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HUMANA INC.
RESTRICTED STOCK PLAN FOR
OFFICERS & DIRECTORS
(As Adopted July 13, 2000)
HUMANA INC.
RESTRICTED STOCK PLAN FOR OFFICERS & DIRECTORS
1. Purpose.
The purpose of the Humana Inc., Restricted Stock Plan
for Officers & Directors ("Plan") is to strengthen Humana Inc., a
Delaware corporation (the "Company"), (a) by providing an
incentive to its officer employees and thereby encouraging them
to devote their abilities and industry to the success of the
Company's business enterprise, and (b) by encouraging the
attraction and retention of officers and directors with
exceptional qualifications. It is intended that this purpose be
achieved by extending to Officers and Directors (including such
future employees who have received a formal written offer of
employment) of the Company and its Subsidiaries an added long-
term incentive for high levels of performance and unusual efforts
through the grant of Restricted Stock.
2. Definitions.
Except as otherwise stated herein, defined terms
whenever used in this Plan, shall have the same meaning as
defined in the Humana Inc. 1996 Stock Incentive Plan for
Employees or its successor.
3. Administration.
3.1 The Plan shall be administered by the Committee,
which shall hold meetings at such times as may be necessary for
the proper administration of the Plan. The Committee shall keep
minutes of its meetings. The Committee shall consist of at least
two (2) directors of the Company ("Directors") and may consist of
the entire Board; provided, however, that if the Committee
consists of less than the entire Board, then the Committee shall
consist of at least two (2) Directors each of whom shall be a
nonemployee director, within the meaning of Rule 16b-3
promulgated under the Exchange Act ("Nonemployee Director"). For
purposes of the preceding sentence, if one or more members of the
Committee is not a Nonemployee Director but recuses himself or
herself or abstains from voting with respect to a particular
action taken by the Committee, then the Committee, with respect
to that action, shall be deemed to consist only of the members of
the Committee who have not recused themselves or abstained from
voting. A quorum shall consist of not fewer than two (2) members
of the Committee and a majority of a quorum may authorize any
action. Any decision or determination reduced to writing and
signed by all of the members of the Committee shall be as fully
effective as if made by vote at a meeting duly called and held.
Subject to applicable law, the Committee may delegate its
authority under the Plan to any other person or persons.
3.2 No member of the Committee shall be liable for any
action, failure to act, determination or interpretation made in
good faith with respect to this Plan or any transaction
hereunder. The Company hereby agrees to indemnify each member of
the Committee for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection
with defending against, responding to, negotiating for the
settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying
authorization to any transaction hereunder.
3.3 Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to
time to:
(a) select those Eligible Individuals to whom
Awards shall be granted under the Plan and to determine the
number of Shares in respect of which each Award is granted, the
terms and conditions (which need not be identical) of each such
Award, and make any amendment or modification to any Award
Agreement consistent with the terms of the Plan;
(b) construe and interpret the Plan and Awards
granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but
not limited to, correcting any defect or supplying any omission,
or reconciling any inconsistency in the Plan or in any Agreement,
in the manner and to the extent it shall deem necessary or
advisable, including so that the Plan and the operation of the
Plan complies with Rule 16b-3 under the Exchange Act, the Code to
the extent applicable and other applicable law, and otherwise to
make the Plan fully effective. The Committee shall have full
authority, in its discretion, to determine when capital awards
will become vested, including the ability to accelerate the
vesting date of Awards previously granted under the Plan. All
decisions and determinations by the Committee in the exercise of
this power shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Grantees, and all other persons
having any interest therein;
(c) determine the duration and purposes for
leaves of absence which may be granted to a Grantee on an
individual basis without constituting a termination of employment
or service for purposes of the Plan;
(d) exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan; and
(e) exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best
interests of the Company with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
4.1 The maximum number of Shares that may be made the
subject of Awards granted under the Plan is five million
(5,000,000); provided that the number of Shares issuable under
the Plan shall be reduced by the number of Shares issuable
pursuant to any "Awards" granted pursuant to the Humana Inc.
Restricted Stock Plan for Employees. Only Shares held in the
Company's treasury shall be issuable under this Plan and the
Company shall reserve for the purposes of the Plan, out of Shares
held in the Company's treasury, such number of Shares as shall be
determined by the Board.
4.2 Upon the granting of an Award, the number of
Shares available under Section 4.1 for the granting of further
Awards shall be reduced by the number of Shares in respect of
which the Award is granted or denominated.
Whenever any outstanding Award or portion thereof
expires, is canceled, is settled in cash (including the
settlement of tax withholding obligations using Shares) or is
otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Award, the
Shares allocable to the expired, canceled, settled or otherwise
terminated portion of the Award may again be the subject of
Awards granted hereunder.
5. Eligible Individuals
Any of the following shall be considered eligible to
participate in the Plan ("Eligible Individual")(a) any employee
of the Company or a Subsidiary who is an officer of the Company,
(b) any individual to whom the Company or a Subsidiary has
extended a formal, written offer of employment for an officer
position, or (c) any Director. For purposes of the Plan
"Officer" is defined as Executive Officer is defined pursuant to
Securities and Exchange Commission Rule 3b-7 and any other
Officer elected by the Company's Board of Directors.
6. Restricted Stock.
6.1 Grant. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement
shall contain such restrictions, terms and conditions as the
Committee may, in its discretion, determine and (without limiting
the generality of the foregoing) such Agreements may require that
an appropriate legend be placed on Share certificates. Awards of
Restricted Stock shall be subject to the terms and provisions set
forth below in this Section 6.
6.2 Purchase Price. The purchase price, if any, for
Shares of Restricted Stock shall be determined by the Committee,
but shall not be less than the par value per Share, except in the
case of treasury Shares for which no payment need be required.
6.3 Rights of Grantee. Shares of Restricted Stock
granted pursuant to an Award hereunder shall be issued in the
name of the Grantee as soon as reasonably practicable after the
Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require
as a condition to the issuance of such Shares. If a Grantee
shall fail to execute the Agreement evidencing a Restricted Stock
Award, the appropriate blank stock powers, an escrow agreement or
any other or any documents which the Committee may require within
the time period prescribed by the Committee at the time the Award
is granted, the Award shall be null and void. At the discretion
of the Committee, Shares issued in connection with a Restricted
Stock Award shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set
forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder
with respect to such Shares, including the right to vote the
Shares and to receive all dividends or other distributions paid
or made with respect to the Shares.
6.4 Non-transferability. Until all restrictions upon
the Shares of Restricted Stock awarded to a Grantee shall have
lapsed in the manner set forth in Section 6.5, such Shares shall
not be sold, transferred or otherwise disposed of and shall not
be pledged or otherwise hypothecated, nor shall they be delivered
to the Grantee.
6.5 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or
times and on such terms and conditions as the Committee may
determine, which in the sole discretion of the Committee, may
include the lapsing of restrictions based solely on the passage
of time, on the attainment of individual and/or corporate
performance criteria or a combination thereof. The Agreement
evidencing the Award shall set forth any such restrictions and
the basis on which such restrictions shall lapse.
(b) Effect of Change in Control. Unless the
Committee shall determine otherwise at the time of the grant of
an Award of Restricted Stock, the restrictions upon Shares of
Restricted Stock shall lapse upon a Change in Control. The
Agreement evidencing the Award shall set forth any such
provisions.
6.6 Treatment of Dividends. At the time an Award of
Shares of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held
by the Company for the account of the Grantee until such time.
In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in
Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in
cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning
of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest
accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Shares in respect of which the
deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any
Shares of Restricted Stock shall be forfeited upon the forfeiture
of such Shares.
6.7 Effect of a Termination of Employment or Service as a
Director.
(a) Except as provided in Section 6.7(c), if the
employment or service as a Director of a Grantee is terminated
for any reason other than death, Disability or a Change in
Control prior to the expiration of any restrictions applicable to
any Shares of Restricted Stock then held by the Grantee, such
Shares shall thereupon be forfeited immediately by the Grantee
and returned to the Company, and the grantee shall only receive
the amount, if any, paid by the Grantee for such Restricted
Stock.
(b) If the employment or service as a Director of
a Grantee is terminated as a result of death or Disability prior
to the expiration of any restrictions applicable to any Shares of
Restricted Stock then held by the Grantee, any restrictions and
other conditions pertaining to such Shares then held by the
Grantee, including, but not limited to, vesting requirements,
shall immediately lapse and such Shares shall thereafter be
immediately transferable and nonforfeitable.
(c) Notwithstanding anything in the Plan to the
contrary, the Committee may determine, in its sole discretion, in
the case of any termination of Grantee's employment or service as
a Director other than for Cause, that the restrictions on some or
all of the Shares of Restricted stock then held by the Grantee
shall immediately lapse and such Shares shall thereafter be
immediately transferable and nonforfeitable.
6.8 Delivery of Shares. Upon the lapse of the
restrictions on Shares of Restricted Stock, the Committee shall
cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder.
7. Adjustment Upon Changes in Capitalization.
In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments, if any, to (i) the maximum number and class of
Shares or other stock or securities with respect to which Awards
may be granted under the Plan, and (ii) the number and class of
Shares or other stock or securities which are subject to
outstanding Awards granted under the Plan and the exercise price
therefor, if applicable.
8. Effect of Certain Transactions.
Subject to Section 6.5(b) or as otherwise provided in
an Agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a merger or consolidation of
the Company (a "Transaction"), the Plan and Awards issued
hereunder shall continue in effect in accordance with their
respective terms, except that following a Transaction either
(i) each outstanding Award shall be treated as provided for in
the agreement entered into in connection with the Transaction
or (ii) if not so provided in such agreement, each Grantee
shall be entitled to receive in respect of each Share subject
to any outstanding Awards, as the case may be, upon payment or
transfer in respect of any Award, the same number and kind of
stock, securities, cash, property or other consideration that
each holder of a Share was entitled to receive in the
Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall
remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Awards prior
to such Transaction.
9. Interpretation.
The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
10. Pooling Transactions.
Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control
which is also intended to constitute a Pooling Transaction, the
Committee shall take such actions, if any, as are specifically
recommended by an independent accounting firm retained by the
Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including
but not limited to (a) deferring the vesting, exercise,
payment, settlement or lapsing of restrictions with respect to
any Award and (b) providing that the payment or settlement in
respect of any Award be made in the form of cash, Shares or
securities of a successor or acquirer of the Company, or a
combination of the foregoing.
11. Termination and Amendment of the Plan or Modification
of Awards.
11.1 Plan Amendment or Termination. The Plan shall
terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board and no Award may be granted
thereafter. The Board may sooner terminate the Plan and the
Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension
or termination shall impair or adversely alter any Awards
theretofore granted under the Plan, except with the consent of
the Grantee, nor shall any amendment, modification, suspension or
termination deprive any Grantee of any Shares which he or she may
have acquired through or as a result of the Plan; and
(b) to the extent necessary under any applicable
law, regulation or exchange requirement no amendment shall be
effective unless approved by the stockholders of the Company in
accordance with applicable law, regulation or exchange
requirement.
11.2 Modification of Awards. No modification of an
Award shall adversely alter or impair any rights or obligations
under the Award without the consent of the Grantee, as the case
may be.
12. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on
the power of the Board to adopt such other incentive arrangements
as it may deem desirable and such arrangements may be either
applicable generally or only in specific cases.
13. Limitation of Liability.
As illustrative of the limitations of liability of
the Company, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:
(a) give any person any right to be granted an Award
other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time;
or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period
of time.
14. Regulations and Other Approvals; Governing Law.
14.1 Except as to matters of federal law, the Plan and
the rights of all persons claiming hereunder shall be construed
and determined in accordance with the laws of the State of
Delaware without giving effect to conflicts of laws principles
thereof.
14.2 The obligation of the Company to sell or deliver
Shares with respect to Awards granted under the Plan shall be
subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may
be deemed necessary or appropriate by the Committee.
14.3 The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any government authority.
14.4 Each Award is subject to the requirement that, if
at any time the Committee determines, in its discretion, that the
listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the
issuance of Shares, no Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
14.5 Notwithstanding anything contained in the Plan or
any Agreement to the contrary, in the event that the disposition
of Shares acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), and is not otherwise exempt
from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and
Rule 144 or other regulations thereunder. The Committee may
require any individual receiving Shares pursuant to an Award
granted under the Plan, as a condition precedent to receipt of
such Shares, to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired without
a view to any distribution thereof and will not be sold or
transferred other than pursuant to an effective registration
thereof under said Act or pursuant to an exemption applicable
under the Securities Act or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall
be appropriately amended or have an appropriate legend placed
thereon to reflect their status as restricted securities as
aforesaid.
15. Miscellaneous.
15.1 Multiple Agreements. The terms of each Award may
differ from other Awards granted under the Plan at the same time,
or at some other time. The Committee may also grant more than
one Award to a given Eligible Individual during the term of the
Plan, either in addition to, or in substitution for, one or more
Awards previously granted to that Eligible Individual.
15.2 Withholding of Taxes.
(a) At such times as a Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder
(a "Taxable Event"), the Grantee shall pay to the Company an
amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld by the
Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such
Shares or the payment of such cash. The Company shall have the
right to deduct from any payment of cash to a Grantee an amount
equal to the Withholding Taxes in satisfaction of the obligation
to pay Withholding Taxes. The Committee may provide in the
Agreement at the time of grant, or at any time thereafter, that
the Grantee, in satisfaction of the obligation to pay Withholding
Taxes to the Company, may elect to have withheld a portion of the
Shares then issuable or transferable to him or her having an
aggregate Fair Market Value equal to the Withholding Taxes.
15.3 Effective Date. The effective date of this Plan
shall be as determined by the Board.
339079 (7/00)
