Exhibit 10.02
CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
On [date of grant] (the "Grant Date"), Cardinal Health, Inc., an Ohio
corporation (the "Company"), has awarded to [employee name] ("Awardee"), an
option (the "Option") to purchase [# of shares] common shares, without par
value, of the Company (the "Shares") for a price of [$X.XX] per share. The
Option has been granted under the Cardinal Health, Inc. 2005 Long-Term Incentive
Plan (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. 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 vest and become exercisable [CLIFF ALTERNATIVE: on
[vesting date]] [INSTALLMENT ALTERNATIVE: in accordance with the following
schedule: [vesting schedule], subject [INSTALLMENT ALTERNATIVE: in each case] to
the provisions of this agreement, including those relating to the Awardee's
continued employment with the Company and its Affiliates. Notwithstanding the
foregoing, in the event of a Change of Control prior to Awardee's Termination of
Employment, the Option shall vest in full. This Option shall expire on [date of
expiration] (the "Grant Expiration Date").
1. Method of Exercise and Payment of Price.
(a) Method of Exercise. At any time when all or a portion of the Option is
exercisable under the Plan and this agreement, some or all of the exercisable
portion of 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, 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 Awardee, 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 portion of the Option
being exercised shall be paid to the Company as provided below:
(i) in cash;
(ii) by check or wire transfer (denominated in U.S. Dollars);
(iii) subject to any conditions or limitations established by the
Administrator, other Shares which (A) in the case of Shares acquired from the
Company (whether upon the exercise of an Option or otherwise), have been owned
by the Participant for more than six months on the date of surrender (unless
this condition is waived by the Administrator), and (B) have a Fair Market Value
on the date of surrender equal to or greater than the aggregate exercise price
of the Shares as to which said Option shall be exercised (it being agreed that
the excess of the Fair Market Value over the aggregate exercise price shall be
refunded to the Awardee in cash);
(iv) consideration received by the Company under a broker-assisted sale
and remittance program acceptable to the Administrator; or
(v) any combination of the foregoing methods of payment.
2. Transferability. The Option shall be transferable (I) at Awardee's death, by
Awardee by will or pursuant to the laws of descent and distribution, and (II) by
Awardee during Awardee'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 Awardee, or any other persons sharing
Awardee's household (other than tenants or employees) (collectively, "Family
Members"), (b) a trust or trusts for the primary benefit of Awardee or such
Family Members, (c) a foundation in which Awardee or such Family Members control
the management of assets, or (d) a partnership in which Awardee 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 Awardee. The
Administrator 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 Awardee 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, Awardee 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 Awardee shall be deemed to refer to the transferee. The events of a
Termination of Employment of Awardee provided in paragraph 3 hereof shall
continue to be applied with respect to the original Awardee, 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 Awardee's Termination of Employment with the Company
for any reason. The conduct prohibited of Awardee in paragraphs 5 and 6 hereof
shall continue to be prohibited of Awardee 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
Awardee to the same extent as would have been the case of Awardee had the Option
not been transferred. Awardee shall remain subject to the recoupment provisions
of paragraphs 5 and 6 of this agreement and tax withholding provisions of
Section 29 of the Plan following transfer of the Option.
3. Termination of Employment.
(a) Termination of Employment by Reason of Death. If a Termination of Employment
occurs by reason of death prior to the vesting in full of the Option, then any
unvested portion of the Option shall vest upon and become exercisable in full
from and after such death. The Option may thereafter be exercised by any
transferee of Awardee, if applicable, or by the legal representative of the
estate or by the legatee of Awardee under the will of Awardee for a period of
one year from the date of death or until the Grant Expiration Date, whichever
period is shorter.
(b) Termination of Employment by Reason of Retirement or Disability. If a
Termination of Employment occurs by reason of Retirement or Disability prior to
the vesting in full of the
2
Option, then any unexercised portion of the Option which has not vested on such
date of Termination of Employment will automatically be forfeited. The Option,
to the extent vested, may be exercised by Awardee (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, provided that if Awardee
has at least 15 years of service with the Company and its Affiliates
(collectively, the "Cardinal Group") at the time of Retirement, the Option, to
the extent vested, may be exercised by Awardee (or any transferee, if
applicable) until the Grant Expiration Date. Notwithstanding the foregoing, if
Awardee dies after Retirement or Disability, but before the expiration of the
exercise period provided for by the preceding sentence, the Option, to the
extent vested, may be exercised by any transferee of the Option, if applicable,
or by the legal representative of the estate or by the legatee of Awardee under
the will of Awardee from and after such death only until the earlier of (x) the
first anniversary of the date of death or (y) the date upon which such exercise
period would have otherwise expired.
(c) Other Termination of Employment. If a Termination of Employment occurs by
any reason other than death, Retirement or Disability, any unexercised portion
of the Option which has not vested on such date of Termination of Employment
will automatically be forfeited. Unless otherwise determined by the
Administrator at or after grant or Termination of Employment and subject to
Section 16(b)(ii) of the Plan, Awardee (or any transferee, if applicable) will
have 90 days from the date of Termination of Employment or until the Grant
Expiration Date, whichever period is shorter, to exercise any portion of the
Option that is vested and exercisable on the date of Termination of Employment;
provided, however, that if the Termination of Employment was a Termination for
Cause, as determined by the Administrator, the Option may be immediately
canceled by the Administrator (whether then held by Awardee 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 Awardee 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 Awardee's compliance with the terms of
paragraphs 5 and 6 of this agreement or any employment or severance agreement
between the Cardinal Group and Awardee) reasonably requested by the Company.
5. Triggering Conduct/Competitor Triggering Conduct. As used in this agreement,
"Triggering Conduct" shall include the following: 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 Awardee; 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 Awardee's Termination of Employment; any
action by Awardee 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 Awardee; and breaching
any provision of any employment or severance agreement with a member of the
Cardinal Group. As used in this agreement, "Competitor Triggering
3
Conduct" shall include, either during Awardee's employment or within one year
following Awardee's Termination of Employment, 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 Awardee has been introduced to
trade secrets, confidential information or business sensitive information during
Awardee'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 Awardee continues as an
employee with the Cardinal Group and for three years following Termination of
Employment regardless of the reason, Awardee agrees not to engage in Triggering
Conduct. If Awardee 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) Awardee 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
Awardee 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 three years prior to
the Triggering Conduct (the "Look-Back Period"), less $1.00. If Awardee engages
only in Competitor Triggering Conduct, then the Look-Back Period shall be
shortened to exclude any period more than one year prior to Awardee's
Termination of Employment, but including any period between the time of
Termination of Employment and engagement in Competitor Triggering Conduct.
Awardee may be released from Awardee's obligations under this paragraph 6 if and
only if the Administrator (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 Awardee
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, Awardee's acceptance of employment
with a Competitor. Awardee 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 Awardee's continuing obligations contained
herein. No provisions of this agreement shall diminish, negate or otherwise
impact any separate noncompete or other agreement to which Awardee 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 Awardee contained in this agreement, the
provisions of this agreement shall take precedence and such other inconsistent
provisions shall be null and void. Awardee acknowledges and agrees that the
restrictions contained in this agreement are being made for the benefit of the
Company in consideration of Awardee's receipt of the Option, in consideration of
4
employment, in consideration of exposing Awardee 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. Awardee further acknowledges that the receipt of the Option and
execution of this agreement are voluntary actions on the part of Awardee and
that the Company is unwilling to provide the Option to Awardee without including
the restrictions and covenants of Awardee 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, Awardee consents to a deduction
from, and set-off against, any amounts owed to Awardee by any member of the
Cardinal Group from time to time (including, but not limited to, amounts owed to
Awardee as wages, severance payments or other fringe benefits) to the extent of
the amounts owed to the Cardinal Group by Awardee under this agreement.
8. Withholding Tax. The Company shall have the right to require Awardee to pay
to the Company the amount of any taxes which the Company is required to withhold
with respect to the Options, or, in lieu thereof, to retain, or sell without
notice, a sufficient number of Shares subject to the Option 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 Shares, the amount withheld shall not exceed
the minimum required by applicable law and regulations.
9. 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 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. Awardee 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
Awardee'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
Awardee 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 Awardee
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 Awardee, and Awardee 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, Awardee 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.
5
10. Action by the Administrator. The parties agree that the interpretation of
this agreement shall rest exclusively and completely within the sole discretion
of the Administrator. The parties agree to be bound by the decisions of the
Administrator with regard to the interpretation of this agreement and with
regard to any and all matters set forth in this agreement. The Administrator may
delegate its functions under this agreement to an officer of the Cardinal Group
designated by the Administrator (hereinafter the "designee"). In fulfilling its
responsibilities hereunder, the Administrator or its designee may rely upon
documents, written statements of the parties or such other material as the
Administrator or its designee deems appropriate. The parties agree that there is
no right to be heard or to appear before the Administrator or its designee and
that any decision of the Administrator 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.
11. Prompt Acceptance of Agreement. The Option grant evidenced by this agreement
shall, at the discretion of the Administrator, be forfeited be forfeited if this
agreement is not manually executed and returned to the Company, or
electronically executed by Awardee by indicating Awardee's acceptance of this
agreement in accordance with the acceptance procedures set forth on the
Company's third-party equity plan administrator's web site, within 90 days of
the Grant Date.
12. 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. Awardee 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.
13. Notices. All notices, requests, consents and other communications required
or provided under this agreement to be delivered by Awardee 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 Awardee 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 Awardee.
6
CARDINAL HEALTH, INC.
By: _______________________________
Its: ______________________________
7
ACCEPTANCE OF AGREEMENT
Awardee 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 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, if applicable, carries the same legal significance as if
he or she manually signed the agreement. Awardee further acknowledges receiving
a copy of the Company's most recent annual report to shareholders 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.
[_______________________________
Awardee's Signature
________________________________
Awardee's Social Security Number
________________________________
Date]
8
