EXHIBIT 10.04
CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Grant Date: November 19, 2001
Exercise Price: $68.10
Grant vesting date: November 19, 2004
Grant expiration date: November 19, 2011
Cardinal Health, Inc., an Ohio corporation (the "Company"), has granted to
Xxxxxx X. Xxxxxx ("Grantee"), an option (the "Option") to purchase 440,529
shares (the "Shares") of common stock in the Company for a total purchase price
of $30,000,024.90, (i.e., the equivalent of $68.10 for each full Share). The
Option has been granted pursuant to the Cardinal Health, Inc. Amended and
Restated Equity Incentive Plan, as amended (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 November 19, 2004 and prior to November 19,
2011.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Executive Vice President
1. METHOD OF EXERCISE AND PAYMENT OF PRICE
(a) METHOD OF EXERCISE. At any time when the Option is exercisable under the
Plan and this agreement, the Option shall be exercised from time to time by
written notice to the Company which shall:
(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 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.
(b) PAYMENT OF PRICE. The full exercise price for the Option shall be paid to
the Company as provided in the Plan.
2. 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), (c) or (d), above, with respect to the original Grantee.
The Human Resources and Compensation Committee of the Board of Directors of the
Company (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 3 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 item 3. 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 5 and 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 Grantee shall remain subject to the
recoupment provisions of items 5 and 6 of this agreement and tax withholding
provisions of Section 13(d) of the Plan following transfer of the Option.
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3. 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 any unvested portion of the Option shall immediately vest and
become exercisable. 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
until the expiration of the stated term of the Option.
(b) TERMINATION BY REASON OF RETIREMENT OR DISABILITY. If the Grantee's
employment by the Cardinal Group terminates by reason of retirement (as
defined in the Plan) or Disability (as defined in the Employment Agreement
between the Grantee and the Company dated as of November 20, 2001 (the
"Employment Agreement")), then any unvested 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 expiration of the stated term of the Option (the
"Exercise Period"). Notwithstanding the foregoing, if the Grantee dies
after retirement or Disability but before the expiration of the Exercise
Period, any unvested portion of the Option shall immediately vest 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 until the expiration of the Exercise Period.
(c) TERMINATION FOR GOOD REASON OR OTHER THAN FOR CAUSE. If the Company
terminates Grantee's employment other than for Cause (as defined in the
Employment Agreement) or the Grantee terminates employment for Good Reason
(as defined in the Employment Agreement), then any unvested portion of the
Option shall immediately vest and become exercisable. The Option may
thereafter be exercised by the Grantee (or any transferee, if applicable)
until the expiration of the stated term of the Option.
(d) OTHER TERMINATION OF EMPLOYMENT. If the Grantee's employment by the
Cardinal Group terminates for Cause or for any reason other than death,
retirement, Disability, or Good Reason (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 vested and exercisable on the date
of termination; provided, however, that, subject to Grantee's rights of Due
Process (as defined in the Employment Agreement), if the termination was
for Cause the Option may be immediately canceled by the Committee (whether
then held by Grantee 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 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 5 and 6 of this agreement) reasonably requested by the Company.
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5. TRIGGERING CONDUCT/COMPETITOR TRIGGERING CONDUCT. As used in this agreement,
"Triggering Conduct" shall mean engaging in any conduct described in Section
9(b), 9(c) or 9(f) of the Employment Agreement. As used herein, "Competitor
Triggering Conduct" shall mean engaging in any conduct described in Section 9(d)
or 9(e) of the Employment Agreement.
6. SPECIAL FORFEITURE/REPAYMENT RULES. If Grantee engages in Triggering Conduct
prior to the second anniversary of the date on which the Option vests hereunder
or in Competitor Triggering Conduct prior to the sooner to occur of (a) the
first anniversary of Grantee's termination of employment with the Cardinal Group
and (b) the second anniversary of the date on which the Option vests hereunder,
then, subject to Grantee's rights of Due Process (as defined in the Employment
Agreement):
(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 60 days following written notice from the Company,
pay 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), less $1.00; provided, Grantee shall not be deemed to have
engaged in Triggering Conduct or Competitor Triggering Conduct until he shall
have been afforded Due Process (as defined in the Employment Agreement). The
Grantee may be released from Grantee's obligations under this item 6 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 item 6 constitutes a so-called "noncompete" covenant. However,
this item 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.
This agreement is subject to the provisions of Grantee's Employment Agreement.
No provisions 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 Certificate of Compliance with Company Business Ethics Policies.
Grantee acknowledges and agrees that the provisions contained in this item 6 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 6. Further, the parties agree and acknowledge that
the provisions contained in items 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, 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.
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8. 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. Grantee
acknowledges that the covenants contained in items 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 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 5 or 6 of this agreement, the Company
shall have the right (in addition to, and not in lieu of, any right or remedy
that may be available to it) to temporary and permanent injunctive relief from a
court of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage. 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.
9. 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 ninety 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 and understands all provisions of the Plan
and this agreement; and (b) voluntarily and knowingly 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 8, 2001 pertaining to the Plan.
/s/ Xxxxxx X. Xxxxxx
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Signature
Xxxxxx X. Xxxxxx
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Print Name
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Grantee's Social Security Number
1/19/02
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Date
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