EX-99.2 OTH CONTRCT 4 pw10bpln.txt SECTION 10B5-1 TRADING PLAN - UBSPAINEWEBBER Rule 10b5-1 Trading Plan This Trading Plan dated March 4, 2002 (the "Trading Plan") is entered into between David A. Jones ("Seller") and UBS PaineWebber Inc. ("UBS PaineWebber"), acting as agent, for the purpose of establishing a trading plan that complies with Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Seller and UBS PaineWebber agree as follows: 1. Specific Plan of Sale. UBS PaineWebber agrees to effect sales of common stock, par value $0.1667 per share, of Humana Inc. ("Issuer") (the "Stock") on behalf of Seller in accordance with the specific instructions set forth in Exhibit A hereto (the "Sales Instructions"). 2. Fees/Commissions. Seller shall pay UBS PaineWebber XXXXXXXX per share of Stock sold; such amount to be deducted by UBS PaineWebber from the proceeds of sales under this Trading Plan. 3. Seller's Representations and Warranties. As of the date hereof, Seller represents and warrants that: (a) Seller is not aware of any material nonpublic information concerning Issuer or any securities of Issuer; (b) Seller is entering into this Trading Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1; (c) Seller is not subject to any legal, regulatoryor contractual restriction or undertaking that would prevent UBS PaineWebber from conducting sales in accordance with this Trading Plan; (d) This Trading Plan is consistent with Issuer's insider trading policy; (e) Seller has informed Issuer of this Trading Plan, has furnished Issuer with a copy of this Trading Plan and has been informed by Issuer that this Trading Plan is consistent with the Issuer's insider trading policy; (f) Seller has informed UBS PaineWebber that he is currently a party to an agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated for the purpose of establishing a trading plan that complies with Rule 10b5-1 (the "Merrill Lynch Plan"). Seller is not currently a party to and within the 60 days preceding the date hereof, has not been a party to any other such agreements or trading plans. (g) the Stock to be sold under this Trading Plan is owned free and clear by Seller and is not subject to any liens, security interests or other encumbrances or limitations on dispositions; (h) to the extent that any Stock is eligible for sale under Rule 144 or Rule 145 under the Securities Act of 1933, as amended (the "Securities Act"), that Stock is not subject to any liens, security interests or other encumbrances or limitations on disposition, other than those imposed by Rule 144 or Rule 145; and (i) Seller has had an opportunity to consult with Seller's own advisors as to the legal (including this Trading Plan's compliance with Rule 10b5-1 and applicable state law), tax, business, financial, accounting and related aspects of this Trading Plan, including potential application of Section 16(b) of the Exchange Act to any transaction (whether or not under this Trading Plan) engaged in by Seller or on Seller's behalf. Seller has not relied upon UBS PaineWebber or any person affiliated with UBS PaineWebber in connection with Seller's adoption or implementation of this Trading Plan, and Seller acknowledges that Seller has not received or relied on any representations from UBS PaineWebber concerning this Trading Plan's compliance with Rule 10b5-1. 4. Agreements by Seller. (a) Brokerage Account. Seller agrees that it will open a UBS PaineWebber brokerage account prior to the execution of sales under this Trading Plan and agrees to comply with its terms and conditions. (b) Delivery of Stock. (i) Seller agrees to deliver all shares of Stock to be sold pursuant to this Trading Plan (with the amount to be agreed upon by Seller and UBS PaineWebber, if the Sale Amount is designated as an aggregate dollar amount) (the "Plan Shares") into an account at UBS PaineWebber in the name of and for the benefit of Seller (the "Plan Account") prior to the commencement of any sales under this Trading Plan. Upon notification from UBS PaineWebber, if any, that the number of shares of Stock in the Plan Account is less than the number of Plan Shares that UBS PaineWebber estimates remain to be sold pursuant to this Trading Plan, Seller agrees to deliver promptly to the Plan Account the number of shares of Stock specified by UBS PaineWebber as necessary to eliminate this shortfall. (ii) Seller agrees that its failure to make effective delivery ofshares of Stock shall relieve UBS PaineWebber of its obligations under this Trading Plan. (c) Hedging Transactions. While this Trading Plan is in effect, Seller agrees to comply with the prohibition set forth in Rule 10b5 1(c)(1)(C) against entering into or altering a corresponding or hedging transaction or position with respect to the Stock. (d) Notice to UBS PaineWebber. Seller agrees to notify UBS PaineWebber to terminate or suspend sales, as appropriate, as soon as practicable upon the occurrence of any of the events contemplated in paragraph 8(a), (b), (c) or (d) or paragraph 9(c). (e) Communications. Seller agrees that it shall not, directly or indirectly, communicate any material nonpublic information relating to the Stock or Issuer to any employee of the UBS PaineWebber 10b5-1 Group or any UBS PaineWebber Financial Advisor. (f) Certain Required Exchange Act Filings. Seller agrees to make all filings, if any, required under Sections 13(d), 13(g) and 16 of the Exchange Act in a timely manner, to the extent any such filings are applicable to Seller. (g) Compliance with Applicable Laws. Seller agrees to comply with all applicable laws, including, without limitation, Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. (h) No Influence. Seller acknowledges and agrees that Seller does not have, and shall not attempt to exercise, any influence over how, when or whether to effect sales of Stock pursuant to this Trading Plan. (i) Stock Non-Marginable. The Stock is not marginable and may not be used by Seller as collateral for any purpose. (j) Discretion. Seller acknowledges and agrees that UBS PaineWebber and its affiliates and any of their respective officers, employees or other representatives shall not exercise discretionary authority or discretionary control in connection with effecting sales under this Trading Plan, except pursuant to the Sales Instructions under this Trading Plan or the express provisions of this Trading Plan. (k) Exclusivity. Seller agrees that until this Trading Plan has been terminated, Seller shall not establish any other Rule 10b5-1 trading plans with respect to the Stock, other than the Merrill Lynch Plan. (l) Acknowledgment of Relief from Obligation to Effect Sales. Seller acknowledges and agrees that UBS PaineWebber shall be relieved of its obligation to sell Stock as otherwise required by paragraph 1 above at any time when: (i) UBS PaineWebber has determined that (A) a material adversechange in the financial markets, in the market activity in Issuer or in the internal systems of UBS PaineWebber or one of its affiliates, an outbreak or escalation of hostilities or other crisis or calamity has occurred (in each case, the effect of which is such as to make it, in the sole judgment of UBS PaineWebber, impracticable for UBS PaineWebber to sell Stock); or (B) a trading suspension with respect to the Stock by the Securities and Exchange Commission or New York Stock Exchange ("Primary Exchange"), a delisting of the Stock by the Primary Exchange, or a banking moratorium has occurred; (ii) UBS PaineWebber determines, in its sole discretion, that it is prohibited from doing so by a legal, contractual or regulatory restriction applicable to it or its affiliates or to Seller or Seller's affiliates; (iii) UBS PaineWebber suspends this Trading Plan in accordance with paragraph 6 below; (iv) This Trading Plan is terminated in accordance with paragraph 7 below; or Seller further acknowledges and agrees that if UBS PaineWebber cannot effect a sale as required by paragraph 1 above for any of such reasons, UBS PaineWebber shall effect such sale as promptly as practical after the cessation or termination of such cause, subject to the restrictions set forth in paragraph 1 of Exhibit A. (m) Seller agrees to notify UBS PaineWebber of any amendment, modification or termination of the Merrill Lynch Plan. 5. Rule 144 and Rule 145. With respect to sales of Stock subject to Rule 144 or Rule 145, Seller and UBS PaineWebber agree to comply with the following provisions. (a) Agreements by Seller Regarding Rule 144 and Rule 145. (i) Seller agrees not to take, and agrees to cause any person or entity with which Seller would be required to aggregate sales of Stock pursuant to Rule 144(a)(2) or (e) not to take, any action that would cause the sales hereunder not to meet all applicable requirements of Rule 144 or Rule 145. (ii) Seller agrees to complete, execute and deliver to UBS PaineWebber Forms 144 for sales to be effected under the Trading Plan at such times and in such numbers as UBS PaineWebber shall request. (iii) Seller agrees to complete, execute and deliver to UBS PaineWebber Rule 144 Letters (in the form attached hereto as Exhibit C) for sales to be effected under the Trading Plan at such times and in such numbers as UBS PaineWebber shall request. (iv) Seller will file such Forms 144 pursuant to paragraph 5(a)(ii) above as required by applicable law. Seller shall make one Form 144 filing at the beginning of each three-month period, commencing upon the first Sale Day under the Trading Plan. (b) Agreements by UBS PaineWebber Regarding Rule 144 and Rule 145. (i) UBS PaineWebber agrees to conduct all sales pursuant to the Trading Plan in accordance with the manner of sale requirement of Rule 144 and/or Rule 145. UBS PaineWebber shall not effect any sales that it knows would exceed the then-applicable volume limitation under Rule 144 or Rule 145. UBS PaineWebber has been advised that Seller has entered into a Rule 10b5-1 trading plan with Merrill Lynch and that together these sales will be in compliance with Rule 144 volume limitations. 6. Suspension. Sales under this Trading Plan shall be suspended as follows: (a) Promptly after the date on which UBS PaineWebber receives notice from Seller or Issuer of legal, contractual or regulatory restrictions applicable to Seller or Seller's affiliates that would prevent UBS PaineWebber from selling Stock for Seller's account during the Plan Sales Period (as defined below) (such notice merely stating that there is a restriction applicable to Seller without specifying the reasons for the restriction), including a restriction based on Seller's awareness of material nonpublic information in connection with a tender offer for Issuer's securities (transactions on the basis of which Rule 14e- 3 of the Exchange Act could be violated). (b) In the event of a Qualifying Securities Offering (as defined below), from the Suspension Date until UBS PaineWebber receives notice from Issuer of the Resumption Date (each as defined below); provided, however, that (i) UBS PaineWebber has received reasonable notice of such Qualifying Securities Offering from Seller or Issuer; and (ii) Seller certifies that Seller has no control over the date on which the Preliminary Offering Document or Underwriting Agreement (each, as defined below) is filed, used, distributed or executed, as the case may be. (c) "Qualifying Securities Offering" means any offering of securities of Issuer for cash in which the lead underwriter, lead manager, initial purchaser, placement agent or other entity performing a similar function (each, an "Underwriter") requires Seller to agree to restrict Seller's ability to effect Sales pursuant to this Trading Plan. "Suspension Date" means the earlier of (i) the date on which a preliminary prospectus, offering memorandum, offering circular or other disclosure document (each, a "Preliminary Offering Document") is first used to market securities of Issuer by the Underwriter or (ii) if no such offering document is used in connection with a Qualifying Securities Offering, the date on which the underwriting agreement, purchase agreement, placement agent agreement or similar agreement (each, an "Underwriting Agreement") is entered into by the Underwriter and Issuer. "Resumption Date" means the day immediately following the expiration of the time period during which Seller was restricted from effecting Sales pursuant to this Trading Plan in accordance with the Underwriting Agreement. (d) During any "blackout" period declared by Issuer ("Blackout Period"); provided, however, that (i) Seller certifies that Seller has no control over the timing or duration o the Blackout Period under which sales are to be suspended and (ii) UBS PaineWebber has received reasonable notice of the timing and duration of such Blackout Period from Seller or Issuer (such notice merely stating that there is a restriction applicable to Seller without specifying the reasons for the restriction). Sales under this Trading Plan shall be resumed promptly following the expiration of the time period during which Seller was restricted from effecting Sales pursuant to this Trading Plan in accordance with such Blackout Period. (e) In the event that the UBS PaineWebber 10b51 Group becomes aware of material nonpublic information concerning Issuer or the Stock, UBS PaineWebber may be required by applicable law or, in its sole discretion, find it advisable, to suspend sales under this Trading Plan. In such case, UBS PaineWebber shall promptly notify Seller of the suspension of sales under this Plan. 7. Effectiveness and Termination. This Trading Plan is effective as of the date first written above and will terminateon the earliest to occur of the following (the "Plan Sales Period"): (a) On February 28, 2003 ("Termination Date"); (b) promptly after the date on which UBS PaineWebber receives notice from Seller of the termination of this Trading Plan; provided, however, that such notice shall be accompanied by a certification from Seller that Seller has notified Issuer in writing of such termination; (c) upon the determination by UBS PaineWebber, or promptly after the determination by Seller and notice to UBS PaineWebber (either of which determinations must be reasonable), that this Trading Plan does not comply with Rule 10b5-1; or (d) promptly after the date UBS PaineWebber is notified of the death of Seller. (e) Promptly after UBS PaineWebber is notified that the Merrill Lynch Plan has been amended, modified or terminated. 8. Indemnification; Limitation of Liability. (a) Indemnification. (i) Seller agrees to indemnify and hold harmless UBS PaineWebber and its directors, officers, employees and affiliates from and against all claims, losses, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) arising out of or attributable to UBS PaineWebber's actions taken or not taken in compliance with this Trading Plan, arising out of or attributable to any breach by Seller of this Trading Plan (including Seller's representations and warranties hereunder), or any violation by Seller of applicable laws or regulations. This indemnification shall survive termination of this Trading Plan. (ii) UBS PaineWebber agrees to indemnify and hold harmless Seller from and against all claims, losses, damages and liabilities(including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) arising out of or attributable to the gross negligence or willful misconduct of UBS PaineWebber in connection with this Trading Plan. (b) Limitation of Liability. (i) Notwithstanding any other provision hereof, UBS PaineWebber shall not be liable to Seller, and Seller shall not be liable to UBS PaineWebber, for: (A) special, indirect, punitive, exemplary or consequential damages, or incidental losses or damages of any kind, even if advised of the possibility of such losses or damages or if such losses or damages could have been reasonably foreseen; or (B) any failure to perform or to cease performance or any delay in performance that results from a cause or circumstance that is beyond its reasonable control, including, but not limited to, failure of electronic or mechanical equipment, strikes, failure of common carrier or utility systems, severe weather, market disruptions or other causes commonly known as "acts of God" (ii) Notwithstanding any other provision hereof, UBS PaineWebber shall not be liable to Seller for (A) the exercise of discretionary authority or discretionary control under this Trading Plan, if any, or (B) any failure to effect a sale required by paragraph 1, except for failures to effect sales as a result of the gross negligence or willful misconduct of UBS PaineWebber. 9. Agreement to Arbitrate. Any dispute between Seller and UBS PaineWebber arising out of, relating to or in connection with this Trading Plan or any transaction relating to this Trading Plan shall be determined only by arbitration as provided in the UBS PaineWebber brokerage account agreement referred to in paragraph 4(a) above. 10. Notices. (a) All notices to UBS PaineWebber under this Trading Plan shall be provided to Jason Madden, UBS PaineWebber in the manner specified by this Trading Plan by facsimile at 212-821-5536. (b) All notices to Seller under this Trading Plan shall be given to David A. Jones in the manner specified by this Trading Plan by telephone 502-580 3650, by facsimile at 502-580-3698 or by certified mail to the address below: David A. Jones 500 W. Main St. Louisville, KY 40202 11. Amendments and Modifications. This Trading Plan may be amended by Seller only upon the written consent of UBS PaineWebber and receipt by UBS PaineWebber of the following documents, each dated as of the date of such amendment: (a) a certificate signed by Seller, certifying that the representations and warranties of Seller contained in this Trading Plan are true at and as of the date of such certificate as if made at and as of such date; and (b) an issuer certificate completed by Issuer substantially in the form of Exhibit B hereto. 12. Assignment. Seller's rights and obligations under this Trading Plan may not be assigned or delegated without the written permission of UBS PaineWebber. 13. Inconsistency with Law. If any provision of this Trading Plan is or becomes inconsistent with any applicable present or future law, rule or regulation, that provision will be deemed modified or, if necessary, rescinded in order to comply with the relevant law, rule or regulation. All other provisions of this Trading Plan will continue and remain in full force and effect. 14. Governing Law. This Trading Plan shall be governed by and construed in accordance with the internal laws of the State of New York and may be modified or amended only by a writing signed by the parties hereto. 15. Entire Agreement. This Trading Plan, including Exhibits and the brokerage account agreement referred to in paragraph 4(a) above, constitutes the entire agreement between the parties with respect to this Trading Plan and supercedes any prior agreements or understandings with regard to this Trading Plan. 16. Counterparts. This Trading Plan may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. NOTICE: THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE IN PARAGRAPH 9. IN WITNESS WHEREOF, the undersigned have signed this Trading Plan as of the date first written above. /s/ David A. Jones __________________________________________ Name: David A. Jones Title: Chairman of the Board UBS PAINEWEBBER INCORPORATED /s/ Rick Sommer __________________________________________ Name: Rick Sommer Title: Senior Vice President EXHIBIT A This Exhibit A may not be amended except in accordance with the Trading Plan. SPECIFIC INSTRUCTIONS 1. UBS PaineWebber shall enter a Sell Order for a specified Sale Amount (as defined below) for the account of Seller on each specified Sale Day (as defined below) at the specified Sale Price (as defined below), subject to the following restrictions: In no event shall UBS PaineWebber sell any shares of Stock pursuant to the Trading Plan prior to April 1, 2002 ("Effective Date"). 2. A "Sale Day" shall be any Trading Day during the months of April 2002, June 2002, August 2002, October 2002, December 2002, and February 2003 ("Plan Sales Period") that the limit price specified below is met. UBS PaineWebber shall enter the order before the opening on the first Trading Day of the month. 3. The "Sale Amount" for any month of the Plan Sales Period shall be up to Eighty Thousand (80,000) shares of Common Stock of Humana Inc. not to exceed Four Hundred Eighty Thousand (480,000) shares over the term of the Trading Plan. 4. The Sale Price shall be a limit price, such that sales should only be effected if the market price on the Sale Day is greater than or equal to Thirteen Dollars $13.00 per share. 5. If a limit order is entered pursuant to this Trading Plan it will be entered as a GTC order (good until cancelled), provided, however, that no GTC orders will last beyond the close of the last Trading Day of the calendar month during which the order was entered, at which time any GTC order that has not been filled will be cancelled. 6. The Sale Amount and the Sale Price shall be adjusted automatically on a proportionate basis to take into account any stock split, reverse stock split or stock dividend with respect to the Stock or any change in capitalization with respect to Issuer that occurs while the Trading Plan is in effect. 7. The term "Stock" as used in the Trading Plan shall include any class or series of common stock of Issuer into which the Stock shall be converted whether pursuant to a reclassification, reorganization, reincorporation or similar event. 8. A "Trading Day" is any day during the Plan Sales Period that the Primary Exchange (the "Principal U.S. Market") is open for business and the Stock trades regular way on the principal U.S. market; provided, however, that a "Trading Day" shall mean only that day's regular trading session of the Principal U.S. Market and shall not include any extended-hours or after-hours trading sessions that the Principal U.S. Market may allow. 9. UBS PaineWebber may sell Stock on any national securities exchange, in the over-the-counter market, on an automated trading system or otherwise. 10. UBS PaineWebber may, in its sole discretion, elect to act as principal in executing sales under the Trading Plan. EXHIBIT B This Exhibit B may not be amended except in accordance with the Trading Plan. ISSUER CERTIFICATE 1. Humana Inc. ("Issuer") certifies that it has approved, and retained a copy of, the Trading Plan dated March 4, 2002 (the "Trading Plan") between David A. Jones ("Seller") and UBS PaineWebber Incorporated ("UBS PaineWebber") relating to the common stock, par value $0.1667 per share, of Issuer (the "Stock"). 2. The Trading Plan is consistent with Issuer's insider trading policies, and, to the best of Issuer's knowledge, there are no legal, contractual or regulatory restrictions applicable to Seller or Seller's affiliates as of the date of this representation that would prohibit either Seller from entering into the Trading Plan or any sale pursuant to the Trading Plan. 3. During the Plan Sales Period, Issuer agrees to provide notice as soon as practicable to UBS PaineWebber in the event of: (a) a Qualifying Securities Offering and of the corresponding Suspension Date and Resumption Date (each as defined in the Trading Plan); or (b) a legal, contractual or regulatory restriction applicable to Seller or Seller's affiliates that would prohibit any sale pursuant to the Trading Plan (such notice merely stating that there is a restriction applicable to Seller without specifying the reasons for such restriction). Such restrictions shall include, without limitation, any restriction relating to Seller's possession of material nonpublic information in connection with a tender offer for Issuer's securities, transactions on the basis of which would violate Rule 14e- 3 of the Exchange Act. (c) A Blackout Period (as defined in the Trading Plan). (d) Issuer learning that the Merrill Lynch Plan (as defined in this Trading Plan) has been amended, modified or terminated. Such notice shall be provided by facsimile to Jason Madden, UBS PaineWebber, at 212-821 5536 and shall indicate the anticipated duration of the restriction but shall not include any other information about the nature of the restriction or its applicability to Seller. In any event, Issuer shall not communicate any material nonpublic information about Issuer or its securities to UBS PaineWebber with respect to the Trading Plan. 4. To avoid delays in connection with transfers of stock certificates and settlement of transactions under the Trading Plan, and in acknowledgment of UBS PaineWebber's agreement in paragraph 5(b) of the Trading Plan that sales of Stock under the Trading Plan will be effected in compliance with Rule 144, Issuer agrees that it will, immediately upon Seller's directing delivery of Stock into an account at UBS PaineWebber in the name of and for the benefit of Seller, instruct its transfer agent to process the transfer of shares and issue a new certificate to Seller that does not bear any legend or statement restricting its transferability to a buyer. Dated: March 4, 2002 /s/ Arthur P. Hipwell By:______________________________________ Arthur P. Hipwell Senior Vice President & General Counsel EXHIBIT C This Exhibit C may not be amended except in accordance with the Trading Plan RULE 144 LETTER UBS PaineWebber Incorporated Arthur P. Hipwell Attn: Jason Madden Sr. Vice President & 299 Park Ave, 26th floor General Counsel New York, NY 10171 Humana Inc. 500 W. Main St. Louisville, KY 40202 Ladies and Gentlemen: In conjunction with my order to sell shares of common stock, par value $0.1667 per share, of Humana Inc. ("Issuer") ("the Stock"), through you as broker or dealer for my account pursuant to the Rule 10b5-1 Trading Plan dated March 4, 2002 (the "Trading Plan"), under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), I advise you as follows: 1.During the next twelve (12) months following the date of this letter, I intend to sell Stock pursuant to Rule 10b5-1. I intend for UBS PaineWebber to adhere to the Trading Plan without alteration or modification during the above-stated period. 2. I am an affiliate of the Issuer. 3. The number of shares of Stock, which I have ordered you to sell as broker or dealer for my account, will conform to the Sales Instructions in Exhibit A of the Trading Plan. 4. I have verified that Issuer has been subject to the Securities and Exchange Commission (the "SEC") information reporting requirements pursuant to the Exchange Act for at least the preceding 90 days and has filed all required periodic reports during the 12 months preceding the first sale or during any shorter period that the SEC may require. As of the date of the Trading Plan, I did not know of any material nonpublic information concerning Issuer. 5. I confirm that I have been the beneficial owner for a period of at least one year as provided in paragraph (d) of Rule 144. 6. a) I have not solicited or arranged for the solicitation of any orders to buy in anticipation or in connection with my proposed sales. b) I have made no payments to any other person in connection with your execution of my order. c) I have not agreed to act in concert with any other person in connection with my proposed sales. 7. It is my bona fide intention to sell the Stock as expressly prescribed in the Trading Plan pursuant to the Plan. 8. I understand that the payment of the proceeds of the sales will be delayed until the shares of Stock are transferred and delivered free of restrictions to UBS PaineWebber. 9. All capitalized terms used in this Rule 144 Letter shall have the meanings ascribed to them in the Trading Plan. The undersigned agrees to notify UBS PaineWebber immediately if any of the above representations become inaccurate before the sales are completed. Very truly yours, /s/ David A. Jones David A. Jones Print Name Signature of the Seller 500 W. Main St.,Louisville, KY 40202 March 4, 2002 Seller's Address Date