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Exhibit 10.06
DIRECTORS' STOCK OPTION AGREEMENT
Cardinal Health, Inc., an Ohio corporation (the "Company"), has
granted to [[Board_Member]] (the "Grantee"), an option (the "Option") to
purchase 1,440 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. Amended and Restated 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.
Section 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.
Section 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.
Section 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,
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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. Upon 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.
Section 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.
Section 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.
Section 6. Special Forfeiture/Repayment Rules. If Grantee engages
in certain "Triggering Conduct" (defined below), then: (a) the Option (or any
part thereof that has not been exercised) shall immediately terminate, be
forfeited, and shall cease to be exercisable; 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.,
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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"). If the only
Triggering Conduct is Competitor Triggering Conduct (as defined below), 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 activity in
competition with or inimical, contrary, or harmful to the interests of the
Company, including, but not limited to the following: disclosing or misusing any
confidential information or material concerning the Company; 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; accepting employment with or serving as a consultant,
advisor, or any other capacity to an entity that is in competition (a
"Competitor") with the business conducted by the Company or any of its
subsidiaries (collectively, the "Cardinal Group") either during or within one
year following Grantee's termination of service as a Director of the Company
("Competitor Triggering Conduct"); 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. The Committee shall resolve in good faith any
disputes concerning whether particular conduct constitutes 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 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 Company 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 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.
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, 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.
Section 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
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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.
Section 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.
Section 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. 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.
Section 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 executed by the Grantee and returned to the
Company within forty-five days of the Grant Date set forth below.
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 August 11, 1999,
pertaining to the Plan.
_____________________________________
Grantee
_____________________________________
Social Security Number
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