Exhibit 10(n)
CHANGE IN CONTROL
AGREEMENT
This CHANGE IN CONTROL AGREEMENT
(“Agreement”) is made as of
, 2008 by and between HUMANA INC., Louisville, Kentucky (the
“Company”), and
(the “Employee”).
WHEREAS, the Board of Directors (the
“Board”) of the Company desires to foster the
continuous employment of the Employee and has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of the Employee to his or her
duties free from distractions which could arise in the event of a
threatened Change in Control of the Company.
WHEREAS, the Company and the
Employee are each a party to a Change in Control Agreement dated [
], and whereas the parties desire to amend the Change in Control
Agreement to comply with Section 409A of the Internal Revenue
Code and the regulations and other interpretive guidance issued
thereunder (“Section 409A”) and to make certain other
changes to the Change in Control Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein, the Company and the Employee
agree as follows:
1. QUALIFYING TERMINATIONS. The
Employee shall receive the termination benefits set forth in
Section 2 of this Agreement if the Employee’s employment
with the Company is terminated:
(i) by the Company other than for
Cause, or by the Employee for Good Reason within twenty-four
(24) months following a Change in Control and during the term
of this Agreement, or
(ii) by the Company other than for
Cause at any time prior to the date of a Change in Control and such
termination occurred after the Company entered into a definitive
agreement, the consummation of which would constitute a Change in
Control.
2. TERMINATION BENEFITS. In the
event of a Qualifying Termination, the Employee shall receive the
following termination benefits:
(i) The Company shall, within ten
(10) days following the Date of Termination, pay the
Employee:
(a) The Employee’s base salary
earned but not yet paid through the Date of Termination at the
greater of the rate in effect at the time the Change in Control
occurred, if applicable, or when the Notice of Termination was
given, plus any bonuses or incentive compensation which, pursuant
to the terms of any compensation or benefit plan, have been earned
and are payable as of the Date of Termination. For purposes of this
Agreement, bonuses and incentive compensation shall be
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considered payable if all conditions
for earning them have been met and any requirement that Employee be
actively employed as of the date of payment shall be disregarded;
and
(b) A lump sum in an amount equal to
(
) times the amount equal to the sum of (A) the
Employee’s Annual Base Salary at the greater of the rate in
effect at the time the Change in Control occurred, if applicable,
or when the Notice of Termination was given plus (B) the
maximum bonus or incentive compensation which could have been
earned by the Employee calculated as if all relevant goals had been
met during the then-current fiscal year of the Company pursuant to
the terms of the incentive compensation plan in which the Employee
participates. If there is no incentive compensation plan in effect
at the time the Notice of Termination is given, then for purposes
of this Agreement it shall be assumed that the amount of incentive
compensation to be paid to the Employee shall be the maximum target
amount under any incentive compensation plan in which the Employee
participated at the date of the Change in Control, if applicable,
or the most recent plan participated in, whichever would be
greater.
(ii) The Company shall, for the
period stated below, maintain in full force and effect for the
benefit of the Employee and the Employee’s dependents and
beneficiaries, at the Company’s expense, all life insurance,
health insurance, dental insurance, accidental death and
dismemberment insurance and disability insurance under plans and
programs in which the Employee and/or the Employee’s
dependents and beneficiaries participated immediately prior to the
Date of Termination, provided that continued participation is
possible under the general terms and provisions of such plans and
programs (“Extended Benefits”). The Extended Benefits
shall be continued until the earlier of (A) the second
(2nd) anniversary of the Date of Termination, (B) the
effective date of the Employee’s coverage under equivalent
benefits from a new employer (provided that no such equivalent
benefits shall be considered effective unless and until all
pre-existing condition limitations and waiting period restrictions
have been waived or have otherwise lapsed), or (C) the death
of the Employee. If participation in any such plan or program is
barred, the Company shall arrange at its own expense to provide the
Employee with benefits substantially similar to those which the
Employee would have been entitled to receive under such plans and
programs. At the end of the period of coverage, the Employee shall
have the right to have assigned to him or her, at no cost and with
no apportionment of prepaid premiums, any assignable insurance
policy relating specifically to him or her. At the conclusion of
the coverage provided under this Subsection, Employee shall be
entitled to the continuation for a period of 18 months of the
health and dental insurance then being provided
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to him or her at a cost to him or
her equal to the amount then being charged to employees of the
Company for such coverage provided pursuant to the Consolidated
Omnibus Budget Reconciliation Act (COBRA). The coverage provided
pursuant to this Subsection shall be in satisfaction of the
Company’s obligation to provide coverage under COBRA. The
Company will use all commercially reasonable efforts to provide for
the continuation of benefits in a manner that (A) does not
subject the benefits to Section 409A and (B) does not
cause the benefits to be included in the taxable income of the
Employee.
3. TIMING OF PAYMENTS AND PROVISION
OF BENEFITS.
(i) Notwithstanding any other
provision in this Agreement, if, on the Date of Termination, the
Employee is a “specified employee” as defined under
Section 409A, the amount payable to the Employee pursuant to
Section 2(i)(b) of this Agreement shall not be made or
commenced until the date that is six (6) months and one
(1) day after the Employee’s Date of Termination (the
“Delay Period”) and shall be paid on such date;
provided , however , that the payments shall not be
delayed during the Delay Period if the termination occurs by reason
of his death.
(ii) To the extent that benefits to
be provided to the Employee pursuant to Section 2(ii) of this
Agreement are not (A) “disability pay,”
“death benefit” plans or non-taxable medical benefits
within the meaning of Treasury Regulation
Section 1.409A-1(a)(5) or (B) other benefits not
considered nonqualified deferred compensation within the meaning of
that regulation, such provision of benefits shall be delayed until
the end of the Delay Period, unless the Employee’s
termination occurs by reason of his death. Notwithstanding the
foregoing, to the extent that the previous sentence applies to the
provision of any ongoing benefits that would not be required to be
delayed if the premiums were paid by the Employee, the Employee
shall pay the full cost of the premiums for such benefits during
the Delay Period and the Company shall pay the Employee an amount
equal to the amount of such premiums paid by the Employee during
the Delay Period within ten (10) days after the end of the
Delay Period.
(iii) To the extent that any
benefits to be provided to the Employee pursuant to this Agreement
are considered nonqualified deferred compensation and are
reimbursements subject to Treasury Regulation
Section 1.409A-3(i)(1)(iv), then (i) the reimbursement of
eligible expenses related to such benefits shall be made on or
before the last day of the Employee’s taxable year following
the Employee’s taxable year in which the expense was incurred
and (ii) notwithstanding anything to the contrary in this
Agreement or any plan providing for such benefits, the amount of
expenses eligible for reimbursement during any taxable year of the
Employee shall not affect the expenses eligible for reimbursement
in any other taxable year.
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4. DEFINITIONS. For purposes of this
Agreement, the following definitions shall apply:
(i) “Annual Base Salary”
shall mean an Employee’s stated annual compensation without
regard to any bonus, perquisite or other benefits.
(ii) A termination for
“Cause” shall be termination by reason of the
conviction of the Employee, by a court of competent jurisdiction
and following the exhaustion of all possible appeals, of a criminal
act involving the Company or its assets.
(iii) “Change in
Control” shall have the meaning set forth in Appendix
A.
(iv) “Company” shall
mean Humana Inc. or any successor thereof.
(v) “Date of
Termination” shall mean the date specified in the Notice of
Termination, not to exceed thirty (30) days from the date such
Notice of Termination is given.
(vi) “Good Reason” shall
mean the occurrence after a Change in Control of any of the
following events without the Employee’s express written
consent:
(a) Any material reduction in the
Employee’s title, authority or responsibilities, including
reporting responsibilities;
(b) A reduction by the Company in
the Employee’s Annual Base Salary as in effect on the date
hereof or as the same
