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Exhibit 10.04
FORM OF
CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Grant Date:
Grant vesting date:
Grant expiration date:
Xxxxx Xxxxx:
Cardinal Health, Inc., an Ohio corporation (the "Company"), has granted to
[employee name] ("Grantee"), an option (the "Option") to purchase [# of shares]
(the "Shares") of common stock in the Company for a total purchase price of [#
of shares *stock price], (i.e., the equivalent of [stock price] 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 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 .
CARDINAL HEALTH, INC.
By:__________________
Xxxxxx X. Xxxxxx
Chairman and CEO
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1. Method of Exercise. At any time when the Option is exercisable under the Plan
and this agreement, the Option shall be exercisable from time to time by written
notice to the Company 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 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 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 Price. The full exercise price for the Option shall be paid to the
Company as provided in the Plan.
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 termination of
employment of the Grantee provided in item 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
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for the periods, specified in item 4. The Company shall have no obligation to
notify any transferee of the Grantee's termination of employment with the
Company for any reason. The conduct prohibited of Grantee in items 6 and 7
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 Grantee shall remain subject to the
recoupment provisions of items 6 and 7 of this agreement and tax withholding
provisions of Section 13(d) of the Plan following transfer of the Option.
4. Termination of Relationship.
(a) Termination by Death. If the 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 sixty days of such
death, any unexercised portion of the Option shall be exercisable in full from
and after and any unvested portion thereof shall vest upon, the sixtieth day
after such death. The Option may thereafter be exercised by any transferee of
the Option, if applicable, or by the legal representative of the estate or by
the legatee of the Grantee under the will of the 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 expiration of the stated term of the
Option, whichever period is shorter.
(b) Termination by Reason of Retirement. If the Grantee's employment by the
Cardinal Group terminates by reason of retirement (as defined in the Plan),
then, unless otherwise determined by the Committee within sixty days of such
retirement, any unexercised portion of the Option will vest in accordance with
the terms indicated on the first page of this agreement and may thereafter be
exercised by the Grantee (or any transferee, if applicable) until the earlier of
(the "Exercise Period") the fifth anniversary of the date of such retirement or
the expiration of the stated term of the Option; provided, that any vesting that
would otherwise occur during the sixty-day period beginning immediately after
such retirement shall not occur until the end of such sixty-day period. If the
Grantee has at least fifteen years of service with the Cardinal Group at the
time of retirement, the Option may thereafter be exercised by the Grantee (or
any transferee, if applicable) until the expiration of the stated term of the
Option. Notwithstanding the foregoing, if the Grantee dies after retirement but
before the expiration of the Exercise Period, unless otherwise determined by the
Committee within 60 days of such death, any unexercised portion of the Option
shall be exercisable in full, and any unvested portion thereof shall vest upon,
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 the Grantee
under the will of the Grantee from and after, the sixtieth 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.
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(c) Other Termination of Employment. If the Grantee's employment by the Cardinal
Group terminates for any reason other than death or retirement (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, the Grantee (or any transferee, if applicable) will have ninety
days (or such other period as the Committee may specify at or after grant or
termination) from the date of termination or until the expiration of the stated
term of the Option, whichever period is shorter, to exercise any portion of the
Option that is then exercisable on the date of termination; provided, however,
that if the termination was for Cause, the Option may be immediately canceled by
the Committee (whether then held by Grantee or any transferee).
5. 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 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
items 6 and 7 of this agreement or any employment or severance agreement between
any member of the Cardinal Group and the Grantee) reasonably requested by the
Company.
6. 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 or material concerning 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 employment 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
in any other capacity to an entity that is in competition with the business
conducted by any member of the Cardinal Group (a "Competitor") either during or
within one year following Grantee's termination of employment with the Cardinal
Group ("Competitor Triggering Conduct"). 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.
7. 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, Grantee agrees not to engage
in Triggering Conduct. If Grantee engages in such Triggering conduct or in
Competitor Triggering
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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 employment with the Cardinal Group. The
Grantee may be released from Grantee's obligations under this item 7 only if the
Committee (or its duly appointed agent) determines, in writing and in its sole
discretion, that such action is in the best interests of the Company. Nothing in
this item 7 constitutes a so-called "noncompete" covenant. However, this item 7
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 item 7
and 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 item 7 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
this item 7.
8. 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 wages, severance payments, or other fringe benefits) to
the extent of the amounts owed to the Cardinal Group by the Grantee under this
agreement.
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 superseded by the laws of the United States of America. 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
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jurisdiction of such courts. Grantee acknowledges that the covenants contained
in items 6 and 7 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 item 6 or 7 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.
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 sixty days of the
Grant Date set forth on the first page of this agreement.
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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 provided with this agreement, and
represents that he is familiar with all provisions of the Plan; and (b) accepts
this agreement and the Option granted to him 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 and other
communications routinely distributed to the Company's shareholders and a copy of
the Plan Description dated August 11, 1999 pertaining to the Plan.
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Signature
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Print Name
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Grantee's Social Security Number
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Date
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