QUESTAR GAS COMPANY
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 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 "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, 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.