees, sustained or incurred by the Partner as a result of the
Default, excluding any amounts described in (a) and (b).
11.9 Status of Partner in Default as Partner. A Defaulting
Partner that has not been required to transfer its interest shall
continue to be a Partner.
12. Sale, Transfer or Pledge of Partnership Interest. Except with
the unanimous consent of the Management Committee, or as permitted by
section 12.2 of this Agreement, no Partner may (or allow any of its
Affiliates to) sell, assign, pledge, hypothecate or otherwise transfer
in any manner all or any part of its right, title or interest in the
Partnership or in this Agreement.
12.1 Sale of Partnership Interest. A Partner may sell some or
all of its interest in the Partnership to an unaffiliated party
only with the unanimous consent of the remaining Partner(s), and
subject to the following provisions.
12.1.1 If a Partner wishes to sell some or all of its
interest in the Partnership, it shall notify the other
Partner(s) to allow it (them) to purchase the selling
Partner's interest. If more than one Partner desires to
purchase a selling Partner's interest, then such sale shall
be on a pro rata basis based on the Partner's Percentage of
the acquiring Partners. If no Partner(s) express(es)
interest within 30 days to purchase the selling Partner's
interest, the selling Partner shall submit to the Management
Committee a notice of intent to sell containing a list of
proposed buyers unaffiliated with any Partner(s). The
Management Committee must unanimously agree on the
acceptability of the buyers before the selling Partner may
negotiate on price and terms with those parties that are
approved. The selling Partner shall provide such
information as the Management Committee reasonably requests
about the prospective buyers. If the Management Committee
cannot unanimously approve one or more of the proposed
buyers, the selling Partner may withdraw from the
Partnership, as provided in section 13. The Management
Committee shall notify the selling Partner of the acceptable
prospective buyers, if any, within 30 days of receiving the
notice of intent to sell.
12.1.2 If the selling Partner is able to reach agreement on
the terms and conditions for sale of all or part of its
interest to an approved proposed buyer, it must then give
the remaining Partner(s) a right of first refusal to
purchase the interest on the same terms and conditions. The
remaining Partner(s) shall have 30 days from the date each
Partner receives the offer to exercise their right of first
refusal.
12.1.3 If the remaining Partner(s) elects not to purchase the
selling Partner's interest, the sale to the approved buyer
must be on the same terms and conditions as those offered to
the remaining Partner(s).
12.2 Permitted Transfers by a Partner. Provided that a transfer
does not result in a termination of the Partnership for federal
income tax purposes, nothing in this Agreement shall prevent:
12.2.1The transfer by any Partner of its entire right, title
and interest in the Partnership and in this Agreement to an
Affiliate of the Partner if the Affiliate assumes by express
agreement with the Partnership, in a way satisfactory to the
Management Committee, all of the obligations of the
transferor under this Agreement and if the transfer does not
relieve the transfer of its obligations under the Agreement
without the approval of the Management Committee, which
approval shall not be unreasonably withheld. Upon approval,
the Affiliate shall be substituted as a Partner.
12.2.2 An assignment, pledge or other transfer creating a
lien or security interest in all or any portion of a
Partner's right, title or interest in the profits and
surplus of the Partnership or in any indebtedness of the
Partnership under any mortgage, indenture or deed of trust
created by such Partner; provided that the assignee,
pledgee, mortgagee or trustee shall hold the same subject to
the terms of this Agreement.
12.3 Effect of Permitted Transfers or Withdrawals. No
assignment, pledge or other transfer or withdrawal pursuant to
section 13 shall give rise to a right in the transferring or
withdrawing Partner to dissolve the Partnership. An assignment,
pledge or other transfer shall not give rise to a right in any
transferee to become a Partner in the Partnership unless agreed
to by unanimous vote of the Management Committee, except that
Affiliates will be substituted as Partners, as provided in
section 12.2.1.
12.4 Effect of Prohibited Transfers. Any transfer of an interest
in the Partnership by a Partner in violation of the terms of this
Agreement shall not cause a dissolution of the Partnership, but
shall result in the forfeiture of the Partner's right to
participate in the management of the Partnership. This section
does not limit any right the Partnership or the other Partner may
have against the Partner making the prohibited transfer.
13. Withdrawal of a Partner. A nondefaulting Partner shall have the
right to request withdrawal from the Partnership if agreement on an
acceptable course of action cannot be reached at any meeting of the
Management Committee. The withdrawing Partner shall give 60 days'
notice of its intent to withdraw to the other Partner(s). If any
Partner gives notice of withdrawal from the Partnership, the following
provisions shall apply.
13.1 Purchase by Partners. The remaining Partner(s) shall decide
whether to purchase the interest of a withdrawing Partner.
Unless the remaining Partner(s) unanimously agree(s) otherwise,
each remaining Partner shall purchase equal percentages of the
Partnership interest at the price provided for in section 13.4.
If the remaining Partner(s) unanimously agree(s) to purchase
unequal percentages of the withdrawing Partner's Partnership
interest, the new interest(s) shall be reflected by appropriate
adjustments to the Capital Account(s), Partner's Percentage and
voting rights on the Management Committee of each remaining
Partner(s).
13.2 Sale to Third Party. If the remaining Partner(s) does (do)
not purchase the Partnership interest, by unanimous vote the
remaining Partner(s) may permit or direct the withdrawing Partner
to assign its Partnership interest to a third Person who will
become a Partner in the Partnership. However, the withdrawing
Partner shall have no obligation to assign its Partnership
interest to a third party for less than the price specified in
section 13.4.
13.3 Need to Agree. If the remaining Partner(s) of the
Management Committee does (do) not unanimously agree either to
purchase the withdrawing Partner's Partnership interest or to
permit its assignment, the Partnership shall be dissolved.
13.4 Price of Partnership Interest. Unless otherwise agreed, the
price to be paid to any withdrawing Partner by the remaining
Partner as consideration for the transfer of its interest in the
Partnership shall be the amount contained in the withdrawing
Partner's Capital Account.
14. Dissolution of the Partnership. Voluntary and involuntary
dissolution of the Partnership shall be governed by this section.
14.1 Voluntary Dissolution.
14.1.1 After the initial term of the Agreement, any Partner
may elect to dissolve the Partnership and terminate this
Agreement by giving the other Partner(s) written notice of
such election not less than 1 year prior to the date the
termination is to take place.
14.1.2 By unanimous vote of the Management Committee, the
Partners may elect to dissolve the Partnership and terminate
this Agreement at any time during or after its initial Term.
14.1.3 Winding up of the Partnership business shall include
securing any necessary prior approval of the FERC and, upon
such election of the Management Committee and receipt of any
necessary FERC approval, the Partnership shall undertake
sale or abandonment of all or substantially all of the
Partnership's business and assets.
14.2 Automatic Dissolution. The Partnership shall automatically
and without notice be dissolved upon the happening of any of the
following events:
14.2.1 Ninety days have elapsed since the commencement of any
proceedings by or against any of the Partners for any relief
under any bankruptcy or insolvency law, or any law relating
to the relief of debtors, readjustment of indebtedness,
reorganization, arrangement, composition or extension, and,
if such proceedings have been commenced against any of the
Partners, the proceedings have not been dismissed,
nullified, stayed or otherwise rendered ineffective (but
then only so long as the stay continues in force);
14.2.2 Ninety days have elapsed since the entry of a decree
or order of a court having jurisdiction for the appointment
of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of any of the Partners or of a
substantial part of a Partner's property, or for the winding
up or liquidation of its affairs, when the decree or order
remains in force undischarged and unstayed for a period of
90 days, or any substantial part of the property of any of
the Partners shall be sequestered or attached and is not
returned to the possession of the Partner or released from
the attachment within 90 days;
14.2.3 Any of the Partners makes a general assignment for the
benefit of creditors or admits in writing its inability to
pay its debts generally as they become due;
14.2.4 The filing of a certificate of dissolution by any
Partner under the laws of the state of its incorporation or
the entering of a final order dissolving any Partner by any
court of competent jurisdiction;
14.2.5 The sale or abandonment of all or substantially all of
the Partnership's business and assets;
14.2.6 Any event which makes it unlawful for the business of
the Partnership to be carried on or for the Partners to
carry on such business in a Partnership; or
14.2.7 Failure of the Management Committee to agree to permit
or require the assignment or purchase of a withdrawing
Partner's interest in the Partnership as provided in section
12.3.
14.3 Winding Up and Liquidation. If the Partnership is dissolved
pursuant to the provisions of section 14, the Management
Committee shall continue to exercise the powers vested in it by
this Agreement and continue to operate the Project in the normal
course to the extent appropriate for the purpose of winding up
the business of the Partnership and liquidating the assets in an
orderly manner. Partnership assets will be treated as follows:
14.3.1 Unrealized appreciation and depreciation on
Partnership assets that are not sold or otherwise disposed
of in connection with the winding up and liquidation of the
Partnership shall be allocated to the Partners' Capital
Accounts as if such assets had been sold for their fair
market value on the date the Partnership is liquidated. If
on the date of liquidation of the Partnership any Partner
has a deficit in its Capital Account after reflecting in its
Capital Account (i) the items specified in section 6.1 for
the period ending on the date of liquidation of the
Partnership, and (ii) the allocations required under the
first sentence of this section 14.3.1, that Partner shall be
required to contribute sufficient cash to the Partnership to
eliminate the deficit.
14.3.2 The net assets of the Partnership remaining after the
payment or provision for payment of all of the liabilities
of the Partnership shall be distributed to all of the
Partners in accordance with the positive Capital Account
balances of the Partners determined after adjustment of the
Partners' Capital Accounts in accordance with section
14.3.1.
14.3.3 No termination or dissolution shall deprive any
Partner not in Default of any remedy otherwise available to
it.
14.4 Termination Subject to the Natural Gas Act. The right and
power to dissolve the Partnership shall at all times be subject
to the obligations and duties of the Partnership as a natural gas
company under the Natural Gas Act or any successor or parallel
statutes and the jurisdiction of the FERC, and no dissolution
under this section 14 shall be accomplished unless all applicable
provisions of the act and any conditions or obligations of any
certificates issued by the FERC have been complied with or
fulfilled.
15. Limitation of Liabilities and Litigation.
15.1 Claims against Partners. If a claim or cause of action is
prosecuted against a Partner for a third-party liability incurred
by the Partnership, the Partner against whom the claim or cause
of action was prosecuted shall have the right to reimbursement of
a judgment or reasonable settlement of the claim, plus costs and
attorney's fees from and to the extent of the assets of the
Partnership. The Management Committee may advance costs and
expenses of litigation to a Partner. A Partner that has a claim
made against it that may result in liability to the Partnership
or to any other Partner shall promptly notify the Partnership and
the other Partners of the claim and shall provide the Partnership
a reasonable opportunity to participate in any litigation.
5.2 Claims against the Partnership. The Management Committee
shall give each Partner timely notice of all claims or litigation
against the Partnership. In addition, any Partner that is sued
as a Partner in the Partnership shall give every other Partner
and the Partnership timely notice of the litigation.
15.3 Contract Restrictions. Unless approved by the Management
Committee, the Partnership or its agents or representatives shall
not enter into any contracts, leases, subleases, notes, deeds of
trust or other obligations unless the agreements or instruments
contain appropriate provisions limiting the claims of all parties
to or beneficiaries of the agreements or instruments to the
assets of the Partnership and expressly waiving any rights of the
parties or beneficiaries to proceed against the Partners
individually.
16. Representations and Warranties of the Partners. Each Partner
represents, warrants and agrees that:
16.1 It is a corporation duly incorporated and validly existing,
that it is in good standing under the laws of its jurisdiction of
incorporation and that it is or will be authorized to do business
in Colorado and other states, as necessary.
16.2 It will not voluntarily cause a dissolution or termination
of the Partnership by failure to maintain its corporate
existence;
16.3 The execution, delivery and performance of this Agreement
have been duly authorized by each Partner's board of directors,
and this Agreement, when executed, will be valid and binding on
it; and
16.4 The execution of this Agreement does not contravene any
provision of, or constitute a Default under, any relevant
indenture, mortgage or other agreement binding on the Partner or
any valid order of any court, commission or governmental agency
to which the Partner is subject.
17. Miscellaneous Provisions.
17.1 Notices. Any written notices or other communication may be
mailed by certified or registered mail, return receipt requested,
postage prepaid, or sent by overnight delivery service, fax or
other electronic means to each of the Partners at the addresses
below or at any other address designated by the Partner by
written notice, and to the Partnership at its principal office
specified in section 3.3 or at any other address designated by
written notice to each of the Partners. Notice shall be deemed
given three days following mailing or upon receipt if sent by any
other means.
KN TransColorado, Inc. Questar TransColorado, Inc.
P.O. Xxx 000000 X.X. Xxx 00000
000 Xxx Xxxxxx Xxxxxx 000 Xxxx 000 Xxxxx
Xxxxxxxx, XX 00000-0000 Xxxx Xxxx Xxxx, XX 00000-0000
Attn: Vice President Attn: Vice President and General
Manager
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
17.2 Subject to Applicable Law. This Agreement and the
obligations of the Partners hereunder are subject to all
applicable laws, rules, court decisions, orders and regulations
of governmental authorities having jurisdiction and in the event
of conflict, said laws, rules, court decisions, orders and
regulations of governmental authorities having jurisdiction shall
control.
17.3 Further Assurances. Each of the Partners agrees to execute
and deliver all such other and additional instruments and
documents and to do such other acts and things as may be
necessary more fully to effectuate this Agreement and the
Partnership created hereby and to carry on the business of the
Partnership in accordance with this Agreement.
17.4 Amendment. This Agreement may be amended, supplemented or
restated only in writing and with a written consent of each of
the Partners. Except as provided in section 12.2, if any Partner
is added to the Partnership for any reason, this Agreement will
be amended to add the Partner as a Party.
17.5 Choice of Law. This Agreement and the Partnership shall be
governed by and interpreted in accordance with the laws of
Colorado.
17.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
17.7 Waiver. A waiver by any Partner of any provision, condition
or requirement shall not be deemed to be a waiver or release of
any other Partner from performance of any other provision,
condition or requirement in this Agreement or release of any
future performance of the same provision, condition or
requirement.
17.8 Attorneys' Fees. Should there be any litigation between the
Partners concerning any provision of or the rights and duties
under this Agreement, the party prevailing in such litigation
shall be entitled, in addition to such other relief as may be
granted in such proceeding, to a reasonable sum from the
nonprevailing Partners (but not from the Partnership) for their
attorneys' fees in the litigation.
17.9 Entire Agreement and Termination of Prior Agreements. This
Agreement, amended and restated July 1, 1997, constitutes the
agreement between the Partners concerning its subject matter and
supersedes any prior understanding or written or oral agreements
concerning the subject matter, with the exception of the June 30
Agreement. This Agreement incorporates within all provisions of
the June 27 Agreement. The Project Agreement dated March 19,
1990, and the letters of intent dated August 18, 1989, and
February 9, 1990, among the Partners were terminated as of the
effective date of the amended and restated September 25, 1995,
Partnership Agreement.
17.10 Severability. Any provision of this Agreement prohibited by
applicable law shall be invalid to the extent of such prohibition
unless it is determined by unanimous consent of the Management
Committee the such prohibition invalidates the purposes or intent
of this Agreement.
This Agreement is effective on the day first set forth above and
is entered into as of the date set forth below by the authorized
representatives whose signatures are shown below.
KN Transcolorado, Inc.
By: ______________________________________
H. Xxxxxx Xxxxx, Vice President
Questar TransColorado, Inc.
By: ______________________________________
X. X. Xxxx, President and
Chief Executive Officer
Date: _____________ 1997
Partnership Agreement
between
KN TransColorado, Inc.,
and
Questar TransColorado, Inc.
As Amended and Restated
JULY 1, 1997
EXHIBIT B
PARTNERSHIP ASSIGNMENT AND DUTIES
Questar:
Construction Project Manager.
Regulatory Affairs
Accounting
Tax Matters
KN:
Finance
Marketing
