Exhibit 10.63
S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
A DJUSTMENTS TO C ARDINAL H EALTH S TOCK O PTIONS AND T ERMS OF C ARE F USION
S TOCK O PTIONS
August 31,
2009
As a result of the separation of the
clinical and medical products businesses of Cardinal Health, Inc.
(“ Cardinal Health ”) by means of a spin-off of
those businesses to Cardinal Health’s shareholders, effective
August 31, 2009 (the “ Spin-Off ”),
outstanding stock option awards granted by Cardinal Health or an
affiliate to you (the “ Cardinal Health Options
”) pursuant to the terms of equity incentive plans adopted by
Cardinal Health (including those plans acquired or assumed by
Cardinal Health in acquisitions) (“ Cardinal Health Equity
Plans ”) and related grant agreements (the “
Cardinal Option Agreements ”) are being adjusted, as
of the effective time of the Spin-Off, as follows:
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With respect to each outstanding
Cardinal Health Option initially granted to you on or prior to
September 26, 2007 (each, a “ Pre-2007 Cardinal
Option ”), (i) the exercise price and number of
shares subject to such option are being adjusted (each, an “
Adjusted Cardinal Option ”) and (ii) you are
receiving a nonqualified stock option to purchase common stock of
CareFusion Corporation (each, a “ CareFusion Option
”).
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With respect to each outstanding
Cardinal Health Option initially granted to you after
September 26, 2007, the option will be cancelled and a
CareFusion Option will be issued.
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For the sole purpose of
determining how the Cardinal Health Options will be adjusted in
connection with the Spin-Off, references to the
“initial” date of grant of a Cardinal Health Option
refer to the date when such option was initially granted pursuant
to one of the Cardinal Health Equity Plans, except that the
“initial” date of grant of a Cardinal Health Option
that was granted under the Offer to Exchange, dated June 19,
2009, shall be deemed to be the initial grant date of the Cardinal
Health Option for which it was exchanged.
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Adjusted Cardinal
Options
Except as described below, your
Adjusted Cardinal Option will continue to be governed by
(i) your Cardinal Option Agreements, as amended (including the
provisions in the agreements relating to “Triggering
Conduct/Competitor Triggering Conduct” and “Special
Forfeiture/Repayment Rules”) and (ii) the Cardinal
Health Equity Plan under which the agreement was issued, also as
amended.
Your Adjusted Cardinal Options will
differ from your Pre-2007 Cardinal Options in the following
ways:
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The exercise price and number of
shares subject to the Adjusted Cardinal Options will be different
from the exercise price and number of shares subject to each
Pre-2007 Cardinal Option to account for the effect of the Spin-Off
on the value of Cardinal Health’s stock. The adjusted
exercise price and number of shares subject to each Adjusted
Cardinal Option can be found on the website of Cardinal
Health’s third-party equity plan administrator.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
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For the purposes of vesting and
exercise of your Adjusted Cardinal Options and forfeiture of your
Adjusted Cardinal Options on termination of employment under the
Cardinal Health Option Agreements and Cardinal Health Equity Plan,
your continued employment with CareFusion Corporation (“
CareFusion ”) or any of its affiliates shall be
treated as continued employment with Cardinal Health until you
cease to be a full-time employee of CareFusion or any of its
affiliates. However, for other purposes with respect to your
Adjusted Cardinal Options, including the provisions in the Cardinal
Option Agreements relating to “Triggering Conduct/Competitor
Triggering Conduct”, “Special Forfeiture/Repayment
Rules” and “Holding Periods Requirements.” you
will cease to be employed by Cardinal Health when the Spin-Off is
effective.
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In addition to the obligations
set forth in the “Triggering Conduct/Competitive Triggering
Conduct” and “Special Forfeiture/Repayment Rules”
provisions of your Cardinal Option Agreement, your Adjusted
Cardinal Options will also be subject to the “Triggering
Conduct/Competitive Triggering Conduct” and “Special
Forfeiture/Repayment Rules” provisions set forth on
Appendix A attached hereto.
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Vesting of your Adjusted Cardinal
Options will not accelerate, and you will not receive other
benefits, upon a “change of control” of Cardinal Health
as defined in your Cardinal Option Agreements, as amended, or in
the Cardinal Health Equity Plan under which the agreement was
issued, also as amended. Rather, in the event of a Change of
Control as defined in the CareFusion Corporation 2009 Long-Term
Incentive Plan as of the effective time of the Spin-Off, the
following acceleration and exercisability provisions shall
apply:
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On the date that such Change of
Control occurs, each Adjusted Cardinal Option not previously
exercisable and vested shall become fully exercisable and
vested.
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In the event that you cease to be
a full-time employee of CareFusion or one of its affiliates within
two (2) years after such Change of Control for any reason
other than because of your death, Retirement, Disability or
Termination for Cause (as such terms are defined in the Cardinal
Health 2005 Long-Term Incentive Plan, as amended and restated
effective as of November 5, 2008), each Adjusted Cardinal
Option that is then vested shall, following such termination of
employment, remain exercisable until the earlier of the third
(3rd) anniversary of such termination of employment (or any
later date until which it would remain exercisable by its terms) or
the expiration of its original term.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
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Please note that CareFusion and
its affiliates are third party beneficiaries of all rights that
benefit CareFusion with respect to your Adjusted Cardinal Options
and as a result CareFusion may enforce with full force and effect
all terms and conditions that benefit CareFusion with respect to
such options.
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CareFusion
Options
Your CareFusion Options are granted
under, and subject to, the terms and conditions of the CareFusion
Corporation 2009 Long-Term Incentive Plan. They are also subject to
the terms of the Cardinal Option Agreement for the corresponding
Pre-2007 Cardinal Option (including provisions regarding
“Triggering Conduct/Competitor Triggering Conduct” and
“Special Forfeiture/Repayment Rules”) and the
applicable Cardinal Health Equity Plan, which have been adjusted
and restated on Appendix B attached hereto for purposes of
applying them to your CareFusion Options and have been approved by
the Human Resources and Compensation Committees of Cardinal Health
and CareFusion. Please note that Cardinal Health and its affiliates
are third party beneficiaries of all rights that benefit Cardinal
Health with respect to your CareFusion Options and as a result
Cardinal Health may enforce with full force and effect all terms
and conditions that benefit Cardinal Health with respect to such
options.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
Appendix A
1. Triggering Conduct/Competitor
Triggering Conduct .
(a) For so long as you are an
employee of the CareFusion Group (as defined below) and for three
(3) years following the termination of your full-time
employment by CareFusion or one of its affiliates regardless of the
reason, in addition to the events set forth in your Cardinal Option
Agreement, “Triggering Conduct” shall
include:
(i) other than in the performance of
duties assigned by the CareFusion Group, disclosing or using in any
capacity any confidential information, trade secrets or other
business sensitive information or material concerning the
CareFusion Group;
(ii) a violation of policies of the
CareFusion Group, including, but not limited to, conduct which
would constitute a breach of any certificate of compliance or
similar attestation/certification signed by you;
(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 the CareFusion Group at any time within the
12 months prior to your Termination of Employment;
(iv) any action by you and/or your
representatives that either does or could reasonably be expected to
undermine, diminish or otherwise damage the relationship between
the CareFusion Group and any of its customers, potential customers,
vendors and/or suppliers that were known to you; and
(v) breaching any provision of any
employment or severance agreement with a member of the CareFusion
Group; and
(b) For so long as you are an
employee of the CareFusion Group (as defined below) and for one
(1) year following the termination of your full-time
employment by CareFusion or one of its affiliates regardless of the
reason, in addition to the events set forth in your Cardinal Option
Agreement, “Competitor Triggering Conduct” shall
include 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
CareFusion Group (a “CareFusion Competitor”),
including, but not limited to, employment or another business
relationship with any CareFusion Competitor if you have been
introduced to trade secrets, confidential information or business
sensitive information during your employment with the CareFusion
Group and such information would aid the CareFusion Competitor
because the threat of disclosure of such information is so great
that, for purposes of these obligations, it must be assumed that
such disclosure would occur.
For purposes of these obligations,
“CareFusion Group” means CareFusion Corporation and any
subsidiary or other entity that is directly or indirectly
controlled by CareFusion Corporation or any entity in which
CareFusion Corporation has a significant ownership interest as
determined by the administrator of the Cardinal Health, Inc. 2005
Long-Term Incentive Plan, as amended and restated effective as of
November 5, 2008.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
2. Special Forfeiture/Repayment
Rules . You shall remain subject to the terms set forth in the
“Special Forfeiture/Repayment Rules” provision of your
Cardinal Option Agreement(s), subject to the following
adjustments:
(a) All references to
“Cardinal Competitor” that appear therein shall also
refer to “CareFusion Competitor” (as defined in
Section 1 of this Appendix A );
(b) All references to the
“Cardinal Group” that appear therein shall also refer
to the “CareFusion Group” (as defined in Section 1
of this Appendix A ); and
(c) With respect to calculating the
length of the Look-Back Period in the event that you engage only in
Competitor Triggering Conduct as described in Section 1(b) of
this Appendix A , the Look-Back Period shall be shortened to
exclude any period more than one (1) year prior to the
effective time of the Spin-Off, but include any period between the
effective time of the Spin-Off and engagement in Competitor
Triggering Conduct.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
Appendix B
CAREFUSION
CORPORATION
NONQUALIFIED STOCK OPTION TERMS
AND CONDITIONS
These Nonqualified Stock Option
Terms and Conditions (the “Terms”) adjust and restate
the terms that apply to the Cardinal Health Options (as defined
below) for purposes of applying such terms to the nonqualified
stock options (the “CareFusion Options”) granted to
Awardee by CareFusion Corporation (the “Company”) under
the CareFusion Corporation 2009 Long-Term Incentive Plan (the
“Plan”) as a result of the separation of the clinical
and medical products businesses of Cardinal Health, Inc.
(“Cardinal Health”) by means of a spin-off of at least
80.1% of the outstanding common stock of the Company to Cardinal
Health’s shareholders, effective on August 31, 2009 (the
“Spin-Off”). These Terms, together with the Option
Terms (as defined below) and the Plan, shall govern the CareFusion
Options. The CareFusion Options are Replacement Awards under the
Plan.
The “Number of Shares”
that are covered by the CareFusion Options and the “Exercise
Price per Share” of the CareFusion Options constitute the
option terms (the “Option Terms”) and can be found on
the website of the Company’s third-party equity plan
administrator. The extent to which the CareFusion Options shall
vest and become exercisable on and after specific dates (the
“Vesting Date(s)”), subject in each case to the
provisions of these Terms, including those relating to
Awardee’s continued employment with the Company and its
Affiliates (collectively, the “CareFusion Group”) and
the date on which the CareFusion Options shall expire (the
“Grant Expiration Date”) are the same terms as those
set forth (i) in Awardee’s stock option agreement(s) for
stock option awards granted to Awardee by Cardinal Health or one of
its Affiliates (the “Cardinal Health Options”) on the
grant date specified in the agreement for such Cardinal Health
Options (the “Pre-Spin Grant Date”) or (ii) on the
website of the Company’s third-party equity plan
administrator in the event that Awardee participated in Cardinal
Health’s Offer to Exchange, effective June 19, 2009
(each of (i) and (ii), the “Cardinal Option
Agreement”).
Capitalized terms used in these
Terms which are not specifically defined herein will have the
meanings ascribed to such terms in the Plan.
1. Method of Exercise and Payment
of Price .
(a) Method of Exercise . At
any time when all or a portion of the CareFusion Options is
exercisable under the Plan and these Terms, some or all of the
exercisable portion of the CareFusion Options 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 website of the
Company’s third-party equity plan administrator, which
will:
(i) state the number of whole Shares
with respect to which the CareFusion Options are being exercised;
and
(ii) if the CareFusion Options are
being exercised by anyone other than Awardee, 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
CareFusion Options under the Plan and all Applicable Laws and
regulations.
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S TOCK O PTIONS
(U.S. C ARE F USION E MPLOYEES )
(b) Payment of Price . The
full exercise price for the portion of the CareFusion Options being
exercised shall be paid to the Company as provided
below:
(i) in cash;
(ii) by check or wire transfer
(denominated in U.S. Dollars);
(iii) subject to any conditions or
limitations established by the Administrator, other Shares which
(A) in the case of Shares acquired from the Company (whether
upon the exercise of the CareFusion Options or otherwise), have
been owned by the Participant for more than six (6) months on
the date of surrender (unless this condition is waived by the
Administrator), and (B) have a Fair Market Value on the date
of surrender equal to or greater than the aggregate exercise price
of the Shares as to which said CareFusion Options shall be
exercised (it being agreed that the excess of the Fair Market Value
over the aggregate exercise price shall be refunded to Awardee,
with any fractional Share being repaid in cash);
(iv) consideration received by the
Company under a broker-assisted sale and remittance program
acceptable to the Administrator; or
(v) any combination of the foregoing
methods of payment.
2. Transferability . The
CareFusion Options shall be transferable (I) at
Awardee’s death, by Awardee by will or pursuant to the laws
of descent and distribution, and (II) by Awardee during
Awardee’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
Awardee, or any other persons sharing Awardee’s household
(other than tenants or employees) (collectively, “Family
Members”), (b) a trust or trusts for the primary benefit
of Awardee or such Family Members, (c) a foundation in which
Awardee or such Family Members control the management of assets, or
(d) a partnership in which Awardee or such Family Members are
the majority or controlling partners; provided ,
however , that subsequent transfers of the transferred
CareFusion Options 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 Awardee. The Administrator
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 Awardee or Family Members in exchange for an
interest in that entity shall be considered to be a transfer for
consideration. Within ten (10) days of any transfer, Awardee
shall notify the Compensation and Benefi
