QUESTAR CORPORATION
EXECUTIVE INCENTIVE RETIREMENT PLAN
(As Amended and Restated effective May 19, 1998)
1. PURPOSE
The Executive Incentive Retirement Plan (hereinafter referred to
as the Plan) is intended to enable Questar Corporation and its
subsidiaries to meet competition and to attract and retain key
management personnel by helping such individuals to maintain their
standards of living at retirement and providing for their families in
the event of their death.
2. DEFINITIONS
Unless otherwise required by the context, the terms used herein
shall have the meanings set forth below.
"Board" shall mean the Board of Directors of Questar Corporation.
"Company" shall mean Questar Corporation and any other
organization controlled by or controlling Questar Corporation, or any
successor thereto.
"Compensation" of a Nominee shall mean the total base salary paid
to the Nominee by the Company and all Participating Corporations, but
excluding any other forms of additional compensation such as bonuses,
contributions made to or under any form of employee benefit program,
or ordinary income recognized as a result of exercising stock options.
Compensation shall include any base salary deferred by the Nominee
under the Company's tax-qualified plans or nonqualified plans and any
base salary reductions under the Company's Cafeteria Plan.
Compensation during a period of leave of absence approved by the Board
shall be assumed to be equal to the Nominee's full time earnings
immediately prior to such leave.
"Dependent" shall mean the unmarried natural or adopted child of
the Nominee prior to the attainment of age 18 by such child, provided
such child is a dependent of such Nominee as defined by the Internal
Revenue Service at the time of death of the Nominee.
"Family Protection Benefit" shall mean the benefit payments
defined in Section 7 of this Plan.
"Final Average Earnings" shall mean the highest average annual
Compensation paid to the Nominee during any period of 72 consecutive
semi-monthly pay periods of employment with the Company and/or any
Participating Corporation.
"Nominee" shall mean an employee nominated for participation in
the Plan who agrees to participate by signing an agreement.
"Participating Corporation" shall mean an organization
participating in the Plan in accordance with the provisions of Section
3.
"Participating Service Units" shall mean a measure of employment
with the Company determined as follows: each Nominee shall be
credited with a total of 100 Participating Service Units for each full
calendar year of employment, disability leave, or approved absence
with the Company and/or any Participating Corporation (prorated for
any calendar year in which such Nominee has less than a full calendar
year of employment, disability leave, or approved absence).
"Regular Retirement Plan" shall mean any retirement plan
maintained by the Company that qualifies as a defined benefit plan
under the terms of ERISA.
"Retirement Benefits" shall mean the benefit payments defined in
Section 5 and Section 6 of the Plan.
"Spouse" shall mean the person to whom the Nominee is legally
married continuously for one year immediately prior to the date of the
Nominee's death if death occurs prior to the Nominee's retirement or
continuously for one year immediately prior to the Nominee's
retirement date if the Nominee's death occurs after retirement. The
term spouse shall not include any person from whom the Nominee is
divorced after his/her retirement.
3. PARTICIPATING CORPORATIONS
The benefits provided to Nominees and their families by the Plan
depend upon the employment and compensation histories of the Nominees.
The Plan will recognize all employment with the Company including
periods of employment with a predecessor organization immediately
prior to the acquisition of control of such organization by the
Company.
Compensation paid directly by the Company to the Nominee will be
recognized for the purpose of determining the benefit payable under
this Plan. The amount of Compensation paid by any other organization
affiliated with the Company will be recognized only if the Company's
Board designates such organization as an eligible Participating
Corporation, and the Board of Directors of such designated
organization adopts a resolution agreeing to participate under the
terms of the Plan. A Participating Corporation may revoke future
participation at any time, except, however, that such revocation shall
not deprive any Nominee, Spouse, or Dependent of benefits that such
Nominee, Spouse or Dependent is then eligible to receive.
The benefits payable to any Nominee or to the Nominee's family
that depend upon amounts of Compensation paid by two or more
Participating Corporations shall be allocated among them.
The Company may provide a funding source for benefits payable
under the Plan by purchasing insurance policies on the lives of
Nominees. The premiums, cash values, loans and interest of any policy
on the life of a Nominee whose benefits depend upon Compensation paid
by two or more organizations will be allocated among the Participating
Corporations.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in this Plan shall be limited to those key
executive employees of the Company or its affiliates nominated prior
to June 20, 1986, by the Company's Board or the Board of Directors of
a Participating Corporation. To become eligible for Retirement
Benefits under the Plan, a Nominee must have continued in the
employment of the Company until completion of 15 years of service or
the attainment of age 65, whichever first occurs. Any Nominee who
reaches age 65 or who has a total of 15 years of service with the
Company (counting no single annual period of service more than once)
and who is at such time a Nominee of more than one Participating
Corporation, shall be eligible for Retirement Benefits as herein
provided from all Participating Corporations having nominated such
employee.
The Company may impose such other terms and conditions as it
shall deem to be desirable including but not limited to an agreement
that the Nominee shall consult upon the request of the Company
following retirement and shall not disclose any trade secrets or other
confidential information and shall engage in no competitive business
activities, directly or indirectly, after retirement.
All Nominees who elect to participate must sign an agreement and
consent to insurance being issued upon their lives to be paid for by
the Company and with the Company as beneficiary and agree to terms and
conditions above specified. Such agreements shall not constitute an
employment contract, and the Company may dismiss or demote such
Nominee as an officer at any time. The Nominee may voluntarily
terminate employment as an officer at any time. A Nominee who ceases
to serve as an officer shall be terminated from this Plan and shall
forfeit all benefit rights under this Plan unless the Nominee has
satisfied the eligibility requirements as hereinafter provided prior
to the date on which service as an officer ends.
5. RETIREMENT BENEFITS
A Nominee who becomes eligible for retirement benefits under the
Company's Regular Retirement Plan shall be eligible to commence
Retirement Benefits under this Plan. Except as set forth in Section
6, the first payment of Retirement Benefits will be due on the first
day of the month following retirement under the provisions of a
Regular Retirement Plan, and payments will continue on the first of
each month thereafter so long as the Nominee is alive.
A Nominee who is not eligible to receive benefits under the
Company's Regular Retirement Plan may receive Retirement Benefits
under this Plan if declared eligible to receive such benefits by the
Board of Directors.
A Nominee may elect to waive any Retirement Benefits payable
under the terms of this Plan to the extent that such benefits would be
payable under the Company's make-up Supplemental Executive Retirement
Plan in the absence of the Nominee's participation in this Plan.
The basic annual retirement amount of such a Nominee shall be ten
percent (10%) of the Final Average Earnings of the Nominee.
6. LUMP-SUM ELECTION
A Nominee has a one-time election to receive the present value of
his Retirement Benefit in a lump sum. The Nominee shall make this
election at least one year prior to his retirement. The present value
of the Retirement Benefit shall be calculated using a standard
mortality table referred to as the "83 Group Annuity Mortality Table"
and 80 percent of the six-month average rate for the 30-year Treasury
bonds prior to the Nominee's retirement. When making this election,
the Nominee shall also indicate when the lump-sum payment shall be
made and if it is to be made in more than one installment. The full
amount of any lump-sum payment, together with credited interest, must
be paid within five years of the Nominee's retirement. Any deferred
payouts of lump-sum payments shall be credited with interest
calculated at a monthly rate using the appropriate 30-year Treasury
bond quoted in the Wall Street Journal on the first business day of
each month. (The appropriate 30-year Treasury bond shall be the bond
that has the closest maturity date (by month) preceding the date on
which the interest is to be credited.) Any lump-sum payments that are
not deferred shall be paid on the first business day of the month
following the Nominee's retirement date or as soon thereafter as is
administratively practicable. The Nominee's spouse must consent to
the Nominee's election to receive a lump-sum payment. This consent
must be in writing and must acknowledge the effect of such election.
If the Nominee fails to timely make an election prior to his
retirement, the Nominee shall receive monthly Retirement Benefits.
7. FAMILY PROTECTION BENEFITS
A Family Protection Benefit shall become payable upon the event
that the Nominee dies in the active service of the Company or after
retirement and leaves a surviving Spouse or Dependent.
In the event that the Nominee dies prior to retirement and before
having 25 years of service or satisfying the age and service
requirements for early or normal retirement under the Company's
Regular Retirement Plan, the amount of the Family Protection Benefit
shall be equal to the full benefit calculated in accordance with
Section 5 that would have been payable if the Nominee had been deemed
to have satisfied the eligibility requirements under this Plan as of
the date of death. The first payment will be due on the first day of
the month following the date of death, and payments will continue on
the first day of each month thereafter provided that the Spouse or a
Dependent is alive and, in the case of a Dependent, until such
Dependent has reached his/her 18th birthday.
In the event that the Nominee dies prior to retirement but after
having 25 years of service or satisfying the age and service
requirements for early or normal retirement under the Company's
Regular Retirement Plan, the amount of the Family Protection Benefit
shall be equal to one-half of the benefit calculated in accordance
with Section 5 that would have been payable if the Nominee had been
deemed to have satisfied the eligibility requirements under this Plan
as of the date of death. The first payment will be due on the first
day of the month following the date of death, and payments will
continue on the first day of the month thereafter provided that the
Spouse or a Dependent is alive and, in the case of a Dependent, until
such Dependent has reached his/her 18th birthday.
In the event that the Nominee dies after retirement and did not
elect a lump-sum, the amount of the Family Protection Benefit shall be
equal to one-half of the Nominee's Retirement Benefits under this
Plan. The first payment will be due on the first day of the month
following the date of death and payments will continue on the first of
each month thereafter provided that the Spouse or a Dependent is alive
and, in the case of a Dependent, until such Dependent has reached
his/her 18th birthday.
Family Protection Benefit payments shall be paid in full to the
surviving Spouse or divided equally amongst those Dependents who have
not reached their 18th birthdays in the event that there is no Spouse.
8. ALLOCATION OF BENEFITS
Benefit payments from the Plan attributable to a Nominee will be
allocated to and paid directly by the Company and the Participating
Corporations.
9. FINANCING THE BENEFITS
The Company may enter into life insurance policies on the lives
of the Nominees to protect against the burdens of premature death and
to provide for an orderly financing program. The policies will be
owned by the Company, and the proceeds will be paid to the Company.
The Nominee will have no beneficial interest in any such insurance
policy.
The premium payments, cash values, loans and interest of any
policies on the life of a Nominee for any calendar year will be
allocated among the Participating Corporations.
Proceeds from policies on the lives of Nominees will be allocated
in proportion to the total benefits and premiums paid by and for which
each Participating Corporation is ultimately responsible.
10. PAYMENT OF BENEFITS
Benefits as well as premium payments will be the obligation of
the Company and/or Participating Corporations.
11. ADMINISTRATION
The Management Performance Committee of the Company's Board shall
administer the Plan and may appoint an officer of the Company to
assist the Committee with this responsibility. The Board shall have
the sole responsibility to interpret the Plan and adopt such rules and
regulations for carrying out the Plan as it may deem necessary.
Decisions of the Board shall be final and binding.
12. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all of the business and/or assets of the Company, to
assume and agree to pay any Retirement Benefits in the same manner and
to the same extent that the Company would be required to perform if no
such succession or assignment had taken place.
13. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Nominee or a Nominee may reasonably incur as a result of the Company's
contesting the validity or enforceability of such person's right to
receive benefits under the terms of this Plan following a "Change in
Control" of the Company.
In the event that a Change in Control of the Company occurs and a
Nominee's employment with the Company or its successor(s) terminates,
the Nominee shall receive a full lump-sum payment of his Retirement
Benefits calculated as set forth in Section 6 within 30 days of
his/her termination.
A Change in Control of the Company shall be deemed to have
occurred if (i) any Acquiring Person (as such term is defined in the
Rights Agreement dated as of February 13, 1996, between the Company
and ChaseMellon Shareholder Services L.L.C.) is or becomes the
beneficial owner (as such term is used in Rule 13d-3 under the
Securities Exchange Act of 1934) of securities of the Company
representing 25 percent or more of the combined voting power of the
Company; or (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, as of May 19, 1998, constitute the Company's Board of
Directors (Board) and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office who
either were directors on May 19, 1998, or whose appointment, election
or nomination for election was previously so approved or recommended;
or (iii) the Company's stockholders approve a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60 percent of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25 percent or more of the combined voting power of the
Company's then outstanding securities; or (iv) the Company's
stockholders approve a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at
least 60 percent of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior
to such sale. A Change in Control, however, shall not be considered
to have occurred until all conditions precedent to the transaction,
including but not limited to, all required regulatory approvals have
been obtained.
14. AMENDMENT OR TERMINATION
The Board may at any time amend, alter, modify or terminate this
Plan; provided, however, that any such action shall not adversely
affect the rights of any current Nominees or their Spouses or
Dependents then eligible to receive benefits under the Plan on the
date of such amendment, alteration, modification or termination.