Form of Company's Stock Option Agreement under the 2003 Stock Incentive Plan



 Exhibit 10(b) 
 HUMANA INC. 
 INCENTIVE STOCK OPTION AGREEMENT 
 UNDER THE AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN 
 THIS STOCK OPTION AGREEMENT (“Agreement”) made as of                      by and between
HUMANA INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter referred to as the “Company”), and
                                        , an
employee of the Company (hereinafter referred to as “Optionee”). 
 WITNESSETH: 
 WHEREAS, the Amended and Restated 2003 Stock Incentive Plan (the “Plan”), for certain employees and non-employee Directors of the
Company and its subsidiaries was approved by the Company’s Board of Directors (the “Board”) and stockholders; and 
 WHEREAS, the Company desires to grant to Optionee an option to purchase shares of common stock of the Company in accordance with the Plan. 
 NOW, THEREFORE, in consideration of the premises, mutual covenants hereinafter set forth, and other good and valuable consideration, the Company and Optionee agree as follows: 
 1. The Company hereby grants to Optionee, as a matter of separate inducement and agreement and not in lieu of salary or other
compensation for services, an Incentive Stock Option to purchase
                                         shares
of the $.16 2/3 par value common stock of the Company
(“Common Stock”) at the purchase price of $              per share (the “Option”) exercisable on the terms and conditions set forth herein. 
 2. The term of the Option shall commence upon the date of grant,
                    , and shall expire on
                     (“Expiration Date”). 
 3. Except as otherwise set forth herein, this Option shall be exercisable in full by Optionee or his/her personal representative on and after the first anniversary of the date hereof in cumulative annual installments
of one-third of the number of shares covered hereby. 
 4. A. If the employment of Optionee by the Company is terminated for Cause, all the
rights of Optionee under this Agreement, whether or not exercisable, shall terminate immediately. 
 B. If the employment of Optionee is
terminated for any reason other than for Cause, Retirement, death or Disability, unless otherwise specified herein, all the rights of Optionee under this Agreement then exercisable shall remain exercisable at any time within ninety (90) days
after the date of such termination, but in no event beyond the Expiration Date. 
 C. In the event of Optionee’s Retirement, (i) to
the extent that this Option (or portion hereof) is exercisable as of the date of such Retirement, this Option (or portion hereof) shall be exercisable at any time within two (2) years after the date of Retirement, but in no event beyond the
Expiration Date, and only to the extent the Option (or portion hereof) was exercisable at the date of Retirement, and (ii) to the extent that this Option (or portion hereof) is not exercisable as of 

  

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the date of such Retirement, this Option (or portion hereof) shall continue to vest and become exercisable as if the Optionee were continuing to provide
services to the Company or a Subsidiary, as applicable, and this Option (or portion hereof) shall be exercisable at any time within two (2) years following the date on which this Option (or portion hereof) becomes vested and exercisable.

 D. In the event of death or Disability of Optionee while in the employ of the Company, this Option shall become immediately exercisable
and shall remain exercisable by Optionee or the person or the persons to whom those rights pass by will or by the laws of descent and distribution or, if appropriate, by the legal representative of the Optionee or the estate of the Optionee at any
time within two (2) years after the date of such death or Disability. 
 5. A. This Option shall be exercisable only by written notice
to the Secretary of the Company at the Company’s principal executive offices by Optionee or his/her legal representative as herein provided. Such notice shall state the number of shares to be exercised and shall be signed by Optionee or his/her
legal representative, as applicable. 
 B. The purchase price shall be paid as follows: 
 i) In full in cash upon the exercise of the Option; or 
 ii) By tendering to the Company shares of the Common Stock of Company owned by him/her prior to the date of exercise and having an aggregate fair market value equal to the cash exercise price applicable to his/her
Option; or 
 iii) A combination of 5(B)(i) and 5(B)(ii) above. 
 C. Federal, state and local income taxes and other amounts as may be required by law to be collected by the Company in connection with the exercise of
this Option shall be paid pursuant to the Plan by Optionee prior to the delivery of any Common Stock under this Agreement. 
 6. The Option
granted under this Agreement to Optionee may not be assigned, transferred, pledged, alienated or hypothecated in any manner during Optionee’s lifetime, but shall be solely and exclusively the right of Optionee to exercise during his/her
lifetime. Should Optionee attempt to assign, transfer, pledge, alienate or hypothecate this Option or any rights hereunder in any manner whatsoever, such action shall constitute a breach of the covenants hereunder and Company may terminate this
Option as to any then unexercised shares. 
 7. In the event of a Change in Control, as defined in the Plan, this Option shall become fully
vested and immediately exercisable in its entirety. In addition, Optionee will be permitted to surrender for cancellation within sixty (60) days after a Change in Control, any portion of this Option to the extent not yet exercised and Optionee
will be entitled to receive a payment in an amount equal to the excess, if any, of (x) the greater of (1) the Fair Market Value on the date of surrender of the Shares subject to this Option or portion thereof surrendered, or (2) the
Fair Market Value, as Adjusted, of the Shares subject to this Option or portion thereof surrendered, over (y) the aggregate purchase price for such Shares under this Option or portion thereof surrendered. The form of payment shall be determined
by the Committee. 
  

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 In the event Optionee’s employment with the Company is terminated other than for Cause within three
(3) years following a Change in Control, each Option held by the Optionee that was exercisable as of the date of termination of the Optionee’s employment or service shall remain exercisable for a period ending the earlier of the second
anniversary of the termination of the Optionee’s employment or the expiration of the stated term of the Option. 
 8. This Agreement
shall be binding and conclusive upon each successor and assign of the Company. This Agreement may be amended only by a writing signed by each of the parties hereto. It is the intent of the parties to this Agreement that the benefits of any
appreciation of the underlying Common Stock during the term of the Option shall be preserved in any event, including but not limited to a recapitalization, merger, consolidation, reorganization, stock dividend, stock split, reverse stock split,
spin-off or similar transaction, or other change in corporate structure affecting the Shares, as more fully described in Section 4.6 of the Plan. All obligations imposed upon Optionee and all rights granted to Optionee and to the Company shall
be binding upon Optionee’s heirs and legal representatives. 
 9. Except as to matters of federal law, this Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof. 
 10. If any provision of this Agreement is or becomes or is deemed invalid, illegal or unenforceable in any relevant jurisdiction, or would disqualify the Optionee under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the
remainder of the Agreement shall remain in full force and effect. Any provision in this Agreement determined by competent authority to be in conflict with 422 of the Internal Revenue Code of 1986, as amended, or its successor, in regard to
qualifying this Option as an incentive stock option shall be ineffective ab initio to the extent of such conflict. 
 11. Any term used
herein and not otherwise defined herein shall have the same meaning as in the Plan. Any conflict between this Agreement and the Plan will be resolved in favor of the Plan. Any disputes or questions of right or obligation which shall result from or
relate to any interpretation of this Agreement shall be determined by the Committee. Any such determination shall be binding and conclusive upon Optionee, his/her assigns, and any person or persons claiming through Optionee as to any rights
hereunder. 
  

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 IN WITNESS WHEREOF, Company has caused this Agreement to be executed on its behalf by its duly
authorized officer, and Optionee has executed this Agreement, each as of the day first above written. 
  

									
		 		 		 	“Company”
	ATTEST:	 		 	HUMANA INC.
				
	BY:	 	  
	 		 	  

	[Name]	 		 		 	[Name]	 	
	[Title]	 		 		 	[Title]	 	
				
		 		 		 	“Optionee”
				
		 		 		 	  

		 		 		 	[Name]	 	

  

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