-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rf4BAsTutQkvWkthRM7UQAJ9JDPqjfcAIWS6Bu5dL69hSBqhcvp9yLBRIPV98QYm /xEUdHNUVbgU3cWtedbcfw== /in/edgar/work/0000068589-00-000014/0000068589-00-000014.txt : 20001115 0000068589-00-000014.hdr.sgml : 20001115 ACCESSION NUMBER: 0000068589-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUESTAR GAS CO CENTRAL INDEX KEY: 0000068589 STANDARD INDUSTRIAL CLASSIFICATION: [4923 ] IRS NUMBER: 870407509 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-55866 FILM NUMBER: 767456 BUSINESS ADDRESS: STREET 1: 180 E FIRST SOUTH ST STREET 2: PO BOX 45433 CITY: SALT LAKE CITY STATE: UT ZIP: 84145-0433 BUSINESS PHONE: 8013245555 MAIL ADDRESS: STREET 1: 180 EAST FIRST SOUTH ST STREET 2: P O BOX 11150 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 FORMER COMPANY: FORMER CONFORMED NAME: MOUNTAIN FUEL SUPPLY CO DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000. 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. 1-935 QUESTAR GAS COMPANY (Exact name of registrant as specified in its charter) STATE OF UTAH 87-0155877 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 45360, 180 East 100 South, Salt Lake City, Utah 84145-0360 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801) 324-5555 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 October 31, 2000 Common Stock, $2.50 par value 9,189,626 shares Registrant meets the conditions set forth in General Instruction H(a)(1) and (b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure format. 1 PART I FINANCIAL INFORMATION Item 1. Financial Statements QUESTAR GAS COMPANY STATEMENTS OF INCOME (Unaudited)
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 2000 1999 2000 1999 2000 1999 (In Thousands) REVENUES $ 59,552 $ 54,823 $328,246 $297,299 $480,884 $459,327 OPERATING EXPENSES Natural gas purchases 32,619 26,839 190,828 162,302 285,791 260,628 Operating and maintenance 24,170 23,679 73,306 73,691 102,923 97,388 Depreciation 9,182 8,909 27,220 26,194 37,452 35,639 Other taxes 2,464 2,107 8,991 6,486 10,130 7,630 TOTAL OPERATING EXPENSES 68,435 61,534 300,345 268,673 436,296 401,285 OPERATING INCOME (LOSS) (8,883) (6,711) 27,901 28,626 44,588 58,042 INTEREST AND OTHER INCOME 605 553 1,718 2,524 2,174 3,216 DEBT EXPENSE (5,265) (4,509) (15,401) (14,357) (21,106) (19,691) INCOME (LOSS) BEFORE INCOME TAXES (13,543) (10,667) 14,218 16,793 25,656 41,567 INCOME TAXES (5,654) (4,800) 4,722 5,238 8,496 13,842 NET INCOME (LOSS) $ (7,889) $ (5,867) $ 9,496 $ 11,555 $ 17,160 $ 27,725
See note to financial statements 2 QUESTAR GAS COMPANY CONDENSED BALANCE SHEETS
September 30, December 31, 2000 1999 1999 (Unaudited) (In Thousands) ASSETS Current assets Cash and cash equivalents $ 1,708 Accounts receivable $ 21,169 $ 15,669 83,098 Inventories, at lower of average cost or market Gas stored underground 23,065 19,264 18,497 Materials and supplies 2,327 4,429 3,183 Purchased-gas adjustments 8,880 11,263 432 Prepaid expenses and other 2,927 2,754 3,168 Total current assets 58,368 53,379 110,086 Property, plant and equipment 1,054,589 981,176 1,013,599 Less allowances for depreciation 445,829 410,897 421,111 Net property, plant and equipment 608,760 570,279 592,488 Other assets 19,189 21,600 20,978 $686,317 $645,258 $723,552 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Checks outstanding in excess of cash balances $ 1,661 $ 1,716 Notes payable to Questar Corporation 75,200 25,100 $ 79,300 Accounts payable and accrued expenses 39,718 43,694 69,122 Total current liabilities 116,579 70,510 148,422 Long-term debt 225,000 225,000 225,000 Other liabilities 466 1,529 1,394 Deferred income taxes and investment tax credits 89,008 86,740 85,343 Common shareholder's equity Common stock 22,974 22,974 22,974 Additional paid-in capital 81,875 81,875 81,875 Retained earnings 150,415 156,630 158,544 Total common shareholder's equity 255,264 261,479 263,393 $686,317 $645,258 $723,552
See note to financial statements 3 QUESTAR GAS COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
9 Months Ended September 30, 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $ 9,496 $ 11,555 Depreciation 29,817 28,200 Deferred income taxes and investment tax credits 3,665 6,717 42,978 46,472 Change in operating assets and liabilities 21,467 30,192 NET CASH PROVIDED FROM OPERATING ACTIVITIES 64,445 76,664 INVESTING ACTIVITIES Capital expenditures (46,123) (35,602) Proceeds from disposition of property, plant and equipment 34 2,746 NET CASH USED IN INVESTING ACTIVITIES (46,089) (32,856) FINANCING ACTIVITIES Checks outstanding in excess of cash balances 1,661 1,716 Decrease in notes payable to Questar Corporation (4,100) (71,600) Equity investment 40,000 Payment of dividends (17,625) (17,250) NET CASH USED IN FINANCING ACTIVITIES (20,064) (47,134) DECREASE IN CASH AND CASH EQUIVALENTS $ (1,708) $ (3,326)
See note to financial statements 4 QUESTAR GAS COMPANY NOTE TO FINANCIAL STATEMENTS September 30, 2000 (Unaudited) Note 1 - Basis of Presentation The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Due to the seasonal nature of the business, the results of operations for the three- and nine-month periods ended September 30, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations QUESTAR GAS COMPANY September 30, 2000 (Unaudited) Operating Results Following is a summary of financial and operating information for the Company:
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 2000 1999 2000 1999 2000 1999 FINANCIAL RESULTS - (dollars in thousands) Revenues From unaffiliated customers $ 58,287 $ 53,957 $324,771 $296,002 $476,375 $457,758 From affiliates 1,265 866 3,475 1,297 4,509 1,569 Total revenues 59,552 54,823 328,246 297,299 480,884 459,327 Natural gas purchases 32,619 26,839 190,828 162,302 285,791 260,628 Margin $ 26,933 $ 27,984 $137,418 $134,997 $195,093 $198,699 Operating income (loss) $ (8,883) $ (6,711) $ 27,901 $ 28,626 $ 44,588 $ 58,042 Net income (loss) (7,889) (5,867) 9,496 11,555 17,160 27,725 OPERATING STATISTICS Natural gas volumes (in thousands of decatherms) Residential and commercial sales 7,462 8,252 50,567 54,822 77,946 84,249 Industrial sales 1,993 1,827 7,244 7,049 10,018 9,827 Transportation for industrial customers 12,899 12,258 40,781 37,409 55,015 50,988 Total deliveries 22,354 22,337 98,592 99,280 142,979 145,064 Natural gas revenue (per decatherm) Residential and commercial $ 5.79 $ 5.18 $ 5.56 $ 4.73 $ 5.37 $ 4.83 Industrial sales 4.25 2.85 3.46 2.91 3.35 2.97 Transportation for industrial customers $ 0.12 $ 0.13 $ 0.12 $ 0.13 $ 0.12 $ 0.14 Heating degree days Colder (warmer) than normal 7% 3% (18%) (7%) (15%) (5%) Number of customers at September 30, Residential and commercial 690,205 670,652 Industrial 1,345 1,361 Total 691,550 672,013
The margin decreased 4% in the third quarter of 2000 when compared with the prior-year quarter due to changes in the rate treatment of gathering and processing costs which reduced the margin in the third quarter of 2000. The margin increased 2% for the nine-month period of 2000 compared with 1999 primarily from higher residential and commercial rates and from an increased number of residential customers. 6 The Public Service Commission of Utah (PSCU) issued a final order on August 11, 2000, which granted $6.5 million of additional annualized rate relief over and above the $7 million interim rate relief granted on January 1, 2000, that includes the collection of $5 million annually for gas processing costs. The rate order also allows for an 11% return on equity. The number of customers served by Questar Gas grew by 19,537 or 2.9% from a year ago to 691,550. The number of customer additions for the year ending December 31, 2000 is expected to be between 20,000 to 21,000. Volumes delivered were unchanged in the third quarter and were 1% lower for the nine and twelve-month periods of 2000 when compared with the same periods in 1999. Temperature adjusted usage of gas per customer was 3% lower in the 2000 quarter compared with the prior year quarter and unchanged for the nine-month periods year-to-year. Weather was 7% colder than normal in the third quarter of 2000 and 3% colder than normal in the 1999 quarter. For the nine-month periods, weather was 18% warmer in 2000 compared with 7% warmer in the comparable 1999 period. The effects of warmer weather were mitigated somewhat by a weather normalization adjustment. Questar Gas' natural gas purchase costs increased in each of the 2000 periods presented when compared with the 1999 periods due to higher commodity costs. Commodity rates for the first half were $2.23 per Dth in 2000 compared to $1.72 per Dth in 1999. In the third quarter, commodity rates were $2.23 per Dth in 2000 compared to $1.88 per Dth in 1999. Natural gas purchases in the third quarter of 2000 were partially offset by $1.3 million due to a one-time refund of gas processing costs. The Company files for adjustment of purchased-gas costs with the Utah and Wyoming Public Service Commissions on a semiannual basis. Effective October 1, 2000, the PSCU approved on an interim basis a $63 million pass-through filing that increased Utah natural gas rates 12.7%. Also effective October 1, 2000, the Wyoming Public Service Commission approved a $2.5 million pass-through filing for Wyoming natural gas rates. Operating and maintenance (O & M) expenses increased 2% in the third quarter of 2000 compared with the prior year primarily from one-time expense adjustments amounting to $2,250,000 in the 1999 quarter. O & M expenses decreased 1% for the nine months of 2000 compared with 1999 mainly from lower information-technology costs which were partially offset by the higher costs associated with strong customer growth and increased bad debt expenses. Depreciation expenses was higher in the 2000 periods presented compared to the 1999 periods as a result of increased investment in property, plant and equipment, particularly technology related which have a shorter useful life. Other taxes increased in the three- and nine-months comparisons because of a current year adjustment of prior year taxes and from higher property tax rates in 2000. Interest and other income was 32% lower in the nine-month period of 2000 compared with the prior year. Gains from the sale of surplus property were $649,000 less in the 2000 period. The effective income tax rate for the nine-month period was 33.2% in 2000 and 31.2% in 1999. The lower effective income tax rate in 1999 was due to an adjustment of federal income taxes in the 1999 period. The Company realized $1,374,000 of tight-sands gas-production credits in the 2000 period and $1,381,000 in the 1999 period. Liquidity and Capital Resources Operating Activities Net cash provided from operating activities in the first nine months of 2000 was $12.2 million less than was generated in the same period of 1999. The decrease in cash flows resulted partially from lower net income and from lower cash flows generated from operating assets and liabilities. The year-to-year decrease in cash flows from operating assets and liabilities was primarily due to higher customer receivables, increased underground gas storage inventory costs, and higher tax and other liability payments. 7 Investing Activities Capital expenditures were $46.1 million for the nine months of 2000. Capital expenditures for calendar year 2000 are estimated at $63.3 million. Financing Activities Net cash generated from operating activities was used to fund capital expenditures, repay loans to Questar and pay dividends. Loan balances owed to Questar as of September 30, amounted to $75.2 million in 2000 and $25.1 million in 1999. Capital expenditures for the remainder of 2000 are expected to be financed with net cash flow provided from operating activities and borrowings from Questar. Early Retirement Offered On August 28, 2000, Questar's Regulated Services unit announced an early retirement window program to be effective October 31, 2000. A total of 281 employees and 14 disability recipients from Questar Gas, Questar Pipeline and Questar Regulated Services were eligible for the enhanced benefit. The offer was accepted by 262 of Regulated Services' employees and all 14 long-term disability recipients. The window program is projected to result in pretax labor cost savings for Regulated Services of over $1 million in 2000 and $6-8 million yearly. Regulatory Matters Effective October 1, 2000, the PSCU approved on an interim basis a $63 million increase in its Utah natural gas rates which resulted in a 12.7 percent increase for the typical residential Utah customer. The increase was based on recent significant increases in natural gas prices at the wellhead and was part of Questar Gas' gas-cost-adjustment or "pass-through" filings. Such filings enable the company to adjust rates at least twice each year to reflect changes in gas-supply costs. These costs are passed on to the customer on a dollar-for-dollar basis with no markup. The impact of the gas cost increase on customers was lessened by the fact that close to 50% of the Company's annual supply comes from its own wells and is priced to customers at cost of service prices rather than market prices. Also, effective October 1, 2000, the Wyoming Public Service Commission approved a $2.5 million pass-through filing for Wyoming natural gas rates. Revenue Recognition Guideline Issued by the Securities and Exchange Commission (SEC) In December 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements." The SAB raised issues concerning the timing of recording revenues given that sales transactions may contain some conditions allowing customers to return products or receive refunds. The SEC expects companies that make conditional sales to postpone fully recognizing revenues until the earnings process is completed. The Company records revenues when services are provided or products are delivered. Periodically revenues are collected subject to refund pending final orders from regulatory agencies. In those situations, revenues are reported net of estimated refunds. The pronouncement is effective for Questar Gas beginning with the fourth quarter 2000 and is not expected to cause a change in the method used to record revenues. Forward-Looking Statements This 10-Q contains forward-looking statements about future operations, capital spending, regulatory matters and expectations of Questar Gas. 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. 8 Important assumptions and other significant factors that could cause actual results to differ materially from those discussed in forward-looking statements include changes in: general economic conditions, gas prices and availability of gas supplies, competition, regulatory issues, weather conditions and other factors beyond the control of the Company. These other factors include the rate of inflation and adverse changes in the business or financial condition of the Company. These factors are not necessarily all of the important factors that could cause actual results to differ significantly from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have a significant adverse effect on future results. The Company does not undertake an obligation to update forward-looking information contained herein or elsewhere to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. 9 Part II Other Information Item 1. Legal Proceedings. a. Questar Gas Company ("Questar Gas" or the "Company"), on August 31, 2000, filed an "out-of-period" pass-on application with the Public Service Commission of Wyoming (the PSCW"), seeking approval to reflect higher natural gas prices in its rates. In the application, as supplemented, the Company requested permission to reflect annualized gas costs of $13,778,002 in rates for Wyoming customers effective October 1, 2000. The PSCW authorized the Company to reflect the requested gas cost increase in rates effective October 1, 2000. b. On September 20, 2000, Questar Gas, filed a special pass-through application with the Public Service Commission of Utah (the "PSCU"). In its application, Questar Gas requested permission to reflect annualized gas costs of $354,405,075 in rates for Utah customers effective October 1, 2000. In this out-of-period application, the Company noted that purchased gas prices had increased significantly higher than the estimated prices used in its mid-year filing and reported that its 191 or gas cost account was undercollected by approximately $5.9 million as of the end of August. Questar Gas advised the PSCU that reflecting the increase in its rates would increase the typical residential customer's annual bill by approximately 12.7 percent per year. By an interim order dated October 18, 2000, the PSCU authorized the Company to reflect the requested increase in rates effective October 1, 2000. c. The Committee of Consumer Services ("Committee"), a party to the Company's general rate case, has appealed the PSCU's order concerning the treatment of carbon dioxide ("CO2") removal costs. In its order concerning Questar Gas's general rate case, the PSCU, adopted the stipulation entered into by the Company and the Division of Public Utilities that allows Questar Gas to collect $5 million of annual CO2 removal costs. The Committee opposed this stipulation during the proceedings and filed a request for rehearing with the PSCU after the PSCU approved it. When the PSCU took no action on its request for rehearing, the Committee filed an appeal seeking judicial review of the decision. The Company has filed a motion to intervene in the case. d. The Company filed an appeal with the Supreme Court of Utah after the PSCU, by order dated December 9, 1999, denied Questar Gas's request to recover the CO2 removal costs in its semi-annual pass-through filing. See Questar Gas's Form 8-K Report dated December 9, 1999 for a description of the PSCU's order denying the Company's request to recover the costs in its pass-through application. Oral arguments to consider the Company's appeal will be heard on December 13, 2000. In its brief, Questar Gas noted that the CO2 removal costs are "costs" that can be recovered through the Company's 191 account and the PSCU's action to exclude such costs should only be done prospectively, not retroactively. Questar Gas also defended its decision to pay processing plant costs as a reasonable, prudent, and low-cost means to solve a problem caused by the combustion settings on appliances used in its service area. 10 Item 5. Other Information. Messrs. Gary W. DeBernardi, Lowell F. Gill, and Stephen C. Yeager retired as officers and employees of the Company effective October 31, 2000. Mr. DeBernardi, age 57, had served as Vice President, Technical Services, for Questar Gas and its primary affiliates, Questar Pipeline Company ("Pipeline") and Questar Regulated Services Company ("QRS") and had 31 years of service at retirement. Mr. Gill, age 58, had served as Vice President, Transportation Operations, for the Company and QRS and as Vice President and General Manager for Pipeline; he had 38 years of service. Mr. Yeager, age 53, had served as Vice President, Business, Development, for all three entities and had over 24 years of service. The retirements of these officers, coupled with the retirements of other employees, led to a reorganization of responsibilities and the appointment of two new officers. Ms. Susan Glasmann, age 53, was named to serve as Vice President, Operations, for the Company, Pipeline, and QRS effective November 1. She had been serving as the Company's Vice President and General Manager since August 1, 1998. Mr. Alan K. Allred, age 50, was named to serve as Vice President, Business Development, for Questar Gas and its affiliates in the Regulated Services group. Mr. Allred has more than 22 years of experience with the Company and its affiliates and had been serving as Manager, Regulatory Affairs. In his new position, Mr. Allred has responsibility for regulatory affairs, gas supply management, capacity marketing, gas control, parnterships, acquisitions and new ventures. Mr. Shahab Saeed, age 41, was named to serve as Vice President, Support Services, for Questar Gas and its affiliates in the Regulated Services group. He has more than 19 years of service and had been serving as Manager, Administrative Services. Mr. Saeed, in his new position, has responsibility for engineering, human resources, information services, system integrity, safety and environmental activities, research and development, materials and equipment, and facilities. Messrs. R. D. Cash, D. N. Rose and S. E. Parks will continue to serve in their executive officer positions as Chairman of the Board, President and Chief Executive Officer and Vice President, Treasurer, and Chief Financial Officer, respectively. Item 6. Exhibits and Reports on Form 8-K a. The following exhibit has been filed as part of this report. Exhibit No. Exhibit 10.1.* Joint Annual Management Incentive Plan adopted by Questar Gas Company, Questar Pipeline Company, and Questar Regulated Services Company as amended and restated effective October 26, 2000. 10.2.* Questar Gas Company Deferred Compensation Plan for Directors as amended and restated effective October 26, 2000. 11 10.3.* Questar Corporation Long-term Stock Incentive Plan as amended and restated effective October 26, 2000. (Exhibit No. 10.3. to Questar Corporation's Form 10-Q Report for Quarter Ended September 30, 2000.) *Exhibit so marked is a management contract or compensation plan or arrangement. (b) The Company did not file any Current Reports 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 GAS COMPANY (Registrant) November 13, 2000 /s/ D. N. Rose D. N. Rose President and Chief Executive Officer November 13, 2000 /s/ S. E. Parks S. E. Parks Vice President, Treasurer, and Chief Financial Officer 12 EXHIBIT INDEX Exhibit Number Exhibit 10.1.* Joint Annual Management Incentive Plan adopted by Questar Gas Company, Questar Pipeline Company, and Questar Regulated Services Company as amended and restated effective October 26, 2000. 10.2.* Questar Gas Company Deferred Compensation Plan for Directors as amended and restated effective October 26, 2000. 10.3.* Questar Corporation Long-term Stock Incentive Plan as amended and restated effective October 26, 2000. (Exhibit No. 10.3. to Questar Corporation's Form 10-Q Report for Quarter Ended September 30, 2000.) *Exhibit so marked is a management contract or compensation plan or arrangement. EX-10.1 2 0002.txt Exhibit 10.1 QUESTAR REGULATED SERVICES COMPANY, QUESTAR GAS COMPANY, AND QUESTAR PIPELINE COMPANY ANNUAL MANAGEMENT INCENTIVE PLAN (As Amended and Restated Effective October 26, 2000) Paragraph 1. Name. The name of this Plan is the Annual Management Incentive Plan (the Plan) for Questar Regulated Services Company, Questar Gas Company, and Questar Pipeline Company (collectively referred to as Regulated Services). Paragraph 2. Purpose. The purpose of the Plan is to provide an incentive to officers and key employees of Regulated Services for the accomplishment of major organizational and individual objectives designed to further the efficiency, profitability, and growth of Regulated Services. Paragraph 3. Administration. The Management Performance Committee (Committee) of the Board of Directors of Questar Corporation (Questar) shall have full power and authority to interpret and administer the Plan. Such Committee shall consist of no less than three disinterested members of the Board of Directors. Recommendations made by the Committee shall be reviewed by the Boards of Directors of participating employers. Paragraph 4. Participation. Within 60 days after the beginning of each year, the Committee shall nominate Participants from the officers and key employees for such year. The Committee shall also establish a target bonus for the year for each Participant expressed as a percentage of base salary or specified portion of base salary. Participants shall be notified of their selection and their target bonus as soon as practicable. Paragraph 5. Determination of Performance Objectives. Within 60 days after the beginning of each year, the Committee shall establish target, minimum, and maximum performance objectives for Regulated Services and for its affiliates and shall determine the manner in which the target bonus is allocated among the performance objectives. The Committee shall also recommend a dollar maximum for payments to Participants for any Plan year. The Board of Directors shall take action concerning the recommended dollar maximum within 60 days after the beginning of the Plan year. Participants shall be notified of the performance objectives as soon as practicable once such objectives have been established. Paragraph 6. Determination and Distribution of Awards. As soon as practicable, but in no event more than 90 days after the close of each year during which the Plan is in effect, the Committee shall compute incentive awards for eligible participants in such amounts as the members deem fair and equitable, giving consideration to the degree to which the Participant's performance has contributed to the performance of Regulated Services 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 Regulated Services 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. Participants who have a target bonus of $10,000 or higher shall be paid all deferred portions of such bonus with restricted shares of Questar's common stock under Questar's Long-Term Stock Incentive Plan. Such stock shall be granted to the participant when the initial award is determined, but shall vest free of restrictions according to the schedule specified above in Paragraph 6. Paragraph 8. Termination of Employment. (a) In the event a Participant ceases to be an employee during a year by reason of death, disability or approved retirement, an award, or a reduction in force, if any, determined in accordance with Paragraph 6 for the year of such event, shall be reduced to reflect partial participation by multiplying the award by a fraction equal to the months of participation during the applicable year through the date of termination rounded up to whole months divided by 12. For the purpose of this Plan, approved retirement shall mean any termination of service on or after age 60, or, with approval of the Board of Directors, early retirement under Questar's qualified retirement plan. For the purpose of this Plan, disability shall mean any termination of service that results in payments under Questar's long-term disability plan. A reduction in force, for the purpose of this Plan, shall mean any involuntary termination of employment due to the Company's economic condition, sale of assets, shift in focus, or other reasons independent of the Participant's performance. The entire amount of any award that is determined after the death of a Participant shall be paid in accordance with the terms of Paragraph 11. In the event of termination of employment due to disability, approved retirement, or a reduction in force, a Participant shall be paid the undistributed portion of any prior awards in his final paycheck or in accordance with the terms of elections to voluntarily defer receipt of awards earned prior to February 12, 1991, or deferred under the terms of Questar's Deferred Compensation Plan. In the event of termination due to disability, approved retirement, or a reduction in force, any shares of common stock previously credited to a Participant shall be distributed free of restrictions during the last month of employment. The current market value (defined as the closing price for the stock on the New York Stock Exchange on the date in question) of such shares shall be included in the Participant's final paycheck. Such Participant shall be paid the full amount of any award (adjusted for partial participation) declared subsequent to the date of such termination within 30 days of the date of declaration. Any partial payments shall be made in cash. (b) In the event a Participant ceases to be an employee during a year by reason of a change in control, he shall be entitled to receive all amounts deferred by him prior to February 12, 1991, and all undistributed portions for prior Plan years. He shall also be entitled to an award for the year of such event as if he had been an employee throughout such year. The entire amount of any award for such year shall be paid in a lump sum within 60 days after the end of the year in question. Such amounts shall be paid in cash. For the purpose of this Plan, a "change in control" shall be deemed to have occurred if (i) any Acquiring Person (as that term is used in the Rights Agreement dated February 13, 1996, between Questar and ChaseMellon Shareholder Services, L.L.C. ("Rights Agreement")) is or becomes the beneficial owner (as such term is used in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of Questar representing 25 percent or more of the combined voting power of Questar, or (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving as directors of Questar: individuals who, as of May 19, 1998, constitute Questar's Board of Directors (Board) and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Questar) whose appointment of election by the Board or nomination for election by Questar's stockholders was approved or recommended by a vote of at least two-thirds of the directors when still in office who either were directors on May 19, 1998, or who appointment, election or nomination for election was previously so approved or recommended; or (iii Questar stockholders approve a merger or consolidation of Questar or any direct of indirect subsidiary of Questar with any other corporation, other than a merger of consolidation that would result in the voting securities of Questar outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60 percent of the combined voting power of the securities of Questar or such surviving entity or its parent outstanding immediately after such merger or consolidation, or a merger or consolidation effected to implement a recapitalization of Questar (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of Questar representing 25 percent or more of the combined voting power of Questar's then outstanding securities; or (iv) Questar's stockholders approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by Questar of all or substantially all of Questar's assets, other than a sale of disposition by Questar of all or substantially all of the Company's assets to an entity, at least 60 percent of the combined voting power of the voting securities of which are owned by stockholders of Questar in substantially the same proportion as their ownership of Questar immediately prior to such sale. A change in control, however, shall not be considered to have occurred until all conditions precedent to the transaction, including but not limited to, all required regulatory approvals have been obtained. Paragraph 9. Interest on Previously Deferred Amounts. Amounts voluntarily deferred prior to February 12, 1991, shall be credited with interest from the date the payment was first available in cash to the date of actual payment. Such interest shall be calculated at a monthly rate using the typical rates paid by major banks on new issues of negotiable Certificates of Deposit in the amounts of $1,000,000 or more for one year as quoted in The Wall Street Journal on the Thursday closest to the end of the month or other published source of rates as identified by Questar Corporation's Treasury department. Paragraph 10. Coordination with Deferred Compensation Plan. Some Participants are entitled to defer the receipt of their cash bonuses under the terms of Questar's Deferred Compensation Plan, which became effective November 1, 1993. Any cash bonuses deferred pursuant to the Deferred Compensation Plan shall be accounted for and distributed according to the terms of such plan and the choices made by the Participant. Paragraph 11. Death and Beneficiary Designation. In the event of the death of a Participant, any undistributed portions of prior awards shall become payable. Amounts previously deferred by the Participant, together with credited interest to the date of death, shall also become payable. Each Participant shall designate a beneficiary to receive any amounts that become payable after death under this Paragraph or Paragraph 8. In the event that no valid beneficiary designation exists at death, all amounts due shall be paid as a lump sum to the estate of the Participant. Any shares of restricted stock previously credited to the Participant shall be distributed to the Participant's beneficiary or, in the absence of a valid beneficiary designation, to the Participant's estate, at the same time any cash is paid. Paragraph 12. Amendment of Plan. The Boards of Directors for the participating employers, 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 Boards of Directors for the participating employers 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, 1997, and shall remain in effect until it is suspended or terminated as provided by Paragraph 12. This Plan replaces the individual plans previously adopted by Questar Gas and Questar Pipeline that became effective January 1, 1984. Plan participants who previously received awards under predecessor plans or any other Annual Management Incentive Plan adopted by an affiliate shall be treated as ongoing participants for purposes of the distribution schedule in Paragraph 6. EX-10.2 3 0003.txt Exhibit 10.2 QUESTAR GAS COMPANY DEFERRED COMPENSATION PLAN FOR DIRECTORS (As Amended and Restated October 26, 2000) 1. Purpose of Plan. The purpose of the Deferred Compensation Plan for Directors ("Plan") is to provide Directors of Questar Gas Company (the "Company") with an opportunity to defer compensation paid to them for their services as Directors of the Company and to maintain a Deferred Account Balance until they cease to serve as Directors of the Company or its affiliates. 2. Eligibility. Subject to the conditions specified in this Plan or otherwise set by the Company's Board of Directors, all voting Directors of the Company who receive compensation for their service as Directors are eligible to participate in the Plan. Eligible Directors are referred to as "Directors." Directors who elect to defer receipt of fees or who have account balances are referred to as "Participants" in this Plan. 3. Administration. The Company's Board of Directors shall administer the Plan and shall have full authority to make such rules and regulations deemed necessary or desirable to administer the Plan and to interpret its provisions. 4. Election to Defer Compensation. (a) Time of Election. A Director can elect to defer future compensation or to change the nature of his election for future compensation by submitting a notice prior to the beginning of the calendar year. A newly elected Director is entitled to make a choice within five days of the date of his election or appointment to serve as a Director to defer payment of compensation for future service. An election shall continue in effect until the termination of the Participant's service as a Director or until the end of the calendar year during which the Director serves written notice of the discontinuance of his election. All notices of election, change of election, or discontinuance of election shall be made on forms prepared by the Corporate Secretary and shall be dated, signed, and filed with the Corporate Secretary. A notice of change of election or discontinuance of election shall operate prospectively from the beginning of the calendar year, but any compensation deferred shall continue to be held and shall be paid in accordance with the notice of election under which it was withheld. (b) Amount of Deferral. A Participant may elect to defer receipt of all or a specified portion of the compensation payable to him for serving as a Director and attending Board and Committee Meetings as a Director. For purposes of this Plan, compensation does not include any funds paid to a Director to reimburse him for expenses. (c) Period of Deferral. When making an election to defer all or a specified percentage of his compensation, a Participant shall elect to receive the deferred compensation in a lump sum payment within 45 days following the end of his service as a Director or in a number of annual installments (not to exceed four), the first of which would be payable within 45 days following the end of his service as a Director with each subsequent payment payable one year thereafter. Under an installment payout, the Participant's first installment shall be equal to a fraction of the balance in his Deferred Compensation Account as of the last day of the calendar month preceding such payment, the numerator of which is one and the denominator of which is the total number of installments selected. The amount of each subsequent payment shall be a fraction of the balance in the Participant's Account as of the last day of the calendar month preceding each subsequent payment, the numerator of which is one and the denominator of which is the total number of installments elected minus the number of installments previously paid. The term "balance," as used herein, refers to the amount credited to a Participant's Account or to the Fair Market Value (as defined in Section 5 (a)) of the Phantom Shares of Questar Corporation's common stock ("Common Stock") credited to his Account. (d) Phantom Stock Option and Certificates of Deposit Option. When making an election to defer all or a specified percentage of his compensation, a Participant shall choose between two methods of determining earnings on the deferred compensation. He may choose to have such earnings calculated as if the deferred compensation had been invested in Common Stock at the Fair Market Value (as defined in Section 5 (a)) of such stock as of the date such compensation amount would have otherwise been payable to him ("Phantom Stock Option"). Or he may choose to have earnings calculated as if the deferred compensation had been invested in negotiable certificates of deposit at the time such compensation would otherwise be payable to him ("Certificates of Deposit Option"). The Participant must choose between the two options for all of the compensation he elects to defer in any given year. He may change the option for future compensation by filing the appropriate notice with the Corporate Secretary before the first day of each calendar year, but such change shall not affect the method of determining earnings for any compensation deferred in a prior year. 5. Deferred Compensation Account. A Deferred Compensation Account ("Account") shall be established for each Participant. (a) Phantom Stock Option Account. If a Participant elects the Phantom Stock Option, his Account will include the number of shares and partial shares of Common Stock (to four decimals) that could have been purchased on the date such compensation would have otherwise been payable to him. The purchase price for such stock is the Fair Market Value of such stock, i.e., the closing price of such stock as reported on the Composite Tape of the New York Stock Exchange for such date or the next preceding day on which sales took place if no sales occurred on the actual payable date. The Participant's Account shall also include the dividends that would have become payable during the deferral period if actual purchases of Common Stock had been made, with such dividends treated as if invested in Common Stock as of the payable date for such dividends. (b) Certificates of Deposit Option Account. If a Participant elects the Certificates of Deposit Option, his Account will be credited with any compensation deferred by the Participant at the time such compensation would otherwise be payable and with interest calculated at a monthly rate using the typical rates paid by major banks on new issues of negotiable Certificates of Deposit on amounts of $1,000,000 or more for one year as quoted in The Wall Street Journal under "Consumer Savings Rates" on the Thursday closest to the end of the month or other published source of such rates as identified by Questar Corporation's Treasury department. The interest credited to each Account shall be based on the amount held in the Account at the beginning of each particular month. 6. Statement of Deferred Compensation Account. Within 45 days after the end of the calendar year, a statement will be sent to each Participant listing the balance in his Account as of the end of the year. 7. Retirement. Upon retirement or resignation as a Director from the Board of Directors, a Participant shall receive payment of the balance in his Account in accordance with the terms of his prior instructions and the terms of the Plan unless he is still serving as a voting director of Questar Corporation ("Questar"). Upon retirement or resignation as a Director of Questar or upon appointment as a non-voting Senior Director of Questar, a Participant shall receive payment of the balance in his Account in accordance with the terms of his prior instructions and the terms of the Plan unless he is currently serving as a Director of the Company. 8. Payment of Deferred Compensation. (a) Phantom Stock Option. The amount payable to the Participant choosing the Phantom Stock Option shall be the cash equivalent of the stock using the Fair Market Value of such stock on the date of withdrawal. (b) Certificates of Deposit Option. The amount payable to the Participant choosing the Certificate of Deposit Option shall include the interest on all sums credited to the Account, with such interest credited to the date of withdrawal. (c) The date of withdrawal for both the Phantom Stock Option Account and the Certificates of Deposit Option Account shall be the last day of the calendar month preceding payment or if payment is made because of death, the date of death. (d) The payment shall be made in the manner (lump sum or installment) chosen by the Participant. In the event of a Participant's death, payment shall be made within 45 days of the Participant's death to the beneficiary designated by the Participant or, in the absence of such designation, to the Participant's estate. 9. Payment, Change in Control. Notwithstanding any other provisions of this Plan or deferral elections made pursuant to Section 4 of this Plan, a Director, in the event of a Change in Control of Questar, shall be entitled to elect a distribution of his account balance within 60 days following the date of a Change in Control. For the purpose of this Plan, a "Change in Control" shall be deemed to have occurred if (i) any "Acquiring Person" (as that term is used in the Rights Agreement dated February 13, 1996, between Questar and ChaseMellon Shareholder Services, L.L.C. ("Rights Agreement")) is or becomes the beneficial owner (as such term is used in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of Questar representing 25 percent or more of the combined voting power of Questar, or (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving as directors of Questar: individuals who, as of May 19, 1998, constitute Questar's Board of Directors ("Board") and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Questar) whose appointment of election by the Board or nomination for election by Questar's stockholders was approved or recommended by a vote of at least two-thirds of the directors when still in office who either were directors on May 19, 1998, or who appointment, election or nomination for election was previously so approved or recommended; or (iii Questar stockholders approve a merger or consolidation of Questar or any direct of indirect subsidiary of Questar with any other corporation, other than a merger of consolidation that would result in the voting securities of Questar outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60 percent of the combined voting power of the securities of Questar or such surviving entity or its parent outstanding immediately after such merger or consolidation, or a merger or consolidation effected to implement a recapitalization of Questar (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of Questar representing 25 percent or more of the combined voting power of Questar's then outstanding securities; or (iv) Questar's stockholders approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by Questar of all or substantially all of Questar's assets, other than a sale of disposition by Questar of all or substantially all of the Company's assets to an entity, at least 60 percent of the combined voting power of the voting securities of which are owned by stockholders of Questar in substantially the same proportion as their ownership of Questar immediately prior to such sale. A Change in Control, however, shall not be considered to have occurred until all conditions precedent to the transaction, including but not limited to, all required regulatory approvals have been obtained. 10. Hardship Withdrawal. Upon petition to and approval by the Company's Board of Directors, a Participant may withdraw all or a portion of the balance in his Account in the case of financial hardship in the nature of an emergency, provided that the amount of such withdrawal cannot exceed the amount reasonable necessary to meet the financial hardship. The Board of Directors shall have sole discretion to determine the circumstances under which such withdrawals are permitted. 11. Amendment and Termination of Plan. The Plan may be amended, modified or terminated by the Company's Board of Directors. No amendment, modification, or termination shall adversely affect a Participant's rights with respect to amounts accrued in his Account. In the event that the Plan is terminated, the Board of Directors has the right to make lump-sum payments of all Account balances on such date as it may determine. 12. Nonassignability of Plan. The right of a Participant to receive any unpaid portion of his Account shall not be assigned, transferred, pledged or encumbered or be subject in any manner to alienation or attachment. 13. No Creation of Rights. Nothing in this Plan shall confer upon any Participant the right to continue as a Director. The right of a Participant to receive any unpaid portion of his Account shall be an unsecured claim against the general assets and will be subordinated to the general obligations of the Company. 14. Effective Date. The Plan was effective on June 1, 1982, and shall remain in effect until it is discontinued by action of the Company's Board of Directors. The effective date of the amendment to the Plan establishing a Phantom Stock Option is January 1, 1983. The Plan was amended and restated effective April 30, 1991, was amended and restated effective February 13, 1996, and was further amended and restated effective May 19, 1998. EX-10.3 4 0004.txt Exhibit 10.3 QUESTAR CORPORATION LONG-TERM STOCK INCENTIVE PLAN (As Amended and Restated October 26, 2000) 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 Termination" shall mean any retirement under the Company's Retirement Plan, with approval of the Board of Directors, or any termination of service on or after age 55, with approval of the Board. "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 regular closing benchmark 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. "Reduction in Force" shall mean an involuntary termination of employment due to economic conditions, sale of assets, shift in focus, or other reasons independent of the Participant's performance. "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 Termination, Disability, death, or Reduction in Force. 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, Designated Beneficiaries, and Family Members. 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 200,000 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 Termination, Disability, death, or Reduction in Force 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 Termination, Disability, death or Reduction in Force. (2) A Participant who terminates employment as a result of an Approved Termination 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) A Participant whose employment is terminated as a result of a Reduction in Force shall have 30 days from the date on which he is notified of his termination to exercise any Options or Rights that were vested as of the date of notification. (5) 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 Termination but within the period specified by the Committee to exercise Options or Rights after the Participant's Approved Termination, the Participant's Designated Beneficiary shall have the period specified by the Committee to exercise the Option or Right. (6) The foregoing notwithstanding, a Participant or the Participant's Designated Beneficiary shall not be permitted to exercise an Option or Right after the expiration date and a Participant shall forfeit any Options or Rights upon a determination made by the Board that the Participant has accepted employment or provided consulting services to a direct competitor of the Company. (b) Restricted Stock. If a Participant terminates employment before the end of the Restricted Period for a reason other than death, Approved Termination, Disability, Change of Control, or Reduction in Force, 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 Termination, Change of Control, or Reduction in Force, 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 Termination, Disability, or Reduction in Force, 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. EX-27 5 0005.txt
5 Exhibit 27 The following scheduled contains summarized financial information extracted from the Questar Gas Company Statements of Income and Balance Sheet for the period ended September 30, 2000, and is qualified in its entirety by reference to such unaudited financial statements. 1,000 9-MOS DEC-31-2000 SEP-30-2000 0 0 21,169 0 25,392 58,368 1,054,589 445,829 686,317 116,579 225,000 0 0 22,974 232,290 686,317 0 328,246 0 264,134 36,211 0 15,401 14,218 4,722 9,496 0 0 0 9,496 0 0
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