Exhibit 10.04
CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
On [date of grant] (the "Grant Date"), Cardinal Health, Inc., an Ohio
corporation (the "Company"), has granted to [employee name] ("Grantee"), an
option (the "Option") to purchase [# of shares] common shares, without par
value, of the Company (the "Shares") for a price of [stock price] per share (the
"Exercise Price"). The Option has been granted under the Cardinal Health, Inc.
Amended and Restated Equity Incentive Plan, as amended (the "Plan"), and will
include and be subject to all provisions of the Plan, which are incorporated
herein by reference, and will be subject to the provisions of this agreement. In
the event of a conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan shall control. Capitalized
terms used in this agreement which are not specifically defined will have the
meanings ascribed to such terms in the Plan. This Option shall be exercisable at
any time on or after the three-year anniversary of the Grant Date (the "Grant
Vesting Date") and prior to [date of expiration] (the "Grant Expiration Date").
1. Method of Exercise and Payment of Price.
(a) Method of Exercise. At any time when the Option is exercisable under the
Plan and this agreement, the Option may be exercised from time to time by
written notice to the Company, or such other method of exercise as may be
specified by the Company, including without limitation, exercise by electronic
means on the web site of the Company's third-party option plan administrator
(the "Plan Administrator"), which will:
(i) state the number of Shares with respect to which the Option is being
exercised; and
(ii) if the Option is being exercised by anyone other than Grantee,
if not already provided, be accompanied by proof satisfactory to counsel for the
Company of the right of such person or persons to exercise the Option under the
Plan and all applicable laws and regulations.
(b) Payment of Price. The full exercise price for the Option shall be paid to
the Company as provided in the Plan.
2. Transferability. The Option shall be transferable (I) at Grantee's death,
by Grantee by will or pursuant to the laws of descent and distribution, and (II)
by Grantee during Grantee's lifetime, without payment of consideration, to (a)
the spouse, former spouse, parents, stepparents, grandparents, parents-in-law,
siblings, siblings-in-law, children, stepchildren, children-in-law,
grandchildren, nieces or nephews of Grantee, or any other persons sharing
Grantee's household (other than tenants or employees) (collectively, "Family
Members"), (b) a trust or trusts for the primary benefit of Grantee or such
Family Members, (c) a foundation in which Grantee or such Family Members
control the management of assets, or (d) a partnership in which Grantee or such
Family Members are the majority or controlling partners; provided, however, that
subsequent transfers of the transferred Option shall be prohibited, except (X)
if the transferee is an individual, at the transferee's death by the transferee
by will or pursuant to the laws of descent and distribution, and (Y) without
payment of consideration to the individuals or entities listed in subparagraphs
II(a), (b) or (c), above, with respect to the original Grantee. The Human
Resources and Compensation Committee of the Board of Directors of the Company
(the "Committee") may, in its discretion, permit transfers to other persons and
entities as permitted by the Plan. Neither a transfer under a domestic relations
order in settlement of marital property rights nor a transfer to an entity in
which more than 50% of the voting interests are owned by Grantee or Family
Members in exchange for an interest in that entity shall be considered to be a
transfer for consideration. Within 10 days of any transfer, Grantee shall notify
the Compensation and Benefits department of the Company in writing of the
transfer. Following transfer, the Option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer and,
except as otherwise provided in the Plan or this agreement, references to the
original Grantee shall be deemed to refer to the transferee. The events of
termination of employment of Grantee provided in paragraph 3 hereof shall
continue to be applied with respect to the original Grantee, following which the
Option shall be exercisable by the transferee only to the extent, and for the
periods, specified in paragraph 3. The Company shall have no obligation to
notify any transferee of Grantee's termination of employment with the Company
for any reason. The conduct prohibited of Grantee in paragraphs 5 and 6 hereof
shall continue to be prohibited of Grantee following transfer to the same extent
as immediately prior to transfer and the Option (or its economic value, as
applicable) shall be subject to forfeiture by the transferee and recoupment from
Grantee to the same extent as would have been the case of Grantee had the Option
not been transferred. Grantee shall remain subject to the recoupment provisions
of paragraphs 5 and 6 of this agreement and tax withholding provisions of
Section 13(d) of the Plan following transfer of the Option.
3. Termination of Relationship.
(a) Termination by Death. If Grantee's employment by the Company and its
subsidiaries (collectively, the "Cardinal Group") terminates by reason of death,
then, unless otherwise determined by the Committee within 60 days of such death,
any unvested portion of the Option shall vest upon and become exercisable in
full from and after the 60th day after such death. The Option may thereafter be
exercised by any transferee of Grantee, if applicable, or by the legal
representative of the estate or by the legatee of Grantee under the will of
Grantee for a period of one year (or such other period as the Committee may
specify at or after grant or death) from the date of death or until the Grant
Expiration Date, whichever period is shorter.
(b) Termination by Reason of Retirement or Disability. If Grantee's employment
by the Cardinal Group terminates prior to the Grant Vesting Date by reason of
retirement or disability (each as defined in the Plan), then, unless otherwise
determined by the
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Committee within 60 days of such retirement or disability, a Ratable Portion
(defined below) of the Option will vest on the Grant Vesting Date. Such "Ratable
Portion" shall be an amount equal to the number of Shares the subject of the
Option, multiplied by a fraction the numerator of which shall be the number of
full months between the Grant Date and the date of retirement or disability, and
the denominator of which shall be the number of full months from the Grant Date
to the Grant Vesting Date. The Option may be exercised after the Grant Vesting
Date by Grantee (or any transferee, if applicable) until the earlier of the
fifth anniversary of the date of such retirement or disability or the Grant
Expiration Date (the "Exercise Period"); provided, however, that any vesting
that would otherwise occur during the 60-day period beginning immediately after
such retirement or disability shall not occur until the end of such 60-day
period. If Grantee has at least 15 years of service with the Cardinal Group at
the time of retirement, the Option may be exercised after the Grant Vesting Date
by Grantee (or any transferee, if applicable) until the Grant Expiration Date.
Notwithstanding the foregoing, if Grantee dies after retirement or disability
but before the expiration of the Exercise Period, unless otherwise determined by
the Committee within 60 days of such death, the Ratable Portion of the Option
shall vest upon the 60th day after such death, and the Option may be exercised
by any transferee of the Option, if applicable, or by the legal representative
of the estate or by the legatee of Grantee under the will of Grantee from and
after the 60th day after such death, for a period of one year (or such other
period as the Committee may specify at or after grant or death) from the date of
death or until the expiration of the Exercise Period, whichever period is
shorter.
(c) Other Termination of Employment. If Grantee's employment by the Cardinal
Group terminates for any reason other than death, retirement or disability
(subject to Section 10 of the Plan regarding acceleration of the vesting of the
Option upon a Change of Control), any unexercised portion of the Option which
has not vested on such date of termination will automatically terminate on the
date of such termination. Unless otherwise determined by the Committee at or
after grant or termination, Grantee (or any transferee, if applicable) will have
90 days (or such other period as the Committee may specify at or after grant or
termination) from the date of termination or until the Grant Expiration Date,
whichever period is shorter, to exercise any portion of the Option that is then
vested and exercisable on the date of termination; provided, however, that if
the termination was for Cause, as determined by the Committee, the Option may be
immediately canceled by the Committee (whether then held by Grantee or any
transferee).
4. Restrictions on Exercise. The Option is subject to all restrictions in
this agreement and/or in the Plan. As a condition of any exercise of the Option,
the Company may require Grantee or his or her transferee or successor to make
any representation and warranty to comply with any applicable law or regulation
or to confirm any factual matters (including Grantee's compliance with the terms
of paragraphs 5 and 6 of this agreement or any employment or severance agreement
between any member of the Cardinal Group and Grantee) reasonably requested by
the Company.
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5. Triggering Conduct/Competitor Triggering Conduct. As used in this
agreement, "Triggering Conduct" shall include disclosing or using in any
capacity other than as necessary in the performance of duties assigned by the
Cardinal Group any confidential information, trade secrets or other business
sensitive information or material concerning the Cardinal Group; violation of
Company policies, including conduct which would constitute a breach of any of
the Certificates of Compliance with Company Policies and/or the Certificates of
Compliance with Company Business Ethics Policies signed by Grantee; directly or
indirectly employing, contacting concerning employment, or participating in any
way in the recruitment for employment of (whether as an employee, officer,
director, agent, consultant or independent contractor), any person who was or is
an employee, representative, officer or director of the Cardinal Group at any
time within the 12 months prior to the termination of Grantee's employment with
the Cardinal Group; any action by Grantee and/or his or her representatives that
either does or could reasonably be expected to undermine, diminish or otherwise
damage the relationship between the Cardinal Group and any of its customers,
potential customers, vendors and/or suppliers that were known to Grantee; and
breaching any provision of any employment or severance agreement with a member
of the Cardinal Group. As used in this agreement, "Competitor Triggering
Conduct" shall include, either during Grantee's employment or within one year
following Grantee's termination of employment with the Cardinal Group, accepting
employment with or serving as a consultant or advisor or in any other capacity
to an entity that is in competition with the business conducted by any member of
the Cardinal Group (a "Competitor"), including, but not limited to, employment
or another business relationship with any Competitor if Grantee has been
introduced to trade secrets, confidential information or business sensitive
information during Grantee's employment with the Cardinal Group and such
information would aid the Competitor because the threat of disclosure of such
information is so great that, for purposes of this agreement, it must be assumed
that such disclosure would occur.
6. Special Forfeiture/Repayment Rules. For so long as Grantee continues as an
employee with the Cardinal Group and for three years following Grantee's
termination of employment with the Cardinal Group regardless of the reason,
Grantee agrees not to engage in Triggering Conduct. If Grantee engages in
Triggering Conduct during the time period set forth in the preceding sentence or
in Competitor Triggering Conduct during the time period referenced in the
definition of "Competitor Triggering Conduct" set forth in paragraph 5 above,
then:
(a) the Option (or any part thereof that has not been exercised) shall
immediately and automatically terminate, be forfeited, and shall cease to be
exercisable at any time; and
(b) Grantee shall, within 30 days following written notice from the Company,
pay the Company an amount equal to the gross option gain realized or obtained by
Grantee or any transferee resulting from the exercise of such Option, measured
at the date of exercise (i.e., the difference between the market value of the
Shares underlying the Option on the exercise date and the exercise price paid
for such Shares underlying the Option), with respect to any portion of the
Option that has already been exercised at any time within
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three years prior to the Triggering Conduct (the "Look-Back Period"), less
$1.00. If Grantee engages only in Competitor Triggering Conduct, then the
Look-Back Period shall be shortened to exclude any period more than one year
prior to Grantee's termination of employment with the Cardinal Group, but
including any period between the time of Grantee's termination and engagement in
Competitor Triggering Conduct. Grantee may be released from Grantee's
obligations under this paragraph 6 if and only if the Committee (or its duly
appointed designee) determines, in writing and in its sole discretion, that such
action is in the best interests of the Company. Nothing in this paragraph 6
constitutes a so-called "noncompete" covenant. This paragraph 6 does, however,
prohibit certain conduct while Grantee is associated with the Cardinal Group and
thereafter and does provide for the forfeiture or repayment of the benefits
granted by this agreement under certain circumstances, including, but not
limited to, Grantee's acceptance of employment with a Competitor. Grantee agrees
to provide the Company with at least 10 days written notice prior to directly or
indirectly accepting employment with or serving as a consultant or advisor or in
any other capacity to a Competitor, and further agrees to inform any such new
employer, before accepting employment, of the terms of this paragraph 6 and
Grantee's continuing obligations contained herein. No provisions of this
agreement shall diminish, negate or otherwise impact any separate noncompete or
other agreement to which Grantee may be a party, including, but not limited to,
any of the Certificates of Compliance with Company Policies and/or the
Certificates of Compliance with Company Business Ethics Policies; provided,
however, that to the extent that any provisions contained in any other agreement
are inconsistent in any manner with the restrictions and covenants of Grantee
contained in this agreement, the provisions of this agreement shall take
precedence and such other inconsistent provisions shall be null and void.
Grantee acknowledges and agrees that the restrictions contained in this
agreement are being made for the benefit of the Company in consideration of
Grantee's receipt of the Option, in consideration of employment, in
consideration of exposing Grantee to the Company's business operations and
confidential information, and for other good and valuable consideration, the
adequacy of which consideration is hereby expressly confirmed. Grantee further
acknowledges that the receipt of the Option and execution of this agreement are
voluntary actions on the part of Grantee and that the Company is unwilling to
provide the Option to Grantee without including the restrictions and covenants
of Grantee contained in this agreement. Further, the parties agree and
acknowledge that the provisions contained in paragraphs 5 and 6 are ancillary
to, or part of, an otherwise enforceable agreement at the time the agreement is
made.
7. Right of Set-Off. By accepting this Option, Grantee consents to a
deduction from, and set-off against, any amounts owed to Grantee by any member
of the Cardinal Group from time to time (including, but not limited to, amounts
owed to Grantee as wages, severance payments or other fringe benefits) to the
extent of the amounts owed to the Cardinal Group by Grantee under this
agreement.
8. Governing Law/Venue. This agreement shall be governed by the laws of the
State of Ohio, without regard to principles of conflicts of law, except to the
extent superceded
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by the laws of the United States of America. The parties agree and acknowledge
that the laws of the State of Ohio bear a substantial relationship to the
parties and/or this agreement and that the Option and benefits granted herein
would not be granted without the governance of this agreement by the laws of the
State of Ohio. In addition, all legal actions or proceedings relating to this
agreement shall be brought in state or federal courts located in Franklin
County, Ohio and the parties executing this agreement hereby consent to the
personal jurisdiction of such courts. Grantee acknowledges that the covenants
contained in paragraphs 5 and 6 of this agreement are reasonable in nature, are
fundamental for the protection of the Company's legitimate business and
proprietary interests, and do not adversely affect Grantee's ability to earn a
living in any capacity that does not violate such covenants. The parties further
agree that in the event of any violation by Grantee of any such covenants, the
Company will suffer immediate and irreparable injury for which there is no
adequate remedy at law. In the event of any violation or attempted violations of
the restrictions and covenants of Grantee contained in this agreement, the
Cardinal Group shall be entitled to specific performance and injunctive relief
or other equitable relief, including the issuance ex parte of a temporary
restraining order, without any showing of irreparable harm or damage, such
irreparable harm being acknowledged and admitted by Grantee, and Grantee hereby
waives any requirement for the securing or posting of any bond in connection
with such remedy, without prejudice to the rights and remedies afforded the
Cardinal Group hereunder or by law. In the event that it becomes necessary for
the Cardinal Group to institute legal proceedings under this agreement, Grantee
shall be responsible to the Company for all costs and reasonable legal fees
incurred by the Company with regard to such proceedings. Any provision of this
agreement which is determined by a court of competent jurisdiction to be invalid
or unenforceable should be construed or limited in a manner that is valid and
enforceable and that comes closest to the business objectives intended by such
provision, without invalidating or rendering unenforceable the remaining
provisions of this agreement.
9. Action by the Committee. The parties agree that the interpretation of this
agreement shall rest exclusively and completely within the sole discretion of
the Committee. The parties agree to be bound by the decisions of the Committee
with regard to the interpretation of this agreement and with regard to any and
all matters set forth in this agreement. The Committee may delegate its
functions under this agreement to an officer of the Cardinal Group designated by
the Committee (hereinafter the "designee"). In fulfilling its responsibilities
hereunder, the Committee or its designee may rely upon documents, written
statements of the parties or such other material as the Committee or its
designee deems appropriate. The parties agree that there is no right to be heard
or to appear before the Committee or its designee and that any decision of the
Committee or its designee relating to this agreement, including without
limitation whether particular conduct constitutes Triggering Conduct or
Competitor Triggering Conduct, shall be final and binding unless such decision
is arbitrary and capricious.
10. Prompt Acceptance of Agreement. The Option grant evidenced by this
agreement shall, at the discretion of the Committee, be forfeited if this
agreement is not
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electronically executed by Grantee by indicating Grantee's acceptance of this
agreement in accordance with the acceptance procedures set forth on the Plan
Administrator's web site within 90 days of the Grant Date.
11. Electronic Delivery and Consent to Electronic Participation. The Company
may, in its sole discretion, decide to deliver any documents related to the
Option grant under and participation in the Plan or future options that may be
granted under the Plan by electronic means. Grantee hereby consents to receive
such documents by electronic delivery and to participate in the Plan through an
on-line or electronic system established and maintained by the Company or
another third party designated by the Company, including the acceptance of
option grants and the execution of option agreements through electronic
signature.
12. Notices. All notices, requests, consents and other communications required
or provided under this agreement to be delivered by Grantee to the Company will
be in writing and will be deemed sufficient if delivered by hand, facsimile,
nationally recognized overnight courier, or certified or registered mail, return
receipt requested, postage prepaid, and will be effective upon delivery to the
Company at the address set forth below:
Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Legal Officer
Facsimile: (000) 000-0000
All notices, requests, consents and other communications required or provided
under this agreement to be delivered by the Company to Grantee may be delivered
by e-mail or in writing and will be deemed sufficient if delivered by e-mail,
hand, facsimile, nationally recognized overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and will be
effective upon delivery to the Grantee.
CARDINAL HEALTH, INC.
By:____________________
Xxxxxx X. Xxxxxx
Chairman and CEO
ACCEPTANCE OF AGREEMENT
GRANTEE HEREBY: (A) ACKNOWLEDGES RECEIVING A COPY OF THE PLAN, WHICH HAS EITHER
BEEN PREVIOUSLY DELIVERED OR IS PROVIDED WITH THIS AGREEMENT, AND REPRESENTS
THAT HE OR SHE IS FAMILIAR WITH AND UNDERSTANDS ALL PROVISIONS OF THE PLAN AND
THIS AGREEMENT; (B) VOLUNTARILY AND KNOWINGLY ACCEPTS THIS AGREEMENT AND THE
OPTION
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GRANTED TO HIM OR HER UNDER THIS AGREEMENT SUBJECT TO ALL PROVISIONS OF THE PLAN
AND THIS AGREEMENT, INCLUDING THE PROVISIONS IN THE AGREEMENT REGARDING
"TRIGGERING CONDUCT/COMPETITOR TRIGGERING CONDUCT" AND "SPECIAL
FORFEITURE/REPAYMENT RULES" SET FORTH IN PARAGRAPHS 5 AND 6 ABOVE; AND (C)
REPRESENTS THAT HE OR SHE UNDERSTANDS THAT THE ACCEPTANCE OF THIS AGREEMENT
THROUGH AN ON-LINE OR ELECTRONIC SYSTEM CARRIES THE SAME LEGAL SIGNIFICANCE AS
IF HE OR SHE MANUALLY SIGNED THE AGREEMENT. GRANTEE FURTHER ACKNOWLEDGES
RECEIVING A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K AND
OTHER COMMUNICATIONS ROUTINELY DISTRIBUTED TO THE COMPANY'S SHAREHOLDERS AND A
COPY OF THE PLAN DESCRIPTION DATED [DATE OF PLAN DESCRIPTION] PERTAINING TO THE
PLAN.
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