DIRECTORS’ STOCK OPTION AGREEMENT UNDER THE OUTSIDE DIRECTORS EQUITY INCENTIVE PLAN
Exhibit 10.3.4
Cardinal Health, Inc., an Ohio corporation (the “Company”), has granted to (the
“Grantee”), an option (the “Option”) to purchase Common Shares, without par value (the
“Shares”), of the Company for a total purchase price (the “Option Price”) of $ (i.e., the
equivalent of $ for each full Share). The Option has been granted pursuant to the Cardinal
Health, Inc. Outside Directors Equity Incentive Plan (the “Plan”) and shall include and be subject
to all provisions of the Plan, which are hereby incorporated herein by reference, and shall be
subject to the following provisions of this agreement. Capitalized terms used herein which are not
specifically defined herein shall have the meanings ascribed to such terms in the Plan. This
option shall be exercisable at any time on or after and prior to .
§1. Method of Exercise. At any time when the Option is exercisable under the Plan,
the Option shall be exercisable from time to time by written notice to the Company (the date such
notice is received by the Company, the “Exercise Date”) which shall:
| (a) | state that the Option is thereby being exercised, the number of Shares with respect to which the Option is being exercised, each person in whose name any certificates for the Shares should be registered and his or her address and social security number; | ||
| (b) | be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by anyone other than the Grantee, 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; and | ||
| (c) | contain such representations, warranties and agreements with respect to the investment intent of such person or persons in form and substance satisfactory to counsel for the Company. |
§2. Payment of Exercise Price. The full exercise price for the Option shall be paid
to the Company: (i) in cash, (ii) by delivery of Shares with a fair market value equal to the total
exercise price at the time of exercise, (iii) by attestation of ownership of such already-owned
Shares, (iv) by delivery of cash on the extension of credit by a broker-dealer to whom the Grantee
(or other person authorized to exercise the Option) has submitted a notice of exercise or an
irrevocable election to effect such extension of credit, or (v) by a combination of the preceding
methods. Any Shares delivered or attested to in payment of an exercise price shall be valued as of
the Exercise Date.
§3. Transferability. The Option shall be transferable (I) at the Grantee’s death, by
the Grantee by will or pursuant to the laws of descent and distribution, and (II) by the Grantee
during the 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 the Grantee, or any other
persons sharing the Grantee’s household (other than tenants or employees) (“Family Members”), (b) a
trust or trusts for the primary benefit of the Grantee or such Family Members, (c) a foundation in
which the Grantee or such Family Members control the management of assets, or (d) a partnership in
which the Grantee or such Family Members are the majority or controlling partners, provided 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 subitems II(a), (b), or (c), above, with respect to the original Grantee. 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 fifty percent of the voting interests are owned by the
Grantee or Family Members in exchange for an interest in that entity shall be considered to be a
transfer for consideration. Within ten days of any transfer, the Grantee shall notify
the Stock Option Administrator 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 Grantee’s
termination from the Board of Directors of the Company (the “Board”) provided in Section 4 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 Section 4.
The conduct prohibited of Grantee in Section 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
the Grantee to the same extent as would have been the case of the Grantee had the Option not been
transferred. The Company shall have no obligation to notify any transferee of the Option of the
Grantee’s termination as a member of the Board for any reason. The Grantee shall remain subject to
the recoupment provisions of Section 6 of this agreement and tax withholding provisions of Section
13(d) of the Plan following transfer of the Option.
§4. Termination of Relationship. If a Grantee ceases to be a member of the Board for
any reason, then all Options or any unexercised portion of such Options which otherwise are
exercisable by such Grantee (or any transferee) shall remain exercisable until expiration of the
original term of such Option.
§5. Termination for Cause. Notwithstanding any provision to the contrary in the Plan
or in this agreement, upon the discharge of the Grantee as a director of the Company for Cause
(as defined in the Plan), all unexercised Options awarded to such Grantee (whether then held by
Grantee or any transferee) shall immediately lapse and be of no further force or effect.
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§6. Special Forfeiture/Repayment Rules. For so long as Grantee continues as a
Director of the Company and for three years following Grantee’s termination as a Director of the
Company, Grantee agrees not to engage in Triggering Conduct. If Grantee engages in such Triggering
Conduct or in Competitor Triggering Conduct during such time, 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) the Grantee shall, within 30 days following
written notice from the Company, pay to the Company an amount equal to the gross option gain
realized or obtained by the 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 Option
Shares on the exercise date and the exercise price paid for such Option Shares), with respect to
any portion of the Option that has already been exercised at any time within 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 service as a Director of the Company.
As used herein, “Triggering Conduct” shall include disclosing or using in any capacity other
than as necessary in the performance of duties as a Director of the Company any confidential
information or material concerning the Company or its subsidiaries (collectively the “Cardinal
Group”); violation of Company policies, including conduct which would constitute a breach of the
then-most recent version of the Certificate of Compliance with Company Policies signed by the
Grantee; directly or indirectly employing, contacting concerning employment, or participating in
any way in the recruitment for employment (whether as an employee, officer, director, agent,
consultant or independent contractor) any person who was or is at any time during the previous
twelve months an employee, representative, officer, or director of the Cardinal Group; and
breaching any provision of any benefit or severance agreement with a member of the Cardinal Group.
As used herein “Competitor Triggering Conduct” shall include accepting employment with or serving
as a consultant, advisor, or any other capacity to an entity that is in competition with the
business conducted by any member of Cardinal Group (a “Competitor”) either during or within one
year following Grantee’s termination of service as a Director of the Company. The Committee shall
resolve in good faith any disputes concerning whether particular conduct constitutes Triggering
Conduct or Competitor Triggering Conduct, and any such determination by the Committee shall be
conclusive and binding on all interested persons. The Grantee may be released from Grantee’s
obligations under this Section 6 only if the Committee (or its duly appointed agent) determines, in
writing and its sole discretion, that such action is in the best interests of the Company.
Nothing in this Section 6 constitutes a so-called “noncompete” covenant. However, this
Section 6 does 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 the Grantee’s acceptance of
employment with a Competitor. Grantee agrees to provide the Company with at least ten days written
notice prior to directly or indirectly accepting employment with or serving as a consultant,
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 Section 6 and of the Grantee’s
continuing obligations contained herein.
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No provision of this agreement shall diminish, negate, or otherwise impact any separate
noncompete agreement to which Grantee may be a party. Grantee acknowledges and agrees that the
provisions contained in this Section 6 are being made for the benefit of the Company in
consideration of Grantee’s receipt of the Option, 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 this Section 6.
§7. Right of Set-Off. By accepting this Option, the Grantee consents to a deduction
from and set-off against any amounts owed to the Grantee by any member of the Cardinal Group from
time to time (including but not limited to amounts owed to the Grantee as Director fees, severance
payments, or other fringe benefits) to the extent of the amounts owed to the Cardinal Group by the
Grantee under this agreement.
§8. Restrictions on Exercise. The Option is subject to all restrictions in this
agreement or in the Plan. As a condition of any exercise of the Option, the Company may require
the Grantee or his transferee or successor to make such representation and warranties and to enter
into such agreements as are necessary to comply with any applicable law or regulation or to confirm
any factual matters reasonably requested by counsel for the Company.
§9. Governing Law/Venue. This agreement shall be governed by the laws of the
State of Ohio, without regard to principles of conflicts of laws. 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 Section 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 the 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 Section 6 of this agreement, the Company shall be entitled to specific
performance and injunctive relief or other equitable relief without any showing of irreparable harm
or damage, 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 Company
hereunder or by law. In the event that it becomes necessary for the Company 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.
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| CARDINAL HEALTH, INC. | ||||||
DATE OF GRANT:
|
By: | |||||
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ACCEPTANCE OF AGREEMENT
The Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either been
previously delivered or is attached to this Agreement, and represents that he/she is familiar with
all provisions of the Plan; and (b) accepts this Agreement and the Option granted to him/her under
this Agreement subject to all provisions of the Plan and this Agreement. The Grantee further
acknowledges receiving a copy of the Company’s most recent Annual Report to Shareholders and
communications routinely distributed to the Company’s shareholders and a copy of the Plan
Description dated November 1, 2000, pertaining to the Plan.
| Grantee Signature | ||||||
| Social Security Number |
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