Exhibit
10.5
CARDINAL HEALTH,
INC.
DIRECTORS’ RESTRICTED SHARE
UNITS AGREEMENT
UNDER THE
2007 NONEMPLOYEE DIRECTORS EQUITY
INCENTIVE PLAN
This Agreement is entered into in
Franklin County, Ohio. On [date of grant] (the “Grant
Date”), Cardinal Health, Inc., an Ohio corporation (the
“Company”), has awarded to [Director name]
(“Awardee”), [# of Shares] Restricted Share Units (the
“Restricted Share Units” or “Award”),
representing an unfunded unsecured promise of the Company to
deliver common shares, without par value, of the Company (the
“Shares”) to Awardee as set forth herein. The
Restricted Share Units have been granted pursuant to the Cardinal
Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (the
“Plan”), and shall be subject to all provisions of the
Plan, which are incorporated herein by reference, and shall be
subject to the following provisions of this Agreement. Capitalized
terms used in this Agreement which are not specifically defined
shall have the meanings ascribed to such terms in the
Plan.
1. Vesting . [ INITIAL
GRANT : The Restricted Share Units shall vest on the first
anniversary of the Grant Date (the “Vesting Date”),
subject to the provisions of this Agreement, including those
relating to the Awardee’s continued service on the
Company’s Board of Directors (the “Board”).] [
ANNUAL GRANT : The Restricted Share Units shall vest on the
first anniversary of the Grant Date, except that if the [year]
Annual Meeting of Shareholders is prior to the first anniversary of
the Grant Date, then the Restricted Share Units shall vest on the
date of the [year] Annual Meeting of Shareholders (in either event,
the “Vesting Date”), subject to the provisions of this
Agreement, including those relating to the Awardee’s
continued service on the Company’s Board of Directors (the
“Board”).] Notwithstanding the foregoing, in the event
of a Change of Control prior to Awardee’s termination of
service on the Board, the Restricted Share Units shall vest in
full.
2. Transferability . The
Restricted Share Units shallnot be transferable.
3. Termination of Service on the
Board . If the Awardee ceases to be a member of the Board prior
to the vesting of the Restricted Share Units for any reason other
than Awardee’s death, all of the then unvested Restricted
Share Units shall be forfeited by Awardee. If the Awardee ceases to
be a member of the Board prior to the vesting of the Restricted
Share Units by reason of Awardee’s death, then such
Restricted Share Units shall vest in full and not be
forfeited.
4. Triggering Conduct/Competitor
Triggering Conduct . As used in this Agreement,
“Triggering Conduct” shall include (i) disclosing
or using in any capacity other than as necessary in the performance
of duties as a Director of the Company any confidential
information, trade secrets or other business sensitive information
or material concerning the Company or its subsidiaries
(collectively, the “Cardinal Group”);
(ii) violation of Company policies, including but not limited
to conduct which would constitute a breach of any certificate of
compliance or similar attestation/certification signed by Awardee;
(iii) 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 any entity in the
Cardinal Group at any time within the twelve (12) months prior
to the termination of service on the Board; (iv) any action by
Awardee and/or Awardee’s 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 (v) breaching any provision of any
benefit or severance agreement with a member of the Cardinal Group.
As used in this Agreement, “Competitor Triggering
Conduct” shall include, either during Awardee’s service
as a Director or within one year following Awardee’s
termination of service on the Board, accepting employment with or
serving as a consultant, advisor, or 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 service as a
Director of the Company 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. For purposes of this Agreement,
the nature and extent of Awardee’s activities, if any,
disclosed to and reviewed by the Audit Committee or Nominating and
Governance Committee of the Board (each, a “Specified
Committee”) prior to the date of Awardee’s termination
of service on the Board shall not, unless specified to the contrary
by the Specified Committee in a written notice given to Awardee, be
deemed to be 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.
5. Special Forfeiture/Repayment
Rules . For so long as Awardee continues as a Director of the
Company and for three years following Awardee’s termination
of service on the Board regardless of 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 4 above, then:
(a) any Restricted Share Units that
have not yet vested or that vested within the Look-Back Period (as
defined below) with respect to such Triggering Conduct or
Competitor Triggering Conduct and have not yet been settled by a
payment pursuant to Paragraph 6 hereof shall immediately and
automatically terminate, be forfeited, and cease to exist;
and
(b) the Awardee shall, within 30
days following written notice from the Company, pay to the Company
an amount equal to the aggregate gross gain realized or obtained by
the Awardee resulting from the settlement of all Restricted Share
Units (measured as of the settlement date (i.e., the market value
of the Restricted Share Units on such settlement date)) that have
already been settled and that had vested 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 service on the Board, but including any period
between the time of Awardee’s termination of service on the
Board and the time Awardee engaged in Competitor Triggering
Conduct.
Awardee may be released from
Awardee’s obligations under this Paragraph 5 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 5 constitutes a
so-called “noncompete” covenant. However, this
Paragraph 5 does 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
the Awardee’s acceptance of employment with a Competitor.
Awardee agrees to provide the Company with at least ten
(10) 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 Paragraph 5 and of the Awardee’s continuing obligations
contained herein. No provision of this Agreement shall diminish,
negate, or otherwise impact any separate noncompete or other
agr
