1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended and Restated (and Incorporating the December 1996 Amendment)
ARTICLE I - PURPOSE OF PLAN
1.1 Purpose of Plan. USF&G Corporation (the "Corporation") has adopted the 1993
Stock Plan for Non-Employee Directors (the "Plan") to provide for payment in
shares of the Corporation's Common Stock, par value $2.50 per share ("Stock"),
of a portion of the retainer fee payable to members of the Board of Directors of
the Corporation who are not employees of the Corporation or any of its
affiliates or subsidiaries ("Non-Employee Directors") and to allow Non-Employee
Directors to elect to defer receipt of all or a portion of their retainer and/or
meeting fees. The Plan also provides certain retirement benefits in the form of
Stock for Non-Employee Directors. The Plan is intended to provide Non-Employee
Directors with a larger equity interest in the Corporation in order to attract
and retain well-qualified individuals to serve as Non-Employee Directors and to
enhance the identity of interests between Non-Employee Directors and the
shareholders of the Corporation.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 Eligibility and Participation. Only Non-Employee Directors shall be
eligible to participate in the Plan, and participation in the Plan is mandatory
for all Non-Employee Directors.
ARTICLE III - RETAINER STOCK AWARDS AND DEFERRAL ELECTIONS
3.1 Retainer Stock Awards.
(a) July Stock Awards. On each July 1 through and including July 1,
2001 (each such date hereinafter a "Grant Date"), in lieu of the portion of the
retainer fee payable to a Non-Employee Director on such Grant Date determined
without regard to this Plan (the "July Retainer"), and in consideration for
services previously rendered as a Non-Employee Director of the Corporation, the
Corporation shall issue to each Non-Employee Director who has served as such for
at least six (6) months immediately preceding such Grant Date, a whole number of
shares of Stock (the "July Stock Award") equal to the lesser of (1) 1,000 shares
or (2) the number of shares determined by dividing (a) $35,000 reduced by the
July Retainer, by (b) the Fair Market Value of the Stock on such Grant Date. For
purposes of this Plan, the "Fair Market Value" of Stock on any business day
shall be the average of the high and low sales prices quoted on the New York
Stock Exchange Composite Listing on the day in question, or if there was no
quotation on such date, on the next preceding business day on which there were
such quotations. To the extent that any formula described in this Section 3.1(a)
does not result in a whole number of shares of Stock, the result shall be
rounded upwards to the next whole number such that no fractional shares of Stock
shall be issued under the Plan.
(b) January Cash Retainer or Stock Award. Each Non-Employee Director
may elect to have the portion of the retainer fee that is payable in January
1997 and in each January thereafter through and including 2001, determined
without regard to this Plan (the "January Retainer"), paid in Stock rather than
in cash. Such election must be made prior to the first day of January in which
the January Retainer is paid. If the January Retainer is paid in Stock, the
Non-Employee Director shall receive a Stock certificate, pursuant to Section
6.1, evidencing the number of shares of Stock determined by dividing (a) the
January Retainer by (b) the Fair Market Value of the Stock on the date the
January Retainer is paid. To the extent that any formula described in this
Section 3.1(b) does not result in a whole number of shares of Stock, the result
shall be rounded upwards to the next whole number such that no fractional shares
of Stock shall be issued under the Plan.
(c) Committee Retainers; Election to Receive Stock or Cash. Each
Non-Employee Director may elect to have the committee retainer payable in
January and July 1997 and in each January and July thereafter through and
including 2001, determined without regard to this Plan (the "Committee
Retainer"), paid in Stock rather than in cash. Such election must be made prior
to the first day of the calendar year in which the Committee Retainer is paid.
If the Committee Retainer is paid in Stock, the Non-Employee Director shall
receive a Stock certificate, pursuant to Section 6.1, evidencing the number of
shares of Stock determined by dividing (a) the Committee Retainer by (b) the
Fair Market Value of the Stock on the date the Committee Retainer is paid. To
the extent that any formula described in this Section 3.1(c) does not result in
a whole number of shares of Stock, the result shall be rounded upwards to the
next whole number such that no fractional shares of Stock shall be issued under
the Plan.
3.2 Deferrals Elections.
(a) Deferral Elections for Stock Awards, Retainer Fees and Meeting
Fees. Payment of all or any part of the July Stock Award, January Retainer,
Committee Retainer and/or any other retainer or fees payable to a Non-Employee
Director for meetings of the Board or Board Committees or for extraordinary
services may be deferred by election of the Non-Employee Director. Each such
election must be made in writing and delivered to the Corporation prior to the
start of the calendar year for which the July Stock Award, January Retainer,
Committee Retainer and/or any other retainer or fees will be paid and must be
irrevocable for the affected calendar year. Each election shall remain in effect
until revoked in writing, and any such revocation shall become effective no
earlier than the first day of the first calendar year commencing after such
revocation is received by the Corporation.
(b) Special Election for Amounts Deferred Under the 1982 Unfunded
Deferred Compensation Plan for Non-Employee Directors of USF&G Corporation (the
"1982 Plan"). Any Non-Employee Director who deferred receipt under the 1982 Plan
of any amounts which would have been paid, but for such deferral, may elect, on
or before December 31, 1996, to have his or her account in the 1982 Plan debited
as of the date of such election by the total of such amounts, plus interest
credited thereon under the 1982 Plan (the "Transferred Amount") and have the
Transferred Amount credited to his or her Account as provided in Section 3.2(c)
of this Plan. In determining the Transferred Amount, as of any date which is not
the end of a calendar quarter, interest credited under Section 4 of the 1982
Plan shall be pro rated from the last day of the prior calendar quarter to the
date of the election to transfer such amount.
(c) Crediting Stock Units to Accounts. Amounts deferred pursuant to
Section 3.2(a) or 5.2 or transferred pursuant to Section 3.2(b) shall be
credited as of the date of the deferral or transfer to a bookkeeping reserve
account maintained by the Corporation ("Account") in units which are equivalent
in value to shares of Stock ("Stock Units"). The number of Stock Units credited
to an Account with respect to any Non-Employee Director shall equal (i) the
number of shares of any Stock Award deferred plus (ii) a number of Stock Units
equal to (I) the amount deferred under Section 3.2(a) or 5.2 of this Plan or
transferred under Section 3.2(b) of this Plan, as applicable, divided by (II)
the Fair Market Value of Stock on the date on which such cash amount would have
been paid but for the deferral election pursuant to Section 3.2(a) or 5.2 or on
the date of the election referred to in Section 3.2(b), as applicable.
(d) Fully Vested Stock Units. All Stock Units credited to a
Non-Employee Director's Account pursuant to this Article III shall be at all
times fully vested and nonforfeitable.
(e) Payment of Stock Units. Stock Units credited to a Non-Employee
Director's Account pursuant to this Article III shall be payable in an equal
number of shares of Stock in a single distribution made at such time specified
by the Non-Employee Director in the applicable deferral election, provided that
the designated payment date with respect to any election must be the first day
of a subsequent calendar year which is no earlier than twelve (12) months
following the establishment of the affected Stock Unit.
ARTICLE IV - RETIREMENT BENEFITS
4.1 Retirement Benefits for Non-Employee Directors. Each Non-Employee Director
who commences serving as such after the initial effective date of the Plan shall
have credited to his or her Account a number of Stock Units equal to $50,000
divided by the Fair Market Value of Stock on the date on which he or she becomes
a Non-Employee Director; provided, however, that notwithstanding this formula,
no such Non-Employee Director shall be credited with less than 1,500 Stock
Units. To the extent that the formula described in this Section 4.1 does not
result in a whole number of Stock Units, the result shall be rounded upwards to
the next whole number. Each Non-Employee Director who was serving as such on the
initial effective date of this Plan and who made an irrevocable election on or
before July 1, 1993, has credited to his or her Account the number of Stock
Units specified in Section 4.1 of the Plan as in effect prior to this Amendment
and Restatement.
4.2 Vesting of Stock Units. Stock Units credited to a Non-Employee Director's
Account pursuant to this Article IV shall vest at a rate of ten percent (10%)
for each complete year before and after the initial effective date of this Plan
in which the Non-Employee Director served or serves as such with respect to the
Corporation or any immediate predecessor thereof, with full vesting of such
Stock Units upon the completion of ten (10) years of service.
4.3 Payment of Stock Units. Upon termination of service as a Non-Employee
Director for any reason, the total vested Stock Units credited to such
Non-Employee Director's Account pursuant to this Article IV shall be paid to the
Non-Employee Director in an equal number of shares of Stock.
ARTICLE V - DIVIDEND EQUIVALENT PAYMENTS
5.1 Dividend Equivalent Payments. As of each dividend payment date with respect
to Stock, each Non-Employee Director shall receive a cash payment ("Dividend
Equivalent Payment") equal to the product of (i) the per-share cash dividend
payable with respect to each share of Stock on such date and (ii) the total
number of vested Stock Units credited to his or her Account as of the record
date corresponding to such dividend payment date.
5.2 Deferral of Dividend Equivalent Payments. On or before the beginning of any
calendar year, a Non-Employee Director may elect to defer receipt of all
Dividend Equivalent Payments made with respect to any dividend record date which
occurs on or after the first day of such calendar year. Any such election shall
be in writing, delivered to the Corporation, and shall remain in effect until
revoked in writing, delivered to the Corporation. Any revocation shall become
effective no earlier than the first day of the first calendar year commencing
after such revocation is received by the Corporation. Any Dividend Equivalent
Payments deferred pursuant to this Section 5.2 shall be credited to the
Non-Employee Director's Account as provided in Section 3.2(c), shall be fully
vested and shall be paid as provided in Section 4.3.
ARTICLE VI - DELIVERY OF STOCK CERTIFICATES.
6.1 Retainer Fees Paid in Stock. The Stock certificate for shares of Stock
issued to any Non-Employee Director pursuant to a July Stock Award or in lieu of
any January Retainer or Committee Retainer paid after December 1, 1996 shall be
delivered by the Corporation to the Non-Employee Director as soon as practicable
following the date such July Stock Award, January Retainer or Committee Retainer
is payable, provided that the receipt of such Stock is not deferred pursuant to
Section 3.2(a) of this Plan.
6.2 Stock Unit Payments. The Corporation shall issue and deliver to the
Non-Employee Director a Stock certificate for payment of Stock Units as soon as
practicable following the date on which Stock Units are payable.
ARTICLE VII - STOCK
7.1 Stock. The Aggregate number of shares of Stock that may be issued under the
Plan shall not exceed three hundred thousand (300,000) shares, unless such
number of shares is adjusted as provided in Article VIII of this Plan.
ARTICLE VIII - ADJUSTMENT UPON CHANGES IN CAPITALIZATION
8.1 Adjustment Upon Changes in Capitalization. In the event of a stock dividend,
stock split or combination, reclassification, recapitalization or other capital
adjustment of shares of Stock, the number of shares of Stock that may be issued
pursuant to Stock Awards and Stock Units and the number of Stock Units credited
to Accounts shall be appropriately adjusted by the Board of Directors of the
Corporation, whose determination shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan on account of any
adjustment specified herein. The grant of Stock Awards or Stock Units pursuant
to this Plan shall not affect in any way the right or power of the Corporation
to issue additional Stock or other securities, make adjustments,
reclassifications, reorganizations or other changes in its corporate, capital or
business structure, to participate in a merger, consolidation or share exchange
or to transfer its assets or dissolve or liquidate.
ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN
9.1 In General. The Board of Directors of the Corporation may at any time
terminate, suspend or amend this Plan.
9.2 Written Consents. No amendment may adversely affect the right of any
Non-Employee Director to receive any Stock previously granted under this Plan or
to receive any Stock pursuant to an outstanding Stock Unit without the written
consent of such Non-Employee Director.
9.3 Termination of Stock Awards. Unless the Plan is sooner terminated, no
Stock shall be granted as a Stock Award or in lieu of any retainer fees under
this Plan after July 1, 2001.
ARTICLE X - GOVERNMENT REGULATIONS
10.1 Government Regulations.
(a) The obligations of the Corporation to issue any Stock granted under
this Plan shall be subject to all applicable laws, rules and regulations and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Board of Directors of the Corporation.
(b) The Board of Directors of the Corporation may make such changes as
may be necessary or appropriate to comply with the rules and regulations of any
governmental authority.
ARTICLE XI - MISCELLANEOUS
11.1 Unfunded Plan. The Plan shall be unfunded with respect to the Corporation's
obligation to pay any amounts due pursuant to Stock Units and Dividend
Equivalent Payments, and a Non-Employee Director's rights to receive any payment
of any Stock Unit or Dividend Equivalent Payment shall be not greater than the
rights of an unsecured general creditor of the Corporation.
11.2 Assignment; Encumbrances. The right to receive Stock or Stock Units under
this Plan and the right to receive payment with respect to a Stock Unit under
this Plan are not assignable or transferable and shall not be subject to any
encumbrances, liens, pledges or charges of the Non-Employee Director or his or
her creditors. Any attempt to assign, transfer or hypothecate any Stock Unit or
any right to receive Stock or Stock Units shall be void and of no force and
effect whatsoever.
11.3 Designation of Beneficiaries. A Non-Employee Director may designate a
beneficiary or beneficiaries to receive any payments under the Plan upon his
or her death.
11.4 Applicable Law. The validity, interpretation and administration of this
Plan and any rules, regulations, determinations or decisions made hereunder, and
the rights of any and all persons having or claiming to have any interest herein
or hereunder, shall be determined exclusively in accordance with the laws of the
State of Maryland, without regard to the choice of laws provisions thereof.
11.5 Headings. The headings in this Plan are for reference purposes only and
shall not affect the meaning or interpretation of this Plan.
11.6 Notices. All notices, elections or other communications made or given
pursuant to this Plan shall be in writing and shall be sufficiently made or
given if hand-delivered or mailed by certified mail, addressed to any
Non-Employee Director at the address contained in the records of the Corporation
or to the Corporation at its principal office.
ARTICLE XII - EFFECTIVE DATE OF PLAN
12.1 Effective Date of Plan. This Plan initially became effective on July 28,
1993. The Plan as amended and restated became effective on September 25, 1996.
The Plan was further amended effective December 1, 1996.