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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____ TO _____
Commission File No. 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 100 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 June 30, 1998
Common Stock, without par value 82,373,534 shares
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
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,
1998 1997 1998 1997 1998 1997
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $179,157 $151,453 $479,240 $509,831 $902,683 $953,121
OPERATING EXPENSES
Natural gas and other
product purchases 60,250 37,548 202,292 226,980 375,253 417,605
Operating and maintenance 53,529 51,349 104,431 105,427 203,838 204,602
Depreciation and amortization 28,337 29,674 58,409 59,518 122,928 114,532
Other taxes 11,957 9,434 21,968 22,536 33,739 35,619
TOTAL OPERATING EXPENSES 154,073 128,005 387,100 414,461 735,758 772,358
OPERATING INCOME 25,084 23,448 92,140 95,370 166,925 180,763
INTEREST AND OTHER INCOME 7,737 4,811 14,417 6,659 31,766 9,679
DEBT EXPENSE (10,946) (10,599) (22,460) (21,486) (44,740) (42,249)
INCOME BEFORE INCOME TAXES 21,875 17,660 84,097 80,543 153,951 148,193
INCOME TAXES 5,679 4,053 27,019 25,962 46,659 46,131
NET INCOME $16,196 $13,607 $57,078 $54,581 $107,292 $102,062
Earnings per common share
Basic $0.19 $0.16 $0.69 $0.66 $1.30 $1.24
Diluted 0.19 0.16 0.69 0.66 1.30 1.23
Average common shares outstanding
Basic 82,308 82,177 82,255 82,134 82,230 81,986
Diluted 82,864 82,634 82,863 82,544 82,830 82,444
Dividends per common share $0.165 $0.1525 $0.3225 $0.305 $0.6375 $0.605
See notes to consolidated financial statements
</TABLE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 1997
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments $17,271
Accounts receivable $104,080 $108,729 187,014
Inventories 22,650 17,508 29,068
Purchased-gas adjustments 12,506 48,866 37,251
Other current assets 11,195 12,216 14,420
Total current assets 150,431 187,319 285,024
Property, plant and equipment 2,810,468 2,631,139 2,741,937
Less allowances for depreciation and
amortization 1,265,470 1,156,602 1,210,717
Net property, plant and equipment 1,544,998 1,474,537 1,531,220
Securities available for resale,
approximates fair value 55,949 49,350 55,925
Investment in unconsolidated affiliates 44,031 17,941 29,952
Other assets 47,702 34,848 42,896
$1,843,111 $1,763,995 $1,945,017
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks outstanding in excess of
cash balances $7,274 $174
Short-term loans 77,600 44,100 $131,200
Accounts payable and accrued expenses 132,477 123,602 168,944
Current portion of long-term debt 6,096 10,742 6,068
Total current liabilities 223,447 178,618 306,212
Long-term debt, less current portion 503,644 520,116 541,986
Other liabilities 27,960 35,340 29,801
Deferred income taxes and investment
tax credits 210,859 213,381 221,240
Redeemable cumulative preferred stock 4,808
Common shareholders' equity
Common stock 294,530 293,947 291,322
Retained earnings 572,303 517,281 541,663
Other comprehensive income 20,541 16,060 22,966
Note receivable from ESOP (10,173) (15,556) (10,173)
Total common shareholders' equity 877,201 811,732 845,778
$1,843,111 $1,763,995 $1,945,017
See notes to consolidated financial statements
</TABLE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
6 Months Ended
June 30,
1998 1997
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $57,078 $54,581
Depreciation and amortization 60,218 61,879
Deferred income taxes and
investment tax credits (11,047) 3,924
Gain from the sales of securities (4,083) (3,060)
Gain from the conversion of ownership
interest in Nextlink affiliate (3,536)
98,630 117,324
Changes in operating assets and liabilities 76,181 19,524
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 174,811 136,848
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant and equipment (76,447) (62,755)
Other investments (17,074) (3,253)
Total capital expenditures (93,521) (66,008)
Proceeds from disposition of property,
plant and equipment 2,263 3,675
Proceeds from the sales of securities 5,800 6,449
NET CASH USED IN INVESTING
ACTIVITIES (85,458) (55,884)
FINANCING ACTIVITIES
Issuance of common stock 3,792 5,776
Common stock repurchased (584) (4,442)
Redemption of preferred stock (20)
Issuance of long-term debt 1,300 68,722
Repayment of long-term debt (38,368) (98,078)
Decrease in short-term loans (53,600) (33,700)
Checks outstanding in excess of cash balances 7,274 174
Payment of dividends (26,533) (25,244)
Other 95 145
NET CASH USED IN FINANCING
ACTIVITIES (106,624) (86,667)
DECREASE IN CASH AND
SHORT-TERM INVESTMENTS ($17,271) ($5,703)
See notes to consolidated financial statements
</TABLE>
QUESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
Note 1 - 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, 1998 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1998. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1997.
Note 2 - Planned Purchases of Gas and Oil Company and a Pipeline
A Questar subsidiary announced its intention, July 27, 1998, to
acquire 100 percent of the common stock of HSRTW, Inc., a wholly
owned subsidiary of HS Resources, Inc. for $157.5 million, effective
September 1, 1998. In the cash transaction, Universal Resources will
obtain an estimated 150 billion cubic feet equivalent of proved oil
and gas reserves primarily in Oklahoma, as well as in Texas, Arkansas
and Louisiana. The purchase price includes $155 million for gas and
oil reserves and other assets and $2.5 million for working capital.
Approximately 80 percent of the reserves are natural gas. The Company
plans to finance the purchase through short-term borrowings and an
expansion of its existing production-based credit facility.
On June 25, 1998 in an unrelated transaction another Questar
subsidiary announced its intention to acquire 700 miles of oil
pipeline from ARCO Pipe line Company. The purchase price of the line
is $40 million with financial closing expected on or about September
30, 1998. The pipeline extends from northwestern New Mexico to Long
Beach, California. Questar Pipeline will operate the pipeline once
it is modified to carry natural gas. Reconditioning the pipe and
adding compression are scheduled to begin as soon as possible and
will continue for 18-24 months for an estimated total cost up to $60
million. The project will be financed through short-term borrowings
until long-term debt can be issued.
Note 3 - Common Stock Split
In June 1998, Questar's common stock was split two shares for each
share outstanding. Common stock disclosures, such as, earnings per
share, dividends per share and number of shares outstanding in the
prior period financial statements have been restated to reflect the
split.
Note 4 - Comprehensive Income
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130 "Reporting Comprehensive Income" beginning January 1,
1998. SFAS No. 130 establishes new rules for reporting comprehensive
income and its components. However, the adoption of this statement
had no impact on Questar's net income and its shareholders' equity.
SFAS No. 130 requires unrealized gains or losses on
available-for-sale securities and foreign currency translation
adjustments to be included in other comprehensive income. Formerly,
these transactions were reported separately in shareholders' equity.
Prior year amounts have been reclassified to conform to the
requirements of SFAS No. 130.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
(In thousands)
<S> <C> <C> <C> <C>
Comprehensive Income:
Net income $16,196 $13,607 $57,078 $54,581
Other comprehensive income
Unrealized gains (losses) on securities (15,960) 13,205 (3,986) 14,128
Foreign currency translation adjustments 71 55 164
Other comprehensive income (loss)
before income taxes (15,889) 13,205 (3,931) 14,292
Income taxes (credits) on other
comprehensive income (6,081) 5,050 (1,506) 5,461
Other comprehensive income (loss) (9,808) 8,155 (2,425) 8,831
Comprehensive income $6,388 $21,762 $54,653 $63,412
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
QUESTAR CORPORATION AND SUBSIDIARIES
June 30, 1998
(Unaudited)
Results of Operations
Market Resources
Celsius Energy (US and Canada), Universal Resources, Wexpro, Questar
Gas Management, Questar Energy Trading, and Questar Energy Services
(Market Resources) conduct the Company's exploration and production,
gas gathering and processing, 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
1998 1997 1998 1997 1998 1997
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $94,802 $79,607 $193,364 $254,145 $387,984 $509,526
From affiliated companies 19,744 16,392 36,612 44,166 67,030 82,760
Total revenues $114,546 $95,999 $229,976 $298,311 $455,014 $592,286
Operating income $14,166 $11,980 $28,285 $29,472 $55,977 $65,836
Net income 9,245 8,358 19,154 20,004 40,213 43,598
OPERATING STATISTICS
Production volumes
Natural gas (in million
cubic feet) 11,995 11,864 24,089 23,638 47,893 45,824
Oil and natural gas liquids
(in thousands of barrels) 717 748 1,371 1,514 2,795 2,877
Production revenue
Natural gas (per thousand
cubic feet) $1.97 $1.60 $1.97 $1.79 $1.98 $1.68
Oil and natural gas liquids
(per barrel) $12.87 $18.46 $13.65 $19.46 $15.38 $19.69
Energy-marketing volumes
Natural gas (in thousands
of decatherms) 22,435 26,369 47,244 65,565 107,222 150,758
Oil (in thousands of barrels) 547 394 1,102 867 1,913 1,619
Electricity (in thousands of
megawatt hours) 129 189 150 531 318 735
Natural gas gathering volumes (in
thousands of decatherms)
For unaffiliated customers 17,780 12,613 36,303 26,932 66,957 54,898
For Questar Gas 7,048 6,116 15,599 15,402 28,703 31,228
For other affiliated customers 4,515 5,172 8,784 9,345 17,118 13,738
Total gathering 29,343 23,901 60,686 51,679 112,778 99,864
Gathering revenue
(per decatherm) $0.17 $0.23 $0.16 $0.23 $0.17 $0.23
</TABLE>
Revenues from Market Resource operations were higher in the second
quarter of 1998 when compared with the second quarter of 1997 due
primarily to increased energy-marketing activities, particularly gas,
and higher gas production and prices. Revenues were $68,335,000 or
23% lower in the first half of 1998 when compared to the prior year
period primarily the result of a 28% decrease in gas-marketing
volumes. Energy marketing activities reported $368,000 of net income
in the first half of 1998 compared with a $945,000 loss in the first
half of 1997.
Gas production increased 2% in the first half of 1998 when compared
with the first half of 1997 and the average price increased 10%. The
increase in production resulted from gas wells drilled in the Rocky
Mountain region in 1997.
Oil and NGL revenues were $10,755,000 lower in the first half
comparison due to a 30% drop in prices and a 9% decline in
production. The production decline was the result of the sale of
nonstrategic assets in 1997, normal production declines and a
temporary shutdown of the Brady processing plant due to a
construction project.
Market Resources hedged approximately 55% of its gas production
through June of 1999 with a price of about $2.10 per Mcf, net back to
the well. Roughly 26% of its oil production was hedged at
approximately $16.90 per bbl for the remainder of 1998. These
amounts include production volumes to be acquired from HS Resources.
Revenues for Questar Gas Management (QGM) decreased $8,335,000 or 39%
in the first half of 1998 compared with the same period in 1997 due
to a gathering contract revision and the sale of two processing
plants in 1997. Net income reported by QGM was $1,434,000 below last
year's income as a result of these factors and lower earnings from a
gas and NGL processing plant.
Regulated Services
Questar Gas and Questar Pipeline conduct the Company's regulated
services of natural gas distribution, transmission and storage.
Natural Gas Distribution
Questar Gas conducts the Company's natural gas distribution operations.
Following is a summary of financial results and operating information.
<TABLE>
<CAPTON>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $74,268 $62,632 $266,057 $236,854 $474,887 $404,128
From affiliates 119 691 119 1,782 876 3,606
Total revenues 74,387 63,323 266,176 238,636 475,763 407,734
Natural gas purchases 41,965 29,669 160,063 126,880 282,116 208,671
Revenues less natural gas purch $32,422 $33,654 $106,113 $111,756 $193,647 $199,063
Operating income (loss) ($1,541) ($2,063) $36,670 $37,959 $56,948 $60,737
Net income (loss) (2,381) (2,603) 18,333 19,706 27,641 30,460
OPERATING STATISTICS
Natural gas volumes (in thousands of
decatherms)
Residential and commercial sales 13,178 12,157 47,492 48,562 84,677 82,998
Industrial sales 2,267 2,104 5,097 5,006 9,614 9,238
Transportation for industrial
customers 13,115 11,625 27,947 24,577 54,683 49,301
Total deliveries 28,560 25,886 80,536 78,145 148,974 141,537
Natural gas revenue (per decatherm)
Residential and commercial $4.70 $4.31 $5.06 $4.43 $5.02 $4.36
Industrial sales 2.90 2.30 3.01 2.34 2.92 2.25
Transportation for industrial
customers 0.11 0.12 0.11 0.13 0.12 0.12
Heating degree days
Actual 899 678 3,291 3,133 5,623 5,227
Normal 741 741 3,484 3,484 5,801 5,801
Colder (warmer) than normal 21% (9%) (6%) (10%) (3%) (10%)
Number of customers at June 30, 643,696 621,647
</TABLE>
Revenues, less natural gas purchases, were $1,232,000 lower in the
second quarter of 1998 and $5,643,000 lower in the 6-month period
ended June 30, 1998 when compared with the same periods in 1997
because of several rate changes affecting the first half of 1998. A
rate surcharge, associated with construction of a distribution
pipeline into southern Utah and in effect for the past 10 years, was
discontinued in September 1997. Some general-service customers, who
met higher load factor standards, shifted to firm commercial rates,
which have a lower margin. Retail usage of gas per customer fell
during the first half of 1998 after reaching an unusually high mark
in the first half of 1997. This is in large part attributable to
reaction to rising gas costs included in rates during the latter part
of 1997 and first part of 1998.
Partially offsetting the rate changes and lower usage per customer
has been the effect of a strong growth rate in the number of
customers served by Questar Gas. The number of customers served grew
by 3.5% from a year ago to 643,696 at June 30, 1998.
Temperatures, as measured in degree days, were colder than normal in
the second quarter of 1998. However, the impact was slight because
temperatures are relatively mild during the second quarter in
comparison with the winter heating season that extends from November
through March. Also, Questar Gas' rates include a
weather-normalization adjustment that reduces the revenue impact of
weather fluctuations. Virtually all of Questar Gas' residential and
commercial volumes were covered under the weather-normalization
adjustment in the first half of both 1998 and 1997.
In March 1998, the Public Service Commission of Wyoming approved
Questar Gas' gas-merchant unbundling proposal that was filed in
Wyoming in 1997. Under this plan, a transportation service option
was extended to residential and commercial customers as well as
industrial customers. Customers choosing transportation service are
allowed to secure gas supplies directly from producers and marketers
and pay Questar Gas a fee for transportation services. Questar Gas
continues to offer a traditional bundled sales service as well. The
unbundling proposal called for an open enrollment period to be held
from March 1 through April 30. However, no suppliers signed up to
provide gas to Wyoming customers. Another open enrollment will be
held next year. Questar expects that the option of unbundled service
in Wyoming will not have a material effect on earnings.
Volumes delivered to industrial customers increased 12% in the first
half of 1998 when compared with the same period of 1997 due to
additions of new customers as well as expanded operations with
several ongoing customers. Margins from gas delivered to industrial
customers are substantially lower than from gas delivered to
residential and commercial customers.
Questar Gas, as a result of acquiring Questar Pipeline's gas purchase
contracts, is responsible for any judgment rendered against Questar
Pipeline in a lawsuit that was tried before a jury in 1994. In a
ruling issued June 2, 1998, the trial judge set aside all aspects of
the jury's verdict except for $.5 million in favor of a producer
related to certain contractual, take-or-pay issues. Other than on
these take-or-pay matters, a judgment was entered on all other issues
in favor of Questar Pipeline. A notice of appeal has been filed by
the producer.
Natural Gas Transmission
Questar Pipeline conducts the Company's natural gas transmission and
storage 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,
1998 1997 1998 1997 1998 1997
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $9,088 $8,732 $18,153 $17,863 $36,633 $37,253
From affiliates 17,511 17,175 35,695 34,765 70,024 67,751
Total revenues $26,599 $25,907 $53,848 $52,628 $106,657 $105,004
Operating income $14,046 $11,992 $26,852 $25,457 $51,885 $49,480
Net income 7,060 5,460 13,614 11,782 28,400 23,639
OPERATING STATISTICS
Natural gas transportation volumes (in
thousands of decatherms)
For unaffiliated customers 31,289 27,633 64,067 60,936 119,346 119,800
For Questar Gas 27,051 26,011 65,382 68,275 107,418 114,854
For other affiliated customers 7,549 10,993 12,407 17,809 32,395 47,267
Total transportation 65,889 64,637 141,856 147,020 259,159 281,921
Transportation revenue (per
decatherm) $0.26 $0.26 $0.25 $0.23 $0.27 $0.23
</TABLE>
Revenues were higher in the 3-, 6- and 12-month periods of 1998 due
primarily to increased firm-transportation and firm-storage
reservation charges. Questar Pipeline expanded working gas capacity
by 5 Bcf at Clay Basin for a capital investment of $4 million. The
expansion is expected to add about $3 million in annual storage
revenues. Service began in the second quarter of 1998 and all new
capacity was committed to long-term contracts.
Income from unconsolidated affiliates in the 1998 periods include the
Company's share of earnings reported by TransColorado Gas
Transmission Co. The noncash earnings reflect capitalization of
interest and equity costs (AFUDC) associated with the construction of
the TransColorado pipeline amounting to $405,000 in the 3-month
period, $723,000 in the 6-month period and $5,179,000 in the 12-month
period ended June 30, 1998.
Consolidated Results of Operations
Consolidated revenues were 18% higher in the second quarter ended
June 30, 1998 when compared with the second quarter of 1997 due to
increased revenues from energy-marketing and gas-distribution
activities. Consolidated revenues were lower in the 6- and 12-month
periods ended June 30, 1998 when compared with the same periods of
1997 due primarily to decreased energy-marketing activities, oil
prices and oil production, which more than offset higher
gas-distribution revenues, gas production and gas prices during these
same reporting periods.
Natural gas and other product purchases were 60% higher in the second
quarter ended June 30, 1998 when compared with the second quarter of
1997 due to the increased cost, primarily of gas, purchased for
energy-marketing activities and higher gas costs recovered in
distribution rates. Natural gas and other product purchases were
lower in the 6- and 12-month periods of 1998 due primarily to a
decrease in the quantity of gas purchased for energy-marketing
activities.
Increased labor-related costs for data processing caused a 4%
increase in operating and maintenance (O & M) expenses in the second
quarter of 1998 when compared with the same period in the prior year.
Cost-containment efforts, capitalizing labor costs associated with
construction projects and lower bad debt expenses in 1998 resulted in
lower O & M expenses in the 6- and 12-month periods of 1998. The
Company continues efforts to resolve Year 2000 issues and expects
that the expense of becoming Year 2000 compliant will not be
material. Depreciation expenses were lower in the 3- and 6- month
periods of 1998 when compared to the 1997 periods because of a lower
full-cost amortization rate and an adjustment associated with
transmission properties. The full-cost amortization rate for
combined US and Canadian operations was $.83 per equivalent Mcf for
the first half of 1998 down from $.85 for the 1997 period.
Depreciation Other taxes, primarily production and property taxes,
were lower in the 6- and 12-month periods of 1998 because of lower
oil prices and production, and refunds and lower assessments of state
property taxes.
Eligible employees in the Company's Regulated Services group and in
Questar Energy Services, Inc., were offered an early retirement
program that was effective July 31, 1998. Enhanced benefits will be
paid to 178 employees taking advantage of the offer. The regulated
services work force was reduced by more than 10% or 177 employees,
which will decrease future operating expenses. The Regulated
Services group will defer and amortize the costs associated with the
early retirement program over a five-year period in accordance with
past regulatory treatment. The deferred annual charge is expected to
be more than offset by lower labor-related costs.
Interest and other income was higher in the 3- and 6-month periods of
1998 due primarily to a $5,727,000 pretax gain on an exchange of an
interest in Nextlink and $829,000 of interest earned on a
fiber-optics communications project with Nextlink. In addition to
the items mentioned, higher pretax gains from selling Nextel shares
and increased earnings from unconsolidated affiliates resulted in an
increase in interest and other income reported in the 12-month period
ended June 30, 1998.
The effective income tax rate for the first six months was 32.1% in
1998 and 32.2% in 1997. The Company recognized $4,246,000 of
production-related tax credits in the 1998 period and $4,917,000 in
the 1997 period.
Liquidity and Capital Resources
Operating Activities
Net cash provided from operating activities of $174,811,000 for the
first half of 1998 was $37,963,000 higher than was generated in the
same period of 1997. The increase in cash flow resulted primarily
from collection of gas costs incurred by natural gas distribution
operations, which were under-collected in the first half of 1997.
Investing Activities
Capital expenditures were $93,521,000 for the first half of 1998, up
$27,513,000 from the $66,008,000 reported for the same period a year
ago. A comparison of capital expenditures by lines of business for
the first six months of 1998 and 1997 plus an estimate for calendar
year 1998 are below. The 1998 forecast includes announced purchases
of a gas and oil company for $157,500,000 and a pipeline for
$40,000,000. Both transactions are expected to be effective in the
third quarter of 1998.
<TABLE>
<CAPTION>
Estimate
Actual 12 Months
Six Months Ended Ended
June 30, Dec. 31,
1998 1997 1998
(In Thousands)
<S> <C> <C> <C>
Capital Expenditures:
Market Resources $41,038 $31,057 $243,800
Regulated Services
Natural gas distribution 25,292 20,985 66,000
Natural gas transmission 20,761 4,277 162,100
Total Regulated Services 46,053 25,262 228,100
Other operations 6,430 9,689 45,100
$93,521 $66,008 $517,000
</TABLE>
Financing Activities
In the first half of 1998 net cash flow provided from operating
activities was used to reduce short-term debt by $53,600,000 and
long-term debt by $38,638,000 and to fund capital expenditures. The
Company intends to finance forecasted 1998 capital expenditures
through net cash provided from operating activities, bank borrowings
and issuing long-term debt.
Short-term borrowings, represented by commercial paper, amounted to
$77,600,000 at June 30, 1998 and $44,100,000 at June 30, 1997. The
Company has short-term bank lines of credit, which serve as backup to
borrowings made under the commercial paper program. The Company's
lines of credit borrowing capacity is $100 million April 1 through
September 30 to match seasonal-borrowing patterns. However, the
capacity is being expanded to $300 million for interim financing to
accommodate capital spending until long-term financing can be
arranged.
Forward Looking Statements
This 10-Q contains forward-looking statements about the future
operations and expectations of Questar Corporation. According to
management, these statements are made in good faith and are
reasonable representations of the Company's expected performance at
the time. Actual results may vary from management's stated
expectations and projections due to a variety of factors.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Questar Corporation (Questar or the Company) held its annual
meeting of shareholders on Tuesday, May 19, 1998. Four incumbent
directors--R. D. Cash, Gary G. Michael, Gary L. Nordloh, and Scott S.
Parker were elected to serve three year terms. The following chart
lists the name of each director nominated and elected, the number of
votes in favor of his election, the number of votes cast against his
election, and the number of abstaining votes:
Name Votes For Votes Against Abstentions
R. D. Cash 35,338,727 206,226 516,497
Gary G. Michael 35,385,572 158,981 516,497
Gary L. Nordloh 34,964,036 580,517 516,497
Scott S. Parker 35,320,415 224,138 516,497
The Company's other directors are Patrick J. Early, U. Edwin
Garrison, W. Whitley Hawkins, Robert E. Kadlec, Dixie L. Leavitt,
Marilyn S. Kite, D. N. Rose, and Harris H. Simmons. Mr. William N.
Jones reached the mandatory retirement age of 72 and resigned as a
director effective May 19, 1998, leaving a vacancy on the Board.
Questar's shareholders also approved an amendment to the
Company's Articles of Incorporation that increased the authorized
shares of common stock from 175,000,000 shares to 350,000,000 shares.
The Company's shareholders cast 27,521,912 votes in favor of the
proposed amendment and 8,294,903 votes against the proposed amendment;
in addition, there were 244,235 abstaining votes on the proposed
amendment.
(Since the Company's annual meeting was held before the
two-for-one stock split, all shares are reported on a pre-split basis.
Item 5. Other Information.
On August 11, 1998, Questar's Board of Directors unanimously
approved an amendment to the Company's Bylaws to provide that
shareholder proposals must be received at least 90 days prior to the
date of the Company's annual meeting in order for named proxies to
have notice of any item on which they will not have discretionary
voting at the annual meeting. Questar's 1999 annual meeting will be
held on May 18, 1999. Consequently, shareholders must provide proper
notice to the Company's Corporate Secretary by February 17, 1999 of
any matters to be brought before the annual meeting.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits have been filed as part of this
report:
Exhibit No.
3.1. Restated Articles of Incorporation as amended effective
May 19, 1998.
3.2. Bylaws as amended effective August 11, 1998.
10.1. Questar Corporation Annual Management Incentive Plan as
amended and restated effective May 19, 1998.
10.2. Questar Corporation Executive Incentive Retirement Plan
as amended and restated effective May 19, 1998.
10.3. Questar Corporation Executive Severance Compensation
Plan as amended and restated effective May 19, 1998.
10.4. Questar Corporation Long-Term Stock Incentive Plan as
amended and restated effective May 19, 1998.
10.5. Questar Corporation Deferred Compensation Plan for
Directors as amended and restated effective May 19,
1998.
10.6. Questar Corporation Supplemental Executive Retirement
Plan as amended and restated effective June 1, 1998.
10.7. Questar Corporation Deferred Share Plan as amended and
restated effective May 19, 1998.
10.8. Questar Corporation Deferred Share Make-Up Plan.
10.9. Questar Corporation Special Situation Retirement Plan.
10.10. Questar Corporation Deferred Compensation Plan as
amended and restated effective May 19, 1998.
(b) The Company did not file a Current Report on Form 8-K during
the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
QUESTAR CORPORATION
(Registrant)
August 14, 1998 /s/R. D. Cash
(Date) R. D. Cash
Chairman of the Board, President
and Chief Executive Officer
August 14, 1998 /s/ S. E. Parks
(Date) S. E. Parks
Vice President, Treasurer and
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Exhibit
3.1. Restated Articles of Incorporation as amended effective May
19, 1998.
3.2. Bylaws as amended effective August 11, 1998.
10.1. Questar Corporation Annual Management Incentive Plan as
amended and restated effective May 19, 1998.
10.2. Questar Corporation Executive Incentive Retirement Plan as
amended and restated effective May 19, 1998.
10.3. Questar Corporation Executive Severance Compensation Plan as
amended and restated effective May 19, 1998.
10.4. Questar Corporation Long-Term Stock Incentive Plan as
amended and restated effective May 19, 1998.
10.5. Questar Corporation Deferred Compensation Plan for Directors
as amended and restated effective May 19, 1998.
10.6. Questar Corporation Supplemental Executive Retirement Plan
as amended and restated effective June 1, 1998.
10.7. Questar Corporation Deferred Share Plan as amended and
restated effective May 19, 1998.
10.8. Questar Corporation Deferred Share Make-Up Plan.
10.9. Questar Corporation Special Situation Retirement Plan.
10.10 Questar Corporation Deferred Compensation Plan as amended
and restated effective May 19, 1998.
ARTICLES OF AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
OF QUESTAR CORPORATION
Pursuant to the provisions of the Utah Business Corporation Act,
the Undersigned Corporation adopts the following Articles of
Incorporation to its Restated Articles of Incorporation:
FIRST: The name of the Corporation is Questar Corporation.
SECOND: The following amendment to the Restated Articles of
Incorporation was adopted by the shareholders of the Corporation on
May 19, 1998, in the manner presented by the Utah Business Corporation
Act:
The first sentence of Article IV was amended to read as follows:
The aggregate number of shares that the Corporation shall have
authority to issue is Three Hundred Sixty Million (360,000,000) of
which Three Hundred Fifty Million (350,000,000) shares shall be common
stock without par value (hereinafter called "Common Stock"), Five
Million (5,000,000) shares shall be Class A Preferred Stock without
par value (hereinafter called "Class A Preferred Stock"); and Five
Million (5,000,000) shares shall be Class B Preferred Stock without
par value (hereinafter called "Class B Preferred Stock").
THIRD: The number of shares of the Corporation outstanding as
of the record date for the annual meeting of shareholders at which
time the shareholders voted on the amendment was 41,122,825 and the
number of shares entitled to vote was 41,122,825.
FOURTH: The designated number of outstanding shares of each
class entitled to vote on the amendment as a class was 41,122,825
shares of common stock without par value. The Corporation has no
other stock outstanding.
FIFTH: The number of shares voting in favor of the amendment
to Article IV was 27,521,912, or approximately 67 percent of the
outstanding shares of the Corporation's common stock. A total of
8,294,903 shares were voted against the amendment to Article IV.
SIXTH: The amendment does not provide for an exchange,
reclassification or cancellation of issued shares. All of the
Company's outstanding shares of common stock, without par value, shall
be converted into the same number of shares of common stock without
par value.
SEVENTH: The amendment does not provide for a change in the
amount of stated capital.
IN WITNESS WHEREOF, the undersigned president and Secretary of
the Corporation have set their hands this 19th day of May, 1998.
Attest: QUESTAR CORPORATION
/s/Connie C. Holbrook By /s/R. D. Cash
Connie C. Holbrook R. D. Cash
Secretary Chairman, President, and
Chief Executive officer
ACKNOWLEDGMENT
State of Utah )
: ss.
County of Salt Lake )
I, Lucille L. Curtis, a notary public, do hereby certify that on
May 19, 1998, personally appeared before me R. D. Cash personally know
to me to be the Chairman, President and Chief Executive Officer of
Questar Corporation, and that the statements contained therein are
true.
/s/ Lucille L. Curtis
Notary Public
My Commission Expires: Residing at Salt Lake City, Utah
August 27, 1999
RESTATED ARTICLES OF INCORPORATION
OF
QUESTAR CORPORATION
In accordance with the provisions of the Utah Business
Corporation Act and pursuant to a resolution duly adopted by its Board
of Directors, Questar Corporation hereby adopts the following Restated
Articles of Incorporation.
ARTICLE I
The name of said Corporation shall be Questar Corporation.
ARTICLE II
The time of said Corporation's duration and the period for
which it shall exist shall be perpetual.
ARTICLE III
The pursuit of business agreed upon and for which said
Corporation is formed is:
1. To engage in any business involving energy and energy
related matters, including the production, purchase, sale, storage,
transportation, distribution and marketing of oil, gas, petroleum
chemicals, petrochemicals, hydrocarbons, coal, ores, metals and other
minerals and mineral solutions and any and all other natural resources
and the derivatives, products and by-products thereof, and, in such
connection, to search, prospect and explore for oil, gas, petroleum,
coal, ores, metals, minerals and any and all other natural resources
and to produce, manufacture, reduce, refine, prepare, distill and
otherwise deal in and with the same and their derivatives, products
and by-products; to lay down, construct, maintain and operate
pipelines, tubes, tanks, pump stations, compressor stations, gas
purification and dehydration plants, gasoline plants, connections,
fixtures, storage houses and reservoirs and such machinery, apparatus,
devices and arrangements as may be necessary to operate the same; to
own, hold, use and occupy such lands, rights of way, easements,
franchises, buildings, plants and structures as may be necessary to
accomplish the objects or purposes aforesaid; and in general to engage
in such other activity as may in any way relate to or be used or
useful in connection with any one or more of the foregoing businesses.
2. To purchase or otherwise acquire or assume, through
subsidiary corporations or otherwise, as a holding company, the
properties, real, personal and mixed, rights, privileges, primary and
secondary franchises, licenses and certificates of convenience and
necessity of any corporation.
3. To engage in any lawful act or activity for which
corporations may be organized under the laws of the State of Utah.
ARTICLE IV
The aggregate number of shares which the Corporation shall
have authority to issue is One Hundred Eighty-Five Million
(185,000,000) shares of which One Hundred Seventy-Five Million
(175,000,000) shares shall be common stock without par value
(hereinafter called "Common Stock"); Five Million (5,000,000) shares
shall be Class A Preferred Stock without par value (hereinafter called
"Class A Preferred Stock"); and Five Million (5,000,000) shares shall
be Class B Preferred Stock without par value (hereinafter called
"Class B Preferred Stock"). The Company shall not issue any shares of
Class A Preferred Stock or Class B Preferred Stock, if, after giving
effect to such issue and the redemption or retirement of any shares of
Class A Preferred Stock or Class B Preferred Stock being redeemed or
retired concurrently therewith, the aggregate of the amounts payable
upon all outstanding shares of Class A Preferred Stock and Class B
Preferred Stock in the event of involuntary liquidation, exclusive of
accrued dividends, shall exceed One Hundred Million Dollars
($100,000,000.00).
The following is a statement of the voting powers and of the
designations, preferences, limitations, and relative rights of the
Class A Preferred Stock and Class B Preferred Stock and of the
qualifications, limitations and restrictions thereof, except to the
extent to be fixed by the Board of Directors as hereinafter provided.
1. Class A Preferred Stock. Shares of Class A Preferred
Stock may be issued from time to time in one or more series as may
from time to time be determined by the Board of Directors, each of
said series to be distinctly designated. All shares of any one series
of Class A Preferred Stock shall be alike in every particular. All
shares of Class A Preferred Stock shall be identical except as to the
following rights and preferences, as to which there may be variations
between different series: the rate of dividend, whether shares may be
redeemed and, if so, the redemption price and terms and conditions of
redemption, the amount payable upon shares in the event of voluntary
and involuntary liquidation, sinking fund provisions, if any, for
redemption or purchase of shares and the terms and conditions, if any,
on which shares may be converted. So far as is not inconsistent with
these Articles of Incorporation and to the full extent now or
hereafter permitted by the laws of Utah, there is hereby expressly
vested in the Board of Directors of this Corporation the authority to
issue one or more series of Class A Preferred Stock and to fix in the
resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors of this Corporation the designation
of such series, the relative rights and preferences thereof, and the
qualifications, limitations or restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(a) The distinctive designation of, and the number of
shares of Class A Preferred Stock which shall constitute, such
series;
(b) The rate and time at which, and the terms and
conditions upon which, dividends, if any, on Class A Preferred
Stock of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends payable
on any other class or classes, and whether such dividends shall
be cumulative or non-cumulative;
(c) The right, if any, of the holders of Class A
Preferred Stock of such series to convert the same into, or
exchange the same for, shares of any other class or classes or of
any series of the same or any other class or classes of stock of
the Corporation and the terms and conditions of such conversion
or exchange;
(d) Whether or not Class A Preferred Stock of such
series shall be subject to redemption, and the redemption price
or prices and the time or times at which, and the terms and
conditions upon which, Class A Preferred Stock of such series may
be redeemed;
(e) The rights, if any, of the holders of Class A
Preferred Stock of such series upon the voluntary or involuntary
liquidation of the Corporation;
(f) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the Class A
Preferred Stock of such series; and
(g) The voting powers, if any, of the holders of such
series of Class A Preferred Stock which may, without limiting the
generality of the foregoing, include the right, voting as a
series by itself or together with other series of Class A
Preferred Stock or all series of Class A Preferred Stock as a
class, to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any one
or more series of Class A Preferred Stock or under such other
circumstances and on such conditions as the Board of Directors
may determine.
2. Class B Preferred Stock. Shares of Class B Preferred
Stock may be issued from time to time in one or more series as may
from time to time be determined by the Board of Directors, each of
said series to be distinctly designated. All shares of any one series
of Class B Preferred Stock shall be alike in every particular. All
shares of Class B Preferred Stock shall be identical except as to the
following rights and preferences, as to which there may be variations
between different series: the rate of dividend, whether shares may be
redeemed and, if so, the redemption price and terms and conditions of
redemption, the amount payable upon shares in the event of voluntary
and involuntary liquidation, sinking fund provisions, if any, for
redemption or purchase of shares and the terms and conditions, if any,
on which shares may be converted. So far as is not inconsistent with
these Articles of Incorporation and to the full extent now or
hereafter permitted by the laws of Utah, there is hereby expressly
vested in the Board of Directors of this Corporation the authority to
issue one or more series of Class B Preferred Stock and to fix in the
resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors of this Corporation the designation
of such series, the relative rights and preferences thereof, and the
qualifications, limitations or restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(a) The distinctive designation of, and the number of
shares of Class B Preferred Stock which shall constitute, such
series;
(b) The rate and time at which, and the terms and
conditions upon which, dividends, if any, on Class B Preferred
Stock of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends payable
on any other class or classes, and whether such dividends shall
be cumulative or non-cumulative;
(c) The right, if any, of the holders of Class B
Preferred Stock of such series to convert the same into, or
exchange the same for, shares of any other class or classes or of
any series of the same or any other class or classes of stock of
the Corporation and the terms and conditions of such conversion
or exchange;
(d) Whether or not Class B Preferred Stock of such
series shall be subject to redemption, and the redemption price
or prices and the time or times at which, and the terms and
conditions upon which, Class B Preferred Stock of such series may
be redeemed;
(e) The rights, if any, of the holders of Class B
Preferred Stock of such series upon the voluntary and involuntary
liquidation of the Corporation;
(f) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the Class B
Preferred Stock of such series; and
(g) The voting powers, if any, of the holders of such
series of Class B Preferred Stock which may, without limiting the
generality of the foregoing, include the right, voting as a
series by itself or together with other series of Class B
Preferred Stock or all series of Class B Preferred Stock as a
class, to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any one
or more series of Class B Preferred Stock or under such other
circumstances and on such conditions as the Board of Directors
may determine.
ARTICLE V
The Corporation will not commence business until
consideration of a value of at least one thousand dollars ($1,000) has
been received for the issuance of shares.
ARTICLE VI
Stockholders shall have no preemptive rights to acquire any
securities of the Corporation.
ARTICLE VII
In furtherance but not in limitation of the powers conferred
by the statutes of the State of Utah, the Board of Directors without
the authority, consent, vote or other action of the stockholders, or
any of them, is expressly authorized:
From time to time, as and when, and upon such terms and
conditions as it may determine, to issue any part of the authorized
capital stock of the Corporation, without being required to offer such
stock on a pro rata basis to the stockholders of the Corporation.
To purchase, or otherwise acquire for the Corporation, any
property, rights or privileges which the Corporation is authorized to
acquire at such price or consideration and generally upon such terms
and conditions as it deems fit.
In its discretion to pay for any property or rights acquired
by the Corporation, either wholly or partly in money, stock, bonds,
debentures, or other securities of the Corporation.
From time to time to fix and vary the amount of the working
capital, and to direct and determine the use and disposition of any
surplus or net profits, over and above the capital stock paid in; and
in its discretion to use and apply any such surplus or accumulated
profits in acquiring the bonds or other obligations or shares of the
capital stock of this Corporation to such an extent and in such manner
and upon such terms as the Board of Directors shall deem expedient,
but no funds or property of the Corporation shall be used for the
purchase of its own shares of capital stock when such use would cause
any impairment of the capital of the Corporation, and shares of its
capital stock, when acquired by the Corporation may, from time to
time, successively be resold and repurchased.
To issue and sell, pledge or otherwise dispose of bonds,
debentures or other obligations of the Corporation from time to time,
without limitation as to amount, for any of the objects or purposes of
the Corporation, and, if desired, to secure the same of any thereof by
mortgage, pledge, deed of trust or otherwise, upon all or any part of
the property of every kind of the Corporation, and to cause the
Corporation to guarantee bonds, debentures, dividends or other
obligations of other corporations.
At any time, or from time to time, to sell, assign,
transfer, convey, lease or otherwise dispose of the whole or any part
of the property and assets of every kind and nature of the Corporation
upon such terms and conditions as the Board of Directors may deem
expedient for the best interests of the Corporation.
To cause the Corporation to be licensed or recognized in any
state, county, city or other municipality of the United States, the
territories thereof, the District of Columbia, colonial possessions or
territorial acquisitions, and in any foreign country, and in any town,
city or municipality thereof, to conduct its business and have one or
more offices therein.
To make, alter, amend or rescind the Bylaws of the
Corporation.
To authorize and cause to be executed, mortgages and liens
upon the real and personal property of the Corporation.
From time to time to determine whether and to what extent,
and at what time and place and under what conditions and regulations,
the accounts and books of this Corporation (other than the stock
ledger) or any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to inspect any
account or book or document of this Corporation, except as permitted
by statute of the State of Utah or authorized by the Board of
Directors.
The Corporation may, in its Bylaws, confer powers additional
to the foregoing upon the Directors in addition to the powers and
authority expressly conferred upon them by statute.
ARTICLE VIII
The names of the incorporators of said Corporation are as
follows:
Name Address
Glenn H. Robinson 850 Northcrest Drive
Salt Lake City, Utah 84103
Margaret M. Boevers 3735 South 3100 East
Salt Lake City, Utah 84109
Stephen E. Parks 4940 Sommet Drive
Salt Lake City, Utah 84117
ARTICLE IX
The address of said Corporation's initial registered office
and the name of its initial registered agent at such address are:
Glenn H. Robinson
850 Northcrest Drive
Salt Lake City, Utah 84103
ARTICLE X
The number of directors constituting the initial Board of
Directors shall be three (3), and the names and addresses of the
persons who are to serve as directors until the first annual meeting
of stockholders and until their successors are elected and qualified
are:
Name Address
Glenn H. Robinson 850 Northcrest Drive
Salt Lake City, Utah 84103
Margaret M. Boevers 3735 South 3100 East
Salt Lake City, Utah 84109
Stephen E. Parks 4940 Sommet Drive
Salt Lake City, Utah 84117
ARTICLE XI
1. Effective as of the initial annual meeting of
stockholders, there shall be thirteen (13) directors of the
Corporation, notwithstanding any other provision of these Articles of
Incorporation or of the Bylaws.
2. The directors, except those hereinbefore named as initial
directors and those chosen to fill a vacancy for an unexpired term,
must be elected by the stockholders at the regular annual stockholders
meeting, or, if not held, at any special meeting of the stockholders
called for that purpose. As to the directors elected at the initial
annual meeting of stockholders, the first class of directors shall
hold office for an initial term of one (1) year, the second class of
directors shall hold office for an initial term of two (2) years, and
the third class of directors shall hold office for an initial term of
three (3) years, expiring, respectively, at the first, second and
third annual meetings of stockholders held after such initial annual
meeting of stockholders. Thereafter, each class shall hold office for
terms expiring at the third annual meeting of stockholders following
the most recent election of such class. Notwithstanding any other
provision of these Articles of Incorporation or of the Bylaws, any
director or directors, including the entire Board of Directors, may be
removed at any time, but only with cause and by the affirmative vote
of at least two-thirds of the issued and outstanding stock of the
Corporation that is entitled to vote for the election of directors,
and no qualification for the office of director that may be provided
for in the Articles of Incorporation or the Bylaws shall apply to any
director in office at the time such qualification was adopted or to
any successor appointed by the remaining directors to fill the
unexpired portion of the term of such director.
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty by such director as a directory, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing
violation of law; (iii) for any transaction from which the director
derived an improper personal benefit; or (iv) for any action that
would result in statutory liability of the director under Section
16-10-44 of the Utah Code Annotated. Any repeal or modification of
this paragraph by the stockholders shall be prospective only and shall
not adversely affect any limitation on the personal liability of a
director of the Corporation for acts or omissions occurring prior to
the effective date of such repeal or modification.
ARTICLE XII
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in the Articles of Incorporation in
the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation. Nevertheless, and in addition to any other provision of
these Articles of Incorporation, the Bylaws, or statutes, the
affirmative vote of eighty percent of the issued and outstanding
capital stock of the Corporation that is entitled to vote for the
election of directors shall be required for the deletion of language
in or any amendment to Article XI, this Article XII, or Article XIV or
for any amendment to these Articles of Incorporation or to the Bylaws
(unless such amendment to the Bylaws is approved by the Directors in
accordance with the Bylaws) that would restrict or limit the power or
authority of the Board of Directors or any other officer or agent of
the Corporation; that would vest any powers of the Corporation in any
other officer or agent other than the Board of Directors or officers
and agents appointed by or under the authority of the Board of
Directors; that would require the approval of any stockholders in
order for the Board of Directors or any officer or agent to take any
action; or that would change the quorum requirement for any meeting of
the Board of Directors, the vote by which it must act in connection
with any matter, the manner of calling or conducting meetings of
Directors, or the place of such meetings.
ARTICLE XIII
The private property of the stockholders shall not be liable
for any obligations or debts of the Corporation.
ARTICLE XIV
1. The affirmative vote of the holders of not less than
eighty percent of the outstanding shares of capital stock of the
Corporation entitled to vote shall be required for the approval or
authorization of any "Business Combination" (as hereinafter defined)
involving a "Related Person" (as hereinafter defined); provided,
however, that the eighty percent voting requirement shall not be
applicable if:
(a) The "Continuing Directors" (as hereinafter defined)
of the Corporation by a two-thirds vote have expressly approved such
Business Combination either in advance of or subsequent to such
Related Person's having become a Related Person; or
(b) The following conditions are satisfied:
(i) The aggregate amount of the cash and the "Fair
Market Value" (as hereinafter defined) of the property, securities or
"Other Consideration" (as hereinafter defined) to be received per
share by all holders of capital stock of the Corporation in the
Business Combination, other than the Related Person involved in the
Business Combination, is not less than the "Highest Per Share Price"
or the "Highest Equivalent Price" (as hereinafter defined) paid by the
Related Person in acquiring any of its holdings of the Corporation's
capital stock; and
(ii) A proxy statement complying with the
requirements of the Securities Exchange Act of 1934, as amended,
whether or not the Corporation is then subject to such requirements
shall have been mailed to all stockholders of the Corporation for the
purpose of soliciting stockholder approval of the Business
Combination. The proxy statement shall contain at the front thereof,
in a prominent place, the position of the Continuing Directors as to
the advisability (or inadvisability) of the Business Combination and,
if deemed advisable by a majority of the Continuing Directors, the
opinion of an investment banking firm selected by the Continuing
Directors as to the fairness of the terms of the Business Combination,
from the point of view of the holders of the outstanding shares of
capital stock of the Corporation other than any Related Person.
Such eighty percent vote shall be required notwithstanding the
fact that no vote may be required or that a lesser percentage may be
specified by law or in any agreement with any national securities
exchange or otherwise.
2. For purposes of this Article XIV:
(a) The term "Business Combination" shall mean (i) any
merger, consolidation or share exchange of the Corporation or a
subsidiary of the Corporation with or into a Related Person, in each
case without regard to which entity is the surviving entity; (ii) any
sale, lease, exchange, transfer or other disposition, including
without limitation a mortgage or any other security device, of all or
any "Substantial Part" (as hereinafter defined) of the assets of the
Corporation (including without limitation any voting securities of a
subsidiary of the Corporation) or a subsidiary of the Corporation to
or with a Related Person (whether in one transaction or series of
transactions); (iii) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or any other
security device, of all or any Substantial Part of the assets of a
Related Person to the Corporation or a subsidiary of the Corporation;
(iv) the issuance, transfer or delivery of any securities of the
Corporation or a subsidiary of the Corporation by the Corporation or
any of its subsidiaries to a Related Person (other than an issuance or
transfer of securities which is effected on a pro rata basis to all
stockholders of the Corporation); (v) any recapitalization or
reclassification of securities (including any reverse stock split)
that would have the effect of increasing the voting power of a Related
Person; (vi) the issuance or transfer by a Related Person of any
securities of such Related Person to the Corporation or a subsidiary
of the Corporation (other than an issuance or transfer of securities
which is effected on a pro rata basis to all stockholders of the
Related Person); (vii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of a Related Person; or (viii) any agreement, plan, contract or other
arrangement providing for any of the transactions described in this
definition of Business Combination.
(b) The term "Related Person" shall mean and include any
individual, partnership, corporation or other person or entity which,
as of the record date for the determination of stockholders entitled
to notice of and to vote on any Business Combination, or immediately
prior to the consummation of such transaction, together with its
"Affiliates" and "Associates" (as defined in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934 as in
effect at the date of the adoption of this Article XIV by the
stockholders of the Corporation (collectively, and as so in effect,
the "Exchange Act")), are "Beneficial Owners" (as defined in Rule
13d-3 of the Exchange Act) in the aggregate of 10% or more of the
outstanding shares of any class of capital stock of the Corporation,
and any Affiliate or Associate of any such individual, corporation,
partnership or other person or entity. Notwithstanding any provision
of Rule 13d-3 to the contrary, an entity shall be deemed to be the
Beneficial Owner of any share of capital stock of the Corporation that
such entity has the right to acquire at any time pursuant to any
agreement, or upon exercise of conversion rights, warrants or options,
or otherwise.
(c) The term "Substantial Part" shall mean more than 20%
of the fair market value, as determined by two-thirds of the
Continuing Directors, of the total consolidated assets of the
Corporation and its subsidiaries taken as a whole as of the end of its
most recent fiscal year ended prior to the time the determination is
being made.
(d) The term "Other Consideration" shall include,
without limitation, Common Stock or other capital stock of the
Corporation retained by stockholders of the Corporation other than
Related Persons or parties to such Business Combination in the event
of a Business Combination in which the Corporation is the surviving
corporation.
(e) The term "Continuing Director" shall mean a Director
who is unaffiliated with any Related Person and either (i) was a
member of the Board of Directors of the Corporation immediately prior
to the time the Related Person involved in a Business Combination
became a Related Person or (ii) was designated (before his or her
initial election or appointment as Director) as a Continuing Director
by a majority of the then Continuing Directors.
(f) The terms "Highest Per Share Price" and "Highest
Equivalent Price" as used in this Article XIV shall mean the
following: if there is only one class of capital stock of the
Corporation issued and outstanding, the Highest Per Share Price shall
mean the highest price that can be determined to have been paid at any
time by the Related Person for any share or shares of that class of
capital stock. If there is more than one class of capital stock of
the Corporation issued and outstanding, the Highest Equivalent Price
shall mean with respect to each class and series of capital stock of
the Corporation, the amount determined by a majority of the Continuing
Directors, on whatever basis they believe is appropriate, to be the
highest per share price equivalent of the Highest Per Share Price that
can be determined to have been paid at any time by the Related Person
for any share or shares of any class or series of capital stock of the
Corporation. In determining the Highest Per Share Price and Highest
Equivalent Price, all purchases by the Related Person shall be taken
into account regardless of whether the shares were purchased before
or after the Related Person became a Related Person. Also, the
Highest Per Share Price and the Highest Equivalent Price shall include
any brokerage commissions, transfer taxes, soliciting dealers' fees
and other expenses paid by the Related Person with respect to the
shares of capital stock of the Corporation acquired by the Related
Person. In the case of any Business Combination with a Related
Person, the Continuing Directors shall determine the Highest Per Share
Price and the Highest Equivalent Price for each class and series of
capital stock of the Corporation.
(g) The term "Fair Market Value" shall mean (i) in the
case of stock, the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such stock on
the Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the Exchange, on
the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc., Automated Quotation System or any system
then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined
by a two-thirds vote of the Continuing Directors in good faith; and
(ii) in the case of property other than stock or cash, the fair market
value of such property on the date in question as determined by a
two-thirds vote of the Continuing Directors in good faith.
3. The determinations of the Continuing Directors as to Fair
Market Value, Highest Per Share Price, Highest Equivalent Price, and
the existence of a Related Person or a Business Combination shall be
conclusive and binding.
4. Nothing contained in this Article XIV shall be construed
to relieve any Related Person from any fiduciary obligation imposed by
law.
5. The fact that any Business Combination complies with the
provisions of paragraph 1(b) of this Article XIV shall not be
construed to impose any fiduciary duty, obligation or responsibility
on the Board of Directors, or any member thereof, to approve such
Business Combination or recommend its adoption or approval to the
stockholders of the Corporation, nor shall such compliance limit,
prohibit or otherwise restrict in any manner the Board of Directors,
or any member thereof, with respect to evaluations of or actions and
responses taken with respect to such Business Combination.
6. Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation, the affirmative vote
of the holders of not less than eighty percent of the outstanding
shares of capital stock shall be required to amend, alter, change or
repeal, or adopt any provisions inconsistent with, this Article XIV.
The foregoing Restated Articles of Incorporation correctly set
forth without change the corresponding provisions of the Restated
Articles of Incorporation as previously amended and supersede the
Restated Articles of Incorporation as amended.
Dated this 24th day of May, 1991.
QUESTAR CORPORATION
By: /s/R. D. Cash
R. D. CASH
President
By: /s/Connie C. Holbrook
CONNIE C. HOLBROOK
Secretary
State of Utah )
: ss.
County of Salt Lake)
I, Patricia C. Naisbitt, a Notary Public, hereby certify that
on the 24th day of May, 1991, personally appeared before me R. D. CASH
and CONNIE C. HOLBROOK, who each being by me first duly sworn,
declared that they are the President and Secretary, respectively, of
QUESTAR CORPORATION, that they are the persons who signed the
foregoing document and that the statements therein contained are true
and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
24th day of May, 1991.
/s/Patricia C. Naisbitt
NOTARY PUBLIC, Residing in Salt
Lake County, Utah
My Commission Expires: 1-1-93
BYLAWS
of
QUESTAR CORPORATION
A Utah Corporation
OFFICES
SECTION 1. The principal office shall be in Salt Lake City, Salt
Lake County, Utah. The Corporation may also have an office at such
other places as the Board of Directors may from time to time appoint
or the business of the Corporation may require.
SEAL
SECTION 2. The corporate seal shall be inscribed with the name
of the Corporation, the year of its organization, and the words
"Corporate Seal, Utah." The seal may be used by causing it, or a
facsimile thereof, to be impressed, affixed or reproduced.
STOCKHOLDERS' MEETINGS
SECTION 3. All meetings of the stockholders shall be held at the
office of the Corporation in Salt Lake City, Salt Lake County, State
of Utah or any other convenient location within the United States as
the Board of Directors may fix.
SECTION 4. The annual meeting of stockholders shall be held on
the third Tuesday in May in each year if not a legal holiday and if a
legal holiday on the following secular day at 10:00 a.m., local time,
or at such other time as may be fixed in advance when the stockholders
shall elect, by plurality vote, directors equal in number to those
with terms that expire as of the same date and transact such other
business as may properly be brought before the meeting.
SECTION 5. The Board of Directors may direct the calling of
special meetings of the stockholders at such time and place as the
Board may deem necessary.
SECTION 6. Holders of a majority of the stock issued and
outstanding and entitled to vote, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business, except
as otherwise provided by law, by the Articles of Incorporation, or by
these Bylaws. Abstentions, withheld votes, and broker non-votes are
counted for purposes of determining whether a quorum is present. If,
however, such majority shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote,
present in person or by proxy, shall have power to adjourn the
meeting, from time to time, without notice other than announcement at
the meeting, until such requisite amount of voting stock shall be
present. At such adjourned meeting at which the requisite amount of
voting stock shall be represented, any business may be transacted that
might have been transacted at the meeting as originally notified.
SECTION 7. The Secretary shall give, but in case of his failure
any other officer of the Corporation may give, written or printed
notice to the stockholders stating the place, day and hour of each
meeting of stockholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called. Such notice shall be
given not less than ten (10) nor more than fifty (50) days before the
date of the meeting.
SECTION 8. Notice may be given either personally or by mail, and
if given by mail, such notice shall be deemed to be delivered when
deposited in the United States mails addressed to the stockholder at
such address as it appears on the stock transfer books of the
Corporation, with postage prepaid thereon.
SECTION 9. At each meeting of the stockholders, every
stockholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by an instrument in writing, subscribed
by such stockholder and bearing a date not more than eleven months
prior to the meeting, unless the instrument provides for a longer
period. Each stockholder shall have one vote for each share of stock
registered in the stockholder's name on the books of the Corporation
as of the record date set for such meeting. The vote for directors,
and, upon the demand of any stockholder, the vote upon any question
before the meeting, shall be by ballot. All elections shall be had
and all questions decided by a plurality vote, except as otherwise
provided in these Bylaws, the Articles of Incorporation, or applicable
law. For purposes of determining whether a plurality vote, a majority
vote or a supermajority vote (if required by the Bylaws, the Articles
of Incorporation, or applicable law) has been achieved, only votes
cast "for" or "against" are included. Abstentions, withheld votes,
and broker non-votes are not considered votes cast.
SECTION 10. A complete list of stockholders entitled to vote at
the ensuing election shall be prepared and be available for inspection
at the Corporation's principal office by any stockholder beginning two
business days after notice is given of the meeting for which the list
was prepared and continuing throughout the meeting. The list shall be
arranged by voting group and by class or series of shares within each
voting group and be alphabetical within each voting group or class.
The list shall indicate each stockholder's name, address, and number
of voting shares.
A stockholder, directly or through an agent or attorney, has the
right to inspect and copy, at his expense, the list of stockholders
prepared in connection with each meeting of stockholders. The
stockholder must make a written request to examine the list and must
examine it during the Corporation's regular business hours.
SECTION 11. Business transacted at all special meetings of the
stockholders shall be confined to the objects stated in the call and
notice.
SECTION 12. Only proposals properly brought before the
Corporation's annual meeting of stockholders may be considered and
voted upon by stockholders. A proposal shall be properly brought
before the meeting if it is specified in the notice of such meeting
(or any supplement to such notice) mailed by the Corporation to the
stockholders, or if it is otherwise properly brought before the
meeting by or at the direction of the Corporation's Board of
Directors, or if such proposal is otherwise properly brought before
such meeting by a stockholder entitled to vote at such meeting who has
complied with the procedures specified in this section of the
Corporation's Bylaws.
A stockholder desiring to make a proposal before the annual
meeting that is not contained in the notice of such meeting
distributed, by order of the Board of Directors, to the Corporation's
stockholders must give the Corporation advance written notice of such
proposal. The stockholder must give written notice of such proposal
by certified return receipt mail to the Corporation's Secretary. The
notice must be received at the Corporation's principal executive
office not less than ninety days prior to the day of the meeting. The
notice must contain the following information: (a) a brief
description of each matter of business proposed to be brought before
the meeting; (b) the name and address, as they appear on the
Corporation's records, of the stockholder proposing such business; (c)
the number of shares of the Corporation's common stock that are
beneficially owned by the stockholder; and (d) any material interest
of the stockholder in the proposed business. The Chairman of the
annual meeting may refuse to allow any business to be brought before
the meeting if the stockholder seeking to bring the business has not
complied with the procedures specified in this section of the
Corporation's Bylaws.
SECTION 13. At any meeting of stockholders at which directors
are to be elected, nominations of persons for election to the
Corporation's Board of Directors may be made by or at the direction of
the Board of Directors or by any stockholder entitled to vote for the
election of directors at such meeting. Any stockholder proposing to
make such nominations, if other than at the direction of the Board of
Directors, may nominate one or more persons for election as directors
only if written notice of such stockholder's intent to make such
nominations has been given, by certified return receipt mail, to the
Corporation's Secretary at the Corporation's principal executive
office. Such notice must be received by the Corporation not less than
fifty nor more than ninety days prior to the date of the meeting. The
notice must contain the following information: (a) the name and
address, as they appear on the Corporation's books, of the stockholder
making the nomination; (b) the number of shares of the Corporation's
common stock that are beneficially owned by the stockholder; (c) the
name, age, business address, residential address, and principal
occupation or employment of each nominee whom the stockholder intends
to nominate; (d) the number of shares of the Corporation's common
stock beneficially owned by each nominee; (e) a description of all
arrangements and understandings between the stockholder and each
nominee and any other person or persons pursuant to which the
nomination or nominations are to be made by the stockholder; and (f)
such other information concerning each nominee as would be required
under the rules of the Securities and Exchange Commission in a proxy
statement soliciting proxies for the election of such nominees. The
notice must also include a consent, signed by each nominee, to serve
as a director of the Corporation if so elected. The Chairman of the
meeting may refuse to acknowledge the nomination of any person not
made in compliance with the procedures specified in this section of
the Corporation's Bylaws.
SECTION 14. The Chairman of the Board of Directors, or in his
absence, the presiding officer, shall have complete authority to
establish the rules of conduct to be followed at any meeting of
stockholders and to make all decisions concerning procedural issues or
questions raised at any meeting of stockholders; provided, however,
that the Chairman or presiding officer shall not take any action or
make any decision that contravenes applicable state law.
DIRECTORS
SECTION 15. The property and business of this Corporation shall
be managed under the direction of the Board of Directors. The Board
shall consist of thirteen directors. The Board of Directors shall be
divided into three classes, as nearly equal in number as the total
number of directors constituting the entire Board permits, with the
term of office of one class expiring each year. Each class shall hold
office for terms expiring at the third Annual Meeting of Stockholders
following the most recent election of such class and when their
successors are elected and qualified. Notwithstanding any other
provision of the Articles of Incorporation or these Bylaws, any
director, or directors, including the entire Board of Directors, may
be removed, but only for cause and by the affirmative vote of at least
two-thirds of the issued and outstanding stock of the Corporation that
is entitled to vote for the elections of directors, and no
qualification for the office of director that may be provided for in
the Articles of Incorporation or Bylaws shall apply to any director in
office at the time such qualification was adopted or to any successor
appointed by the remaining directors to fill the term of such
director.
SECTION 16. The directors may hold their meetings and have one
or more offices and keep the books of the Corporation outside of Utah
at such places as they may from time to time determine.
SECTION 17. In addition to the powers and authority by these
Bylaws expressly conferred upon them, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute of the State of Utah, or by the
Articles of Incorporation, or by these Bylaws directed or required to
be exercised or done by the stockholders.
COMMITTEES
SECTION 18. The Board of Directors, by resolution or resolutions
passed by a majority of the whole Board, may designate one or more
Committees, one of which Committees shall be known as the Executive
Committee, and with each Committee to consist of two or more of the
directors of the Corporation. To the extent provided in the Articles
of Incorporation, these Bylaws, or resolution, the Committees shall
have and may exercise the powers conferred upon them by the Board of
Directors; provided, however, that the Executive Committee when so
appointed by resolution of the Board of Directors shall have and may
exercise the power of the Board of Directors in the management of the
business and affairs of the Corporation and may have power to
authorize the seal of the Corporation to be affixed to all papers that
may require it. All Committees, except the Executive Committee, when
so appointed, shall have such name or names as may be stated in these
Bylaws or may be determined from time to time by resolutions adopted
by the Board of Directors.
SECTION 19. The Committees shall keep regular minutes for their
proceedings and report the same to the Board of Directors when
required.
COMPENSATION OF DIRECTORS
SECTION 20. Directors, as such, shall not receive any salary for
their services, but the Board of Directors by resolution shall fix the
fees to be allowed and paid to directors, as such, for their services
and provide for the payment of the expenses of the directors incurred
by them in performing their duties. Nothing herein contained,
however, shall be considered to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 21. Fees to members of special or standing committees
and expenses incurred by them in the performance of their duties,
shall also be fixed and allowed by resolution of the Board of
Directors.
MEETINGS OF THE BOARD
SECTION 22. The Board of Directors may meet at the Corporation's
principal office in Salt Lake County, Utah, or at such other place as
may be determined by a majority of the members of the Board.
SECTION 23. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time
be determined by the Board.
SECTION 24. Special meetings of the Board of Directors may be
called by the Chairman of the Board or the President on one day's
notice to each director, with such notice given either in person, by
telephone, or by telegram to the address listed in the corporate
records of the Corporation; special meetings may be called by the
President or Secretary in like manner and on like notice on the
written request of two directors.
SECTION 25. At all meetings of the Board of Directors a majority
of the directors shall be necessary and sufficient to constitute a
quorum for the transaction of business. The act of a majority of the
directors present at any meeting at which there is a quorum shall be
the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Articles of Incorporation, or
by these Bylaws. Directors may participate in a Board meeting and be
counted in the quorum by means of conference telephone or similar
communications equipment by which all directors participating in the
meeting can hear each other.
SECTION 26. Unless the Articles of Incorporation provide
otherwise, any acts required or permitted to be taken by the Board of
Directors at a meeting may be taken without a meeting if all the
directors take the action, each director signs a written consent
describing the action taken, and the consents are filed with the
records of the Corporation. Action taken by consent is effective when
the last director signs the consent, unless the consent specifies a
different effective date. A signed consent has the effect of a
meeting vote and may be described as such in any document.
SECTION 27. The officers of the Corporation shall be elected by
the directors and shall be as stated in the Articles of Incorporation:
a Chairman of the Board of Directors, a President, a Secretary and
Treasurer. The Board of Directors may also appoint one or more Vice
Presidents and other officers as appropriate. The Secretary and
Treasurer may be the same person, and the Chairman of the Board or any
Vice President may hold at the same time the office of Secretary or
Treasurer.
SECTION 28. The Board of Directors at its first meeting after
each annual meeting shall elect a Chairman of the Board of Directors
and a President from their own number; and shall also elect a
Secretary and a Treasurer who need not be members of the Board of
Directors. At such time, the Board of Directors shall also appoint
one or more Vice Presidents.
SECTION 29. The Board of Directors may appoint such other
officers and agents as it may deem necessary; such officers and agents
shall hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time by
the Board.
SECTION 30. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
SECTION 31. The officers of the Corporation shall hold office
until their successors are chosen. Any officer elected or appointed
by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. If
the office of any officer or officers becomes vacant for any reason,
the vacancy shall be filled by the affirmative vote of a majority of
the whole Board of Directors.
CHAIRMAN OF THE BOARD
SECTION 32. The Chairman of the Board of Directors shall preside
at all meetings of the stockholders and of the Board of Directors. He
shall have supervision of such matters as may be designated to him by
the Board of Directors
PRESIDENT
SECTION 33. Unless another officer is so designated by the Board
of Directors, the President shall be the Chief Executive Officer of
the Corporation and shall perform the following duties:
(a) In the absence of the Chairman of the Board, the President
shall preside at all meetings of the stockholders and directors, have
general and active management of the business of the Corporation, and
see that all orders and resolutions of the Board of Directors are
carried into effect.
(b) The President shall execute bonds, mortgages and other
contracts requiring the seal, under the seal of the Corporation.
(c) The President shall have the general powers and duties of
supervision and management usually vested in the office of a president
of a corporation.
If another officer is designated by the Board of Directors as
Chief Executive Officer, the President shall have supervision of such
matters as shall be designated to him by the Board of Directors and/or
the Chief Executive Officer.
VICE PRESIDENT
SECTION 34. The Vice President shall perform the duties
prescribed by the President or the Board of Directors. The Board of
Directors may appoint one or more of the Vice Presidents as Senior
Vice Presidents and one or more as Executive Vice Presidents.
SECRETARY
SECTION 35. (a) The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for the standing Committees when
required. The Secretary shall give or cause to be given notice of all
meetings of the stockholders and of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he shall serve. The
Secretary shall keep in safe custody the seal of the Corporation and
shall affix the seal to any instrument requiring it and shall attest
it.
(b) In the absence or disability of the Secretary, the President
may designate an employee to serve as Assistant Secretary to perform
the responsibilities prescribed in the Bylaws for the Secretary.
TREASURER
SECTION 36. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
account of receipts and disbursements in moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the President and directors at the regular meeting
of the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
Corporation.
(b) The President may designate an employee to serve as
Assistant Treasurer to assist the Treasurer perform his
responsibilities. In the absence or disability of the Treasurer, the
Assistant Treasurer shall perform the responsibilities prescribed in
the Bylaws for the Treasurer.
VACANCIES
SECTION 37. If the office of any director or directors becomes
vacant by reason of the death, resignation, disqualification, removal
from office, or otherwise, the remaining directors, though not less
than a quorum, shall choose a successor or successors who shall hold
office for the remaining portion of the term or terms of the office
left vacant until the successor or successors shall have been duly
elected, unless sooner displaced.
DUTIES OF OFFICERS MAY BE DELEGATED
SECTION 38. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may
deem sufficient, the Board may delegate, for the time being, the power
or duties, or any of them, of such officer to any other officer, or to
any director, provided a majority of the entire Board concur therein.
CERTIFICATES OF STOCK
SECTION 39. The certificates of stock of the Corporation shall
be numbered and shall be entered in the books of the Corporation as
they are issued. Every holder of stock shall be entitled to have a
certificate signed by or in the name of the Corporation by the
President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him; provided,
however, that where such certificate is signed by a transfer agent or
an assistant transfer agent or by a transfer clerk, acting in behalf
of the Corporation, and a registrar, the signature of any such
President, Vice President, Treasurer, Assistant Treasurer, Secretary
or Assistant Secretary, may be facsimile. In case any officer or
officers, who shall have signed or whose facsimile signature or
signatures shall have been used on any such certificate or
certificates, shall cease to be such officer or officers of such
Corporation, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be
adopted by the Corporation and be issued and delivered as though the
person or persons, who signed such certificate or certificates or
whose facsimile signatures shall have been used thereon, had not
ceased to be such officer or officers of the Corporation.
TRANSFER OF STOCK
SECTION 40. Transfers of stock shall be made on the books of the
Corporation only by the person named in the certificate, or by an
attorney, lawfully constituted in writing, and upon surrender of the
certificate therefor, and upon the payment of any transfer tax or
transfer fees which may be imposed by law or by the Board of
Directors.
CLOSING OF TRANSFER BOOKS
SECTION 41. The Board of Directors shall have power to close the
stock transfer books of the Corporation for a period not exceeding
fifty (50) days preceding the date of any meeting of stockholders, or
the date for payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion, or exchange of
capital stock shall go into effect, or for a period of not exceeding
fifty (50) days in connection with obtaining the consent of
stockholders for any purpose. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date not exceeding
fifty (50) days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for the
allotment of rights or the date when any change or conversion, or
exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of and to vote at
any such meeting, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion, or exchange of capital stock.
If a record date is fixed by the Board of Directors, only stockholders
as of the record date shall be entitled to notice of and to vote at
any meeting or to receive payment of dividend or to receive an
allotment of rights, notwithstanding any
transfer of stock on the books of the Corporation after any such
record date.
REGISTERED STOCKHOLDERS
SECTION 42. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact
and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any person, whether
or not it shall have express or other notice thereof, except as
expressly provided by the laws of the State of Utah.
LOST CERTIFICATE
SECTION 43. When authorized by the Secretary of the Corporation
in writing, the duly appointed stock transfer agency may issue and the
duly appointed registrar may register, new or duplicate stock
certificates to replace lost, stolen, or destroyed certificates of the
same tenor and for the same number of shares as those alleged to be
lost, stolen, or destroyed, upon delivery to the Corporation in each
case of an affidavit of loss and indemnity bond acceptable to the
Secretary; but the Board of Directors may authorize the issuance of
new or duplicate stock certificates without requiring an indemnity
bond when in its judgment it is proper so to do.
INSPECTION OF BOOKS
SECTION 44. The Corporation shall maintain permanent records of
the minutes of all meetings of its stockholders and Board of
Directors; all actions taken by the stockholders or Board of Directors
without a meeting; and all actions taken by a Committee of the Board
of Directors in place of the Board of Directors on behalf of the
Corporation. The Corporation shall also maintain appropriate
accounting records.
A stockholder of the Corporation, directly or through an agent or
attorney, shall have the limited rights to inspect and copy the
Corporation's records as provided under applicable state law and upon
complying with the procedures specified under such law.
BANK ACCOUNTS
SECTION 45. All checks, demands for money, or other transactions
involving the Corporation's bank accounts shall be signed by such
officers or other responsible persons as the Board of Directors may
designate. No third party is allowed access to the Corporation's bank
accounts without express written authorization by the Board of
Directors.
FISCAL YEAR
SECTION 46. The fiscal year shall begin the first day of January
in each year.
DIVIDENDS
SECTION 47. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Articles of Incorporation and the
laws of the State of Utah, if any, may be declared by the Board of
Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the
capital stock.
Before payment of any dividend there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as
the Board of Directors, in their sole discretion, think proper as a
reserve fund to meet contingencies or for equalizing dividends, or for
repairing or maintaining property of the Corporation, or for such
other purposes as the Board of Directors shall think conducive to the
interests of the Corporation.
ANNUAL STATEMENT
SECTION 48. The Chairman of the Board of Directors or any other
director so designated by the Board of Directors shall present at each
Annual Meeting of Stockholders, and when called for by vote of the
stockholders at any special meeting of the stockholders, a full and
clear statement of the business and condition of the Corporation.
NOTICE
SECTION 49. Whenever, under the provisions of the Articles of
Incorporation or the laws of the State of Utah, notice is required to
be given to any director, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in
writing, by mail, by depositing the same in the post office or letter
box in a postpaid, sealed envelope, addressed to such stockholder,
officer or director, at such address as appears on the books of the
Corporation, or in default of other address, to such director, officer
or stockholder, at the general post office in the Salt Lake City,
Utah, and such notice shall be deemed to be given at the time when the
same shall be thus mailed. Notice may be published as provided in the
Articles of Incorporation in lieu of mailing notice.
Any stockholder, director or officer may waive any notice
required to be given under these Bylaws or the Articles of
Incorporation.
AMENDMENTS
SECTION 50. These Bylaws may be amended by a majority vote of
the Directors. These Bylaws may be also amended by the affirmative
vote of a majority of the stock issued and outstanding and entitled to
vote at any special or regular meeting of the stockholders if notice
of the proposed amendment be contained in the minutes of the meeting.
Provided, however, that in addition to any vote required by any other
provision of these Bylaws, the Articles of Incorporation, or any
applicable law, if such amendment is to be adopted solely by the
stockholders, the affirmative vote of eighty percent of the issued and
outstanding stock of the Corporation that is entitled to vote for the
election of directors shall be required for any amendment that deletes
or changes Section 15 or this Section 50 of these Bylaws; that
restricts or limits the powers of the Board of Directors or any other
officers or agents of the Corporation; that vests any powers of the
Corporation in any officer or agent other than the Board of Directors,
or officers and agents appointed by the Board of Directors, or
officers and agents appointed by officers or agents appointed by the
Board of Directors; that requires the approval of any stockholders or
any other person or entity in order for the Board of Directors or any
other corporate officer or agent to take any action; or that changes
the quorum requirement for any meeting of the Board of Directors, the
vote by which it must act in connection with any matter, the manner of
calling or conducting meetings of directors, or the place of such
meeting.
INDEMNIFICATION AND LIABILITY INSURANCE
SECTION 51. (a) Voluntary Indemnification. Unless otherwise
provided in the Articles of Incorporation, the Corporation shall
indemnify any individual made a party to a proceeding because he is or
was a director of the Corporation, against liability incurred in the
proceeding, but only if the Corporation has authorized the payment in
accordance with the applicable statutory provisions [Sections
16-10a-902 and 16-10a-904 of Utah's Revised Business Corporation Act]
and a determination has been made in accordance with the procedures
set forth in such provision that the director conducted himself in
good faith; that he reasonably believed that his conduct, if in his
official capacity with the Corporation, was in its best interests and
that his conduct, in all other cases, was at least not opposed to the
Corporation's best interests; and that he had no reasonable cause to
believe his conduct was unlawful in the case of any criminal
proceeding.
(b) The Corporation shall not indemnify a director in connection
with a proceeding by or in the right of the Corporation in which the
director was adjudged liable to the Corporation or in connection with
any other proceeding charging improper personal benefit to him,
whether or not involving action in his official capacity, in which he
was adjudged liable on the basis that personal benefit was improperly
received by him.
(c) Indemnification permitted under Paragraph (a) in connection
with a proceeding by or in the right of the Corporation is limited to
reasonable expenses incurred in connection with the proceeding.
(d) If a determination is made, using the procedures set forth
in the applicable statutory provision, that the director has satisfied
the requirements listed herein and if an authorization of payment is
made, using the procedures and standards set forth in the applicable
statutory provision, then, unless otherwise provided in the
Corporation's Articles of Incorporation, the Corporation shall pay for
or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding in advance of the final disposition of the
proceeding if the director furnishes the Corporation a written
affirmation of his good faith belief that he has satisfied the
standard of conduct described in this Section, furnishes the
Corporation a written undertaking, executed personally or on his
behalf, to repay the advance if it is ultimately determined that he
did not meet the standard of conduct (which undertaking must be an
unlimited general obligation of the director, but need not be secured
and may be accepted without reference to financial ability to make
repayment); and if a determination is made that the facts then known
of those making the determination would not preclude indemnification
under this Section.
(e) Mandatory Indemnification. Unless otherwise provided in the
Corporation's Articles of Incorporation, the Corporation shall
indemnify a director or officer of the Corporation who was wholly
successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director or
officer of the Corporation against reasonable expenses incurred by him
in connection with the proceeding.
(f) Court-Ordered Indemnification. Unless otherwise provided in
the Corporation's Articles of Incorporation, a director or officer of
the Corporation who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. The court may order indemnification
if it determines that the director or officer is entitled to mandatory
indemnification as provided in this Section and applicable law, in
which case the court shall also order the Corporation to pay the
reasonable expenses incurred by the director or officer to obtain
court-ordered indemnification. The court may also order
indemnification if it determines that the director or officer is
fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director or officer met the
applicable standard of conduct set forth in this Section and
applicable law. Any indemnification with respect to any proceeding in
which liability has been adjudged in the circumstances described in
Paragraph (b) above is limited to reasonable expenses.
(g) Unless otherwise provided in the Corporation's Articles of
Incorporation, an officer, employee, or agent of the Corporation shall
have the same indemnification rights provided to a director by this
Section. The Board of Directors may also indemnify and advance
expenses to any officer, employee, or agent of the Corporation, to any
extent consistent with public policy as determined by the general or
specific purpose of the Board of Directors.
(h) Insurance. The Corporation may purchase and maintain
liability insurance on behalf of a person who is or was a director,
officer, employee, fiduciary, or agent or the Corporation, or who,
while serving as a director, officer, employee, fiduciary, or agent of
the Corporation, is or was serving at the request of the Corporation
as a director, officer, partner, trustee, employee, fiduciary or agent
of another foreign or domestic corporation, other person, of an
employee benefit plan, or incurred by him in that capacity or arising
from his status as a director, officer, employee, fiduciary, or agent,
whether or not the Corporation has the power to indemnify him against
the same liability under applicable law.
QUESTAR CORPORATION
ANNUAL MANAGEMENT INCENTIVE PLAN
(As amended and restated effective May 19, 1998)
Paragraph 1. Name. The name of this Plan is the Questar
Corporation Annual Management Incentive Plan (the Plan).
Paragraph 2. Purpose. The purpose of the Plan is to provide
an incentive to officers and key employees of Questar Corporation (the
Company) for the accomplishment of major organizational and individual
objectives designed to further the efficiency, profitability, and growth
of the Company.
Paragraph 3. Administration. The Management Performance
Committee (Committee) of the Board of Directors shall have full power
and authority to interpret and administer the Plan. Such Committee
shall consist of no less than three disinterested members of the Board
of Directors.
Paragraph 4. Participation. Within 60 days after the
beginning of each year, the Committee shall nominate Participants from
the officers and key employees for such year. The Committee shall also
establish a target bonus for the year for each Participant expressed as
a percentage of base salary or specified portion of base salary.
Participants shall be notified of their selection and their target bonus
as soon as practicable.
Paragraph 5. Determination of Performance Objectives.
Within 60 days after the beginning of each year, the Committee shall
establish target, minimum, and maximum performance objectives for the
Company and for its major operating subsidiaries and shall determine the
manner in which the target bonus is allocated among the performance
objectives. The Committee shall also recommend a dollar maximum for
payments to Participants for any Plan year. The Board of Directors
shall take action concerning the recommended dollar maximum within 60
days after the beginning of the Plan year. Participants shall be
notified of the performance objectives as soon as practicable once such
objectives have been established.
Paragraph 6. Determination and Distribution of Awards. As
soon as practicable, but in no event more than 90 days after the close
of each year during which the Plan is in effect, the Committee shall
compute incentive awards for eligible participants in such amounts as
the members deem fair and equitable, giving consideration to the degree
to which the Participant's performance has contributed to the
performance of the Company and its affiliated companies and using the
target bonuses and performance objectives previously specified.
Aggregate awards calculated under the Plan shall not exceed the maximum
limits approved by the Board of Directors for the year involved. To be
eligible to receive a payment, the Participant must be actively employed
by the Company or an affiliate as of the date of distribution except as
provided in Paragraph 8.
Amounts shall be paid (less appropriate withholding taxes and
FICA deductions) according to the following schedule:
Award Distribution Schedule
Percent of
Award Date
Initial Award 75% As soon as possible after initial
award is (First Year of determined
Participation)
25 One year after initial award is
determined
100%
Subsequent Awards 50% As soon as possible after award is
determined
25 One year after award is determined
25 Two years after award is
determined
100%
Paragraph 7. Restricted Stock in Lieu of Cash. For 1992 and
subsequent years, participants who have a target bonus of $10,000 or
higher shall be paid all deferred portions of such bonus with restricted
shares of the Company's common stock under the Company's Long-Term Stock
Incentive Plan. Such stock shall be granted to the participant when the
initial award is determined, but shall vest free of restrictions
according to the schedule specified above in Paragraph 6.
Paragraph 8. Termination of Employment.
(a) In the event a Participant ceases to be an employee
during a year by reason of death, disability or approved retirement, an
award, if any, determined in accordance with Paragraph 6 for the year of
such event, shall be reduced to reflect partial participation by
multiplying the award by a fraction equal to the months of participation
during the applicable year through the date of termination rounded up to
whole months divided by 12.
For the purpose of this Plan, approved retirement shall mean
any termination of service on or after age 60, or, with approval of the
Board of Directors, early retirement under the Company's qualified
retirement plan. For the purpose of this Plan, disability shall mean
any termination of service that results in payments under the Company's
long-term disability plan.
The entire amount of any award that is determined after the
death of a Participant shall be paid in accordance with the terms of
Paragraph 11.
In the event of termination of employment due to disability
or approved retirement, a Participant shall be paid the undistributed
portion of any prior awards in his final paycheck or in accordance with
the terms of elections to voluntarily defer receipt of awards earned
prior to February 12, 1991, or deferred under the terms of the Company's
Deferred Compensation Plan. In the event of termination due to
disability or approved retirement, any shares of common stock previously
credited to a Participant shall be distributed free of restrictions
during the last month of employment. The current market value (defined
as the closing price for the stock on the New York Stock Exchange on the
date in question) of such shares shall be included in the Participant's
final paycheck. Such Participant shall be paid the full amount of any
award (adjusted for partial participation) declared subsequent to the
date of such termination within 30 days of the date of declaration. Any
partial payments shall be made in cash.
(b) In the event a Participant ceases to be an employee
during a year by reason of a change in control, he shall be entitled to
receive all amounts deferred by him prior to February 12, 1991, and all
undistributed portions for prior Plan years. He shall also be entitled
to an award for the year of such event as if he had been an employee
throughout such year. The entire amount of any award for such year
shall be paid in a lump sum within 60 days after the end of the year in
question. Such amounts shall be paid in cash.
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
ChaseMellon Shareholder Services L.L.C. ("Rights Agreement")) is or
becomes the beneficial owner (as such term is used in Rule 13d-3 under
the Securities Exchange Act of 1934) of securities of the Company
representing 25 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors ("Board") and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of at
least two-thirds of the directors then still in office who either were
directors on May 19, 1998, or whose appointment, election or nomination
for election was previously so approved or recommended; or (iii) the
Company's stockholders approve a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation that would result in
the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 60 percent of the
combined voting power of the securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or
consolidation, or a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25 percent or more of the
combined voting power of the Company's then outstanding securities; or
(iv) the Company's stockholders approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for
the sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at least
60 percent of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such
sale. A Change in Control, however, shall not be considered to have
occurred until all conditions precedent to the transaction, including
but not limited to, all required regulatory approvals have been
obtained.
Paragraph 9. Interest on Previously Deferred Amounts.
Amounts voluntarily deferred prior to February 12, 1991, shall be
credited with interest from the date the payment was first available in
cash to the date of actual payment. Such interest shall be calculated
at a monthly rate using the typical rates paid by major banks on new
issues of negotiable Certificates of Deposit in the amounts of
$1,000,000 or more for one year as quoted in The Wall Street Journal on
the first day of the relevant calendar month or the next preceding
business day if the first day of the month is a non-business day.
Paragraph 10. Coordination with Deferred Compensation Plan.
Some Participants are entitled to defer the receipt of their cash
bonuses under the terms of the Company's Deferred Compensation Plan,
which became effective November 1, 1993. Any cash bonuses deferred
pursuant to the Deferred Compensation Plan shall be accounted for and
distributed according to the terms of such plan and the choices made by
the Participant.
Paragraph 11. Death and Beneficiary Designation. In the
event of the death of a Participant, any undistributed portions of prior
awards shall become payable. Amounts previously deferred by the
Participant, together with credited interest to the date of death, shall
also become payable. Each Participant shall designate a beneficiary to
receive any amounts that become payable after death under this Paragraph
or Paragraph 8. In the event that no valid beneficiary designation
exists at death, all amounts due shall be paid as a lump sum to the
estate of the Participant. Any shares of restricted stock previously
credited to the Participant shall be distributed to the Participant's
beneficiary or, in the absence of a valid beneficiary designation, to
the Participant's estate, at the same time any cash is paid.
Paragraph 12. Amendment of Plan. The Company's Board of
Directors, at any time, may amend, modify, suspend, or terminate the
Plan, but such action shall not affect the awards and the payment of
such awards for any prior years. The Company's Board of Directors
cannot terminate the Plan in any year in which a change of control has
occurred without the written consent of the Participants. The Plan
shall be deemed suspended for any year for which the Board of Directors
has not fixed a maximum dollar amount available for award.
Paragraph 13. Nonassignability. No right or interest of any
Participant under this Plan shall be assignable or transferable in whole
or in part, either directly or by operation of law or otherwise,
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy, or in any other manner, and no right or
interest of any Participant under the Plan shall be liable for, or
subject to, any obligation or liability of such Participant. Any
assignment, transfer, or other act in violation of this provision shall
be void.
Paragraph 14. Effective Date of the Plan. The Plan shall be
effective with respect to the fiscal year beginning January 1, 1984, and
shall remain in effect until it is suspended or terminated as provided
by Paragraph 12.
QUESTAR CORPORATION
EXECUTIVE INCENTIVE RETIREMENT PLAN
(As Amended and Restated effective May 19, 1998)
1. PURPOSE
The Executive Incentive Retirement Plan (hereinafter referred to
as the Plan) is intended to enable Questar Corporation and its
subsidiaries to meet competition and to attract and retain key
management personnel by helping such individuals to maintain their
standards of living at retirement and providing for their families in
the event of their death.
2. DEFINITIONS
Unless otherwise required by the context, the terms used herein
shall have the meanings set forth below.
"Board" shall mean the Board of Directors of Questar Corporation.
"Company" shall mean Questar Corporation and any other
organization controlled by or controlling Questar Corporation, or any
successor thereto.
"Compensation" of a Nominee shall mean the total base salary paid
to the Nominee by the Company and all Participating Corporations, but
excluding any other forms of additional compensation such as bonuses,
contributions made to or under any form of employee benefit program,
or ordinary income recognized as a result of exercising stock options.
Compensation shall include any base salary deferred by the Nominee
under the Company's tax-qualified plans or nonqualified plans and any
base salary reductions under the Company's Cafeteria Plan.
Compensation during a period of leave of absence approved by the Board
shall be assumed to be equal to the Nominee's full time earnings
immediately prior to such leave.
"Dependent" shall mean the unmarried natural or adopted child of
the Nominee prior to the attainment of age 18 by such child, provided
such child is a dependent of such Nominee as defined by the Internal
Revenue Service at the time of death of the Nominee.
"Family Protection Benefit" shall mean the benefit payments
defined in Section 7 of this Plan.
"Final Average Earnings" shall mean the highest average annual
Compensation paid to the Nominee during any period of 72 consecutive
semi-monthly pay periods of employment with the Company and/or any
Participating Corporation.
"Nominee" shall mean an employee nominated for participation in
the Plan who agrees to participate by signing an agreement.
"Participating Corporation" shall mean an organization
participating in the Plan in accordance with the provisions of Section
3.
"Participating Service Units" shall mean a measure of employment
with the Company determined as follows: each Nominee shall be
credited with a total of 100 Participating Service Units for each full
calendar year of employment, disability leave, or approved absence
with the Company and/or any Participating Corporation (prorated for
any calendar year in which such Nominee has less than a full calendar
year of employment, disability leave, or approved absence).
"Regular Retirement Plan" shall mean any retirement plan
maintained by the Company that qualifies as a defined benefit plan
under the terms of ERISA.
"Retirement Benefits" shall mean the benefit payments defined in
Section 5 and Section 6 of the Plan.
"Spouse" shall mean the person to whom the Nominee is legally
married continuously for one year immediately prior to the date of the
Nominee's death if death occurs prior to the Nominee's retirement or
continuously for one year immediately prior to the Nominee's
retirement date if the Nominee's death occurs after retirement. The
term spouse shall not include any person from whom the Nominee is
divorced after his/her retirement.
3. PARTICIPATING CORPORATIONS
The benefits provided to Nominees and their families by the Plan
depend upon the employment and compensation histories of the Nominees.
The Plan will recognize all employment with the Company including
periods of employment with a predecessor organization immediately
prior to the acquisition of control of such organization by the
Company.
Compensation paid directly by the Company to the Nominee will be
recognized for the purpose of determining the benefit payable under
this Plan. The amount of Compensation paid by any other organization
affiliated with the Company will be recognized only if the Company's
Board designates such organization as an eligible Participating
Corporation, and the Board of Directors of such designated
organization adopts a resolution agreeing to participate under the
terms of the Plan. A Participating Corporation may revoke future
participation at any time, except, however, that such revocation shall
not deprive any Nominee, Spouse, or Dependent of benefits that such
Nominee, Spouse or Dependent is then eligible to receive.
The benefits payable to any Nominee or to the Nominee's family
that depend upon amounts of Compensation paid by two or more
Participating Corporations shall be allocated among them.
The Company may provide a funding source for benefits payable
under the Plan by purchasing insurance policies on the lives of
Nominees. The premiums, cash values, loans and interest of any policy
on the life of a Nominee whose benefits depend upon Compensation paid
by two or more organizations will be allocated among the Participating
Corporations.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in this Plan shall be limited to those key
executive employees of the Company or its affiliates nominated prior
to June 20, 1986, by the Company's Board or the Board of Directors of
a Participating Corporation. To become eligible for Retirement
Benefits under the Plan, a Nominee must have continued in the
employment of the Company until completion of 15 years of service or
the attainment of age 65, whichever first occurs. Any Nominee who
reaches age 65 or who has a total of 15 years of service with the
Company (counting no single annual period of service more than once)
and who is at such time a Nominee of more than one Participating
Corporation, shall be eligible for Retirement Benefits as herein
provided from all Participating Corporations having nominated such
employee.
The Company may impose such other terms and conditions as it
shall deem to be desirable including but not limited to an agreement
that the Nominee shall consult upon the request of the Company
following retirement and shall not disclose any trade secrets or other
confidential information and shall engage in no competitive business
activities, directly or indirectly, after retirement.
All Nominees who elect to participate must sign an agreement and
consent to insurance being issued upon their lives to be paid for by
the Company and with the Company as beneficiary and agree to terms and
conditions above specified. Such agreements shall not constitute an
employment contract, and the Company may dismiss or demote such
Nominee as an officer at any time. The Nominee may voluntarily
terminate employment as an officer at any time. A Nominee who ceases
to serve as an officer shall be terminated from this Plan and shall
forfeit all benefit rights under this Plan unless the Nominee has
satisfied the eligibility requirements as hereinafter provided prior
to the date on which service as an officer ends.
5. RETIREMENT BENEFITS
A Nominee who becomes eligible for retirement benefits under the
Company's Regular Retirement Plan shall be eligible to commence
Retirement Benefits under this Plan. Except as set forth in Section
6, the first payment of Retirement Benefits will be due on the first
day of the month following retirement under the provisions of a
Regular Retirement Plan, and payments will continue on the first of
each month thereafter so long as the Nominee is alive.
A Nominee who is not eligible to receive benefits under the
Company's Regular Retirement Plan may receive Retirement Benefits
under this Plan if declared eligible to receive such benefits by the
Board of Directors.
A Nominee may elect to waive any Retirement Benefits payable
under the terms of this Plan to the extent that such benefits would be
payable under the Company's make-up Supplemental Executive Retirement
Plan in the absence of the Nominee's participation in this Plan.
The basic annual retirement amount of such a Nominee shall be ten
percent (10%) of the Final Average Earnings of the Nominee.
6. LUMP-SUM ELECTION
A Nominee has a one-time election to receive the present value of
his Retirement Benefit in a lump sum. The Nominee shall make this
election at least one year prior to his retirement. The present value
of the Retirement Benefit shall be calculated using a standard
mortality table referred to as the "83 Group Annuity Mortality Table"
and 80 percent of the six-month average rate for the 30-year Treasury
bonds prior to the Nominee's retirement. When making this election,
the Nominee shall also indicate when the lump-sum payment shall be
made and if it is to be made in more than one installment. The full
amount of any lump-sum payment, together with credited interest, must
be paid within five years of the Nominee's retirement. Any deferred
payouts of lump-sum payments shall be credited with interest
calculated at a monthly rate using the appropriate 30-year Treasury
bond quoted in the Wall Street Journal on the first business day of
each month. (The appropriate 30-year Treasury bond shall be the bond
that has the closest maturity date (by month) preceding the date on
which the interest is to be credited.) Any lump-sum payments that are
not deferred shall be paid on the first business day of the month
following the Nominee's retirement date or as soon thereafter as is
administratively practicable. The Nominee's spouse must consent to
the Nominee's election to receive a lump-sum payment. This consent
must be in writing and must acknowledge the effect of such election.
If the Nominee fails to timely make an election prior to his
retirement, the Nominee shall receive monthly Retirement Benefits.
7. FAMILY PROTECTION BENEFITS
A Family Protection Benefit shall become payable upon the event
that the Nominee dies in the active service of the Company or after
retirement and leaves a surviving Spouse or Dependent.
In the event that the Nominee dies prior to retirement and before
having 25 years of service or satisfying the age and service
requirements for early or normal retirement under the Company's
Regular Retirement Plan, the amount of the Family Protection Benefit
shall be equal to the full benefit calculated in accordance with
Section 5 that would have been payable if the Nominee had been deemed
to have satisfied the eligibility requirements under this Plan as of
the date of death. The first payment will be due on the first day of
the month following the date of death, and payments will continue on
the first day of each month thereafter provided that the Spouse or a
Dependent is alive and, in the case of a Dependent, until such
Dependent has reached his/her 18th birthday.
In the event that the Nominee dies prior to retirement but after
having 25 years of service or satisfying the age and service
requirements for early or normal retirement under the Company's
Regular Retirement Plan, the amount of the Family Protection Benefit
shall be equal to one-half of the benefit calculated in accordance
with Section 5 that would have been payable if the Nominee had been
deemed to have satisfied the eligibility requirements under this Plan
as of the date of death. The first payment will be due on the first
day of the month following the date of death, and payments will
continue on the first day of the month thereafter provided that the
Spouse or a Dependent is alive and, in the case of a Dependent, until
such Dependent has reached his/her 18th birthday.
In the event that the Nominee dies after retirement and did not
elect a lump-sum, the amount of the Family Protection Benefit shall be
equal to one-half of the Nominee's Retirement Benefits under this
Plan. The first payment will be due on the first day of the month
following the date of death and payments will continue on the first of
each month thereafter provided that the Spouse or a Dependent is alive
and, in the case of a Dependent, until such Dependent has reached
his/her 18th birthday.
Family Protection Benefit payments shall be paid in full to the
surviving Spouse or divided equally amongst those Dependents who have
not reached their 18th birthdays in the event that there is no Spouse.
8. ALLOCATION OF BENEFITS
Benefit payments from the Plan attributable to a Nominee will be
allocated to and paid directly by the Company and the Participating
Corporations.
9. FINANCING THE BENEFITS
The Company may enter into life insurance policies on the lives
of the Nominees to protect against the burdens of premature death and
to provide for an orderly financing program. The policies will be
owned by the Company, and the proceeds will be paid to the Company.
The Nominee will have no beneficial interest in any such insurance
policy.
The premium payments, cash values, loans and interest of any
policies on the life of a Nominee for any calendar year will be
allocated among the Participating Corporations.
Proceeds from policies on the lives of Nominees will be allocated
in proportion to the total benefits and premiums paid by and for which
each Participating Corporation is ultimately responsible.
10. PAYMENT OF BENEFITS
Benefits as well as premium payments will be the obligation of
the Company and/or Participating Corporations.
11. ADMINISTRATION
The Management Performance Committee of the Company's Board shall
administer the Plan and may appoint an officer of the Company to
assist the Committee with this responsibility. The Board shall have
the sole responsibility to interpret the Plan and adopt such rules and
regulations for carrying out the Plan as it may deem necessary.
Decisions of the Board shall be final and binding.
12. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all of the business and/or assets of the Company, to
assume and agree to pay any Retirement Benefits in the same manner and
to the same extent that the Company would be required to perform if no
such succession or assignment had taken place.
13. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Nominee or a Nominee may reasonably incur as a result of the Company's
contesting the validity or enforceability of such person's right to
receive benefits under the terms of this Plan following a "Change in
Control" of the Company.
In the event that a Change in Control of the Company occurs and a
Nominee's employment with the Company or its successor(s) terminates,
the Nominee shall receive a full lump-sum payment of his Retirement
Benefits calculated as set forth in Section 6 within 30 days of
his/her termination.
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 ChaseMellon Shareholder Services L.L.C.) 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 25 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors (Board) and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office who
either were directors on May 19, 1998, or whose appointment, election
or nomination for election was previously so approved or recommended;
or (iii) the Company's stockholders approve a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60 percent of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25 percent or more of the combined voting power of the
Company's then outstanding securities; or (iv) the Company's
stockholders approve a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at
least 60 percent of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior
to such sale. A Change in Control, however, shall not be considered
to have occurred until all conditions precedent to the transaction,
including but not limited to, all required regulatory approvals have
been obtained.
14. AMENDMENT OR TERMINATION
The Board may at any time amend, alter, modify or terminate this
Plan; provided, however, that any such action shall not adversely
affect the rights of any current Nominees or their Spouses or
Dependents then eligible to receive benefits under the Plan on the
date of such amendment, alteration, modification or termination.
EXECUTIVE SEVERANCE COMPENSATION PLAN
(As Amended and Restated effective May 19, 1998)
Section 1. Purpose. Questar Corporation and its affiliated
companies (hereinafter collectively referred to as "Questar" or the
"Company") consider the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best
interest of the Company, its shareholders, customers, and other
employees. The Executive Severance Compensation Plan (hereinafter
referred to as the "Plan") is designed to encourage the officers of
the Company and its affiliated companies to continue to dedicate their
full attention and energy to their duties as officers without
distraction from the potentially disturbing circumstances arising from
the possibility of a change in control of Questar.
Section 2. Term of Plan. This Plan was originally adopted on
September 22, 1983, and has been amended and restated several times
since, most recently as of May 19, 1998. The Plan as amended shall be
automatically extended for one-year periods as of January 1 of each
year, unless not later than September 30 of the preceding year, the
Company, through its Board of Directors, shall determine that it does
not wish to extend the Plan; and provided, further, that the Plan
shall continue in effect for a period of 36 months beyond the date on
which a "Change in Control" of the Company, as defined in Section 3,
shall have occurred.
Section 3. Definitions. The terms used in this Plan shall have
the meanings set forth below:
a. "Cause" shall mean the willful and continued failure to
perform employment duties, after a written demand for substantial
performance is made by the Chief Executive Officer of the Successor
Entity or the willful engaging in conduct that is materially injurious
to the Successor Entity. No act or failure to act shall be considered
"willful" unless done or omitted to be done in bad faith and without a
reasonable belief that such action or omission was in the best
interests of the Successor Entity.
b. 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 ChaseMellon Shareholder Services L.L.C. ("Rights Agreement")) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the
Company representing 25 percent or more of the combined voting power
of the Company; or (ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors ("Board") and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds of the directors then still in office
who either were directors on May 19, 1998, or whose appointment,
election or nomination for election was previously so approved or
recommended; or (iii) the Company's stockholders approve a merger or
consolidation of the Company or any direct or indirect subsidiary of
the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least 60 percent of the combined voting power of the
securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or consolidation, or a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no person is or becomes
the beneficial owner, directly or indirectly, of securities of the
Company representing 25 percent or more of the combined voting power
of the Company's then outstanding securities; or (iv) the Company's
stockholders approve a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at
least 60 percent of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior
to such sale. A Change in Control, however, shall not be considered
to have occurred until all conditions precedent to the transaction,
including but not limited to, all required regulatory approvals have
been obtained.
c. "Dependent" shall mean any member of a Participant's
household who is eligible for benefits under specified welfare benefit
plans sponsored by the Company or Successor Entity.
d. "Disability" shall mean termination of employment that
results in payments under the Company's Long-Term Disability Plan or a
similar plan sponsored by Successor Entity.
e. "Participant" shall mean a person who serves as an officer
of the Company and/or its affiliated companies nominated by the Board
of Directors to participate in the Plan who assents to the terms of
the Plan by signing an agreement that incorporates the terms of the
Plan. (A form of the agreement is attached as Appendix A.)
f. "Successor Entity" shall mean the entity existing after the
date of the Change in Control.
g. "Termination of Employment" shall mean involuntary
termination of the responsibilities, status, titles, salary, or
benefits of the respective Participant's employment, within three
years following a Change in Control, or a voluntary termination of the
Participant's employment if made within the "Window Period."
h. "Voluntary Retirement" shall mean voluntary termination of
employment in accordance with the terms of the Company's qualified
Retirement Plan or any retirement arrangement established for the
Participant with his consent.
i. "Window Period" shall mean a thirty-day period that begins
on the first anniversary of a Change in Control.
Section 4. Participation in the Plan. Participation in this
Plan shall be limited to Participants who accept the terms and
conditions of the Plan by signing and returning an agreement that
incorporates the terms of the Plan.
Participation in the Plan is at the discretion of the Board of
Directors of the Company. A Participant may be terminated from the
Plan by action by the Board of Directors taken before the date of any
Change in Control of the Company.
Participants shall be automatically terminated from the Plan upon
death, Disability, Voluntary Retirement, or termination prior to any
Change in Control of the Company.
Section 5. Termination of Employment Following Change in
Control. In the event of any Change in Control of the Company, a
Participant is entitled to receive the compensation and benefits
specified in Sections 9 through 15 upon Termination of Employment,
unless such termination occurs as a result of death, Disability,
Voluntary Retirement, or Cause.
Section 6. Notice of Termination of Employment. To terminate
the employment of a Participant, the Successor Entity shall notify the
Participant, in writing, of Termination of Employment. Such notice
shall be mailed, postage prepaid, to the Participant at the home
address shown on Company records and shall include a statement
concerning the Participant's right to receive the benefits specified
in Sections 9 through 15.
Termination of Employment shall not occur until proper written
notice is given as above provided by the Successor Entity. Until the
Successor Entity provides such notice, a Participant is entitled to be
paid the same compensation and benefits earned prior to the Change in
Control.
To terminate employment during the Window Period, a Participant
shall send a written notice to the Successor Entity at its principal
place of business, which shall constitute an election of the
Participant to receive the benefits specified in Sections 9 through
15.
Section 7. Constructive Termination of Employment. In the event
that the Successor Entity, following a Change in Control, decreases
the base salary, target bonus percentage, or stock option grant (or
the equivalent) earned by or awarded to a Participant as an employee
of the Company prior to a Change in Control and takes such action
without securing the Participant's signed consent, the Successor
Entity shall be deemed to have constructively terminated the
Participant's employment. A constructive termination shall constitute
a Termination of Employment for purposes of the Participant's right to
receive the compensation and benefits specified herein.
Section 8. Termination of Employment for Cause. The Successor
Entity cannot terminate the Participant's employment for Cause unless
the Participant has willfully and continuously failed to perform his
employment duties after receiving a written demand for substantial
performance made by the Chief Executive Officer of the Successor
Entity or unless the Participant has willfully engaged in conduct that
is materially injurious to the Successor Entity after the Change in
Control. For purposes of this Section, no act, or failure to act, by
a Participant shall be deemed "willful" unless done, or omitted to be
done, by a Participant not in good faith and without reasonable belief
that his action or omission was in the best interests of the Successor
Entity. The Successor Entity, through its Board of Directors, must
notify the Participant in writing that the employment is being
terminated for Cause. The Notice of Termination shall include a list
of factual findings to sustain the judgment that the Participant's
employment has been terminated for Cause. After receiving a Notice of
Termination for Cause, the Participant shall have the right to seek
arbitration or legal review of the Successor Entity's determination
that the employment was terminated for Cause and to continue receiving
all salary and benefits in effect prior to receipt of the Notice of
Termination until the conclusion of such arbitration or legal review
proceedings or the expiration of one year from the date of the receipt
of the Notice of Termination, whichever event occurs first.
In the event that arbitration or legal review proceedings do not
uphold the Termination of Employment for Cause, the Participant shall
have the right to receive the benefits specified in Sections 9 through
15, but such benefits shall be reduced by the benefits received during
the pendency of the arbitration or legal review proceedings.
Section 9. Compensation and Benefits.
a. Upon Termination of Employment following a Change in
Control, a Participant is entitled to receive a cash payment equal to
twice the annual salary at the rate in effect for such Participant
immediately prior to the Change in Control. The Participant is also
entitled to receive a cash payment equal to twice the higher of the
average annual amount earned by the Participant under the Annual
Management Incentive Plan ("AMIP") and any other annual incentive
compensation plans maintained by the Company for the three years
preceding a Change in Control or the average annual target amount
specified under such plans for the years in question. (The AMIP is
described in Appendix B to this Plan.) Any Participant whose
employment is terminated at any time after the date of a Change in
Control of the Company is also entitled to receive the amounts
previously awarded or allocated to or earned by him under the AMIP and
any other annual incentive compensation plans then in effect.
Any compensation and benefits payable under the terms of this
Plan shall be payable, in a single lump-sum payment within ten days of
Termination of Employment.
b. Upon Termination of Employment, the Participant is entitled
to receive a pro rata bonus payment under the AMIP and any other
annual incentive compensation plans in effect for the year in which
the Termination of Employment occurred and shall be based on the
portion of such year the Participant was employed. The full amount of
this bonus payment shall be payable in a single lump-sum payment
within 60 days after the end of the year in which his employment
terminated.
Section 10. Deferred Compensation Benefits. Upon ceasing to be
employed by the Successor Entity at any time of a Change in Control of
the Company, a Participant is also entitled to receive the amounts
previously deferred by him under the Company's AMIP, Deferred
Compensation Plan for Directors, Deferred Compensation Plan, Deferred
Share Plan, Deferred Share Make-Up Plan, and other deferred
compensation plans then in effect. (The Company's deferred
compensation plans are described in Appendix B.)
Notwithstanding any other provisions of such deferred
compensation plans, lump-sum distributions of account balances shall
be automatically distributed within 30 days following the Change in
Control.
Section 11. Supplemental Retirement Benefits.
a. Upon Termination of Employment, a Participant who has a
vested right under the Company's Retirement Plan shall be entitled to
receive a supplemental retirement benefit equal to the difference
between the amount payable to him under the terms of the Company's
Retirement Plan and the amount that would have been payable to him had
he been credited with two additional years of service under the
Company's Retirement Plan. Benefits payable hereunder shall be
calculated using the Participant's annual compensation (as the term
"compensation" is defined in the Company's Supplemental Executive
Retirement Plan ("SERP") or Special Situation Retirement Plan
("SERP2") and other supplemental retirement plans then in effect) for
the last full year prior to the Termination of Employment as his
compensation for the additional years of service credited to the
Participant under the terms of this provision. Upon Termination of
Employment, a Participant who does not have a vested right under the
Company's Retirement Plan at such time shall be entitled to receive a
supplemental retirement benefit equal to the amount that would have
been payable to him under the terms of the Company's Retirement Plan
and SERP or SERP2 had he become vested under the terms of such Plans
if he had continued in the Company's employment for the two-year
period of time following his Termination of Employment after the
Change in Control. (The Company's supplemental retirement plans are
described in Appendix B.)
b. Upon Termination of Employment, a Participant who is
entitled to receive supplemental retirement benefits under the terms
of the Company's SERP or SERP2 shall be entitled to receive such
benefits. Benefits payable under the Company's SERP or SERP2 shall be
calculated using the Participant's annual compensation (as the term
compensation is defined in the Company's SERP or SERP2) for the last
full year prior to the Termination of Employment as his compensation
for the two additional years of service credited to the Participant
under the terms of this provision.
c. Any Participant who is a Nominee in the Company's Executive
Incentive Retirement Plan ("EIRP") and who has satisfied the
eligibility requirements contained in the EIRP at the date of a Change
in Control of the Company shall have the right to receive the
retirement benefits specified in the EIRP. The Participant's
surviving spouse and dependent children shall also have the right to
receive the family protection benefits specified in the EIRP in the
event of the Participant's death.
Section 12. Special Lump-Sum Provision. Upon Termination of
Employment, a Participant shall receive a single-installment, lump-sum
payment of supplemental retirement benefits under the EIRP, SERP and
SERP2. The present value of such benefits shall be calculated using a
standard mortality table referred to as the "83 Group Annuity
Mortality Table" and 80 percent of the six-month average rate for the
30-year Treasury bonds (using the six-month period ending prior to the
Participant's Termination of Employment). This lump-sum payment shall
be made within 30 days of a Participant's Termination of Employment.
Section 13. Stock Options and Restricted Stock. Upon a Change
in Control, all stock options and stock appreciation rights granted
under the Company's Long-Term Stock Incentive Plan and its successors
shall vest. A Participant shall have 60 days following a Change in
Control to exercise any vested stock options and stock appreciation
rights, notwithstanding a Termination of Employment, or to receive a
cash payment equal to the value of such vested stock options. Upon a
Change in Control, all shares of restricted stock granted as partial
payment of earned bonuses under the AMIP or other annual incentive
compensation plans adopted by the Company shall immediately vest free
of restrictions and shall be distributed.
Section 14. Miscellaneous Benefits. Upon Termination of
Employment at any period of time within three years from the date of a
Change in Control of the Company, a Participant shall receive (for
himself and his Dependents), at the sole expense of the Successor
Entity, life, disability, accident and health insurance benefits, or a
payment to reimburse for coverage obtained by the Participant,
substantially similar to those received or eligible to be received
prior to Termination of Employment, for a period of six months
following Termination of Employment, unless within such period the
Participant chooses to take Voluntary Retirement, in which event the
Participant will be entitled to receive the same benefits as any
eligible employee choosing to retire prior to the Change in Control.
Section 15. Tax Provision. The benefits payable under the terms
of the Plan (excluding any benefits earned prior to the Termination of
Employment), are collectively referred to as "Severance Payments."
The Severance Payments are designed to be fully deductible under
Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"). However, if any portion of the Severance Payments will be
subject to the excise tax ("Excise Tax") imposed by Section 4999 of
the Code, the Company or Successor Entity shall pay to the Participant
at the time specified in Section 9 an additional estimated amount (the
"Gross-Up Payment") such that the net amount retained by the
Participant, after deduction of any Excise Tax on the Severance
Payments and any federal and state taxes payable on the Gross-Up
Payment, shall be equal to the Severance Payments (adjusted for
applicable federal and state taxes). In the event that the Excise Tax
is subsequently determined to be less than the amount taken into
account at the time of the Participant's Termination of Employment,
the Participant shall repay to the Successor Entity the portion of the
Gross-Up Payment attributable to the Excise Tax and federal and state
income tax imposed on the Gross-Up payment being repaid by the
participant if such repayment results in a reduction in Excise Tax and
federal and state income tax deduction plus interest on the amount of
such repayment at the applicable rate (as defined in Section 174(d) of
the Code). In the event that the Excise Tax is determined to exceed
the amount taken into account at the time of Termination of Employment
(including by reason of any payment that is unknown or undetermined at
the time of the Gross-Up Payment), the Successor Entity shall make an
additional payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of
such excess is finally determined.
Section 16. Binding Agreement. Any and all agreements entered
into pursuant to this Plan with individual officers of the Company
shall be binding upon any Successor Entity as defined above. The
Company will require any Successor Entity to expressly assume and
agree to perform such agreements. Failure of the Company to obtain
such assumption and agreement prior to the effective date of control
by the Successor Entity shall be a breach of the agreement entered
into pursuant to the terms of the Plan and shall entitle Participants
to receive compensation from the Company in the same amount and on the
same terms as they would otherwise be entitled to receive, except that
the day prior to the date upon which the Successor Entity obtains
control shall be deemed the date of Termination of Employment.
Section 17. Miscellaneous.
a. Except as set forth in Section 18, no provisions outlined in
this Plan and the separate agreements entered into pursuant to such
Plan may be modified, waived, or discharged after the date of a Change
in Control unless such waiver, modification, or discharge is agreed to
in writing by the Participant. No waiver by either a Participant or
Successor Entity at any time or any breach of any condition or
provision of this Plan or the separate agreements entered into
pursuant to this Plan shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or
subsequent time.
b. The validity, interpretation, construction and performance
of this Plan and the separate agreements entered into pursuant to such
Plan shall be governed by the laws of the State of Utah.
c. The invalidity or unenforceability of any provision of this
Plan and the separate agreements entered pursuant to such Plan shall
not affect the validity or enforceability of any other provision of
the Plan and the separate agreements, which shall remain in full force
and effect.
d. The Participants are entitled to receive the benefits
specified in Sections 9 through 15 of this Plan in accordance with the
terms of the Plan. Such benefits are not to be construed as
"damages."
e. Upon written request by the Participant, the Successor
Entity shall be obligated to pay the legal fee, and expenses incurred
by any Participant reasonably expended to obtain, protect or enforce
any right or benefit provided by this Plan and the individual
agreements executed pursuant to such Plan. The Successor shall be
obligated to reimburse the Participant for legal fees within 30 days
of receiving the Participant's request for reimbursement.
Section 18. Amendment or Termination of Plan. This Plan and the
individual agreements entered into pursuant to this Plan may be
amended or terminated by action of the Company's Board of Directors
taken prior to a Change in Control of the Company. Notwithstanding
any other provision of the Plan to the contrary, in the event that the
consummation of a Change in Control is contingent on using pooling of
interest accounting methodology, the Board of Directors may take any action
necessary to preserve the use of pooling of interest accounting.
QUESTAR CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
(As Amended and Restated May 19, 1998)
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.
"Family Member" shall mean the Participant's spouse, children,
grandchildren, parents, siblings, nieces and nephews.
"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.
(d) Transferability. Participants are allowed to transfer
vested Nonqualified Stock Options to Family Members or family trusts,
provided that such options were granted as of and after February 10,
1998 and provided that such transfers are made and transferred Options
are exercised in accordance with procedural rules adopted by the
Committee.
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. Any Options transferred to a Family Member or family
trust shall also be terminated as of the Participant's Termination of
Employment for any reason other than Approved Retirement, Disability,
or death.
(2) A Participant who terminates employment as a result of
an Approved Retirement shall have a period of time specified in the
individual agreements by which Options are granted to exercise such
Options or Rights.
(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.
(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. Except as provided in Section 6(d), 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.
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 ChaseMellon Shareholder Services L.L.C. ("Rights Agreement")) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the
Company representing 25 percent or more of the combined voting power
of the Company; or (ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company's stockholders was approved or recommended by a vote of at
least two-thirds of the directors then still in office who either were
directors on May 19, 1998, or whose appointment, election or
nomination for election was previously so approved or recommended; or
(iii) the Company's stockholders approve a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 60 percent of
the combined voting power of the securities of the Company or such
surviving entity or its parent outstanding immediately after such
merger or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
securities; or (iv) the Company's stockholders approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. A
Change in Control, however, shall not be considered to have occurred
until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
QUESTAR CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
(As Amended and Restated May 19, 1998)
1. Purpose of Plan.
The purpose of the Deferred Compensation Plan for Directors
("Plan") is to provide Directors of Questar Corporation (the
"Company") with an opportunity to defer compensation paid to them
for their services as Directors.
2. Eligibility.
Subject to the conditions specified in this Plan or
otherwise set by the Executive Committee of the Company's Board
of Directors, all voting Directors of the Company who receive
compensation for their service as Directors are eligible to
participate in the Plan. Eligible Directors are referred to as
"Directors." Directors who elect to defer receipt of fees or who
have account balances are referred to as "Participants" in this
Plan.
3. Administration.
The Company's Board of Directors shall administer the Plan
and shall have full authority to make such rules and regulations
deemed necessary or desirable to administer the Plan and to
interpret its provisions.
4. Election to Defer Compensation.
(a) Time of Election. A Director can elect to defer future
compensation or to change the nature of his election for future
compensation by submitting a notice prior to the beginning of the
calendar year. A newly elected Director is entitled to make a
choice within five days of the date of his election or
appointment to serve as a Director to defer payment of
compensation for future service. An election shall continue in
effect until the termination of the Participant's service as a
Director or until the end of the calendar year during which the
Director serves written notice of the discontinuance of his
election.
All notices of election, change of election, or
discontinuance of election shall be made on forms prepared by the
Corporate Secretary and shall be dated, signed, and filed with
the Corporate Secretary. A notice of change of election or
discontinuance of election shall operate prospectively from the
beginning of the calendar year, but any compensation deferred
shall continue to be held and shall be paid in accordance with
the notice of election under which it was withheld.
(b) Amount of Deferral. A Participant may elect to defer
receipt of all or a specified portion of the compensation payable
to him for serving as a Director and attending Board and
Committee Meetings as a Director. For purposes of this Plan,
compensation does not include any funds paid to a Director to
reimburse him for expenses or any income recognized by him as a
result of exercising options under the Company's Stock Option
Plan for Directors.
(c) Period of Deferral. When making an election to defer
all or a specified percentage of his compensation, a Participant
shall elect to receive the deferred compensation in a lump sum
payment within 45 days following the end of his service as a
Director or in a number of annual installments (not to exceed
four), the first of which would be payable within 45 days
following the end of his service as a Director with each
subsequent payment payable one year thereafter. Under an
installment payout, the Participant's first installment shall be
equal to a fraction of the balance in his Deferred Compensation
Account as of the last day of the calendar month preceding such
payment, the numerator of which is one and the denominator of
which is the total number of installments selected. The amount
of each subsequent payment shall be a fraction of the balance in
the Participant's Account as of the last day of the calendar
month preceding each subsequent payment, the numerator of which
is one and the denominator of which is the total number of
installments elected minus the number of installments previously
paid. The term "balance," as used herein, refers to the amount
credited to a Participant's Account or to the Fair Market Value
(as defined in Section 5 (a)) of the Phantom Shares of the
Company's Common Stock credited to his Account.
(d) Phantom Stock Option and Certificates of Deposit
Option. When making an election to defer all or a specified
percentage of his compensation, a Participant shall choose
between two methods of determining earnings on the deferred
compensation. He may choose to have such earnings calculated as
if the deferred compensation had been invested in the Company's
Common Stock at the Fair Market Value (as defined in Section 5
(a)) of such stock as of the date such compensation amount would
have otherwise been payable to him ("Phantom Stock Option") or
may choose to have earnings calculated as if the deferred
compensation had been invested in negotiable certificates of
deposit at the time such compensation would otherwise be payable
to him ("Certificates of Deposit Option").
The Participant must choose between the two options for all
of the compensation he elects to defer in any given year. He may
change the option for future compensation by filing the
appropriate notice with the Corporate Secretary before the first
day of each calendar year, but such change shall not affect the
method of determining earnings for any compensation deferred in a
prior year.
5. Deferred Compensation Account.
A Deferred Compensation Account ("Account") shall be
established for each Participant.
(a) Phantom Stock Option Account. If a Participant elects
the Phantom Stock Option, his Account will include the number of
shares and partial shares of the Company's Common Stock (to four
decimals) that could have been purchased on the date such
compensation would have otherwise been payable to him. The
purchase price for such stock is the Fair Market Value of such
stock, i.e., the closing price of such stock as reported on the
Composite Tape of the New York Stock Exchange for such date or
the next preceding day on which sales took place if no sales
occurred on the actual payable date.
The Participant's Account shall also include the dividends
that would have become payable during the deferral period if
actual purchases of Common Stock had been made, with such
dividends treated as if invested in Common Stock as of the
payable date for such dividends.
(b) Certificates of Deposit Option Account. If a
Participant elects the Certificates of Deposit Option, his
Account will be credited with any compensation deferred by the
Participant at the time such compensation would otherwise be
payable and with interest calculated at a monthly rate using the
typical rates paid by major banks on new issues of negotiable
Certificates of Deposit on amounts of $1,000,000 or more for one
year as quoted in The Wall Street Journal under "Money Rates" on
the first day of the relevant calendar month or the next
preceding business day if the first day of the month is a
non-business day. The interest credited to each Account shall be
based on the amount held in the Account at the beginning of each
particular month.
6. Statement of Deferred Compensation Account.
Within 45 days after the end of the calendar year, a
statement will be sent to each Participant listing the balance in
his Account as of the end of the year.
7. Retirement
Upon retirement or resignation as a Director from the Board
of Directors or upon appointment as a non-voting Senior Director,
a Participant shall receive payment of the balance in his Account
in accordance with the terms of his prior instructions and the
terms of the Plan. Upon appointment as a non-voting Senior
Director of the Company, a Participant shall also receive payment
of account balances under any other Deferred Compensation Plans
maintained by the Company's affiliates unless the Participant
serves as a Director of the affiliate maintaining the account
balance.
8. Payment of Deferred Compensation.
(a) Phantom Stock Option. The amount payable to the
Participant choosing the Phantom Stock Option shall be the cash
equivalent of the stock using the Fair Market Value of such stock
on the date of withdrawal.
(b) Certificates of Deposit Option. The amount payable to
the Participant choosing the Certificate of Deposit Option shall
include the interest on all sums credited to the Account, with
such interest credited to the date of withdrawal.
(c) The date of withdrawal for both the Phantom Stock
Option Account and the Certificates of Deposit Option Account
shall be the last day of the calendar month preceding payment or
if payment is made because of death, the date of death.
(d) The payment shall be made in the manner (lump sum or
installment) chosen by the Participant. In the event of a
Participant's death, payment shall be made within 45 days of the
Participant's death to the beneficiary designated by the
Participant or, in the absence of such designation, to the
Participant's estate.
9. Payment, Change in Control
Notwithstanding any other provisions of this Plan or
deferral elections made pursuant to Section 4 of this Plan, a
Director, in the event of a Change in Control of the Company,
shall be entitled to elect a distribtuion of his account balance
within 60 days following the date of a Change in Control.
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 ChaseMellon Shareholder Services L.L.C. ("Rights
Agreement")) is or becomes the beneficial owner (as such term is
used in Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of the Company representing 25 percent or more of the
combined voting power of the Company; or (ii) the following
individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, as of May 19,
1998, constitute the Company's Board of Directors ("Board") and
any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a
vote of at least two-thirds of the directors then still in office
who either were directors on May 19, 1998, or whose appointment,
election or nomination for election was previously so approved or
recommended; or (iii) the Company's stockholders approve a merger
or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other than
a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at
least 60 percent of the combined voting power of the securities
of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person is or becomes
the beneficial owner, directly or indirectly, of securities of
the Company representing 25 percent or more of the combined
voting power of the Company's then outstanding securities; or
(iv) the Company's stockholders approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the
combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior
to such sale. A Change in Control, however, shall not be
considered to have occurred until all conditions precedent to the
transaction, including but not limited to, all required
regulatory approvals have been obtained.
10. Hardship Withdrawal.
Upon petition to and approval by the Executive Committee, a
Participant may withdraw all or a portion of the balance in his
Account in the case of financial hardship in the nature of an
emergency, provided that the amount of such withdrawal cannot
exceed the amount reasonable necessary to meet the financial
hardship. The Executive Committee shall have sole discretion to
determine the circumstances under which such withdrawals are
permitted.
11. Amendment and Termination of Plan
The Plan may be amended, modified or terminated by the
Company's Board of Directors. No amendment, modification, or
termination shall adversely affect a Participant's rights with
respect to amounts accrued in his Account. In the event that the
Plan is terminated, the Board of Directors has the right to make
lump-sum payments of all Account balances on such date as it may
determine.
12. Nonassignability of Plan.
The right of a Participant to receive any unpaid portion of
his Account shall not be assigned, transferred, pledged or
encumbered or be subject in any manner to alienation or
attachment.
13. No Creation of Rights.
Nothing in this Plan shall confer upon any Participant the
right to continue as a Director. The right of a Participant to
receive any unpaid portion of his Account shall be an unsecured
claim against the general assets and will be subordinated to the
general obligations of the Company.
14. Effective Date.
The Plan shall become effective on October 15, 1984, and
shall remain in effect until it is discontinued by action of the
Company's Board of Directors. The Plan was amended and restated
effective May 1, 1991, was amended and restated effective
February 13, 1996, and was further amended and restated effective
May 19, 1998.
QUESTAR CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated effective June 1, 1998)
1. PURPOSE
The Supplemental Executive Retirement Plan is intended to enable
Questar Corporation and its participating affiliates to attract and
retain key management personnel by providing them with supplemental
retirement benefits to compensate them for the limitations imposed by
federal tax laws on benefits payable from the Questar Corporation
Retirement Plan.
2. DEFINITIONS
The following terms, when used herein, shall have the meanings
set forth below, unless a different meaning is plainly required by the
context:
"Board" means the Board of Directors of Questar Corporation or a
successor company.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" means the Management Performance Committee of the
Company's Board.
"Company" means Questar Corporation or any other organization
controlling Questar Corporation or any successor organization.
"Compensation" means a Participant's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Company's cost for any public or private employee benefit plan or any
income recognized by the Participant as a result of exercising stock
options. A Participant's Compensation for any Plan Year shall include
any 401(k) contributions made by the Participant under Questar
Corporation's Employee Investment Plan or other tax-qualified plan,
and any Compensation deferred under the Questar Corporation Deferred
Share Make-Up Plan. An Officer's Compensation also shall include the
amount of any reduction in Compensation for a Plan Year agreed upon
under one or more Compensation reduction agreements entered into
pursuant to the Questar Corporation Cafeteria Plan.
"EIRP" means the Company's Executive Incentive Retirement Plan,
as amended or restated from time to time.
"Participant" means any officer or other highly compensated
manager of the Company and/or its affiliates who has a vested right to
receive benefits under the Company's Retirement Plan, and who has not
deferred any compensation pursuant to the Company's
Deferred Compensation Plan and Deferred Share Plan during the period
covered by his/her Final Average Earnings.
"Participating Corporation" means any company that is affiliated
with the Company and whose employees are covered by the Company's
Retirement Plan or that is affiliated with the Company and receives an
allocation of any employee benefit costs.
"Plan" means the plan set forth in and created by this document.
"Retired Participant" refers to a Participant who has satisfied
the eligibility requirements set forth in Section 4 of this Plan and
who is eligible to receive or who is receiving Supplemental Retirement
Benefits pursuant to the terms of this Plan.
"Retirement Plan" means the Company's Retirement Plan, as amended
or restated from time to time, or any successor plan. If not
otherwise defined, capitalized words or terms used in the Plan shall
have the same definitions used in the Retirement Plan.
"Supplemental Retirement Benefits" means retirement benefits
payable to Retired Participant under the terms of the Plan calculated
as set forth in Section 5 or Section 7.
3. EFFECTIVE DATE
The Plan is effective January 1, 1987. The Company's
Equalization Benefit Plan was merged into the Plan effective May 19,
1998.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in the Plan shall be limited to Participants of the
Company and Participating Corporations. To become eligible for
Supplemental Retirement Benefits under the Plan, a Participant must
have a vested right to receive benefits under the Retirement Plan. A
Retired Participant cannot receive benefits under the Plan during any
period that his monthly benefits from the Retirement Plan are
suspended.
5. SUPPLEMENTAL RETIREMENT BENEFITS
A Participant who satisfies the eligibility requirements
described above shall be eligible to receive Supplemental Retirement
Benefits under the Plan. The first payment of Supplemental Retirement
Benefits will be due on the first day of the month following
retirement, and payments will continue on the first day of each month
thereafter so long as the Retired Participant is alive or so long as
his/her surviving spouse is entitled to receive monthly benefits under
the Retirement Plan. (The Retired Participant's surviving spouse must
have been married to the Participant at date of his/her retirement.)
The monthly Supplemental Retirement Benefit shall equal the
monthly benefit that would have been payable to or on behalf of a
Retired Participant under the Retirement Plan if the limitation on
annual benefits imposed by Section 415 of the Code and if the
limitation on annual compensation as defined in Section 401(a)(17) of
the Code were not applicable, and if the Retired Participant had not
voluntarily chosen to defer any compensation under the terms of the
Questar Corporation Deferred Share Make-Up Plan, less the monthly
benefits payable from the Retirement Plan and the EIRP (if any).
Except as provided in Section 7, the monthly Supplemental
Retirement Benefit payable to or on behalf of the Retired Participant
as determined herein shall be paid in the same form as such Retired
Participant's benefits are payable under the Retirement Plan. Any
monthly Supplemental Retirement Benefits payable to the Retired
Participant's surviving spouse shall be reduced by the monthly
benefits payable to such surviving spouse under the Retirement Plan
and the EIRP (if any).
6. LUMP SUM ELECTION.
A Participant has a one-time election to receive the present
value of his Supplemental Retirement Benefit in a lump sum. The
Participant shall make this election at least one year prior to
retirement. The present value shall be calculated using a standard
mortality table referred to as the "83 Group Annuity Mortality Table"
and 80 percent of the six-month average rate for 30-year Treasury bond
(prior to the Participant's retirement). When making this election,
the Participant shall also indicate when the lump-sum payment shall be
made and if it is to be made in more than one installment. The full
amount of any lump-sum payment, together with credited interest, must
be paid within five years of the Participant's retirement. Any
deferred payouts of lump-sum payments shall be credited with interest
calculated at a monthly rate using the appropriate 30-year Treasury
bond quoted in the Wall Street Journal on the first business day of
each month. (The appropriate 30-year Treasury bond shall be the bond
that has one closest to maturity date (by month) preceding the date on
which the interest is to be credited.) Any lump-sum payments that are
not deferred shall be paid on the first business day of the month
following the Participant's retirement date or as soon thereafter as
is administratively practicable. If the Participant fails to make an
election at least one year prior to retirement, the Participant shall
receive monthly benefits.
Notwithstanding this provision, a Participant who has not been
advised that he may receive Supplemental Retirement Benefits and has
not received an opportunity to make a lump-sum election at least one
year prior to his retirement shall receive any Supplemental Retirement
Benefits in one lump-sum payment. The calculation of this benefit and
the payment of this benefit shall be made in accordance with the
provisions of this Section.
7. FUNDING
The Supplemental Retirement Benefits payable under the Plan shall
be paid by the Company and Participating Corporations out of general
assets. In its discretion, the Board may establish a trust fund or
make other arrangements to assure payment of the Supplemental
Retirement Benefits.
8. ALLOCATION OF COSTS
The cost of Supplemental Retirement Benefits paid to or on behalf
of Retired Participants shall be allocated to and be the
responsibility of the Company and Participating Corporations.
9. ADMINISTRATION
The Committee shall administer the Plan and may appoint an
officer of the Company to assist the Committee with this
responsibility. The Committee shall have the sole responsibility to
interpret the Plan and to adopt such rules and regulations for
carrying out the Plan as it may deem necessary. Decisions of the
Committee shall be final and binding.
10. AMENDMENT OR TERMINATION
The Board may at any time amend, modify, or terminate this Plan;
provided, however, that any Retired Participants or their surviving
spouses receiving Supplemental Retirement Benefits under the Plan at
the date of amendment or termination shall continue receiving such
benefits as if such amendment or termination had not occurred and
provided that any amendment, modification, or termination of the Plan
shall not adversely affect the right of any Participant to receive
benefits earned prior to such action.
11. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all of the business and/or assets of the Company, to
assume and agree to pay any Supplemental Retirement Benefits in the
same manner and to the same extent that the Company would be required
to perform if no such succession or assignment had taken place.
12. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Participant or a Participant may reasonably incur as a result of the
Company's contesting the validity or enforceability of such
participant's right to receive benefits under the terms of this Plan
following a "Change in Control" of the Company.
In the event that a Change in Control of the Company occurs and a
Participant's employment with the Company or its successor(s)
terminates, the Participant shall receive a lump-sum payment of his
Supplemental Retirement Benefits within 30 days of the Participant's
termination. Such benefits shall be calculated as set forth in
Section 6.
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 ChaseMellon Shareholder Services L.L.C.) 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 25 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on May 19, 1998, or
whose appointment, election or nomination for election was previously
so approved or recommended; or (iii) the Company's stockholders
approve a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 60 percent of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
securities; or (iv) the Company's stockholders approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. A
Change in Control, however, shall not be considered to have occurred
until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
QUESTAR CORPORATION
DEFERRED SHARE PLAN
(As Amended and Restated effective May 19, 1998)
Questar Corporation hereby amends and restates this Deferred
Share Plan, effective May 19, 1998. This Plan, which was originally
adopted effective July 1, 1989, is an unfunded plan established for
the exclusive purpose of providing comparable benefits to Employees
who elect to defer compensation under the terms of the Questar
Corporation Deferred Compensation Plan as would be available to them
under the Employee Investment Plan. All of such Employees are select
key management and highly compensated employees.
1. Definitions.
"Affiliated Company" means the Company and any corporation that
is a member of a controlled group of corporations (as defined in Sec.
414(b) of the Code), which includes the Company.
"Beneficiary" means that person or persons who become entitled to
receive payments under the Investment Plan (or successor plan) in the
event of the death of a Participant prior to the distribution of all
benefits to which he is entitled under the such plan.
"Code" means the Internal Revenue Code of 1986 and amendments
thereto. Reference to a section of the Code shall include that
section and any comparable section or sections of any future
legislation that amends, supplements or supersedes said section.
"Common Stock" means common stock of the Company.
"Company" means Questar Corporation, a corporation organized and
existing under the laws of the State of Utah, or its successor or
successors.
"Compensation" means an Employee's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Employer's cost for any public or private employee benefit plan or any
income recognized by the Employee as a result of exercising stock
options. An Employee's Compensation for any Plan Year shall include
any Elective Deferrals of the Employee under the Investment Plan or
other tax-qualified plan and any compensation deferred under the
Questar Corporation Deferred Compensation Plan. An Employee's
Compensation also shall include the amount of any reduction in
Compensation for a Plan Year agreed upon under one or more
Compensation reduction agreements entered into pursuant to the Questar
Corporation Cafeteria Plan.
"Compensation Limit" means the annual amount specified under Code Sec.
401 (a)(17), which dollar amount is $160,000 as of January 1, 1997
and as it may be adjusted in the future.
"Deferred Shares" means those units credited to a Participant's
account as a bookkeeping entry only that represent shares of Common
Stock in which investments are deemed to be made under this Plan.
"Disability" means a condition that renders a Participant unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite
duration. A Participant shall not be considered to be disabled unless
he furnishes proof of the existence of such disability in such form
and manner as may be required by regulations promulgated under Code Sec.
72(m)(7).
"Elective Deferrals" means the pre-tax contributions made to the
Investment Plan or other tax-qualified plan by an Employer on behalf
of a Participant pursuant to a salary reduction agreement entered into
by the Participant under Code Sec. 401(k).
"Employee" means any employee of an Employer who meets the
eligibility criteria set out in Section 4 of this Plan.
"Employer" means the Company and each Affiliated Company that
consents to the adoption of the Plan.
"Fair Market Value" means the closing price of the Company's
common stock as reported on the composite tape of the New York Stock
Exchange for any given valuation date or the next preceding day on
which sales took place if no sales occurred on the actual valuation
date.
"Investment Plan" means the Questar Corporation Employee
Investment Plan, as amended from time to time, or any successor plan.
Such plan is qualified under the provisions of Code Sec. 401(a).
"Participant" means an Employee who has made an election under
Section 6 of this Plan.
"Plan" means the plan set forth in and created by this document
and all subsequent amendments thereto.
"Plan Year" means the fiscal year of the Plan, which shall
coincide with the Company's fiscal year.
Any capitalized term used in this Plan for which no definition is
given shall have the same meaning given such term in the Investment
Plan.
2. Purpose of Plan.
The purpose of the Plan is to provide a benefit to an Employee
approximately equal to the benefit he would have received under the
Investment Plan if the Employee had not elected to defer receipt of
Compensation pursuant to the Deferred Compensation Plan, and the
Employee contributed to the Investment Plan an amount equal to the
amount of Compensation deferred under this Plan.
3. Administration.
The Management Performance Committee of the Company's Board of
Directors shall construe and administer the Plan and shall have full
authority to make such rules and regulations deemed necessary or
desirable to carry out such administration. The Management
Performance Committee may appoint an officer or department to assist
with the administration of the Plan. All interpretations of the Plan
by the Committee shall be final and binding on all parties, including
Participants, Beneficiaries and Employers.
4. Eligibility.
All officers and key managers whose annual Compensation is
expected to exceed $125,000, who participate in the Investment Plan,
and who elect to defer compensation pursuant to the Deferred
Compensation Plan are eligible to participate in the Plan.
5. Election to Defer Compensation and Deemed Investment.
(a) Deferral Election. In order to participate in the Plan
during 1989, an Employee must make an election to defer from 2 to 6
percent of his annual Compensation in excess of the Compensation
Limit. For the first Plan Year, which is a partial Plan Year, such
election must be made at or prior to the effective date of this Plan
and can only be made as to Compensation to be paid for future
services. For all subsequent Plan Years, the election must be made
prior to the first day of the Plan Year in which it is to become
effective and can only be made with respect to Compensation to be paid
for future services. A deferral election, once made, shall remain in
effect for subsequent Plan Years until it is revoked or modified by
the Participant. A Participant can modify or revoke his deferral
election with respect to Compensation to be paid for future services
by submitting a new election or a revocation prior to the beginning of
the Plan Year in which such new deferral election or revocation is to
become effective. All notices of election or revocation shall be made
on forms prepared by the Company's Secretary and shall be dated,
signed, and filed with the Company's Secretary.
(b) Deemed Investment. Any amounts deferred by a Participant
shall be accounted for as if invested in shares of Common Stock
purchased at a price equal to the average price paid for shares of
Common Stock purchased by the trustee of the Investment Plan during
the quarter (prior to January 1, 1996) or month (after such date) in
which the deferrals are made under this Plan. This amount shall be
credited to a Participant's account on a monthly (quarterly prior to
January 1, 1996) basis. In addition, a Participant's account shall be
credited on a quarterly basis with an amount equal to the dividends
that would have become payable during the deferral period if actual
purchases of Common Stock had been made, with such dividends accounted
for as if invested in Common Stock as of the payable date for such
dividends. Any credited shares treated as if they were purchased with
dividends shall be deemed to have been purchased at a price equal to
the average price of shares purchased with reinvested dividends under
the Investment Plan during the quarter in which the deemed purchases
are treated as being made under this Plan. Each share of Common Stock
that is deemed to be purchased under this Paragraph 5(b) shall be
reflected in a Participant's account as a Deferred Share.
6. Matching Allocations.
(a) Amount. A Participant who makes an election under Section 5
is entitled to the same Matching Allocations as are made under the
terms of the Investment Plan. The Matching Allocations are 100
percent for the first 2 percent of contributed Compensation; 75
percent for the second 2 percent; and 50 percent for the last 2
percent.
If there are any Excess ESOP Allocations under the Investment
Plan for a Plan Year, a Participant shall be entitled to an additional
allocation under this Plan if he is employed by an Employer on the
last day of such Plan Year or if his employment terminated during such
Plan Year as a result of an event described in 3.5.1, 3.5.2 or 3.5.3
of the Investment Plan. Such additional allocation, or "Excess ESOP
Allocation," shall be calculated by multiplying the compensation
deferred by the Participant under the Plan during the Plan Year by the
same percentage used for the Excess ESOP Allocation in the Investment
Plan for the comparable year. Any compensation deferred pursuant to
this Plan between January 1, 1998 and the effective date of the
Deferred Share Make-Up Plan that is represented by Deferred Shares
transferred to such plan shall be excluded from the Compensation
deferred pursuant to the terms of this Plan for purposes of
calculating the Excess ESOP Allocation.
The amount of Matching Allocations shall be accounted for as if
invested in shares of Common Stock purchased at a price equal to the
average price paid for shares of Common Stock purchased by the trustee
of the Investment Plan during the month (quarter prior to January 1,
1996) in which Matching Allocations are deemed to be made under this
Plan. Common Stock deemed to have been purchased with Matching
Allocations shall be credited to a Participant's account on a monthly
(quarterly prior to January 1, 1996) basis. The amount of any Excess
ESOP Allocations for a Plan Year shall be accounted for as if invested
in shares of Common Stock purchased at a price equal to the average
price paid for shares of Common Stock purchased by the trustee of the
Investment Plan during the last month (quarter prior to January 1,
1996) of such Plan Year. Common Stock deemed to have been purchased
with Excess ESOP Allocations shall be credited to a Participant's
account as of the last day of the Plan Year to which such Excess ESOP
Allocations relate.
In addition, a Participant's account shall be credited on a
quarterly basis with an amount equal to the dividends that would have
become payable during the deferral period if actual purchases of
Common Stock had been made, with such dividends accounted for as if
invested in Common Stock as of the payable date for such dividends.
Any credited shares treated as if they were purchased with dividends
shall be deemed to have been purchased at a price equal to the average
price paid for shares purchased with reinvested dividends under the
Investment Plan during the quarter in which the deemed purchases are
treated as being made under this Plan. Each share of Common Stock
that is deemed to be purchased under this Section 6 shall be reflected
in the Participant's account as a Deferred Share.
(b) Vesting. A Participant shall be vested in the portion of
his account attributable to Matching Allocations and Excess ESOP
Allocations to the same extent as such Participant is vested in any
Matching Allocations and Excess ESOP Allocations credited to his
account under the Investment Plan.
7. Transfer of Existing Account Balances, Deferred Share Make-Up
Plan.
Any Deferred Shares allocated to a Participant's account balance
under this Plan prior to June 1, 1998, shall be transferred to the
Deferred Share Make-Up Plan as of such date to the extent that such
Deferred Shares are attributable to six percent of Compensation
deferred in excess of the Compensation Limit and can be segregated
from any Deferred Shares attributable to six percent of any
Compensation deferred pursuant to the Company's Deferred Compensation
Plan.
8. Statement of Deferred Share Account.
An annual statement shall be sent to each Participant within 60
days following the end of each year showing for each preceding Plan
Year the Compensation deferred, Matching Allocations, Excess ESOP
Allocations, the total Deferred Shares credited to the Participant's
account, and the number of these Deferred Shares that are attributable
to the Participant's deferred Compensation, to Matching Allocations,
Excess ESOP Allocations, and to reinvested dividends. Such
information shall be shown on a monthly (quarterly prior to January 1,
1996) basis.
9. Payment of Account Balance.
(a) Period of Deferral. When making the first deferral election
under Paragraph (a) of Section 5, a Participant shall elect to receive
all deferred Compensation, Matching Allocations, and Excess ESOP
Allocations either in a lump-sum payment within 45 days following his
death, Disability, or termination of employment or in a number of
annual installments (not to exceed four), the first of which would be
payable within 45 days following his death, Disability or termination
of employment with each subsequent payment payable one year
thereafter. The account balance shall be valued using the Fair Market
Value of the Company's Common Stock on the last day of the calendar
month preceding payment and shall be converted to a cash balance based
upon such Fair Market Value. Under an installment payout, the
Participant's first installment shall be equal to a fraction of the
balance credited to his account as of the last day of the calendar
month preceding such payment, the numerator of which is one and the
denominator of which is the total number of installments selected.
The amount of each subsequent payment shall be a fraction of the
balance in the Participant's account as of the last day of the
calendar month preceding each subsequent payment, the numerator of
which is one and the denominator of which is the total number of
installments elected minus the number of installments previously paid.
(b) Adverse Tax Determination. If there is a determination by
the Internal Revenue Service (IRS) that a Participant should be taxed
on some or all of the amounts allocated to his account prior to the
distribution date(s) elected under Paragraph (a) of this Section 9,
the Participant may elect to have all amounts determined to be
currently taxable paid to him immediately prior to the time he must
pay any taxes owed as a result of such IRS determination.
(c) Change in Control. Notwithstanding any other provision of
this Plan, in the event of a "Change in Control" of the Company, all
Deferred Shares credited to a Participant's account shall be converted
to cash equal in amount to the Fair Market Value of the Deferred
Shares if converted into shares of the Company's Common Stock. The
cash shall be distributed to him within 60 days following the Change
in Control. The account balance shall be valued using the Fair Market
Value of the Company's Common Stock on the last day of the calendar
month preceding payment.
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 ChaseMellon Shareholder Services L.L.C. ("Rights Agreement")) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the
Company representing 25 percent or more of the combined voting power
of the Company; or (ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors ("Board") and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds of the directors then still in office who either
were directors on May 19, 1998, or whose appointment, election or
nomination for election was previously so approved or recommended; or
(iii) the Company's stockholders approve a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 60 percent of
the combined voting power of the securities of the Company or such
surviving entity or its parent outstanding immediately after such
merger or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
securities; or (iv) the Company's stockholders approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. A
Change in Control, however, shall not be considered to have occurred
until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
(d) Method of Payment. All amounts credited to a Participant's
account shall be distributed to him or, in the event of his death, to
his Beneficiary, in cash and in accordance with the election made by
the Participant.
(e) Source of Payments. Each participating Employer will pay
all benefits for its Employees arising under this Plan, out of its
general assets.
10. Amendment and Termination of Plan.
The Plan may be amended, modified or terminated by the Company's
Board of Directors at any time; provided, however, no such amendment,
modification or termination shall be made in the event there is a
Change in Control, as defined in Paragraph (c) of Section 9. In
addition, no amendment, modification, or termination shall reduce any
deferred benefit under the Plan reflected in a Participant's account
prior to the date of such amendment or termination.
11. Non-assignability of Benefits.
To the extent consistent with applicable law, the Participant's
deferred benefits under this Plan shall not be assigned, transferred,
pledged, or encumbered or be subject in any manner to alienation or
attachment.
12. No Creation of Rights.
Nothing in this Plan shall confer upon any Participant the right
to continue as an Employee or to receive annual Compensation in excess
of the Compensation Limit. The right of a Participant to receive a
cash distribution shall be an unsecured claim against the general
assets of his Employer. Nothing contained in this Plan nor any action
taken hereunder shall create, or be construed to create, a trust of
any kind, or a fiduciary relationship between the Company and the
Participants, Beneficiaries, or any other persons. All accounts under
the Plan shall be maintained for bookkeeping purposes only and shall
not represent a claim against specific assets of any Employer.
13. Effective Date.
The Plan, as originally adopted, was effective on July 1, 1989.
The Plan, as most recently amended and restated, is effective May 19,
1998, and shall remain in effect until it is discontinued by action of
the Company's Board of Directors.
QUESTAR CORPORATION
DEFERRED SHARE MAKE-UP PLAN
(Effective May 19, 1998)
Questar Corporation hereby adopts this Deferred Share Make-up
Plan, effective May 19, 1998. This Plan is an unfunded plan
established for the exclusive purpose of providing comparable benefits
to Employees who elect to defer compensation under the terms of the
Questar Corporation Deferred Compensation Plan as would be available
to them under the Employee Investment Plan. All of such Employees are
select key management and highly compensated employees.
1. Definitions.
"Affiliated Company" means the Company and any corporation that
is a member of a controlled group of corporations (as defined in Sec.
414(b) of the Code), which includes the Company.
"Beneficiary" means that person or persons who become entitled to
receive payments under the Investment Plan (or successor plan) in the
event of the death of a Participant prior to the distribution of all
benefits to which he/she is entitled under the such plan.
"Code" means the Internal Revenue Code of 1986 and amendments.
Reference to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.
"Common Stock" means common stock of the Company.
"Company" means Questar Corporation, a corporation organized and
existing under the laws of the State of Utah, or its successor or
successors.
"Compensation" means an Employee's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Employer's cost for any public or private employee benefit plan or any
income recognized by the Employee as a result of exercising stock
options. An Employee's Compensation for any Plan Year shall include
any Elective Deferrals of the Employee under the Investment Plan or
other tax-qualified plan. An Employee's Compensation also shall
include the amount of any reduction in Compensation for a Plan Year
agreed upon under one or more Compensation reduction agreements
entered into pursuant to the Questar Corporation Cafeteria Plan.
"Compensation Limit" means the annual amount specified under Code Sec.
401 (a)(17), which dollar amount is $160,000 as of January 1, 1997
and as it may be adjusted in the future.
"Deferred Shares" means those units credited to a Participant's
account as a bookkeeping entry only that represent shares of Common
Stock in which investments are deemed to be made under this Plan.
"Disability" means a condition that renders a Participant unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and indefinite
duration. A Participant shall not be considered to be disabled unless
he furnishes proof of the existence of such disability in such form
and manner as may be required by regulations promulgated under Code Sec.
72(m)(7).
"Elective Deferrals" means the pre-tax contributions made to the
Investment Plan or other tax-qualified plan by an Employer on behalf
of a Participant pursuant to a salary reduction agreement entered into
by the Participant under Code Sec. 401(k).
"Employee" means any employee of an Employer who meets the
eligibility criteria set out in Section 4 of this Plan.
"Employer" means the Company and each Affiliated Company that
consents to the adoption of the Plan.
"Fair Market Value" means the closing price of the Company's
common stock as reported on the composite tape of the New York Stock
Exchange for any given valuation date or the next preceding day on
which sales took place if no sales occurred on the actual valuation
date.
"Investment Plan" means the Questar Corporation Employee
Investment Plan, as amended from time to time, or any successor plan.
Such plan is qualified under the provisions of Code Sec. 401(a).
"Participant" means an Employee who has made an election under
Section 6 of this Plan.
"Plan" means the plan set forth in and created by this document
and all subsequent amendments thereto.
"Plan Year" means the fiscal year of the Plan, which shall
coincide with the Company's fiscal year.
Any capitalized term used in this Plan for which no definition is
given shall have the same meaning given such term in the Investment
Plan.
2. Purpose of Plan.
The purpose of this make-up Plan is to provide a benefit to an
Employee approximately equal to the benefit he would have received
under the Investment Plan if the Compensation Limit were inapplicable.
3. Administration.
The Management Performance Committee of the Company's Board of
Directors shall construe and administer the Plan and shall have full
authority to make such rules and regulations deemed necessary or
desirable to carry out such administration. The Management
Performance Committee may appoint an officer or department to assist
with the administration of the Plan. All interpretations of the Plan
by the Committee shall be final and binding on all parties, including
Participants, Beneficiaries and Employers.
4. Eligibility.
All officers and key managers whose annual Compensation is
expected to exceed the Compensation Limit and who participate in the
Investment Plan are eligible to participate in the Plan.
5. Transfer of Account Balances, Deferred Share Plan.
Any Deferred Shares allocated to an Employee's account balance
under the Deferred Share Plan prior to June 1, 1998, shall be
transferred to this Plan as of such date to the extent that such
Deferred Shares are attributable to six percent of Compensation
deferred in excess of the Compensation Limit and can be segregated
from any Deferred Shares attributable to six percent of any
Compensation deferred pursuant to the Company's Deferred Compensation
Plan.
6. Election to Defer Compensation and Deemed Investment.
(a) Deferral Election. Any Employee who has previously made an
election to defer Compensation for purposes of the Deferred Share Plan
shall automatically become a Participant in this Plan for 1998 and
subsequent years at such time that his/her Compensation exceeds the
Compensation Ceiling. A deferral election, once made, shall remain in
effect for subsequent Plan Years until it is revoked or modified by
the Participant. A Participant can modify or revoke his/her deferral
election with respect to Compensation to be paid for future services
by submitting a new election or a revocation prior to the beginning of
the Plan Year in which such new deferral election or revocation is to
become effective. All notices of election or revocation shall be made
on forms prepared by the Company's Secretary and shall be dated,
signed, and filed with the Company's Secretary.
(b) Deemed Investment. Any amounts deferred by a Participant
shall be accounted for as if invested in shares of Common Stock
purchased at a price equal to the average price paid for shares of
Common Stock purchased by the trustee of the Investment Plan during
month in which the deferrals are made under this Plan. This amount
shall be credited to a Participant's account on a monthly basis. In
addition, a Participant's account shall be credited on a quarterly
basis with an amount equal to the dividends that would have become
payable during the deferral period if actual purchases of Common Stock
had been made, with such dividends accounted for as if invested in
Common Stock as of the payable date for such dividends. Any credited
shares treated as if they were purchased with dividends shall be
deemed to have been purchased at a price equal to the average price of
shares purchased with reinvested dividends under the Investment Plan
during the quarter in which the deemed purchases are treated as being
made under this Plan. Each share of Common Stock that is deemed to be
purchased under this Paragraph 6(b) shall be reflected in a
Participant's account as a Deferred Share.
7. Matching Allocations.
(a) Amount. A Participant who makes an election under Section 6
is entitled to the same Matching Allocations as are made under the
terms of the Investment Plan. The Matching Allocations are 100
percent for the first 2 percent of contributed Compensation; 75
percent for the second 2 percent; and 50 percent for the last 2
percent.
If there are any Excess ESOP Allocations under the Investment
Plan for a Plan Year, a Participant shall be entitled to an additional
allocation under this Plan if he is employed by an Employer on the
last day of such Plan Year or if his employment terminated during such
Plan Year as a result of an event described in 3.5.1, 3.5.2 or 3.5.3
of the Investment Plan. Such additional allocation shall be
calculated by multiplying the Compensation deferred by the Participant
under the Plan during the Plan Year by the same percentage used for
the Excess ESOP Allocation in the Investment Plan for the comparable
year. Any Compensation deferred pursuant to the Deferred Share Plan
between January 1, 1998 and the effective date of this Plan that is
represented by Deferred Shares transferred to this Plan shall be
included in Compensation deferred pursuant to the terms of this Plan
for purposes of calculating the Excess ESOP Allocation.
The amount of Matching Allocations shall be accounted for as if
invested in shares of Common Stock purchased at a price equal to the
average price paid for shares of Common Stock purchased by the trustee
of the Investment Plan during the month in which Matching Allocations
are deemed to be made under this Plan. Common Stock deemed to have
been purchased with Matching Allocations shall be credited to a
Participant's account on a monthly basis. The amount of any Excess
ESOP Allocations for a Plan Year shall be accounted for as if invested
in shares of Common Stock purchased at a price equal to the average
price paid for shares of Common Stock purchased by the trustee of the
Investment Plan during the last month of such Plan Year. Common Stock
deemed to have been purchased with Excess ESOP Allocations shall be
credited to a Participant's account as of the last day of the Plan
Year to which such Excess ESOP Allocations relate.
In addition, a Participant's account shall be credited on a
quarterly basis with an amount equal to the dividends that would have
become payable during the deferral period if actual purchases of
Common Stock had been made, with such dividends accounted for as if
invested in Common Stock as of the payable date for such dividends.
Any credited shares treated as if they were purchased with dividends
shall be deemed to have been purchased at a price equal to the average
price paid for shares purchased with reinvested dividends under the
Investment Plan during the quarter in which the deemed purchases are
treated as being made under this Plan. Each share of Common Stock
that is deemed to be purchased under this Section 7 shall be reflected
in the Participant's account as a Deferred Share.
(b) Vesting. A Participant shall be vested in the portion of
his account attributable to Matching Allocations and Excess ESOP
Allocations to the same extent as such Participant is vested in any
Matching Allocations and Excess ESOP Allocations credited to his
account under the Investment Plan.
8. Statement of Deferred Share Account.
An annual statement shall be sent to each Participant within 60
days following the end of each year showing for each preceding Plan
Year the Compensation deferred, Matching Allocations, Excess ESOP
Allocations, the total Deferred Shares credited to the Participant's
account, and the number of these Deferred Shares that are attributable
to the Participant's deferred Compensation, to Matching Allocations,
Excess ESOP Allocations, and to reinvested dividends. Such
information shall be shown on a monthly basis.
9. Payment of Account Balance.
(a) Period of Deferral. The Participant's prior deferral
election(s) for the Deferred Share Plan shall be applicable to this
Plan for any amounts transferred to this Plan. When making a first
deferral election under Paragraph (a) of Section 6, a Participant
shall elect to receive all deferred Compensation, Matching
Allocations, and Excess ESOP Allocations either in a lump-sum payment
within 45 days following his death, Disability, or termination of
employment or in a number of annual installments (not to exceed four),
the first of which would be payable within 45 days following his
death, Disability or termination of employment with each subsequent
payment payable one year thereafter. The account balance shall be
valued using the Fair Market Value of the Company's Common Stock on
the last day of the calendar month preceding payment and shall be
converted to a cash balance based upon such Fair Market Value. Under
an installment payout, the Participant's first installment shall be
equal to a fraction of the balance credited to his account as of the
last day of the calendar month preceding such payment, the numerator
of which is one and the denominator of which is the total number of
installments selected. The amount of each subsequent payment shall be
a fraction of the balance in the Participant's account as of the last
day of the calendar month preceding each subsequent payment, the
numerator of which is one and the denominator of which is the total
number of installments elected minus the number of installments
previously paid.
(b) Adverse Tax Determination. If there is a determination by
the Internal Revenue Service (IRS) that a Participant should be taxed
on some or all of the amounts allocated to his account prior to the
distribution date(s) elected under Paragraph (a) of this Section 9,
the Participant may elect to have all amounts determined to be
currently taxable paid to him immediately prior to the time he must
pay any taxes owed as a result of such IRS determination.
(c) Change in Control. Notwithstanding any other provision of
this Plan, in the event of a "Change in Control" of the Company, all
Deferred Shares credited to a Participant's account shall be converted
to cash equal in amount to the Fair Market Value of the Deferred
Shares if converted into shares of the Company's Common Stock. The
cash shall be distributed to him within 60 days following the Change
in Control. The account balance shall be valued using the Fair Market
Value of the Company's Common Stock on the last day of the calendar
month preceding payment.
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 ChaseMellon Shareholder Services L.L.C.) 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 20 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors (Board) and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office who
either were directors on May 19, 1998, or whose appointment, election
or nomination for election was previously so approved or recommended;
or (iii) the Company's stockholders approve a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60 percent of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25 percent or more of the combined voting power of the
Company's then outstanding securities; or (iv) the Company's
stockholders approve a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at
least 60 percent of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior
to such sale. A Change in Control, however, shall not be considered
to have occurred until all conditions precedent to the transaction,
including but not limited to, all required regulatory approvals have
been obtained.
(d) Method of Payment. All amounts credited to a Participant's
account shall be distributed to him or, in the event of his death, to
his Beneficiary, in cash and in accordance with the election made by
the Participant.
(e) Source of Payments. Each participating Employer will pay
all benefits for its Employees arising under this Plan.
10. Amendment and Termination of Plan.
The Plan may be amended, modified or terminated by the Company's
Board of Directors at any time; provided, however, no such amendment,
modification or termination shall be made in the event there is a
Change in Control, as defined in Paragraph (c) of Section 9. In
addition, no amendment, modification, or termination shall reduce any
deferred benefit under the Plan reflected in a Participant's account
prior to the date of such amendment or termination.
11. Non-assignability of Benefits.
To the extent consistent with applicable law, the Participant's
deferred benefits under this Plan shall not be assigned, transferred,
pledged, or encumbered or be subject in any manner to alienation or
attachment.
12. No Creation of Rights.
Nothing in this Plan shall confer upon any Participant the right
to continue as an Employee or to receive annual Compensation in excess
of the Compensation Limit. The right of a Participant to receive a
cash distribution shall be an unsecured claim against the general
assets of his Employer. Nothing contained in this Plan nor any action
taken hereunder shall create, or be construed to create, a trust of
any kind, or a fiduciary relationship between the Company and the
Participants, Beneficiaries, or any other persons. All accounts under
the Plan shall be maintained for bookkeeping purposes only and shall
not represent a claim against specific assets of any Employer.
13. Effective Date.
The Plan is adopted effective on May 19, 1998, and shall remain
in effect until it is discontinued by action of the Company's Board of
Directors.
QUESTAR CORPORATION
SPECIAL SITUATION RETIREMENT PLAN
(As effective May 19, 1998)
1. PURPOSE
The Special Situation Retirement Plan is intended to enable
Questar Corporation and its participating affiliates to attract and
retain key management personnel by providing them with supplemental
retirement benefits to compensate them if they defer compensation
pursuant to the provisions of the Questar Corporation Deferred
Compensation Plan. It is also intended to pay monthly supplemental
retirement benefits to certain officers based on years of service that
cannot be taken into account under the Questar Corporation Retirement
Plan.
2. DEFINITIONS
The following terms, when used herein, shall have the meanings
set forth below, unless a different meaning is plainly required by the
context:
"Board" means the Board of Directors of Questar Corporation or a
successor company.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" means the Management Performance Committee of the
Company's Board.
"Company" means Questar Corporation or any other organization
controlling Questar Corporation or any successor organization.
"Compensation" means a Participant's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Company's cost for any public or private employee benefit plan or any
income recognized by the Participant as a result of exercising stock
options. A Participant's Compensation for any Plan Year shall include
any 401(k) contributions made by the Participant under Questar
Corporation's Employee Investment Plan or other tax-qualified plan and
any Compensation deferred under the Questar Corporation Deferred
Compensation Plan, the Questar Corporation Deferred Share Plan, and
the Questar Corporation Deferred Share Make-Up Plan. A Participant's
Compensation also shall include the amount of any reduction in
Compensation for a Plan Year agreed upon under one or more
Compensation reduction agreements entered into pursuant to the Questar
Corporation Cafeteria Plan.
"EIRP" means the Company's Executive Incentive Retirement Plan,
as amended or restated from time to time.
"Participant" means any officer of the Company and/or its
affiliates who has a vested right to receive benefits under the
Company's Retirement Plan and who has deferred compensation pursuant
to the Company's Deferred Compensation Plan and Deferred Share Plan
during the period covered by his/her Final Average Earnings.
"Participating Corporation" means any company that is affiliated
with the Company and whose employees are covered by the Company's
Retirement Plan or that is affiliated with the Company and receives an
allocation of any employee benefit costs.
"Plan" means the plan set forth in and created by this document.
"Retired Participant" refers to a Participant who has satisfied
the eligibility requirements set forth in Section 4 of this Plan and
who is eligible to receive or who is receiving Supplemental Retirement
Benefits pursuant to the terms of this Plan.
"Retirement Plan" means the Company's Retirement Plan, as amended
or restated from time to time, or any successor plan. If not
otherwise defined, capitalized words or terms used in the Plan shall
have the same definitions used in the Retirement Plan.
"Special Situation Officer" means any officer or former officer
of the Company and/or its affiliates who was expressly promised upon
his reemployment prior to January 1, 1976, that his years of service
prior to a break in service would be restored to him for purposes of
calculating his retirement benefits.
"Special Supplemental Retirement Benefits" means benefits payable
to Special Situation Officers under the terms of the Plan calculated
as set forth in Section 6 or Section 7.
"SERP" means the Supplemental Executive Retirement Plan, which is
another nonqualified retirement benefit plan adopted by the Company.
"Supplemental Retirement Benefits" means retirement benefits
payable to Retired Participants under the terms of the Plan calculated
as set forth in Section 5 or Section 7.
3. EFFECTIVE DATE
The Plan is effective May 19, 1998. Some provisions in this Plan
were formerly included in the Company's SERP.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in the Plan shall be limited to highly compensated
employees of the Company and Participating Corporations who are
eligible to defer compensation pursuant to the Company's Deferred
Compensation Plan. To become eligible for Supplemental Retirement
Benefits and Special Supplemental Retirement Benefits under the Plan,
a Participant must have a vested right to receive benefits under the
Retirement Plan. A Retired Participant cannot receive benefits under
the Plan during any period that his monthly benefits from the
Retirement Plan are suspended.
5. SUPPLEMENTAL RETIREMENT BENEFITS
A Participant who satisfies the eligibility requirements
described above shall be eligible to receive Supplemental Retirement
Benefits under the Plan. The first payment of Supplemental Retirement
Benefits will be due on the first day of the month following
retirement, and payments will continue on the first day of each month
thereafter so long as the Retired Participant is alive or so long as
his surviving spouse is entitled to receive monthly benefits under the
Retirement Plan. (The Retired Participant's surviving spouse must
have been married to the Participant at date of such Participant's
retirement.)
The monthly Supplemental Retirement Benefit shall equal the
monthly benefit that would have been payable to or on behalf of a
Retired Participant under the Retirement Plan if the limitation on
annual benefits imposed by Section 415 of the Code and if the
limitation on annual compensation as defined in Section 401(a)(17) of
the Code were not applicable, and if the Retired Participant had not
voluntarily chosen to defer any compensation under the terms of the
Questar Corporation Deferred Compensation Plan and the Questar
Corporation Deferred Share Plan, less the monthly benefits payable
from the Retirement Plan, the EIRP (if any), and the SERP (if any).
The monthly Supplemental Retirement Benefit of a Special Situation
Officer shall be calculated using the years of service credited to him
for purposes of calculating the Special Supplemental Retirement
Benefits as provided in Section 6.
Except as provided in Section 7, the monthly Supplemental
Retirement Benefit payable to or on behalf of the Retired Participant
as determined herein shall be paid in the same form as such Retired
Participant's benefits are payable under the Retirement Plan. Any
monthly Supplemental Retirement Benefits payable to the Retired
Participant's surviving spouse shall be reduced by the monthly
benefits payable to such surviving spouse under the Retirement Plan,
the EIRP (if any), and the Supplemental Executive Retirement Plan.
6. SPECIAL SUPPLEMENTAL RETIREMENT BENEFITS.
A Special Situation Officer shall be eligible to receive Special
Supplemental Retirement Benefits under the Plan.
The Special Supplemental Retirement Benefit is designed to
provide a Special Situation Officer with a supplemental retirement
benefit that is equal to the difference between the monthly Retirement
Plan benefit that he would have received if his years of service prior
to his break in service could be credited to him for purposes of
calculating his benefit under the Retirement Plan and the monthly
Retirement Plan benefit that he is entitled to receive because he
cannot be given credit for such years of service under the Retirement
Plan.
The first payment of Special Supplemental Retirement Benefits
will be due on the first day of the month following retirement and
payments will continue on the first day of each month thereafter so
long as the Special Situation Officer is alive or so long as his
surviving spouse is entitled to receive monthly benefits under the
Retirement Plan. (The surviving spouse must have been married to the
Special Situation Officer at date of such Officer's retirement.)
The monthly benefit payable under this Section is not offset by
any monthly benefit payable under the EIRP or SERP. Except as
provided in Section 7, the monthly benefit payable to the Special
Situation Officer upon his retirement shall be paid in the same form
as his benefits under the Retirement Plan.
7. LUMP SUM ELECTION.
A Participant has a one-time election to receive the present
value of his Supplemental Retirement Benefit and Special Supplemental
Retirement Benefit (if applicable) in a lump sum. The Participant
shall make this election at least one year prior to retirement. The
present value shall be calculated using a standard mortality table
referred to as the "83 Group Annuity Mortality Table" and 80 percent
of the six-month average rate for 30-year Treasury bond (prior to the
Participant's retirement). When making this election, the Participant
shall also indicate when the lump-sum payment shall be made and if it
is to be made in more than one installment. The full amount of any
lump-sum payment, together with credited interest, must be paid within
five years of the Participant's retirement. Any deferred payouts of
lump-sum payments shall be credited with interest calculated at a
monthly rate using the appropriate 30-year Treasury bond quoted in the
Wall Street Journal on the first business day of each month. (The
appropriate 30-year Treasury bond shall be the bond that has one
closest to maturity date (by month) preceding the date on which the
interest is to be credited.) Any lump-sum payments that are not
deferred shall be paid on the first business day of the month
following the Participant's retirement date or as soon thereafter as
is administratively practicable. The Participant's spouse must
consent to the Participant's election to receive a lump-sum payment.
Such consent must be in writing and must acknowledge the effect of
such election.
If the Participant fails to make an election at least one year
prior to retirement, the Participant shall receive monthly benefits.
8. FUNDING
The Supplemental Retirement Benefits and Special Supplemental
Retirement Benefits payable under the Plan shall be paid by the
Company and Participating Corporations out of general assets. In its
discretion, the Board may establish a trust fund or make other
arrangements to assure payment of the Supplemental Retirement Benefits
and Special Supplemental Retirement Benefits.
9. ALLOCATION OF COSTS
The cost of Supplemental Retirement Benefits and Special
Supplemental Retirement Benefits paid to or on behalf of Retired
Participants shall be allocated to and be the responsibility of the
Company and Participating Corporations.
10. ADMINISTRATION
The Committee shall administer the Plan and may appoint an
officer of the Company to assist the Committee with this
responsibility. The Committee shall have the sole responsibility to
interpret the Plan and to adopt such rules and regulations for
carrying out the Plan as it may deem necessary. Decisions of the
Committee shall be final and binding.
11. AMENDMENT OR TERMINATION
The Board may at any time amend, modify, or terminate this Plan;
provided, however, that any Retired Participants or their surviving
spouses receiving Supplemental Retirement Benefits and Special
Supplemental Retirement Benefits under the Plan at the date of
amendment or termination shall continue receiving such benefits as if
such amendment or termination had not occurred and provided that any
amendment, modification, or termination of the Plan shall not
adversely affect the right of any Participant to receive benefits
earned prior to such action.
12. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all of the business and/or assets of the Company, to
assume and agree to pay any Supplemental Retirement Benefits and
Special Supplemental Retirement Benefits in the same manner and to the
same extent that the Company would be required to perform if no such
succession or assignment had taken place.
13. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Participant or a Participant may reasonably incur as a result of the
Company's contesting the validity or enforceability of such person's
right to receive benefits under the terms of this Plan following a
"Change in Control" of the Company.
In the event that a Change in Control of the Company occurs and a
Participant's employment with the Company terminates, the Participant
shall receive a lump-sum payment of his Supplemental Retirement
Benefits and Special Situation Retirement Benefits within 30 days of
the Participant's termination. Such benefits shall be calculated as
set forth in Section 7.
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 ChaseMellon Shareholder Services L.L.C.) 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 25 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on May 19, 1998, or
whose appointment, election or nomination for election was previously
so approved or recommended; or (iii) the Company's stockholders
approve a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 60 percent of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
securities; or (iv) the Company's stockholders approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. A
Change in Control, however, shall not be considered to have occurred
until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
QUESTAR CORPORATION
DEFERRED COMPENSATION PLAN
FOR HIGHLY COMPENSATED EMPLOYEES
(As Amended and Restated Effective May 19, 1998)
Questar Corporation hereby amends this DEFERRED COMPENSATION PLAN
FOR HIGHLY COMPENSATED EMPLOYEES, effective February 13, 1996. This
Plan, which was originally adopted effective November 1, 1993, is an
unfunded plan established to provide highly compensated employees with
an opportunity to defer receipt of up to a specified portion of their
annual compensation in order to reduce current tax obligations.
1. Definitions.
"Affiliated Company" means the Company and any corporation that
is a member of a controlled group of corporations (as defined in Sec.
414(b) of the Code), which includes the Company.
"Beneficiary" means that person or persons who become entitled to
receive a distribution of benefits under the Plan in the event of the
death of a Participant prior to the distribution of all benefits to
which he is entitled.
"Code" means the Internal Revenue Code of 1986 and amendments
thereto. Reference to a section of the Code shall include that
section and any comparable section or sections of any future
legislation that amends, supplements or supersedes said section.
"Common Stock" means common stock of the Company.
"Company" means Questar Corporation, a corporation organized and
existing under the laws of the State of Utah, or its successor or
successors.
"Compensation" means an Employee's salary or wages and payments
under incentive compensation plans paid by the Employer and includable
in taxable income during the applicable Plan Year, but exclusive of
any other forms of additional Compensation such as the Employer's cost
for any public or private employee benefit plan or any income
recognized by the employee as a result of exercising stock options.
An Employee's Compensation for any Plan Year shall include any
Elective Deferrals of the Employee under the Company's Employee
Investment Plan or other tax-qualified plans. An Employee's
Compensation also shall include the amount of any reduction in
Compensation for a Plan Year agreed upon under one or more
Compensation reduction agreements entered into pursuant to the Questar
Corporation Cafeteria Plan.
"Disability" means a condition that renders a Participant unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. A Participant shall not be
considered to be disabled unless he furnishes proof of the existence
of such disability in such form and manner as may be required by
regulations promulgated under Code Sec. 72(m)(7).
"Employee" means any officer or key manager of an Employer who
meets the eligibility criteria set out in Paragraph 4 of this Plan.
"Employer" means the Company and each Affiliated Company that
consents to the adoption of the Plan.
"Fair Market Value" means the closing price of the Company's
common stock as reported on the composite tape of the New York Stock
Exchange for any given valuation date or the next preceding day on
which sales took place if no sales occurred on the actual valuation
date.
"Participant" means an Employee who has made an election under
Paragraph 5 of this Plan.
"Plan" means the plan set forth in and created by this document
and all subsequent amendments thereto.
"Plan Year" means the fiscal year of the Plan, which shall
coincide with the Company's fiscal year.
"Tax-Qualified Plan" means the Questar Corporation Employee
Investment Plan, as amended from time to time, or any tax-qualified
plan adopted by the Company.
2. Purpose of Plan.
The purpose of the Plan is to provide eligible Employees with the
opportunity to defer receipt of up to a specified portion of their
annual Compensation in order to reduce current tax payment
obligations.
3. Administration.
The Management Performance Committee of the Company's Board of
Directors shall construe and administer the Plan and shall have full
authority to make such rules and regulations deemed necessary or
desirable to carry out such administration. The Management Performance
Committee may appoint an officer or department to assist with the
administration of the Plan. All interpretations of the Plan by the
Committee shall be final and binding on all parties, including
Participants, Beneficiaries and Employers.
4. Eligibility.
All officers and any key manager whose annual Compensation is
expected to exceed $125,000 are eligible to participate in the Plan.
5. Election to Defer Compensation.
In order to participate in the Plan during 1993, an Employee must
make an election to defer at least $500 per month of participation.
For the first Plan Year, which is a partial Plan Year, such election
must be made at or prior to the effective date of this Plan and can
only be made as to Compensation to be paid for future services. In
order to participate in subsequent Plan Years, an Employee must make
an election to defer an amount from $5,000 to 50 percent of annual
Compensation. Such elections must be made prior to the first day of
the Plan Year in which it is to become effective and can only be made
with respect to Compensation to be paid for future services. A
deferral election, once made, shall remain in effect for subsequent
Plan Years until it is revoked or modified by the Participant. A
Participant can modify or revoke his deferral election with respect to
Compensation to be paid for future services by submitting a new
election or a revocation prior to the beginning of the Plan Year in
which such new deferral election or revocation is to become effective.
All notices of election or revocation shall be made on forms prepared
by the Company's Secretary and shall be dated, signed, and filed with
the Company's Secretary.
6. Elections, Deemed Investments.
When making an election to defer Compensation, an Employee must
choose between two methods of determining earnings on the deferred
Compensation. He may choose to have such earnings calculated as if
the deferred Compensation had been invested in shares of the Company's
Common Stock (the "Common Stock Option") or he may choose to have
earnings calculated by adding 100 basis points to the interest payable
on a 10-Year Treasury Note (the "Treasury Note Option"). An Employee
may also choose to allocate his deferred Compensation between the
options in increments of 25 percent, 50 percent, or 75 percent.
The Participant must designate his deemed investment for all of
the Compensation he elects to defer in any given year. He may change
the deemed investment for future deferred Compensation by filing the
appropriate notice with the Company's Corporate Secretary before the
first day of each calendar year, but such change shall not affect the
method of determining earnings of any Compensation deferred in a prior
year.
Any deferred Compensation accounted for under the Common Stock
Option shall be accounted for as if invested in shares of Common
Stock purchased at a price equal to the average price paid for shares
of Common Stock purchased by the trustee of the Tax-Qualified Plan
during the month (quarter prior to January 1, 1996) in which the
deferrals are made under this Plan. This amount shall be credited to
a Participant's account on a monthly (quarterly prior to January 1,
1996) basis. In addition, a Participant's account shall be credited
on a quarterly basis with an amount equal to the dividends that would
have become payable during the deferral period if actual purchases of
Common Stock had been made, with such dividends accounted for as if
invested in Common Stock as of the payable date for such dividends.
Any credited shares treated as if they were purchased with dividends
shall be deemed to have been purchased at a price equal to the average
price of shares purchased with reinvested dividends under the
Tax-Qualified Plan during the quarter in which the deemed purchases
are treated as being made under this Plan.
If a Participant elects the Treasury Note Option, his account
will be credited with any Compensation deferred by the Participant in
any given month. Interest shall be calculated at a monthly rate
calculated by dividing by 12 the sum of 100 basis points plus the rate
for the appropriate 10-Year Treasury Note as quoted in the Wall Street
Journal on the first business day of each month. The appropriate
10-Year Treasury Note shall be the Note that is the closest (in terms
of months) to the date on which the interest is credited. The
interest deemed to be credited to each Account shall be based on the
amount credited to such Account at the beginning of each particular
month.
7. Integration with Other Plans.
If an employee elects to reduce his Compensation under the terms
of this Plan, six percent of any Compensation deferred shall be
accounted for under the terms of the Questar Corporation Deferred
Share Plan. A Participant's benefits (if any) under the Company's
Executive Incentive Retirement Plan shall be based on the
Participant's base salary including any base salary deferred under the
terms of this Plan or the Company's Deferred Share Plan or any base
salary reductions under the Company's Tax-Qualified Plan or Cafeteria
Plan. A Participant's benefits (if any) under the Company's
Supplemental Executive Retirement Plan or Equalization Benefit Plan
shall be based on the Participant's Compensation plus any Compensation
deferred under the terms of this Plan or the Company's Deferred Share
Plan.
8. Account Statement.
Within 60 days after the end of the calendar year, a statement
shall be sent to each Participant listing the balance in his account
as of the end of the year.
9. Payment of Account Balances.
When making the first deferral election under Paragraph 5, a
Participant shall determine when to receive the Compensation deferred
by him. A Participant can elect to receive such deferred Compensation
at a specified date prior to his termination of employment, e.g.,
December 31, 2001, upon his termination of employment or at a
specified time within five years after his termination of employment.
A Participant can also elect whether to receive deferred Compensation
in a lump-sum payment or in a number of annual installments (not to
exceed four). A Participant cannot change such elections for
Compensation previously deferred, but can change such elections for
Compensation to be paid for future services.
Under the Common Stock Option, the account balance shall be
valued using the Fair Market Value of the Company's Common Stock on
the last day of the calendar month preceding payment and shall be
converted to a cash balance based upon such Fair Market Value. Under
an installment payout, the Participant's first installment shall be
equal to a fraction of the balance credited to his account (or the
portion of his account to be paid in installments) as of the last day
of the calendar month preceding such payment, the numerator of which
is one and the denominator of which is the total number of
installments selected. The amount of each subsequent payment shall be
a fraction of the balance in the Participant's account as of the last
day of the calendar month preceding each subsequent payment, the
numerator of which is one and the denominator of which is the total
number of installments elected minus the number of installments
previously paid.
Under the Treasury Note Option, the account balance shall be
valued as of the date of withdrawal, which is the last day of the
calendar month preceding payment, with interest credited to such date.
Under an installment payout, the Participant's first installment shall
be equal to a fraction of the balance credited to his account (or the
portion of his account to be paid in installments) as of the last day
of the calendar month preceding such payment, the numerator of which
is one and the denominator of which is the total number of
installments selected. The amount of each subsequent payment shall be
a fraction of the balance in the Participant's account as of the last
day of the calendar month preceding each subsequent payment, the
numerator of which is one and the denominator of which is the total
number of installments elected minus the number of installments
previously paid.
10. Miscellaneous Payment Issues.
(a) Adverse Tax Determination. If there is a determination by
the Internal Revenue Service (IRS) that a Participant should be taxed
on some or all of the amounts allocated to his account prior to the
distribution date(s) elected under Paragraph 9, the Participant may
elect to have all amounts determined to be currently taxable paid to
him immediately prior to the time he must pay any taxes owed as a
result of such IRS determination.
(b) Change in Control. Notwithstanding any other provision of
this Plan, in the event of a "Change in Control" of the Company (as
defined below), all deferred Compensation credtired to a Participant's
account shall be distributed to him within 60 days following the
Change in Control.
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 ChaseMellon Shareholder Services L.L.C. ("Rights Agreement")) is
or becomes the beneficial owner (as such term is used in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the
Company representing 25 percent or more of the combined voting power
of the Company; or (ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors ("Board") and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds of the directors then still in office who either
were directors on May 19, 1998, or whose appointment, election or
nomination for election was previously so approved or recommended; or
(iii) the Company's stockholders approve a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 60 percent of
the combined voting power of the securities of the Company or such
surviving entity or its parent outstanding immediately after such
merger or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
securities; or (iv) the Company's stockholders approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60 percent of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale. A
Change in Control, however, shall not be considered to have occurred
until all conditions precedent to the transaction, including but not
limited to, all required regulatory approvals have been obtained.
(c) Method of Payment. All amounts credited to a Participant's
account shall be distributed to him or, in the event of his death, to
his Beneficiary, in cash and in accordance with the election made by
the Participant.
(d) Source of Payments. Each participating Employer will pay
all benefits for its Employees arising under this Plan, and all costs,
charges and expenses relating thereto, out of its general assets.
11. Amendment and Termination of Plan.
The Plan may be amended, modified or terminated by the Company's
Board of Directors at any time. Provided, however, no such amendment,
modification or termination shall be made in the event there is a
Change in Control, as defined in Paragraph 10(b). In addition, no
amendment, modification, or termination shall reduce any deferred
benefit under the Plan reflected in a Participant's account prior to
the date of such amendment or termination.
12. Non-assignability of Benefits.
To the extent consistent with applicable law, the Participant's
deferred benefits under this Plan shall not be assigned, transferred,
pledged, or encumbered or be subject in any manner to alienation or
attachment.
13. No Creation of Rights.
Nothing in this Plan shall confer upon any Participant the right
to continue as an Employee of an Employer. The right of a Participant
to receive a cash distribution shall be an unsecured claim against the
general assets of his Employer. Nothing contained in this Plan nor
any action taken hereunder shall create, or be construed to create, a
trust of any kind, or a fiduciary relationship between the Company and
the Participants, Beneficiaries, or any other persons. All accounts
under the Plan shall be maintained for bookkeeping purposes only and
shall not represent a claim against specific assets of any Employer.
14. Effective Date.
The Plan, as originally adopted, was effective November 1, 1993.
The Plan, as amended and restated, is effective February 13, 1996, and
shall remain in effect until it is discontinued by action of the
Company's Board of Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized information extracted
from the Questar Corporation Consolidated Statements of Income and Balance
Sheets for the period ended June 30, 1998, 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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 104,080
<ALLOWANCES> 0
<INVENTORY> 22,650
<CURRENT-ASSETS> 150,431
<PP&E> 2,810,468
<DEPRECIATION> 1,265,470
<TOTAL-ASSETS> 1,843,111
<CURRENT-LIABILITIES> 223,447
<BONDS> 503,644
0
0
<COMMON> 294,530
<OTHER-SE> 582,671
<TOTAL-LIABILITY-AND-EQUITY> 1,843,111
<SALES> 0
<TOTAL-REVENUES> 479,240
<CGS> 0
<TOTAL-COSTS> 306,723
<OTHER-EXPENSES> 80,377
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,460
<INCOME-PRETAX> 84,097
<INCOME-TAX> 27,019
<INCOME-CONTINUING> 57,078
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,078
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
