Exhibit 10.04
CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
On [date of grant] (the "Grant Date"), Cardinal Health, Inc., an Ohio
corporation (the "Company"), has granted to [employee name] ("Grantee"), 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
"Exercise Price"). The Option has been granted under the Cardinal Health, Inc.
Amended and Restated Equity Incentive Plan, as amended (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. 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 will have the
meanings ascribed to such terms in the Plan. This Option shall vest and become
exercisable in equal installments on each of the first anniversaries of
the Grant Date (each, the "Vesting Date" with respect to the portion of the
Option scheduled to vest on such date), subject in each case to the provisions
of this agreement, including those relating to the Grantee's continued
employment with the Company and its subsidiaries. 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 (the "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 Grantee, 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 in the Plan.
2. Transferability. The Option shall be transferable (I) at Grantee's death, by
Grantee by will or pursuant to the laws of descent and distribution, and (II) by
Grantee during 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
Grantee, or any other persons sharing Grantee's household (other than tenants or
employees) (collectively, "Family Members"), (b) a trust or trusts for the
primary benefit of Grantee or such Family Members, (c) a foundation in which
Grantee or such Family Members control the management of assets, or (d) a
partnership in which Grantee 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 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 50% of
the voting interests are owned by Grantee 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, Grantee 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
Grantee shall be deemed to refer to the transferee. The events of termination of
employment of Grantee provided in paragraph 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 paragraph 3. The Company shall have no obligation to notify any
transferee of Grantee's termination of employment with the Company for any
reason. The conduct prohibited of Grantee in paragraphs 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
Grantee to the same extent as would have been the case of Grantee had the Option
not been transferred. Grantee shall remain subject to the recoupment provisions
of paragraphs 5 and 6 of this agreement and tax withholding provisions of
Section 13(d) of the Plan following transfer of the Option.
3. Termination of Relationship.
(a) Termination by Death. If 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 60 days of such death,
any unvested portion of the Option shall vest upon and become exercisable in
full from and after the 60th day after such death. The Option, to the extent
vested, may thereafter be exercised by any transferee of Grantee, if applicable,
or by the legal representative of the estate or by the legatee of Grantee under
the will of 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 Grant Expiration Date, whichever period is shorter.
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(b) Termination by Reason of Retirement or Disability. If Grantee's employment
by the Cardinal Group terminates by reason of retirement or disability (each as
defined in the Plan) prior to the vesting in full of the Option, then, unless
otherwise determined by the Committee within 60 days of such retirement or
disability, a Ratable Portion of each installment of the Option that would have
vested on a Vesting Date shall vest upon and become exercisable in full from and
after the later of (x) the 60th day after such termination of employment and (y)
such Vesting Date. Such Ratable Portion shall, with respect to the applicable
installment, be an amount equal to such installment of the Option scheduled to
vest on the applicable Vesting Date multiplied by a fraction, the numerator of
which shall be the number of days from the Grant Date through the date of such
termination, and the denominator of which shall be the number of days from the
Grant Date through such Vesting Date. The Option, to the extent vested, may be
exercised after the date of vesting by Grantee (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 (the "Exercise Period").
If Grantee has at least 15 years of service with the Cardinal Group at the time
of retirement, the Option may be exercised after the date of vesting by Grantee
(or any transferee, if applicable) until the Grant Expiration Date.
Notwithstanding the foregoing, if Grantee dies after retirement or disability
but before the expiration of the Exercise Period, unless otherwise determined by
the Committee within 60 days of such death, the Ratable Portion with respect to
each installment of the Option that has not yet vested shall vest upon the 60th
day after such death, and 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 Grantee under the will of Grantee from and after
the 60th 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.
(c) Other Termination of Employment. If Grantee's employment by the Cardinal
Group terminates for any reason other than death, retirement or disability
(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, Grantee (or any transferee, if applicable) will have
90 days (or such other period as the Committee may specify at or after grant or
termination) from the date of termination or until the Grant Expiration Date,
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 if
the termination was for Cause, as determined by the Committee, 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 Grantee 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
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matters (including Grantee's compliance with the terms of paragraphs 5 and 6 of
this agreement or any employment or severance agreement between any member of
the Cardinal Group and Grantee) reasonably requested by the Company.
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 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 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) 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) Grantee 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
Grantee or any
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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 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 engagement 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 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 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 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
restrictions contained in this agreement 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
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. Right of Set-Off. By accepting this Option, 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,
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severance payments or other fringe benefits) to the extent of the amounts owed
to the Cardinal Group by Grantee under this agreement.
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 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.
9. 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
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conduct constitutes Triggering Conduct or Competitor Triggering Conduct, shall
be final and binding unless such decision is arbitrary and capricious.
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
electronically executed by Grantee by indicating Grantee's acceptance of this
agreement in accordance with the acceptance procedures set forth on the Plan
Administrator's web site within 90 days of the Grant Date.
11. 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. Grantee 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.
12. Notices. All notices, requests, consents and other communications required
or provided under this agreement to be delivered by Grantee 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 Grantee 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 Grantee.
CARDINAL HEALTH, INC.
By:_____________________
Xxxxxx X. Xxxxxx
Chairman and CEO
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ACCEPTANCE OF AGREEMENT
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 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 CARRIES THE SAME LEGAL SIGNIFICANCE AS
IF HE OR SHE MANUALLY SIGNED THE AGREEMENT. GRANTEE FURTHER ACKNOWLEDGES
RECEIVING 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 [DATE OF PLAN DESCRIPTION] PERTAINING TO THE
PLAN.
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