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 JUNE 30, 1996
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. 1-8796
QUESTAR CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF UTAH 87-0407509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 45433, 180 East First South, Salt Lake City, Utah 84145-0433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 324-5000
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 July 31, 1996
Common Stock, without par value 40,841,584 shares
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1996 1995 1996 1995 1996 1995
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $144,514 $138,569 $370,237 $354,501 $665,023 $666,113
OPERATING EXPENSES
Natural gas purchases 38,724 34,559 119,192 120,147 198,464 208,438
Operating and maintenance 48,036 45,861 97,214 92,205 184,734 180,647
Depreciation and amortization 24,474 24,784 50,195 49,233 97,254 96,146
Other taxes 8,111 8,401 17,406 17,600 31,631 32,615
TOTAL OPERATING EXPENSES 119,345 113,605 284,007 279,185 512,083 517,846
OPERATING INCOME 25,169 24,964 86,230 75,316 152,940 148,267
INTEREST AND OTHER INCOME 5,911 4,322 9,947 6,037 21,224 7,991
WRITE-DOWN OF INVESTMENT IN
NEXTEL COMMUNICATIONS (61,743)
DEBT EXPENSE (9,195) (10,825) (20,320) (22,082) (41,053) (43,533)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 21,885 18,461 75,857 59,271 133,111 50,982
INCOME TAXES 5,817 3,899 25,193 17,636 40,296 4,951
INCOME FROM CONTINUING
OPERATIONS 16,068 14,562 50,664 41,635 92,815 46,031
GAIN FROM SALE OF
DISCONTINUED OPERATIONS 38,126
NET INCOME $16,068 $14,562 $50,664 $41,635 $92,815 $84,157
EARNINGS PER COMMON SHARE
Income from continuing operations $0.39 $0.35 $1.24 $1.02 $2.27 $1.12
Gain from sale of
discontinued operations 0.95
Net income $0.39 $0.35 $1.24 $1.02 $2.27 $2.07
Dividends per common share $0.295 $0.285 $0.59 $0.57 $1.18 $1.14
Average common shares outstanding 40,789 40,529 40,753 40,490 40,690 40,422
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995 1995
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments $5,122
Accounts receivable $105,072 $94,470 126,528
Inventories 17,825 25,659 28,110
Other current assets 10,219 13,570 10,965
Total current assets 133,116 133,699 170,725
Property, plant and equipment 2,352,497 2,296,778 2,330,900
Less allowances for depreciation
and amortization 1,061,996 1,004,792 1,020,779
Net property, plant and equipment 1,290,501 1,291,986 1,310,121
Securities available for resale,
approximates fair value 59,177 54,748 52,745
Other assets 47,339 45,042 50,962
$1,530,133 $1,525,475 $1,584,553
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks outstanding in excess of
cash balances $4,287 $5,134
Short-term loans 10,000 18,000 $77,200
Accounts payable and accrued expenses 100,620 91,500 117,240
Purchased-gas adjustments 1,559 32,372 9,182
Current portion of long-term debt 23,704 19,004
Total current liabilities 140,170 147,006 222,626
Long-term debt, less current portion 404,004 477,692 421,695
Other liabilities and deferred credits 35,197 39,963 34,700
Deferred income taxes and investment
tax credits 195,305 167,939 187,900
Redeemable cumulative preferred stock 4,954 6,218 4,957
Common shareholders' equity
Common stock 286,880 280,003 283,776
Retained earnings 464,897 420,102 438,284
Note receivable from ESOP (20,550) (24,050) (21,238)
Unrealized gain on securities available
for resale, net of income taxes 19,276 10,602 11,853
Total common shareholders' equity 750,503 686,657 712,675
$1,530,133 $1,525,475 $1,584,553
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
6 Months Ended
June 30,
1996 1995
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $50,664 $41,635
Depreciation and amortization 52,466 51,540
Deferred income taxes and
investment tax credits 2,807 (3,170)
Gain from sales of securities (4,957)
100,980 90,005
Change in operating assets
and liabilities 13,439 46,862
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 114,419 136,867
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant
and equipment (38,758) (38,724)
Other investments (1,223) (657)
Total capital expenditures (39,981) (39,381)
Proceeds from disposition of property,
plant and equipment 6,062 2,998
Proceeds from the sales of securities 10,544
NET CASH USED IN INVESTING
ACTIVITIES (23,375) (36,383)
FINANCING ACTIVITIES
Issuance of common stock 4,108 3,874
Common stock repurchased (1,004) (426)
Redemption of preferred stock (3) (106)
Issuance of long-term debt 12,000 2,000
Repayment of long-term debt (24,991) (18,992)
Decrease in short-term loans (67,200) (76,900)
Checks outstanding in excess
of cash balances 4,287 5,134
Payment of dividends (24,245) (23,339)
Other 882 722
NET CASH USED IN FINANCING
ACTIVITIES (96,166) (108,033)
DECREASE IN CASH AND
SHORT-TERM INVESTMENTS ($5,122) ($7,549)
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
Note A - Basis of Presentation
The interim financial statements furnished 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. Due to the
seasonal nature of the business, the results of operations for the
three-and six-month periods ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1996. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1995.
QUESTAR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS
June 30, 1996
Market Resources Operations -
Celsius Energy, Universal Resources, Questar Energy Trading, Questar
Energy Services and Wexpro (Market Resources group) conduct the
Company's exploration, production and energy marketing operations.
Following is a summary of financial results and operating information.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1996 1995 1996 1995 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $74,162 $60,843 $145,285 $125,431 $265,118 $241,580
From affiliates 12,555 14,501 30,158 31,081 63,279 70,084
Total revenues $86,717 $75,344 $175,443 $156,512 $328,397 $311,664
Operating income $12,550 $10,737 $25,621 $22,547 $47,399 $50,673
Net income 8,556 8,896 16,673 16,748 31,840 35,518
OPERATING STATISTICS
Production volumes -
Natural gas (in million
cubic feet) 9,188 8,785 18,333 17,709 33,287 37,068
Oil and natural gas liquids
(in thousands of barrels) 567 640 1,139 1,260 2,315 2,552
Production revenues
Natural gas (per thousand
cubic feet) $1.43 $1.26 $1.50 $1.37 $1.40 $1.48
Oil and natural gas liquids
(per barrel) $18.43 $16.52 $17.43 $16.03 $16.65 $15.80
Gas marketing volumes (in thousands
of decatherms) 26,546 24,651 56,221 48,579 117,016 92,722
Revenues were 15% higher for the second quarter of 1996 and 12% higher
for the first half of 1996 when compared with the same periods in 1995
as a result of increased selling prices and natural gas production and
increased gas-marketing volumes.
For the second quarter of 1996 approximately 57% of the gas production
came from Universal Resources, where the average sales price of $1.61
per Mcf was 25% higher than a year earlier. Prices received by Celsius
Energy averaged $1.18 per Mcf. The regional price weakness was
largely the result of abundant, inexpensive hydroelectric power and a
shortage of capacity on interstate gas pipelines between the Rocky
Mountains and Eastern markets. About 80% of Midcontinent equity
production is under hedged or fixed-price contracts. That portion
will drop to about 50% by the end of the third quarter. Between 20
and 30% of Rocky Mountain production is covered under hedged or
fixed-price contracts.
Revenues were 5% higher for the 12 months ended June 30, 1996 when
compared with the prior year period when gas-marketing volumes
replaced gas produced from Company-owned reserves. A portion of gas
production from the Rocky Mountain region was shut in during the
second half of 1995 in response to extremely low gas prices. The
Market Resources group substituted purchased gas for produced gas to
minimize lost revenue from the shut-in production. Most of the
shut-in wells were producing during the first half of 1996.
Revenues from sales of oil and natural gas liquids were flat in the
3-month period ended June 30, 1996 as higher selling prices offset
lower production volumes. Revenues were lower in the 6- and 12-month
periods ended June 30, 1996 due to a decline in production.
Revenues for cost-of-service operation of Mountain Fuel's gas wells
were lower for the 1996 periods presented as a result of lower
operating expenses and a declining investment base.
Customers' buy-out of gas-sales contracts added $1.3 million to 1995
after-tax earnings of the Market Resources group.
Regulated Services Operations -
Mountain Fuel and Questar Pipeline conduct the Company's regulated
services of natural gas distribution, transmission and storage.
Natural Gas Distribution --
Mountain Fuel conducts the Company's natural gas distribution
operations. Following is a summary of financial results and operating
information.
</TABLE>
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1996 1995 1996 1995 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $57,064 $65,984 $201,631 $205,807 $354,582 $378,347
From affiliates 863 1,312 1,199 2,304 2,906 4,124
Total revenues $57,927 $67,296 $202,830 $208,111 $357,488 $382,471
Operating income (loss) ($537) $814 $33,260 $25,291 $51,691 $41,831
Net income (loss) (617) 152 18,234 13,213 28,689 25,316
OPERATING STATISTICS
Natural gas volumes (in thousands of
decatherms)
Residential and commercial
sales 11,991 13,935 46,408 43,513 76,845 77,840
Industrial sales 1,858 2,068 4,352 5,253 8,309 10,226
Transportation for industrial
customers 11,046 13,952 24,775 31,561 52,783 59,652
Total deliveries 24,895 29,955 75,535 80,327 137,937 147,718
Natural gas revenue (per decatherm)
Residential and commercial $3.93 $3.97 $3.93 $4.20 $4.10 $4.25
Industrial sales 2.14 2.49 2.14 2.55 2.21 2.56
Transportation for industrial
customers 0.13 0.10 0.12 0.10 0.11 0.10
Heating degree days
Actual 617 895 3,213 3,112 5,148 5,572
Normal 741 741 3,484 3,484 5,801 5,801
Colder (warmer) than normal (17%) 21% (8%) (11%) (11%) (4%)
Number of customers at end of
period 597,143 575,450
</TABLE>
Revenues, net of gas costs, decreased $583,000 or 2% in the second
quarter as a result of lower sales volumes caused by warmer weather
that more than offset the affects of a rate case settlement.
Temperatures, as measured in degree days, were 17% warmer than normal
for the second quarter of 1996 compared with 21% colder than normal
for the same quarter in 1995. Revenues, net of gas costs, were
$9,385,000 or 10% higher for the first half of 1996 when compared with
the first half of 1995 due to colder temperatures in the first quarter
of 1996, the benefits of a rate case settlement and a 3.8% annual rate
of growth in the number of customers. Temperatures in the first
quarter of 1996 were 5% warmer than normal compared with 19% warmer
than normal reported in the first quarter of 1995.
The effect of the warmer-than-normal weather in 1996 was partially
offset by the provisions of the 1995 rate settlement that provides for
a weather-normalization adjustment, new-premises fee and sharing of
capacity release revenues. About 40 to 50% of Mountain Fuel's
residential and commercial sales volumes were subjected to
temperature-adjusted rates. Under the provisions of the Utah rate
settlement, the weather-normalization adjustment will be extended to
all residential and commercial volumes beginning October 1 unless
customers inform Mountain Fuel that they desire to be treated
otherwise. The terms of the Utah rate case are expected to add about
$3.7 million in annual revenues from a new-premises fee and the
sharing of capacity-release credits. In addition to the other rate
case items, Mountain Fuel's allowed return on rate base increased from
10.08% to between 10.22% and 10.34%. Mountain Fuel also received
approval from the Public Service Commission of Wyoming to implement a
weather-normalization adjustment for all residential and commercial
customers beginning September 1.
Volumes delivered to industrial customers were 19% less in the second
quarter of 1996 and 21% less in the first half of 1996 when compared
with the same periods of 1995 due to a continued abundance of
inexpensive hydroelectric power. Margins from gas delivered to
industrial customers are substantially lower than from gas sold to
residential and commercial customers.
Natural Gas Transmission Operations --
Questar Pipeline conducts the Company's natural gas transmission,
storage and gathering operations. Following is a summary of financial
results and operating information.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1996 1995 1996 1995 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $12,859 $11,285 $22,532 $22,144 $43,704 $44,355
From affiliates 17,481 18,550 39,576 37,256 76,359 73,484
Total revenues $30,340 $29,835 $62,108 $59,400 $120,063 $117,839
Operating income $12,755 $12,883 $25,826 $25,736 $52,027 $53,067
Net income 5,891 5,811 12,281 12,085 24,844 25,537
OPERATING STATISTICS
Natural gas volumes (in thousands of
decatherms)
Transportation
For unaffiliated customers 36,158 38,978 73,031 77,547 147,427 149,129
For Mountain Fuel 16,426 15,553 53,582 44,752 88,702 77,481
For other affiliated customer 10,271 10,133 14,869 16,359 37,349 40,336
Total transportation 62,855 64,664 141,482 138,658 273,478 266,946
Gathering
For unaffiliated customers 9,725 10,126 20,559 19,747 39,840 39,461
For Mountain Fuel 4,555 7,470 14,373 16,860 29,204 30,756
For other affiliated customer 2,485 1,815 4,401 3,095 7,255 8,359
Total gathering 16,765 19,411 39,333 39,702 76,299 78,576
Natural gas revenues (per decatherm)
Transportation $0.28 $0.25 $0.24 $0.23 $0.24 $0.24
Gathering 0.29 0.28 0.26 0.28 0.27 0.28
Revenues were higher in the 1996 periods presented partially as a
result of a rate increase for transportation and storage activities.
Questar Pipeline filed for a rate increase with the Federal Energy
Regulatory Commission (FERC) on July 31, 1995. Questar Pipeline began
collecting revenues under the new rate structure, subject to refund,
February 1, 1996. The FERC approved a rate settlement July 1, 1996.
The settlement included a stated return on equity of 11.75% and is
expected to add approximately $5.9 million to annual revenues or $3
million in after-tax income. Questar Pipeline had fully reserved for
the differences between the filed rates and the settlement rates and
as a result there was no significant impact on net income. In
addition to the rate increase, Questar Pipeline reported higher
revenues from its expanded firm gas-storage activities.
Revenues for gas-gathering activities were lower for the 1996 periods
presented as a result of decreased volumes gathered and a decrease in
the rate charged on gas volumes gathered for Mountain Fuel.
Reservation charges on Mountain Fuel's firm-gathering contract were
reduced beginning in the Fall of 1995.
Questar Pipeline transferred approximately $55 million of
gas-gathering assets to Questar Gas Management Company, a wholly owned
subsidiary. The transfer was approved by the FERC February 28, 1996
and was effective March 1, 1996. Questar Corporation, in its
continuing efforts to realign its operations into the two primary
activities of Regulated Services and nonregulated Market Resources,
transferred Questar Gas Management Company to its Market Resources
group on July 1, 1996.
Questar Pipeline and Mountain Fuel have consolidated various
financial, technical, administrative and other support functions in an
ongoing effort to improve efficiency and coordination.
Consolidated Results of Operations --
Consolidated revenues increased in the 3- and 6-month periods ended
June 30, 1996 when compared with the same periods of 1995 due to
increases in gas-marketing volumes sold, increases in gas production,
higher gas selling prices and rate increases for gas distribution,
transmission and storage activities.
Natural gas purchase expenses increased for the second quarter ended
June 30, 1996 when compared with the second quarter of 1995 due
primarily to an increase in the volumes of gas purchased for
gas-marketing activities. Natural gas purchase expenses were lower in
the 6- and 12-month periods of 1996 when compared with the same
periods of 1995 primarily because of lower natural gas purchase
prices. The gas cost allowed in distribution rates has decreased from
$1.43 per dth filed in February 1995 to $1.03 per dth beginning
February 1996.
Operating and maintenance expenses were higher for the 1996 periods
when compared with the same periods in the prior year. The increases
resulted from not repeating the recognition of production credits
which amounted to $1.5 million in the first half of 1995, some
one-time expenses from gas transmission operations related to the
gathering division spin down and rate case, and an increase in the
number of distribution customers. The combined benefits of an early
retirement program and consolidation of gas distribution operations
beginning in mid-1995 partially offset these increases.
Depreciation expenses were slightly lower for the second quarter of
1996 when compared to the second quarter of 1995 because the effects
of revising ownership interests in a jointly owned property and a
lower full cost amortization rate more than offset increases in
property, plant and equipment. The full cost amortization rate was
$.78 per equivalent Mcf for the first half of 1996, down from $.81 per
Mcfe in the prior year period. Depreciation and amortization expenses
were higher in the 6- and 12-month periods ended June 30, 1996,
primarily due to increased investment in property, plant and
equipment.
Interest and other income was higher in the first half of 1996 because
of a $4,957,000 pretax gain from the sales of Nextel related
securities, a $1,644,000 pretax gain from selling real estate, which
includes selling two former gas-distribution service centers, and a
$700,000 pretax gain from the sales of FCC licenses and related
equipment. The Company's Market Resources group reported a $2,100,000
pretax gain from customers' buy-out of gas-sales agreements in the
second quarter of 1995.
In the third quarter of 1994, Questar Corporation sold Questar Telecom
to Nextel Communications in exchange for 3.9 million shares of Nextel
common stock and reported a $38,126,000 after-tax gain from the sale.
At year end 1994, the Company wrote down its investment in Nextel
Communications by $61,743,000. This amounted to $38,126,000, or $.95
per share, after income taxes. These transactions are included in
operating results for the 12 months ended June 30, 1995.
The effective income tax rate for the first half was 33.2 % in 1996
and 29.8% in 1995. The Company recognized $4,483,000 of tight-sands
gas production tax credits in the 1996 period and $4,759,000 in the
1995 period.
Liquidity and Capital Resources --
Operating Activities:
Net cash provided from operating activities was $114,419,000 for the
first half of 1996, compared with $136,867,000 for the same period of
1995. A refund of gas costs to gas distribution customers in the
first quarter of 1996, lower gas purchase costs collected in rates
from gas distribution customers and margin calls on gas price swap
agreements resulted in lower net cash flow provided from operating
activities for 1996.
Investing Activities:
Capital expenditures were $39,981,000 for the first six months of
1996, compared with $39,381,000 for the same period a year ago.
Proceeds from the sales of Nextel related securities amounted to
$10,544,000. A comparison of capital expenditures by line of business
for the first half of 1996 and 1995 plus an estimate for calendar year
1996 are as follows:
</TABLE>
<TABLE>
<CAPTION>
Estimate
Actual 12 Months
Six Months Ended Ended
June 30, Dec. 31,
1996 1995 1996
(In Thousands)
<S> <C> <C> <C>
Market Resources $8,245 $10,911 $83,300
Regulated Services
Natural gas distribution 15,969 16,952 55,000
Natural gas transmission 7,381 9,535 37,100
Total Regulated Services 23,350 26,487 92,100
Other operations 8,386 1,983 59,400
$39,981 $39,381 $234,800
<PAGE>
Financing Activities:
Net cash flow from operating activities plus the proceeds from selling
Nextel securities provided funds for repayment of short-term and
long-term debt, payment of dividends and funding capital expenditures
for the first six months of 1996. The Company plans to finance 1996
capital expenditures through net cash provided from operating
activities, bank borrowings, and proceeds from its dividend
reinvestment plan. In addition, the Company may sell up to one third
of its investment in Nextel common stock, depending upon market
conditions, to fund capital expenditures.
Short-term bank borrowings were $10,000,000 at June 30, 1996 and
$18,000,000 at June 30, 1995. Short-term bank lines of credit serve
as backup to the credit received through the commercial paper program.
No amounts were borrowed under commercial paper agreements at either
June 30, 1996 or June 30, 1995. The Company's lines of credit
borrowing capacity was $100,000,000 at June 30, 1996. Borrowing
capacity increases to $135,000,000 from October 1 to March 31
anticipating seasonal credit demands. The Company repaid a
$19,000,000, 8.25% ESOP note as scheduled on July 1, 1996.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders.
Questar Corporation (Questar or the Company) held its annual
meeting of stockholders on May 21, 1996. Four incumbent
directors, Patrick J. Early, Dixie L. Leavitt, Mary Mead, and D. N.
Rose, were elected to serve three-year terms. The following chart lists
the name of each director nominated and elected, the number of votes
cast in favor of his/her election, and the number of votes withheld from
his/her election:
Name Votes Cast in Favor Votes Withheld
Patrick J. Early 30,231,919 1,929,621
Dixie L. Leavitt 30,195,403 1,966,137
Mary Mead 30,260,795 1,900,745
D. N. Rose 30,221,278 1,940,262
Each of the nominees received more than 93.8 percent of the total votes
cast and more than 74 percent of the outstanding shares.
The Company's Board of Directors recommended three proposals for
consideration by the Company's shareholders. The first proposal
involved amendments to the Company's Long-Term Stock Incentive Plan that
would permit such plan to qualify as a performance-based plan under
applicable tax regulations, enlarge the number of eligible participants,
and extend the exercise term after a participant's retirement.
Amendments to the Company's Stock Option Plan for Directors constituted
the second proposal under consideration. The proposed amendments
enlarged the number of shares reserved and extended the term of this
plan. The third proposal involved a new Directors' Stock Plan that
would permit directors to be paid their fees with shares of the
Company's common stock. All three proposals were approved by the
Company's shareholders as is shown in the following chart:
FOR AGAINST ABSTAIN
Proposal No. One: 29,834,316 1,996,908 314,766
Proposal No. Two: 29,140,224 2,617,355 388,411
Proposal No. Three: 30,233,968 1,525,652 386,370
Each of the proposals received more than 90 percent of the votes cast
and more than 71 percent of the outstanding shares.
The United Food and Commercial Workers Union, Local 99R (the UFCW),
a record shareholder of 100 shares, indicated that it intended to
present two proposals for consideration by the Company's shareholders
and filed proxy solicitation materials with the Securities and Exchange
Commission. The Company's Board of Directors opposed both proposals,
but included the proposals in the definitive proxy materials. The
UFCW's proposals involved confidential voting and possible severance
payments under the Company's Executive Severance Compensation Plan. The
proposals were not approved by the Company's shareholders as is shown on
the following chart:
FOR AGAINST ABSTAIN
UFCW Proposal No. One: 10,435,570 17,101,912 1,632,341
UFCW Proposal No. Two: 6,148,664 21,820,853 1,200,306
Item 5. Other Information.
On June 21, 1996, Mary Mead, a director of the Company, was killed
in a horseback riding accident. Mrs. Mead, who turned 61 on the date of
her death, had served as a director of the Company since February of
1990. She was a rancher in Jackson, Wyoming, and had recently been
elected to another three-year term. The Company's Board of Directors
has not replaced her.
Item 6. Exhibits and Reports on Form 8-K.
The following exhibits are filed as part of this report.
Exhibit No. Exhibit
10.5. Questar Corporation Long-Term Stock Incentive
Plan, as amended and restated May 21, 1996.
10.10. Questar Corporation Stock Option Plan for
Directors, as amended and restated May 21, 1996.
10.15. Questar Corporation Directors' Stock Plan as
approved May 21, 1996.
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 CORPORATION
(Registrant)
August 13, 1996 /s/ R. D. Cash
(Date) R. D. Cash
Chairman of the Board,
President and Chief
Executive Officer
August 13, 1996 /s/ S. E. Parks
(Date) S. E. Parks
Vice President, Treasurer and
Chief Financial Officer
</TABLE>
Exhibit 10.5
QUESTAR CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
As amended and restated May 21, 1996
Section 1. Purpose
The Questar Corporation Long-Term Stock Incentive Plan (the "Plan")
is designed to encourage officers and selected key employees of and
consultants to Questar Corporation and its affiliated companies (the
"Company") to acquire a proprietary interest in the Company, to generate
an increased incentive to contribute to the Company's future growth and
success, and to enhance the Company's ability to attract and retain
talented officers and employees. Accordingly, the Company, during the
term of this Plan, may grant incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock, performance
shares, and other awards valued in whole or in part by reference to the
Company's stock.
Section 2. Definitions
"Affiliate" shall mean any business entity in which the Company
directly or indirectly has an equity interest deemed significant by the
Company's Board of Directors.
"Approved Retirement" shall mean any retirement of service on or
after age 60 or, with approval of the Board, early retirement under the
Company's Retirement Plan.
"Award" shall mean a grant or award under Section 6 through 10,
inclusive, of the Plan, as evidenced in a written document delivered to
a Participant as provided in Section 12(b).
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" shall mean the Management Performance Committee of the
Board of Directors.
"Common Stock" or "Stock" shall mean the Common Stock, no par
value, of the Company. The term shall also include any Common Stock
Purchase Rights attached to the Common Stock.
"Company" shall mean Questar Corporation on a consolidated basis.
"Designated Beneficiary" shall mean the beneficiary designated by
the Participant, in a manner determined by the Committee, to receive
amounts due the Participant in the event of the Participant's death. In
the absence of an effective designation by the Participant, Designated
Beneficiary shall mean the Participant's estate.
"Disability" shall mean permanent and total disability within the
meaning of Section 105(d)(4) of the Code.
"Employee" shall mean any officer or key employee of or consultant
to the Employer.
"Employer" shall mean the Company and any Affiliate.
"Fair Market Value" shall mean the closing price of the Company's
Common Stock reported on the New York Stock Exchange on the date in
question, or, if the Common Stock shall not have been traded on such
date, the closing price on the next preceding day on which a sale
occurred.
"Fiscal Year" shall mean the fiscal year of the Company.
"Incentive Stock Option" shall mean a stock option granted under
Section 6 that is intended to meet the requirements of Section 422 of
the Code.
"Nonqualified Stock Option" shall mean a stock option granted under
Section 6 that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
"Participant" shall mean an Employee who is selected by the
Committee to receive an Award under the Plan.
"Payment Value" shall mean the dollar amount assigned to a
Performance Share which shall be equal to the Fair Market Value of the
Common Stock on the day of the Committee's determination under Section
8(c)(2) with respect to the applicable Performance Period.
"Performance Period" or "Period" shall mean the period of years
selected by the Committee during which the performance is measured for
the purpose of determining the extent to which an Award of Performance
Shares has been earned.
"Performance Goals" shall mean the objectives established by the
Committee for a Performance Period, for the purpose of determining the
extent to which Performance Shares that have been contingently awarded
for such Period are earned.
"Performance Share" shall mean an Award granted pursuant to Section
8 of the Plan expressed as a share of Common Stock.
"Restricted Period" shall mean the period of years selected by the
Committee during which a grant of Restricted Stock or Restricted Stock
Units may be forfeited to the Company.
"Restricted Stock" shall mean shares of Common Stock contingently
granted to a Participant under Section 9 of the Plan.
"Restricted Stock Unit" shall mean a fixed or variable dollar
denominated unit contingently awarded under Section 9 of the Plan.
"Right" shall mean a Stock Appreciation Right granted under Section
7.
"Stock Unit Award" shall mean an Award of Common Stock or units
granted under Section 10.
"Termination of Employment" shall mean the date on which a
Participant actually notifies his/her supervisor of his/her resignation,
in the case of a voluntary termination; and the date on which the
Company actually notifies the Participant of his/her termination, in the
case of an involuntary termination. This term, as defined, does not
include termination of employment as the result of an Approved
Retirement, Disability, or death.
Section 3. Administration
The Plan shall be administered by the Committee. The Committee
shall have sole and complete authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the operation
of the Plan, and to interpret the terms and provisions of the Plan. The
Committee's decisions shall be binding upon all persons, including the
Company, stockholders, an Employer, Employees, Participants and
Designated Beneficiaries.
Section 4. Eligibility
Awards may only be granted to officers and key employees of or
consultants to the Company or any Affiliate who have the capacity to
contribute to the success of the Company. When selecting Participants
and making Awards, the Committee may consider such factors as the
Employee's functions and responsibilities and the Employee's past,
present and future contributions to the Company's profitability and
growth.
Neither the members of the Committee nor any member of the Board
who is not an Employee of the Company shall be eligible to receive
awards.
Nothing contained in the Plan or in any individual agreement
pursuant to the terms of the Plan shall confer upon any Participant any
right to continue in the employment of the Company or to limit in any
respect the right of the Company to terminate the Participant's
employment at any time and for any reason.
Section 5. Maximum Amount Available for Awards and Maximum Award
The aggregate number of shares of Common Stock that may be issued
under Awards pursuant to this Plan on an annual basis shall not exceed
one percent (1%) of the issued and outstanding shares of Common Stock as
of the first day of each calendar year for which the Plan is in effect.
Any shares available in any year using this formula that are not granted
under this Plan or other plans in which stock is awarded to Employees
would be available for use in subsequent years. Shares of Common Stock
may be made available from the authorized but unissued shares of the
Company or from shares reacquired by the Company, including shares
purchased in the open market. In the event that an Option or Right
expires or is terminated unexercised as to any shares of Common Stock
covered thereby, or any Award in respect of shares is forfeited for any
reason under the Plan, such shares, to the extent not precluded by
applicable law or regulation, shall be again available for Awards
pursuant to the Plan.
In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange of
shares, warrants or rights offering to purchase Common Stock at a price
substantially below fair market value or other similar corporate event
affects the Common Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be made
available under this Plan, then the Committee, in its sole discretion,
may take action. The Committee may adjust any or all of the number and
kind of shares that thereafter may be awarded or optioned and sold or
made the subject of Rights under the Plan, the number and kind of shares
subject to outstanding Options and other Awards, and the grant, exercise
or conversion price with respect to any of the foregoing and/or, if
deemed appropriate, make provision for a cash payment to a Participant
or a person who has an outstanding Option or other Award.
There is a maximum of 100,000 shares that can be the subject of
Awards granted to any single Participant in any given fiscal year.
Section 6. Stock Options
(a) Grant. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to
whom Options shall be granted, the number of shares to be covered by
each Option, the option price therefor and the conditions and
limitations, applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, Nonqualified
Stock Options, or both types of Options. In the case of Incentive Stock
Options, the terms and conditions of such grants shall be subject to and
comply with such rules as may be prescribed by Section 422 of the Code
and any implementing regulations.
(b) Option Price. The Committee shall establish the option price
at the time each Option is granted, which price shall not be less than
100 percent of the Fair Market Value of the Common Stock on the date of
grant.
(c) Exercise. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee, in its sole
discretion, may specify in the applicable Award or thereafter; provided,
however, that in no event may any Option granted hereunder be
exercisable earlier than six months after the date of such grant or
after the expiration of ten years from the date of such grant. The
Committee may impose such conditions with respect to the exercise of
Options, including without limitation, any conditions relating to the
application of federal or state securities laws, as it may deem
necessary or advisable.
No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price is received by the Company.
Such payment may be made in cash, or its equivalent, or, if and to the
extent permitted by the Committee, by exchanging shares of Common Stock
owned by the optionee (which are not the subject of any pledge or other
security interest), or by a combination of the foregoing, provided that
the combined value of all cash and cash equivalents and the Fair Market
Value of any such Common Stock so tendered to the Company, valued as of
the date of such tender, is at least equal to such option price.
Section 7. Stock Appreciation Rights
(a) The Committee may, with sole and complete authority, grant
Rights in tandem with an Option. Rights shall not be exercisable
earlier than six months after grant, shall not be exercisable after the
expiration of ten years from the date of grant and shall have an
exercise price of not less than 100 percent of the Fair Market Value of
the Common Stock on the date of grant.
(b) A Right shall entitle the Participant to receive from the
Company an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the exercise of the Right over the grant price
thereof. The Committee shall determine whether such Right shall be
settled in cash, shares of Common Stock or a combination of cash and
shares of Common Stock.
Section 8. Performance Shares
(a) The Committee shall have sole and complete authority to
determine the Employees who shall receive Performance Shares and the
number of such shares for each Performance Period and to determine the
duration of each Performance Period and the value of each Performance
Share. There may be more than one Performance Period in existence at
any one time, and the duration of Performance Periods may differ from
each other.
(b) Once the Committee decides to use Performance Shares, it shall
establish Performance Goals for each Period on the basis of criteria
selected by it. During any Period, the Committee may adjust the
Performance Goals for such Period as it deems equitable in recognition
of unusual or non-recurring events affecting the Company, changes in
applicable tax laws or accounting principles, or such other factors as
the Committee may determine.
(c) As soon as practicable after the end of a Performance Period,
the Committee shall determine the number of Performance Shares that have
been earned on the basis of performance in relation to the established
Performance Goals. Payment Values of earned Performance Shares shall be
distributed to the Participant or as soon as practicable after the
expiration of the Performance Period and the Committee's determination.
The Committee shall determine whether Payment Values are to be
distributed in the form of cash and/or shares of Common Stock.
Section 9. Restricted Stock and Restricted Stock Units
(a) Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom
shares of Restricted Stock and Restricted Stock Units shall be granted,
the number of shares of Restricted Stock and the number of Restricted
Stock Units to be granted to each Participant, the duration of the
Restricted Period during which and the conditions under which the
Restricted Stock and Restricted Stock Units may be forfeited to the
Company, and the other terms and conditions of such Awards.
(b) Shares of Restricted Stock and Restricted Stock Units may not
be sold, assigned, transferred, pledged or otherwise encumbered, except
as herein provided, during the Restricted Period. At the expiration of
the Restricted Period, the Company shall deliver such certificates to
the Participant or the Participant's legal representative. Payment for
Restricted Stock Units shall be made to the Company in cash and/or
shares of Common Stock, as determined at the sole discretion of the
Committee.
Section 10. Other Stock Based Awards
(a) In addition to granting Options, Rights, Performance Shares,
Restricted Stock, Restricted Stock Units, the Committee shall have
authority to grant Stock Unit Awards to Participants that can be in the
form of Common Stock or units, the value of which is based, in whole or
in part, on the value of Common Stock. Subject to the provisions of the
Plan, Stock Unit Awards shall be subject to such terms, restrictions,
conditions, vesting requirements and payment rules as the Committee may
determine in its sole and complete discretion at the time of grant.
(b) Any shares of Common Stock that are part of a Stock Unit Award
may not be assigned, sold, transferred, pledged or otherwise encumbered
prior to the date on which the shares are issued or, if later, the date
provided by the Committee at the time of grant of the Stock Unit Award.
Stock Unit Awards may provide for the payment of cash consideration
by the person to whom such Award is granted or provide that the Award,
and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash
consideration, provided that for any Common Stock to be purchased in
connection with a Stock Unit Award the purchase price shall be at least
50 percent of the Fair Market Value of such Common Stock on the date
such Award is granted.
Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of grant.
Stock Unit Awards may provide for deferred payment schedules and/or
vesting over a specified period of employment. In such circumstances as
the Committee may deem advisable, the Committee may waive or otherwise
remove, in whole or in part, any restriction or limitation to which a
Stock Unit Award was made subject at the time of grant.
(c) In the sole and complete discretion of the Committee, an
Award, whether made as a Stock Unit Award under this Section 10 or as an
Award granted pursuant to Sections 6 through 9, may provide the
Participant with dividends or dividend equivalents (payable on a current
or deferred basis) and cash payments in lieu of or in addition to an
Award.
Section 11. Termination of Employment
The following provisions define a Participant's status in the event
of termination of employment:
(a) Options and Rights. If a Participant shall cease to be
employed by the Company or an Affiliate either directly or in a
consulting role, any Option and any Right granted to him under the Plan
shall terminate in accordance with the following rules:
(1) A Participant who terminates employment for any reason
other than Approved Retirement, Disability or death shall lose the right
to exercise any Options or Rights as of Termination of Employment.
(2) A Participant who terminates employment as a result of
an Approved Retirement shall have a period of time determined by the
Committee, but not to exceed three years from the date of retirement, to
exercise an Option or Right granted after February 13, 1996. A
Participant who terminates employment as a result of an Approved
Retirement shall have three months from the date of retirement to
exercise an Option or Right granted prior to February 13, 1996.
(3) A Participant who is Disabled shall have 12 months after
Termination of Employment in which to exercise an Option or Right.
(4) Upon the death of a Participant during employment, the
Participant's Designated Beneficiary shall have 12 months from the date
of death to exercise the Participant's Option or Right. Upon the death
of a Participant after an Approved Retirement but within the period
specified by the Committee to exercise Options or Rights after the
Participant's Approved Retirement, the Participant's Designated
Beneficiary shall have the period specified by the Committee to exercise
the Option or Right.
(5) The foregoing notwithstanding, a Participant or the
Participant's Designated Beneficiary shall not be permitted to exercise
an Option or Right after the expiration date and shall not be permitted
to exercise an Option or Right to which the Participant was not entitled
to exercise on the date of termination of employment.
(b) Restricted Stock. If a Participant terminates employment
before the end of the Restricted Period for a reason other than death,
Approved Retirement, Disability, or Change of Control, the Participant
shall forfeit all shares of Restricted Stock as of Termination of
Employment. If a Participant terminates employment as a result of
death, Approved Retirement, or Change of Control, the Committee, in its
sole discretion, shall determine what portion, if any, of the Restricted
Stock shall be freed from restrictions.
(c) Performance Shares and Other Awards. If a Participant ceases
to be an Employee before the end of any Performance Period as a result
of death, Approved Retirement, or Disability, the Committee may
authorize the payment to such Participant or his Designated Beneficiary
of a pro rata portion of the amount that would have been paid to him had
he continued as an Employee to the end of the Performance Period. In
the event a Participant terminates employment for any other reason, any
amounts for outstanding Performance Periods shall be forfeited as of
Termination of Employment.
Section 12. General Provisions
(a) Withholding. The Employer shall have the right to deduct from
all amounts paid to a Participant in cash any taxes required by law to
be withheld in respect of Awards under this Plan. In the case of
payments of Awards in the form of Common Stock, the Committee shall
require the Participant to pay to the Employer the amount of any taxes
required to be withheld with respect to such Common Stock, or, in lieu
thereof, the Employer shall have the right to retain (or the Participant
may be offered the opportunity to elect to tender) the number of shares
of Common Stock whose Fair Market Value equals the amount required to be
withheld.
(b) Awards. Each Award shall be evidenced in writing delivered to
the Participant and shall specify the terms and conditions and any rules
applicable to such Award.
(c) Nontransferability. No Award shall be assignable or
transferable, and no right or interest of any Participant shall be
subject to any lien, obligation or liability of the Participant, except
by will or the laws of descent and distribution.
(d) No Rights as Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have
any rights as a stockholder with respect to any shares of Common Stock
to be distributed under the Plan until becoming the holder.
Notwithstanding the foregoing, in connection with each grant of
Restricted Stock hereunder, the applicable Award shall specify if and to
what extent the Participant shall not be entitled to the rights of a
stockholder in respect of such Restricted Stock.
(e) Construction of the Plan. The validity, construction,
interpretation, administration and effect of the Plan and of its rules
and regulations, and rights relating to the Plan, shall be determined
solely in accordance with the laws of Utah.
(f) Effective Date. Subject to the approval of the stockholders
of the Company, the Plan shall be effective on March 1, 1991. No
Options or Awards may be granted under the Plan, however, until the Plan
is approved by the Company's shareholders or after May 20, 2001.
(g) Amendment of Plan. The Board of Directors may amend, suspend
or terminate the Plan or any portion thereof at any time, provided that
no amendment shall be made without stockholder approval if such approval
is necessary to comply with any tax or regulatory requirement, including
for these purposes any approval requirement that is a prerequisite for
exemptive relief under Section 16(b) of the Securities Exchange Act of
1934.
(h) Amendment of Award. The Committee may amend, modify or
terminate any outstanding Award with the Participant's consent at any
time prior to payment or exercise in any manner not inconsistent with
the terms of the Plan, including without limitation, to change the date
or dates as of which an Option or Right becomes exercisable; a
Performance Share is deemed earned; Restricted Stock becomes
nonforfeitable; or to cancel and reissue an Award under such different
terms and conditions as it determines appropriate.
Section 13. Change of Control.
In the event of a Change of Control of the Company, all Options,
Restricted Stock, and other Awards granted under the Plan shall vest
immediately.
As used herein, a Change in Control of the Company shall be deemed
to have occurred if (i) any "Acquiring Person" (as that term is used in
the Rights Agreement dated February 13, 1996, between the Company and
Chemical Mellon Shareholder Services, L.L.C. ("Rights Agreement")) is or
becomes the beneficial owner (as such term is used in Rule 13d-3 under
the Securities Exchange Act of 1934) of securities of the Company
representing 15 percent or more of the combined voting power of the
Company, or (ii) the stockholders of the Company approve (A) a plan of
merger or consolidation of the Company (unless, immediately following
consummation of such merger or consolidation, the persons who held the
Company's voting securities immediately prior to consummation thereof
will hold at least a majority of the total voting power of the surviving
or new company, or (B) a sale or disposition of all or substantially all
assets of the Company, or (C) a plan or liquidation or dissolution of
the Company.
A Change in Control shall also include any act or event that, with
the passage of time, would result in a Distribution Date, within the
meaning of the Rights Agreement.
Exhibit 10.10
STOCK OPTION PLAN FOR DIRECTORS
(as amended and restated effective May 21, 1996)
1. Purpose of the Plan
The Questar Corporation Stock Option Plan for Directors ("Plan")
is intended to provide a method whereby the nonemployee voting directors
("Directors") of Questar Corporation (the "Company"), who are
responsible for reviewing and monitoring the performance of the Company
and the performance of the Company's officers, may be encouraged to
acquire a larger stock ownership in the Company, thereby promoting the
interests of the Company and all its stockholders. Accordingly, the
Company, during the term of the Plan, will grant options to Directors to
purchase shares of the Company's common stock, subject to the conditions
hereinafter provided.
2. Administration of the Plan
The Plan shall be administered by the Company's Option Plan
Committee ("Committee"), a group appointed by the Company's President
and Chief Executive Officer that includes three or more officers of the
Company. The Committee shall hold meetings at such times and places as
it may determine. No member of the Committee shall be eligible to
receive options granted under the Plan.
3. Stock Subject to the Plan
(a) The stock to be issued upon exercise of options granted under
the Plan shall be the Company's common stock, without par value, that
shall be made available either from authorized but unissued common stock
or from common stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares of common
stock that may be issued under options shall not exceed 470,000 shares.
The limitations established by the preceding sentence shall be subject
to adjustment as provided in Section 13 of the Plan.
(b) In the event that any outstanding option under the Plan for
any reason expires or is terminated, the shares of common stock
allocable to the unexercised portion of such option may again be made
subject to options under the Plan.
4. Type of Option
Only nonqualified stock options shall be granted under the terms
of the Plan. Nonqualified stock options granted under the terms of the
Plan are not to be treated as incentive stock options.
5. Option Price
The purchase price per share shall be 100 percent of the fair
market value of one share of the Company's common stock on the date the
option is granted.
The fair market value shall be deemed to be the closing price of
the Company's common stock as reported on the New York Stock Exchange
Composite Tape on the date the option is granted, or, if no sale of
common stock has been reported on that date, the fair market value shall
be determined by reference to such price for the next preceding day on
which a sale occurred.
The purchase price shall be subject to adjustment only as provided
in Section 13 of the Plan.
6. Eligibility of Optionees
(a) Options shall be granted only to Directors of the Company who
are not currently serving as employees of the Company or its affiliates.
(b) Neither anything contained in the Plan or in any instrument
under the Plan nor the grant of any option hereunder shall confer upon
any optionee any right to continue as a Director of the Company.
7. Grant of Option
All Directors shall receive the first grant of Options pursuant to
this Plan upon the date such Plan is initially approved by the Company's
stockholders. Thereafter, all Directors shall receive options each year
on the date of the first regular meeting of the Board of Directors.
Each Director shall receive, on an annual basis, an option to purchase
3,200 shares of the Company's common stock. Each Director who serves as
the chairman of a committee of the Board of Directors shall receive an
option to purchase an additional 800 shares of the Company's common
stock for each assignment as chairman of a committee.
8. Non-Transferability of Options
No option granted under the Plan shall be assignable or
transferable by the optionee.
9. Term and Exercise of Options
(a) Each option granted under the Plan shall terminate ten years
after the date on which it was granted and shall vest installment six
months from the grant date.
(b) A Director electing to exercise an option shall give written
notice to the Company of such election and of the number of shares he
has elected to purchase, in such form as the Committee shall have
prescribed or approved, and shall at the time of exercise tender the
full purchase price of the shares he has elected to purchase. The
purchase price shall be paid in full in cash upon the exercise of the
option; provided, however, that in lieu of cash, an optionee may
exercise his option by tendering to the Company shares of common stock
owned by him and having a fair market value equal to the cash exercise
price applicable to his option, with the fair market value of such stock
to be determined in the manner provided in Section 5 of the Plan. The
optionee may also use a combination of cash and previously acquired
shares. An optionee may not use shares of common stock obtained by
exercising an option as consideration for additional shares until such
shares have been held for six months.
(c) An optionee shall have no rights as a stockholder with
respect to any shares covered by his option until the date the stock
certificate is issued evidencing ownership of the shares. No
adjustments shall be made for dividends (ordinary or extraordinary),
whether in cash, securities or other property, or distributions or other
rights, for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 13 hereof.
(d) Notwithstanding any provision of the Plan or any provision or
limitation in any option to the contrary, if the Company obtains actual
knowledge of a "change in control" in the Company (as defined below),
then all outstanding options held by Directors may be exercised with
respect to all shares of common stock subject thereto at any time during
the period of 60 days following the date upon which the Company obtained
actual knowledge of such change of control of the Company. As used
herein, a "change in control" of the Company shall be deemed to have
occurred if (i) any "Acquiring Person" (as such term is defined in the
Rights Agreement dated as of February 13, 1996, between the Company and
Chemical Mellon Shareholder Services, L.L.C. (the "Rights Agreement)) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the Company
representing 15% or more of the combined voting power of the Company, or
(ii) the stockholders of the Company approve (A) a plan of merger or
consolidation of the Company (unless, immediately following consummation
of such merger or consolidation, the persons who held the Company's
voting securities immediately prior to consummation thereof will hold at
least a majority of the total voting power of the surviving or new
corporation), or (B) a sale or disposition of all or substantially all
assets of the Company, or (C) plan of liquidation or dissolution of the
Company. A change in control shall also include any act or event which,
with the passage of time, would result in a Distribution Date, within
the meaning of the Rights Agreement.
10. Termination of Status as Director
If an optionee is removed from his position as Director, any
option granted to him under the terms of the Plan shall terminate as of
the date of his removal or resignation. Any unvested options granted
after February 13, 1996, shall vest upon the optionee's retirement as a
Director. If an optionee dies, retires, or resigns for some reason
other than to pursue a business opportunity that is or could be
perceived to be a business opportunity for the Company, he (or his
estate in the event of his death), shall have one year from the date of
death, retirement or resignation to exercise options that were granted
prior to such date.
11. Period in Which Options May be Granted
Options may be granted pursuant to the Plan, as amended, after
such amendments are approved by the Company's stockholders and prior to
May 21, 2001.
12. Amendment or Termination of the Plan
The Company's Board of Directors may at any time terminate, annul,
modify or suspend the Plan subject to the following conditions:
(a) The Board of Directors cannot amend the Plan more often than
once per six-month period except for amendments to comply with changes
in federal tax laws.
(b) The Board of Directors cannot amend, modify, suspend, or
terminate the Plan in such a way that affects any options previously
granted under the Plan without the consent of the optionee.
(c) Without the approval of the stockholders of the Company, no
amendment or modification shall be made by the Board that:
(i) Increases the maximum number of shares as to which
options may be granted under the Plan;
(ii) Alters the method by which the option price is
determined;
(iii) Extends any option for a period longer than 10 years
after the date of grant;
(iv) Materially modifies the requirements as to eligibility
for participation in the Plan; or
(v) Provides for the administration of the Plan by a
Committee that is not composed entirely of officers of the Company who
are not eligible to participate in the Plan;
(vi) Alters this Section 12 so as to defeat its purpose.
13. Changes in Capitalization
(a) In the event that the shares of stock of the Company, as
presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up, combination
of shares or otherwise) or if the number of such shares of stock shall
be increased through the payment of a stock dividend, then, subject to
the provisions of Section 13(c) below, there shall be substituted for or
added to each share of stock of the Company that was theretofore
appropriated or that thereafter may become subject to an option under
the Plan, the number and kind of shares of stock or other securities
into which each outstanding share of the stock of the Company shall be
so changed or for which each such share shall be exchanged or to which
each such share shall be entitled, as the case may be. Outstanding
options shall also be appropriately amended as to price and other terms,
as may be necessary to reflect the foregoing events.
(b) A dissolution or liquidation of the Company, or a merger or
consolidation in which the Company is not the surviving corporation,
shall cause each outstanding option to terminate, except to the extent
that another corporation may and does in the transaction assume and
continue the option or substitute its own options.
(c) Fractional shares resulting from any adjustment in options
pursuant to this Section 13 may be settled as the Committee shall
determine.
(d) To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive. Notice of any adjustment shall be given by the Company
to each holder of an option which shall have been so adjusted.
(e) The grant of an option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganization or changes of its capital or business
structure, to merge, to consolidate, to dissolve, to liquidate or to
sell or transfer all or any part of its business or assets.
(f) In the case of an option exercised prior to the redemption or
other termination of Rights pursuant to the Rights Agreement, (i) if
such exercise occurs prior to the Distribution Date, the shares received
upon exercise shall be deemed to include the Rights to which a holder of
such shares on the Record Date would have been entitled, and (ii) if
such exercise occurs on or after the Distribution Date, the holder of
such option shall receive, upon exercise, in addition to the shares of
common stock subject to such option, the Rights to which he would have
been entitled had he been a holder of such shares on the Distribution
Date; provided, however, that the preceding clause (ii) shall not apply
if and to the extent that the Company shall have been advised by counsel
that application thereof would create a significant risk of material
adverse tax consequences to the Company or to such holder, and provided
further that, if the provisions of clause (i) or (ii) hereof apply to an
option with respect to a distribution of Rights, no further adjustment
shall be made to such option under this Section 13 with regard to such
distribution. The immediately preceding sentence contains terms and
concepts that are defined in the Rights Agreement; the use of such terms
and concepts is subject to the definitions and restrictions contained in
the Rights Agreement.
Exhibit 10.15
QUESTAR CORPORATION
DIRECTORS' STOCK PLAN
Section 1. Purpose
Questar Corporation (the "Company") hereby establishes the Questar
Corporation Directors' Stock Plan (the "Plan"), which provides
nonemployee directors with the option to receive all or part of their
fees in shares of the Company's common stock. The purpose of this Plan
is to further strengthen the alignment of interests between nonemployee
directors and the Company's shareholders.
Section 2. Definitions
"Director" means a member of the Company's Board of Directors who
is not an employee of the Company.
"Election" means a Participant's delivery of written notice of
election to the Secretary of the Company electing to receive fees or a
portion of such fees (in 25 percent increments) in the form of common
stock.
"Fees" means the annual retainer (paid in monthly installments)
and meeting fees earned by a Director for service as a member of the
Board of Directors and as a member of a Committee established by the
Board of Directors. Fees shall also mean any annual retainers and
meeting fees earned by a Director for service as a director of a
subsidiary owned or controlled by the Company.
"Participant" means a Director who has elected to receive payment
of all or a portion of his or her fees in shares of common stock.
Section 3. Administration.
The Plan shall be administered by the Board of Directors or a
Committee designated by the Board. The Plan is designed to qualify for
the exemption for "formula award" plans provided for in Rule
16b-3(c)(ii) of the rules adopted by the Securities and Exchange
Commission to enforce Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Act"). The Board of Directors shall appoint a
committee of "disinterested" directors to administer the Plan if, in the
opinion of counsel to the Company, it is necessary to preserve the
exemption for shares obtained pursuant to this Plan from Section 16(b)
of the Act.
Subject to the provisions of the Plan, the Board of Directors or
the designated Committee shall have the authority to interpret the Plan;
to establish, amend, and rescind appropriate rules and regulations
pertaining to the Plan; to administer the Plan; and to take all such
steps and make all such determinations in connection with the Plan. No
member of the Board of Directors or designated Committee shall be liable
for any action or
determination made in good faith. The determinations, interpretations,
and other actions
of the Board of Directors or designated Committee pursuant to the
provisions of the Plan shall be binding and conclusive for all purposes
and all persons.
Section 4. Eligibility and Participation
Participation in the Plan shall be limited to members of the Board
of Directors who are not employees of the Company.
A Director may elect to receive all or a portion (in 25 percent
increments) of his/her fees in shares of the Company's common stock.
These fees include the annual retainer paid by the Company or its
subsidiaries and any meeting fees for attendance at meetings of the
Board of Directors, its Committees, and subsidiary Boards of Directors.
A Director may elect to participate in the Plan by providing
written notice of his or her election to participate and to receive all
or a portion of earned fees in shares of the Company's common stock.
This notice shall be effective six months after being received by the
Company's Corporate Secretary. A Director's election to participate in
the Plan shall be irrevocable. Notwithstanding the preceding sentence,
a Participant may revoke or change any election by making a subsequent
written election that takes effect six months after being received by
the Company's Corporate Secretary.
Section 5. Common Stock Subject to Plan
A maximum of 50,000 shares of common stock may be issued under
this Plan. The common stock issued under this Plan, at the option of
the Board of Directors, may be either original issue or purchased on the
open market. In the event of any change in the outstanding common stock
of the Company by reason of any stock split, stock dividend, merger,
consolidation, reorganization, or other similar change in
capitalization, the number or kind of shares that may be issued under
the Plan shall be automatically adjusted so that the proportionate
interest of the shares issuable under this Plan is maintained as before
the occurrence of such event.
Section 6. Issuance of Shares
The number of shares to be awarded by a Director shall be
calculated using the closing price of the Company's common stock on the
New York Stock Exchange ("NYSE") on the date the Director's fees for
service would otherwise have been paid. If there is no closing price on
such day, the number of shares shall be calculated using the closing
price of the common stock on the NYSE on the next preceding business
day.
All shares issued under the Plan, including fractional shares,
shall be held in a book-entry account. Participants may choose to
receive a stock certificate representing the number of whole shares
acquired by notifying the Company's Corporate Secretary in writing. The
Company shall make a cash payment to the Participant for any fractional
shares using the closing price of the Company's common stock on the NYSE
on the date the notification is received (or the next preceding business
day if the notification is received on a day when there is no closing
price on the NYSE).
Section 7. Effective Date
The Plan shall be submitted to the shareholders of the Company for
their approval and adoption and will become effective June 1, 1996, upon
such approval.
Section 8. Amendment and Termination
The Board of Directors of the Company may at any time terminate,
and from time to time may amend or modify, the Plan, provided, however,
that no amendment or modification may become effective without approval
by the shareholders of the Company, if shareholder approval is required
to enable the Plan to satisfy any applicable statutory or regulatory
requirements or if the Board of Directors, on advice of counsel,
determines that shareholder approval is otherwise necessary or
advisable. In addition, the Board of Directors may not amend the Plan
more than once every six months unless the amendment is designed to
implement changes in the Internal Revenue Code of 1986 as amended, or
rules promulgated to enforce it.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summarized financial information extracted from the
Questar Corporation Statements of Income and Balance Sheets for the period
ended June 30, 1996, and is qualified in its entirety by reference to such
unaudited financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 105,072
<ALLOWANCES> 0
<INVENTORY> 17,825
<CURRENT-ASSETS> 133,116
<PP&E> 2,352,497
<DEPRECIATION> 1,061,996
<TOTAL-ASSETS> 1,530,133
<CURRENT-LIABILITIES> 140,170
<BONDS> 404,004
4,954
0
<COMMON> 286,880
<OTHER-SE> 463,623
<TOTAL-LIABILITY-AND-EQUITY> 1,530,133
<SALES> 0
<TOTAL-REVENUES> 370,237
<CGS> 0
<TOTAL-COSTS> 216,406
<OTHER-EXPENSES> 67,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,320
<INCOME-PRETAX> 75,857
<INCOME-TAX> 25,193
<INCOME-CONTINUING> 50,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,664
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
