Exhibit 10.05
RESTRICTED SHARE UNITS AGREEMENT
On _____________ (the "Grant Date"), Cardinal Health, Inc, an Ohio
corporation (the "Company"), has granted to _________ ("Grantee") ________
Restricted Share Units (the "Restricted Share Units" or "Award"), representing
an unfunded unsecured promise of the Company to deliver common shares, without
par value, of the Company (the "Common Shares") to Grantee as set forth herein.
The Restricted Share Units have been granted pursuant to the Cardinal Health,
Inc. Amended and Restated Equity Incentive Plan, as amended (the "Plan"), and
shall be subject to all provisions of the Plan, which are hereby incorporated
herein by reference, and shall be subject to the provisions of this Restricted
Share Units Agreement (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 shall have the meanings ascribed to such terms in the Plan.
1. VESTING. Subject to the provisions set forth elsewhere in this
agreement, the Restricted Share Units shall vest in full (100%) on __________
(the "Vesting Date").
2. PURCHASE PRICE. The purchase price of the Restricted Share Units shall
be $______.
3. TRANSFERABILITY. The Restricted Share Units shall not be transferable.
4. TERMINATION OF SERVICE. Unless otherwise determined by the Committee at
or after grant or termination, and except as set forth below, if Grantee's
Continuous Service (as hereinafter defined) to the Company and its subsidiaries
(collectively, the "Cardinal Group") terminates prior to the Vesting Date, all
of the then unvested Restricted Share Units shall be forfeited by Grantee. If
Grantee's Continuous Service terminates prior to the Vesting Date by reason of
Grantee's death or disability (as defined in the Plan), then a ratable portion
of the Restricted Share Units shall vest and not be forfeited. Such ratable
portion shall be determined with respect to this award of Restricted Share Units
as an amount equal to the number of Restricted Share Units awarded to Grantee
multiplied by a fraction, the numerator of which is the number of whole calendar
months between the Grant Date and the date of such death or disability, and the
denominator of which is the number of whole calendar months between the Grant
Date and the Vesting Date. For purposes of this Agreement, the term "Continuous
Service" shall mean the absence of any interruption or termination of service as
an employee or director of any entity within the Cardinal Group.
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 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) any Restricted Share Units that have not yet vested or that vested
within the Look-Back Period (as defined below) with respect to such Triggering
Conduct or Competitor Triggering Conduct and have not yet been settled by a
payment pursuant to Paragraph 7 hereof shall immediately and automatically
terminate, be forfeited, and cease to exist; and
(b) Grantee shall, within 30 days following written notice from the
Company, pay to the Company an amount equal to (x) the aggregate gross gain
realized or obtained by Grantee resulting from the settlement of all Restricted
Share Units pursuant to Paragraph 7 hereof (measured as of the settlement date
(i.e., the market value of the Restricted Share Units on such settlement date))
that have already been settled and that had vested at any time within three
years prior to the Triggering Conduct (the "Look-Back Period"), minus (y) $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 the time of Grantee's
engaging 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
2
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 provision 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 provisions contained in this Agreement are being made for the benefit
of the Company in consideration of Grantee's receipt of the Restricted Share
Units, 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
Restricted Share Units and execution of this Agreement are voluntary actions on
the part of Grantee and that the Company is unwilling to provide the Restricted
Share Units 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. PAYMENT. Subject to the provisions of Paragraphs 5 and 6 of this
Agreement, on the [vesting payment alternative: date of vesting of any]
[deferred payment alternative: [___-month][___-year] anniversary of the first
date on which Grantee ceases to be an employee of the Company, or, to the extent
permitted by Treasury Regulations, on such earlier date as may be approved by
the Committee as to all or any portion of the] Restricted Share Units, Grantee
shall be entitled to receive from the Company (without any payment on behalf of
Grantee other than as described in Paragraph 11) the Common Shares represented
by such Restricted Share Units [deferred payment alternative: ; provided,
however, that, subject to the next sentence, in the event that some or all of
the Restricted Share Units vest prior to the Vesting Date as a result of the
death or disability of Grantee or as a result of a Change of Control, Grantee
shall be entitled to receive the corresponding Common Shares from the Company on
the date of such vesting. Notwithstanding the proviso of the preceding sentence,
if Restricted Share Units vest as a result of the occurrence of a disability or
a Change of Control under circumstances where such occurrence would not qualify
as a permissible date of distribution under Section 409A(a)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder, such proviso shall not apply and Grantee shall be entitled to
receive the corresponding Common Shares from the Company on the date that would
have applied absent such proviso]. Elections to defer receipt of the Common
Shares beyond the date of settlement provided herein may be permitted in the
discretion of the Committee pursuant to procedures established by the Committee
in compliance with the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended.
8. DIVIDENDS. Grantee shall not receive cash dividends on the Restricted
Share Units but instead shall receive a cash payment from the Company on each
cash dividend
3
payment date with respect to the Common Shares with a record date between the
Grant Date and the earlier of the termination or forfeiture of this grant in
accordance with the terms hereof or the payment described in Paragraph 7 hereof,
such cash payment to be in an amount equal to the dividends that would have been
paid on the Common Shares represented by the Restricted Share Units.
9. RIGHT OF SET-OFF. By accepting these Restricted Share Units, 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.
10. NO SHAREHOLDER RIGHTS. Grantee shall have no rights of a shareholder
with respect to the Restricted Share Units, including, without limitation,
Grantee shall not have the right to vote the Common Shares represented by the
Restricted Share Units.
11. WITHHOLDING TAX. The Company shall have the right to require Grantee
to pay to the Company the amount of any taxes which the Company is required to
withhold with respect to the Restricted Share Units (including the amount of any
taxes which the Company is required to withhold with respect to the cash
payments described in Paragraph 8 hereof) or, in lieu thereof, to retain, or
sell without notice, a sufficient number of Common Shares to cover the amount
required to be withheld. In the case of any amounts withheld for taxes pursuant
to this provision in the form of Common Shares, the amount withheld shall not
exceed the minimum required by applicable law and regulations. The Company shall
have the right to deduct from all cash payments paid pursuant to Paragraph 8
hereof the amount of any taxes which the Company is required to withhold with
respect to such payments.
12. BENEFICIARY DESIGNATION. Grantee may designate a beneficiary to
receive any Common Shares to which the Grantee is entitled with respect to the
Restricted Share Units which vest as a result of Grantee's death.
Notwithstanding the foregoing, if Grantee engages in Triggering Conduct or
Competitor Triggering Conduct as herein defined, the Restricted Share Units
subject to such beneficiary designation shall be subject to the Special
Forfeiture/Repayment Rules and the Company's Right of Set-Off or other right of
recovery set forth in this Agreement, and all rights of the beneficiary shall be
subordinated to the rights of the Company pursuant to such provisions of this
Agreement. Grantee acknowledges that the Company may exercise all rights under
this Agreement and the Plan against Grantee and Grantee's estate, heirs, lineal
descendants and personal representatives and shall not be limited to exercising
its rights against Grantee's beneficiary.
13. 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 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 Restricted Share
Units 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,
4
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.
14. 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.
15. PROMPT ACCEPTANCE OF AGREEMENT. The Restricted Share Units grant
evidenced by this Agreement shall, at the discretion of the Committee, be
forfeited if this Agreement is not executed by Grantee and returned to the
Company within 30 days of the Grant Date set forth below.
16. ELECTRONIC DELIVERY. The Company may, in its sole discretion, decide
to deliver any documents related to the Restricted Share Units grant under and
participation in the Plan or future Restricted Share Units that may be granted
under the Plan by electronic means or to request Grantee's consent to
participate in the Plan by electronic means. Grantee hereby consents to receive
such documents by electronic delivery and, if requested, to participate in the
5
Plan through an on-line or electronic system established and maintained by the
Company or another third party designated by the Company.
CARDINAL HEALTH, INC.
DATE OF GRANT: By: _____________________________
Its: _____________________________
6
ACCEPTANCE OF AGREEMENT
Grantee hereby: (a) acknowledges that he has received a copy of the Plan, 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 ____________ pertaining to the Plan; (b) accepts this
Agreement and the Restricted Share Units granted to him under this Agreement
subject to all provisions of the Plan and this Agreement; (c) represents and
warrants to the Company that he is purchasing the Restricted Share Units for his
own account, for investment, and not with a view to or any present intention of
selling or distributing the Restricted Share Units either now or at any specific
or determinable future time or period or upon the occurrence or nonoccurrence of
any predetermined or reasonably foreseeable event; and (d) agrees that no
transfer of the Common Shares delivered in respect of the Restricted Share Units
shall be made unless the Common Shares have been duly registered under all
applicable Federal and state securities laws pursuant to a then-effective
registration which contemplates the proposed transfer or unless the Company has
received a written opinion of, or satisfactory to, its legal counsel that the
proposed transfer is exempt from such registration.
_________________________________
Grantee's Signature
_________________________________
Grantee's Social Security Number
_________________________________
Date
7
