Exhibit 10.7
CIGNA CORPORATION
STOCK PLAN
(As Amended through July 2000)
ARTICLE 1
Statement of Purpose
The CIGNA Corporation Stock Plan (the “Plan”) is intended to reward and provide
incentives for key employees of CIGNA Corporation and its Subsidiaries by
providing them with an opportunity to acquire an equity interest in CIGNA
Corporation, thereby increasing their personal interest in its continued success
and progress. It also is intended to aid the Company in attracting key personnel
of exceptional ability.
ARTICLE 2
Definitions

  2.2   Defined Terms. For all purposes of this Plan, except as otherwise
expressly provided or defined herein or unless the context otherwise requires,
the terms defined in this Article shall have the following meanings:

“Board of Directors” means either the board of directors of CIGNA Corporation or
any duly authorized committee of that board.
“Change of Control” means:

  (i)   a corporation, person or group acting in concert as described in
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange
Act”), holds or acquires beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act of a number of preferred or common shares of
CIGNA Corporation having voting power which is either (I) more than 50% of the
voting power of the shares which voted in the election of directors of CIGNA
Corporation at the shareholders’ meeting immediately preceding such
determination, or (ii) more than 25% of the voting power of CIGNA Corporation’s
outstanding common shares; or

  (ii)   as a result of a merger or consolidation to which CIGNA Corporation is
a party, either (I) CIGNA Corporation is not the surviving corporation or
(ii) Directors of CIGNA Corporation immediately prior to the merger or
consolidation constitute less than a majority of the Board of Directors of the
surviving corporation; or

 

 

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  (iii)   a change occurs in the composition of the Board at any time during any
consecutive 24-month period such that the “Continuity Directors” cease for any
reason to constitute a majority of the Board. For purposes of the preceding
sentence “Continuity Directors” shall mean those members of the Board who
either: (I) were directors at the beginning of such consecutive 24-month period;
or (ii) were elected by, or on nomination or recommendation of, at least a
majority (consisting of at least nine directors) of the Board.

“Committee” means the People Resources Committee of the Board of Directors or
any successor committee with responsibility for compensation. The number of
Committee members and their qualifications shall at all times be sufficient to
meet the requirements of Securities and Exchange Commission Rule 16b-3 as in
effect from time to time.
“Common Stock” means the common stock, par value $1 per share, of CIGNA
Corporation.
“Company” means CIGNA Corporation, a Delaware corporation, and/or its
Subsidiaries.
“Deferred Compensation Account” means a separate account established pursuant to
a Deferred Compensation Plan.
“Deferred Compensation Plan” means and refers to a deferred compensation plan of
the Company which has been designated by the Committee as a “Deferred
Compensation Plan” for purposes of this Plan.
“Disability” means permanent and total disability as defined in Section 22(e)(3)
of the Internal Revenue Code.
“Early Retirement” means a Termination of Employment, after appropriate notice
to the Company, (I) on or after age 55 and before age 65 with eligibility for
immediate annuity benefits under a qualified pension or retirement plan of the
Company, or (ii) upon such terms and conditions approved by the Committee or
officers of the Company designated by the Board of Directors or the Committee.
“Eligible Employee” means a salaried officer or other key employee of the
Company who (I) occupies a position with the Company that has been designated by
the Committee as an eligible position for participation in this Plan or (ii) has
been specifically authorized or designated by the Committee to participate in
this Plan.

 

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“Fair Market Value” means the mean between the highest and lowest quoted selling
prices as reported on the Composite Tape (or other successor means of publishing
stock prices) on the date as of which any determination of such value is or is
required to be made, or, if the Composite Tape or such successor publication is
not published on such date, on the next preceding date of publication. In the
absence of such sales, Fair Market Value shall be determined by the Committee,
which shall take into account all relevant facts and circumstances.
“Incentive Stock Option” means a stock option granted in accordance with
Section 422A of the Internal Revenue Code.
“Participant” means an Eligible Employee to whom any one or more of the awards
authorized in this Plan shall have been granted.
“Payment Date” means the date that payment of an award pursuant to a Qualifying
Incentive Plan, or of a benefit pursuant to a Qualifying Supplemental Benefit
Plan, is made or would have been made but for deferral pursuant to
Section 3.7(b).
“Qualifying Incentive Plan” means any Company bonus plan, short-term or
long-term incentive compensation plan or any other incentive compensation
arrangement, including but not limited to the Company’s Performance Recognition
Award Program.
“Qualifying Supplemental Benefit Plan” means any plan of the Company pursuant to
which benefits which would have been paid under a tax qualified retirement plan
but for legal limitations are payable in cash to eligible employees of the
Company.
“Retirement” means a Termination of Employment, after appropriate notice to the
Company, (I) on or after age 65 with eligibility for immediate annuity benefits
under a qualified pension or retirement plan of the Company, or (ii) upon such
terms and conditions approved by the Committee, or officers of the Company
designated by the Board of Directors or the Committee.
“Subsidiary” means any corporation of which more than 50% of the total combined
voting power of all classes of stock entitled to vote, or other equity interest,
is directly or indirectly owned by CIGNA Corporation; or a partnership, joint
venture or other unincorporated entity of which more than a 50% interest in the
capital, equity or profits is directly or indirectly owned by CIGNA Corporation.
“Termination for Cause” means a Termination of Employment initiated by the
Company on account of the conviction of Participant of a felony involving fraud
or dishonesty directed against the Company.

 

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“Termination of Employment” means the termination of the Participant’s active
employment relationship with the Company, unless otherwise expressly provided by
the Committee, or the occurrence of a transaction by which the Participant’s
employing Company ceases to be a Subsidiary.
“Termination Upon a Change of Control” means a Termination of Employment upon or
within two years after a Change of Control (I) initiated by the Company or a
successor corporation other than pursuant to Termination for Cause or
(ii) initiated by the Participant and pursuant to the Participant’s
certification that the Change of Control has rendered him unable to perform the
duties and responsibilities of the position he held immediately prior to the
Change of Control by adverse changes in his authority, compensation, office
location, duties, responsibilities, or title.

  2.2   General. Certain terms are defined in other Articles of this Plan. The
terms defined in this Article and elsewhere in this Plan shall include the
feminine as well as the masculine gender and the plural as well as the singular,
as the context in which they are used requires.

ARTICLE 3
Authorized Stock Incentive Awards

  3.1   Authorized Awards. The awards authorized are as follows:

  (a)   stock options,

  (b)   stock appreciation rights,

  (c)   restricted stock grants,

  (d)   dividend equivalent rights, and

  (e)   Common Stock in lieu of cash or other awards payable under a Qualifying
Incentive Plan or Qualifying Supplemental Benefit Plan.

  3.2   General Powers of the Committee. Subject to the provisions of this Plan,
the Committee is authorized and empowered in its sole discretion to select
Participants and to grant to them any one or more of the awards authorized above
in such amounts and combinations and upon such terms and conditions as it shall
determine.

 

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  3.3   Stock Options. (Paragraphs (d), (f), (g) and (h) below apply only to
options granted on or after February 24, 1999.) The Committee shall have the
authority to grant Eligible Employees options to purchase Common Stock upon such
terms and conditions as it shall establish, including restrictions on the right
to exercise options, subject in all events to the following limitations and
provisions of general application:     (a)   The option price per share of any
option shall not be less than the Fair Market Value on the date of grant. The
option price may be paid in cash or, if the Committee so provides, in Common
Stock (including Common Stock subject to a Restricted Period pursuant to Section
3.5(a)). Common Stock used to pay the option price shall be valued using the
Fair Market Value on the date of exercise. To the extent the option price is
paid in shares of restricted stock, an equal number of the shares of Common
Stock purchased upon exercise of the option shall be subject to identical
restrictions which shall continue in effect for the remaining part of the
Restricted Period applicable to the restricted stock used to pay the option
price.

  (b)   No option shall be for a term of more than 10 years from the date of
grant.

  (c)   No option may be exercised during a leave of absence except to the
extent exercisable immediately prior to commencement of the leave of absence,
unless otherwise expressly provided by the Committee.

  (d)   Except as provided elsewhere in this Section 3.3, in the event of
Termination of Employment (including termination during an approved leave of
absence) for any reason of a Participant holding an outstanding option, the term
of the option shall expire on the earlier of the date of Termination of
Employment or the expiration date set forth in the option.

  (e)   In the event of Termination of Employment due to death or Disability
(including death or Disability during an approved leave of absence) of a
Participant holding an outstanding Incentive Stock Option, the option shall be
fully exercisable immediately and the term of the option shall expire on the
earlier of 12 months from the date of Termination of Employment or the
expiration date set forth in the option.

  (f)   Any outstanding option granted on or after July 26, 2000 and held by a
Participant at Termination of Employment due to death, Disability, Early
Retirement or Retirement shall become or remain exercisable in accordance with
the terms and conditions established by the Committee at the time of grant.

  (g)   In the event of Termination of Employment due to Early Retirement or
Retirement (including during an approved leave of absence) of a Participant
holding an outstanding Incentive Stock Option or Termination of Employment Upon
a Change of Control of a Participant holding an outstanding option, the term of
the option shall expire on the earlier of 3 months from the date of Termination
of Employment or the expiration date set forth in the option.

 

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  (h)   Notwithstanding the provisions of Section 3.3(f), in the event of a
Termination of Employment due to Early Retirement (including during an approved
leave of absence) of a Participant holding an outstanding option, the Committee
or its designee may, in its or his sole discretion, curtail the exercise period
of the option from the expiration date set forth in the option to any earlier
date up to and including the date of Participant’s Termination of Employment.  
  3.4   Stock Appreciation Rights. The Committee shall have the authority to
grant stock appreciation rights to Eligible Employees who are granted options
under this Plan upon such terms and conditions as it shall establish, subject in
all events to the following limitations and provisions of general application:

  (a)   Each right shall relate to a specific option granted under this Plan and
shall be granted to the optionee either concurrently with the grant of such
option or at such later time as determined by the Committee.

  (b)   The right shall entitle an optionee to receive a number of shares of
Common Stock, without payment to the Company, determined by dividing — (1) the
total number of shares which the optionee is eligible to purchase as of the
exercise date under the related option multiplied by the amount by which the
Fair Market Value of a share of Common Stock on the exercise date of the right
exceeds the Fair Market Value of a share of Common Stock on the date, as
determined by the Committee, that the right or related option was granted to the
optionee; by (2) the Fair Market Value of a share of Common Stock on the
exercise date.

  (c)   In lieu of issuing shares on an exercise of a right, the Committee may
elect to pay the cash equivalent of the Fair Market Value on the date of
exercise of any or all the shares which would otherwise be issuable pursuant to
such exercise.

  (d)   Shares under an option to which a right is related shall be used not
more than once to calculate a number of shares or cash to be received pursuant
to an exercise of such right.

  (e)   The number of shares which may be purchased pursuant to an exercise of
the related option will be reduced to the extent such shares are used in
calculating the number of shares or cash to be received pursuant to an exercise
of a related right.

 

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  (f)   In the event of Termination of Employment of a Participant holding an
outstanding right, the right shall be exercisable only to the extent and upon
the conditions that its related option is exercisable.

  3.5   Restricted Stock Grants. The Committee shall have the authority to award
Common Stock to Eligible Employees by grant (a “Grant”) upon such terms and
conditions as it shall establish, subject in all events to the following
limitations, restrictions and provisions of general application:

  (a)   Except as expressly provided below, the Common Stock awarded by a Grant
shall not be sold, transferred, assigned, pledged or otherwise disposed of by
the Participant during the period or periods established by the Committee (each
such period, a “Restricted Period”). Common Stock subject to a Restricted Period
may be used to exercise options pursuant to Section 3.3(a). The Committee may
establish different Restricted Periods applicable to such number of the shares
of Common Stock evidenced by a single Grant as it deems appropriate.

  (b)   The Common Stock awarded by a Grant shall be issued by the Company as of
the date of the Grant. During the Restricted Period, the Participant shall be
entitled to vote the shares. Shares issued as a consequence of stock dividends,
splits or reclassifications shall be issued subject to the same limitations,
restrictions and provisions applicable to the Common Stock with respect to which
they are issued.

  (c)   In the event of Termination of Employment of a Participant during a
Restricted Period, except Termination Upon a Change of Control or termination by
reason of death or Disability, ownership of the Common Stock subject to any
Restricted Period at the date of Termination of Employment and all rights
therein shall be forfeited to the Company, unless otherwise expressly provided
by the Committee. In the event of Termination of Employment by reason of
Retirement of a Participant during a Restricted Period, the Committee or its
designee in the sole discretion of either may provide, before the Participant’s
Retirement, that the Restricted Period applicable to any outstanding Grant at
the date of Retirement shall lapse immediately upon the Participant’s
Retirement.

  (d)   In the event of Termination Upon a Change of Control or Termination of
Employment by reason of death or Disability of a Participant during a Restricted
Period, the Restricted Period applicable to any outstanding Grant at the date of
Termination of Employment shall lapse immediately.

 

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  (e)   The effect of approved leaves of absence on the running of applicable
Restricted Periods shall be determined by the Committee, provided, however, that
no Restricted Period shall lapse during an approved leave of absence unless
expressly provided by the Committee.

  (f)   Notwithstanding the other provisions of this Section 3.5, options which
have been granted under this Plan to any Company employees who become employed
by Lincoln National Corporation or one or more of its subsidiaries or affiliates
on or about January 1, 1998 as a result of the sale of the assets of the CIGNA
Individual Insurance Division and which options remain unexercised and unexpired
as of December 31, 1997, shall not expire before the earlier of (1) 10 years
from the date of grant or (2) the later of the close of business on March 31,
1998 or ninety (90) days following the closing of such sale of assets.

  3.6   Dividend Equivalent Rights. The Committee shall have the authority to
grant dividend equivalent rights to Eligible Employees upon such terms and
conditions as it shall establish, subject in all events to the following
limitations and provisions of general application:

  (a)   Each right may relate to a specific option granted under this Plan and
may be granted to the optionee either concurrently with the grant of such option
or at such later time as determined by the Committee, or each right may be
granted independent of any option.

  (b)   The right shall entitle a holder to receive, for a period of time to be
determined by the Committee, a payment equal to the quarterly dividend declared
and paid by the Company on one share of Common Stock. If the right relates to a
specific option, the period shall not extend beyond the earliest of the date the
option is exercised, the date any stock appreciation right related to the option
is exercised, or the expiration date set forth in the option.

  (c)   The Committee shall determine at time of grant whether payment pursuant
to a right shall be immediate or deferred and whether it shall be in the form of
cash or Common Stock, or a combination of cash and Common Stock. If immediate,
the Company shall make payments pursuant to each right within 90 days after the
Company has paid the quarterly dividend to holders of Common Stock. If deferred,
the payments shall accumulate (with interest computed in a manner to be
determined by the Committee) until a date or event specified by the Committee
and then shall be made within 90 days after the occurrence of the specified date
or event, unless the right is forfeited under the terms of the Plan.

 

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  (d)   In the event of Termination of Employment (including termination during
an approved leave of absence) of a Participant for any reason, any dividend
equivalent right held by such Participant at Termination of Employment shall be
forfeited, unless otherwise expressly provided by the Committee.

  3.7   Common Stock in Lieu of Other Awards. The Committee shall have the
authority to award an Eligible Employee Common Stock, including Common Stock
awarded by a Grant under Section 3.5, (collectively referred to as a “Stock
Payment”) in lieu of all or a portion (determined by the Committee) of an award
otherwise payable pursuant to a Qualifying Incentive Plan or Qualifying
Supplemental Benefit Plan. The Stock Payment shall comprise the number of shares
of Common Stock that have an aggregate Fair Market Value, determined as of the
Payment Date, equal to the amount of the award in lieu of which the Stock
Payment is made. All Stock Payments shall be subject to the following
limitations and provisions of general application:

  (a)   Unless the Committee, in its sole discretion, provides otherwise, a
Stock Payment which has been awarded to a Participant who dies or whose
employment otherwise terminates before the Payment Date, shall be paid in the
form of Common Stock to the Participant (or to his spouse or estate).

  (b)   The right to receive all or a portion of Stock Payments in the form of
Common Stock shall be deferred if the Participant has elected to defer the award
otherwise payable in cash under a Deferred Compensation Plan, subject to the
provisions of such Deferred Compensation Plan.

ARTICLE 4
Shares Authorized under the Plan

  4.1   Maximum Number Authorized. The number of shares of Common Stock
Authorized to be issued pursuant to stock options, rights, Grants or Stock
Payments awarded under this Plan is 3,500,000.

  4.2   Maximum Number Per Participant. No more than 10% of the maximum number
of shares of Common Stock authorized pursuant to this Plan shall be acquired by
any one Participant by way of option (including Common Stock subject to option),
right, Grant or Stock Payment under this Plan.

 

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  4.3   Unexercised Options, Grant Forfeitures and Options Exercised with Common
Stock.

  (a)   All Common Stock (1) under options granted under this Plan which expire
or are canceled or surrendered or (2) which is forfeited pursuant to
Section 3.5, shall be available for further awards under this Plan upon such
expiration, cancellation, surrender or forfeiture; and

  (b)   Any Common Stock which is used by a Participant as full or partial
payment to the Company for the purchase of Common Stock acquired upon exercise
of a stock option granted under this Plan, and any shares withheld by the
Company to satisfy a Participant’s tax withholding obligations, shall be
available for further awards under this Plan.

  4.4   No Fractional Shares. No fractional shares of Common Stock shall be
issued pursuant to this Plan.

  4.5   Source of Shares. Common Stock may be issued from authorized but
unissued shares or out of shares held in CIGNA Corporation’s treasury, or both.

ARTICLE 5
Antidilution Provisions

      Except as otherwise expressly provided herein, the following provisions
shall apply to all Common Stock authorized for issuance, and options, granted or
awarded under this Plan:

  5.1   Stock Dividends, Splits, Etc. In the event of a stock dividend, stock
split, or other subdivision or combination of the Common Stock, the number of
shares of Common Stock authorized under this Plan will be adjusted
proportionately. Similarly, in any such event there will be a proportionate
adjustment in the number of shares of Common Stock subject to unexercised stock
options (but without adjustment to the aggregate option price) and in the number
of shares of Common Stock then subject to Restricted Periods under a Grant.

 

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  5.2   Merger, Exchange or Reorganization. In the event that the outstanding
shares of Common Stock are changed or converted into, exchanged or exchangeable
for, a different number or kind of shares or other securities of CIGNA
Corporation or of another corporation, by reason of a reorganization, merger,
consolidation, reclassification or combination, appropriate adjustment shall be
made by the Committee in the number of shares and kind of Common Stock for which
options, rights, Grants and Stock Payments may be or may have been awarded under
this Plan, to the end that the proportionate interests of Participants shall be
maintained as before the occurrence of such event, provided, however, that in
the event of any contemplated transaction which may constitute a Change of
Control of CIGNA Corporation, the Committee, with the approval of a majority of
the members of the Board of Directors who are not then Participants, may modify
any and all outstanding options, rights, Grants and Stock Payments (except those
deferred pursuant to Section 3.7(b)), so as to accelerate, as a consequence of
or in connection with such transaction, the vesting of a Participant’s right to
exercise any such options or stock appreciation right or the unqualified
ownership of Common Stock subject to a Grant or the accelerated payment of any
deferred dividend equivalent rights.

ARTICLE 6
Administration of Plan

  6.1   General Administration. The Plan is to be administered by the Committee,
subject to such requirements for review and approval by the Board of Directors
as the Board of Directors may establish.

  6.2   Administrative Rules. The Committee shall have the power and authority
to adopt, amend and rescind administrative guidelines, rules and regulations
pertaining to this Plan and to interpret and rule on any questions respecting
any provision of this Plan.

  6.3   Committee Members Not Eligible. No member of the Committee shall be
eligible to participate in this Plan.

  6.4   Decisions Binding. Decisions of the Committee concerning this Plan shall
be binding on CIGNA Corporation and its Subsidiaries and their respective boards
of directors, and on all Eligible Employees and Participants.

 

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ARTICLE 7
Amendments
All amendments to this Plan shall be in writing and shall be effective when
approved by the Board of Directors, provided, however, that an amendment shall
not be effective without the prior approval of the shareholders of CIGNA
Corporation if such approval is necessary under Internal Revenue Service or
Securities and Exchange Commission regulations, or the rules of the New York
Stock Exchange or any applicable law. The Board of Directors may make any
changes required to conform this Plan and option agreements with applicable
provisions of the Internal Revenue Code or regulations thereunder pertaining to
Incentive Stock Options. Unless otherwise expressly provided by an amendment or
the Board of Directors, no amendment to this Plan shall apply to grants of
options, rights or Restricted Stock made before the effective date of the
amendment.
ARTICLE 8
Other Provisions

  8.1   Effective Date. This Plan is effective on May 1, 1991 (the “Effective
Date”).

  8.2   Duration of the Plan. The Plan shall remain in effect until all options
and rights granted under this Plan have been satisfied by the issuance of Common
Stock, or terminated under the terms of this Plan, provided that options,
rights, Grants and Stock Payments under this Plan must be awarded on or after
the Effective Date.

  8.3   Early Termination. Notwithstanding the provisions of Section 8.2, the
Board of Directors may terminate this Plan at any time; but no such action by
the Board of Directors shall adversely affect the rights of Participants which
exist under this Plan immediately before its termination.

  8.4   General Restriction. No Common Stock issued pursuant to this Plan shall
be sold or distributed by a Participant until all appropriate listing,
registration and qualification requirements and consents and approvals have been
obtained, free of any condition unacceptable to the Board of Directors.

  8.5   Awards Not Assignable.

  (a)   No derivative security (as defined in rules promulgated under Section 16
of the Securities Exchange Act of 1934), including any right to receive Common
Stock (such as options, stock appreciation rights or similar rights) or any
right to payment pursuant to this Plan, shall be assignable or transferable by a
Participant except by will or by the laws of descent and distribution. Any other
attempted assignment or alienation shall be void and of no force or effect. Any
right to receive Common Stock or any other derivative security (including
options, stock appreciation rights or similar rights) shall be exercisable
during a Participant’s lifetime only by the Participant or by the Participant’s
guardian or legal representatives.

 

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  (b)   Notwithstanding the restrictions set forth above in Section 8.5(a), the
Committee shall have the authority, in its discretion, to grant (or to sanction
by way of amendment of an existing grant, including, without limitation, grants
made before the effective date of this Section 8.5(b)) derivative securities
which may be transferred without consideration by the Participant during his
lifetime to any member of his immediate family, to a trust established for the
exclusive benefit of one or more members of his immediate family, to a
partnership of which the only partners are members of his immediate family, or
to such other person as the Committee shall permit. In the case of a grant, the
written documentation containing the terms and conditions of such derivative
security shall state that it is transferable, and in the case of an amendment to
an existing grant, such amendment shall be in writing. A derivative security
transferred as contemplated in this Section 8.5(b) may not be subsequently
transferred by the transferee except by will or the laws of descent and
distribution and shall continue to be governed by and subject to the terms and
limitations of the Plan and the relevant grant. However, the Committee, in its
sole discretion at the time the transfer is approved, may alter the terms and
limitations of the relevant grant and establish such additional terms and
conditions as it shall deem appropriate. As used in this subparagraph,
“immediate family” shall mean, with respect to any person, a spouse, any child,
stepchild or grandchild, and shall include relationships arising from legal
adoption.

  8.6   Withholding Taxes. Whenever Common Stock is to be issued or delivered in
satisfaction of options or other awards granted hereunder, the Company shall
have the right to require the Participant to remit an amount sufficient to
satisfy federal, state and local withholding taxes prior to delivery of any
certificate for such shares. The Committee may require, or permit, the
Participant to remit such amount in whole or in part in Common Stock. If the
Committee permits a Participant to elect to remit such amount in Common Stock,
any such election shall be made on or prior to the date the withholding
obligation arises and be subject to the disapproval of the Committee. The
Committee may establish such additional conditions as it deems appropriate. If
the Participant remits such amount in Common Stock, the number of shares of
Common Stock delivered to or on behalf of a Participant shall be reduced by the
number of shares so remitted. Common Stock so remitted shall be valued using the
Fair Market Value of Common Stock as of the date the withholding obligation
arises.

  8.7   Safekeeping of Certificates. The certificate evidencing Common Stock
awarded by a restricted stock grant or purchased upon exercise of an option
shall be retained for safekeeping by the Company, or by a custodian appointed by
the Company, except the Committee may in its discretion cause the certificate to
be delivered to the Participant after a restricted stock grant or a purchase
upon exercise of an option. The Company will deliver any such retained
certificates that are not subject to a Restricted Period to the Participant
within a reasonable period after a Participant requests delivery of such
certificates.

 

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