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Exhibit
10.4
CARDINAL HEALTH,
INC.
2007 NONEMPLOYEE DIRECTORS
EQUITY INCENTIVE PLAN
SECTION 1 | PURPOSE
The purpose of the Cardinal Health, Inc.
2007 Nonemployee Directors Equity Incentive Plan (the
“Plan”) is to assist Cardinal Health, Inc. (the
“Company”) in attracting and retaining qualified
members of its Board of Directors (the “Board”). The
Plan provides for equity ownership opportunities to directors in
order to encourage and enable them to participate in the
Company’s future prosperity and growth and to match the
interests of directors with those of shareholders.
These objectives will be promoted
through the granting to Nonemployee Directors (defined below) of
equity-based awards (“awards”). The types of awards
that may be granted under the Plan are options (“Stock
Options”) to purchase Shares (defined below) and grants of
Shares or Share Units subject to Section 6 (“Restricted
Shares” or “Restricted Share Units”).
SECTION 2 |
ADMINISTRATION
The Plan shall be administered by the
Human Resources and Compensation Committee (the
“Committee”) of the Board, which shall have the power
and authority to grant Stock Options, Restricted Shares and
Restricted Share Units to members of the Board who do not serve as
employees of the Company (“Nonemployee Directors”). In
particular, the Committee shall have the authority to:
(i) select Nonemployee Directors as recipients of awards;
(ii) determine the number and type of awards to be granted;
(iii) determine the terms and conditions, not inconsistent
with the terms hereof, of any award; (iv) adopt, alter and
repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable;
(v) interpret the Plan and any award granted and any
agreements relating thereto; and (vi) take any other actions
the Committee considers appropriate in connection with, and
otherwise supervise the administration of, the Plan. All decisions
made by the Committee pursuant to the provisions hereof shall be
made in the Committee’s sole discretion and shall be final
and binding on all persons.
SECTION 3 |
ELIGIBILITY
Only Nonemployee Directors are eligible
to receive awards under the Plan. Members of the Committee who are
Nonemployee Directors are eligible to receive awards.
SECTION 4 | SHARES SUBJECT TO
PLAN
The total number of the common shares of
the Company, without par value (“Shares”), reserved and
available for issuance pursuant to awards hereunder
(“Available Shares”) shall be 750,000. The Available
Shares may consist of authorized but unissued Shares or treasury
Shares, including Shares purchased on the open market. For purposes
of this Section 4, the aggregate number of Available Shares
under the Plan at any time shall not be reduced by Shares subject
to awards that have been cancelled, expired or forfeited. Shares
granted under the Plan shall not be counted as used unless and
until they are
actually issued and delivered to a
Nonemployee Director. Notwithstanding anything to the contrary
contained herein, the following Shares shall not become available
for awards under the Plan: (i) Shares subject to awards that
have been retained by the Company in payment or satisfaction of the
exercise price of an award, or (ii) Shares that have been
delivered (either actually or constructively by attestation) to the
Company in payment or satisfaction of the exercise price of an
award.
In the event of (i) a stock
dividend, stock split, reverse stock split, share combination, or
recapitalization or similar event affecting the capital structure
of the Company (each, a “Share Change”), or (ii) a
merger, consolidation, acquisition of property or shares,
separation, spinoff, reorganization, stock rights offering,
liquidation, disaffiliation from the Company of a Subsidiary or
division (“Disaffiliation”), or similar event affecting
the Company or any of its subsidiaries (each, an “Organic
Change”), the Committee shall make such substitutions or
adjustments as it deems appropriate and equitable to the aggregate
number of Shares reserved for issuance under the Plan, the number
and exercise price of Shares subject to outstanding Stock Options,
the purchase price, if any, for Restricted Shares or Restricted
Share Units, and the number of Shares subject to a Restricted Share
or Restricted Share Unit award. In the case of Organic Changes,
such adjustments may include, without limitation, (x) the
cancellation of outstanding awards in exchange for payments of
cash, property or a combination thereof having an aggregate value
equal to the value of such awards, as determined by the Committee
in its sole discretion (it being understood that in the case of an
Organic Change with respect to which shareholders receive
consideration other than publicly traded equity securities of the
ultimate surviving entity, any such determination by the
Administrator that the value of a Stock Option shall for this
purpose be deemed to equal the excess, if any, of the value of the
consideration being paid for each Share pursuant to such Organic
Change over the exercise price of such Stock Option shall
conclusively be deemed valid), (y) the substitution of other
property (including, without limitation, cash or other securities
of the Company and securities of entities other than the Company)
for the Shares subject to outstanding awards, and (z) in
connection with any Disaffiliation, arranging for the assumption of
awards, or replacement of awards with new awards based on other
property or other securities (including, without limitation, other
securities of the Company and securities of entities other than the
Company), by the affected subsidiary, affiliate or division or by
the entity that controls such subsidiary, affiliate or division
following such Disaffiliation (as well as any corresponding
adjustments to awards that remain based upon Company
securities).
SECTION 5 | STOCK
OPTIONS
Any Stock Options granted under the Plan
shall be in such form as the Committee may from time to time
approve, and the provisions of Stock Option awards need not be the
same with respect to each optionee. Stock Options granted under the
Plan will be options that are not intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”).
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Stock Options granted under the Plan
shall be subject to the following terms and conditions and shall
contain such additional terms and conditions not inconsistent with
the terms of the Plan as the Committee deems
appropriate.
(a) Eligibility and Grant . All
Stock Options shall be evidenced by a written agreement, which
shall be dated as of the date on which a Stock Option is granted,
signed (electronically or otherwise) by an officer of the Company
authorized by the Committee, and which the Committee may also
require the Nonemployee Director to sign (electronically or
otherwise). Such agreement shall describe the Stock Options and
state that such Stock Options are subject to the Plan.
(b) Exercise of Stock Options .
Stock Options shall become exercisable at such time or times and
subject to such terms and conditions (including, without
limitation, installment or cliff exercise provisions) as shall be
determined by the Committee. The Committee shall have the
authority, in its discretion, to accelerate the time at which a
Stock Option shall be exercisable whenever it may determine that
such action is appropriate by reason of changes in applicable tax
or other law or other changes in circumstances occurring after the
award of such Stock Option.
(c) Exercise Price . The exercise
price per Share purchasable under a Stock Option shall be
determined by the Committee, except that the per Share exercise
price shall be no less than 100% of the fair market value per Share
as of the day the Stock Option is granted. Unless otherwise
determined by the Committee, the fair market value shall be the
closing price for the Shares reported on a consolidated basis on
the New York Stock Exchange on the relevant date, or if there were
no sales on such date, the closing price on the nearest preceding
date on which sales occurred.
(d) No Stock Option Repricing .
Subject to Section 4 of the Plan, the exercise price of any
Stock Option may not be reduced without shareholder
approval.
(e) Maximum Term . Each Stock
Option shall be exercisable for 10 years from the date of grant or
such shorter period of time as may be provided in the Stock Option
agreement.
(f) Transferability of Stock
Options . Except as otherwise provided hereunder, Stock Options
shall be transferable by the Nonemployee Director only with prior
approval of the Committee. Any attempted transfer without Committee
approval shall be null and void. Unless Committee approval of the
transfer shall have been obtained, all Stock Options shall be
exercisable during the Nonemployee Director’s lifetime only
by the Nonemployee Director or the Nonemployee Director’s
legal representative. Without limiting the generality of the
foregoing, the Committee may, in the manner established by the
Committee, provide for the irrevocable transfer, without payment of
consideration, of any Stock Option by a Nonemployee Director to a
member of the Nonemployee Director’s family or to a family
entity. In such case, the Stock Option shall be exercisable only by
such transferee. For purposes of this provision: (i) a
Nonemployee Director’s “family” shall include the
Nonemployee Director’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling,
niece,
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nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including through adoptive relationships, and any person sharing
the Nonemployee Director’s household (other than a tenant or
employee); and (ii) a “family entity” shall
include a trust in which the foregoing persons have more than fifty
percent (50%) of the beneficial interest, a foundation in
which the foregoing persons (or the Nonemployee Director) control
the management of assets, and any other entity in which the
foregoing persons (or the Nonemployee Director) own more than fifty
percent (50%) of the voting interests; and (iii) 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 (50%) of the voting interests are owned by
family members (or the Nonemployee Director) in exchange for an
interest in that entity shall be considered to be a transfer for
consideration.
(g) Method of Exercise . Stock
Options may be exercised in whole or in part by giving written
notice of exercise to the Company specifying the number of Shares
to be purchased. No Shares shall be transferred until full payment
therefor has been made. Payment for exercise of a Stock Option may
be made (i) in cash, (ii) by delivery of Shares already
owned by the Nonemployee Director, (iii) by attestation of
ownership of such already-owned Shares, (iv) to the extent
permitted by law, by delivery of cash from the proceeds of a sale
through a bank or broker on a date satisfactory to the Company of
some or all of the shares to which such exercise relates, or
(v) by any combination of the foregoing.
(h) Termination of Option .
Except as otherwise provided herein, unless otherwise determined by
the Committee at or after grant or termination, if a Nonemployee
Director ceases to be a member of the Board for any reason, then
all Stock Options or any unexercised portion of such Stock Options
which otherwise are exercisable shall remain exercisable until
expiration of the original term of such Stock Options.
SECTION 6 | RESTRICTED SHARES AND
RESTRICTED SHARE UNITS
Restricted Shares or Restricted Share
Units may be granted to Nonemployee Directors alone or in addition
to other awards granted under the Plan. For purposes of the Plan,
“Restricted Shares” shall mean Shares issued to
Nonemployee Directors subject to a “substantial risk of
forfeiture” within the meaning of Section 83 of the Code
and a prohibition on transfer, which may also be subject to such
other restrictions as the Committee may impose, and
“Restricted Share Units” shall mean a grant of a right
to receive Shares in the future, with such units subject to a risk
of forfeiture or other restrictions that will lapse at the end of a
specified period or upon the achievement of performance or other
objectives.
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