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Exhibit
10.5
CARDINAL HEALTH,
INC.
DIRECTORS’ STOCK
OPTION 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”), 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 Option has been granted pursuant to the Cardinal Health,
Inc. 2007 Nonemployee Directors Equity Incentive Plan (the
“Plan”), and shall include and 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.
[ INITIAL GRANT : This Option shall vest and become
exercisable 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 : This Option shall
vest and become exercisable 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 Option
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 Option
shall vest in full. 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 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
equity plan administrator which shall:
(i) state the number of whole
Shares with respect to which the Option is being exercised;
and
(ii) if the Option is being
exercised by anyone other than the 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
Option under the Plan and all applicable laws and
regulations.
(b) Payment of Exercise
Price . The full exercise price for the portion of the Option
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 Committee, other
Shares which (A) in the case of Shares acquired from the
Company (whether upon the exercise of an Option or otherwise), have
been owned by the Awardee for more than six months on the date of
surrender (unless this condition is waived by the Committee), 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 Option shall
be exercised (it being agreed that the excess of the Fair Market
Value over the aggregate exercise price shall be refunded to the
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 Committee; or
(v) any combination of the
foregoing methods of payment.
2. Transferability .
The Option shall be transferable (I) at the Awardee’s
death, by the Awardee by will or pursuant to the laws of descent
and distribution, and (II) by the Awardee during the
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
the Awardee, or any other persons sharing the Awardee’s
household (other than tenants or employees) (collectively,
“Family Members”), (b) a trust or trusts for the
primary benefit of the Awardee or such Family Members, (c) a
foundation in which the Awardee or such Family Members control the
management of assets, or (d) a partnership in which the
Awardee 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 Awardee. 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
(50%) of the voting interests are owned by the Awardee 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 Awardee shall notify the Committee 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 Awardee
shall be deemed to refer to the transferee. The events of
Awardee’s termination of service on the Board provided in
paragraph 3 hereof shall continue to be applied with respect to the
original Awardee, following which the Option shall be exercisable
by the transferee only to the extent, and for the periods,
specified in paragraph 3. The conduct prohibited of Awardee in
paragraphs 5 and 6 hereof shall continue to be prohibited of
Awardee 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 Awardee to the same extent as would have been the case of
the Awardee had the Option not been transferred. The Company shall
have no obligation to notify any transferee of the Option of the
Awardee’s termination of service on the Board for any reason.
The Awardee shall remain subject to the recoupment provisions of
paragraphs 5 and 6 of this agreement following transfer of the
Option.
3. Termination of Service
on the Board .
(a) Termination of Service
by Death . If the Awardee ceases to be a member of the Board by
reason of death, any unvested portion of the Option shall vest upon
and become exercisable in full from and after such death. The
Option may thereafter be exercised by any transferee of Awardee, if
applicable, or by the legal representative of the estate or by the
legatee of Awardee under the will of Awardee until the Grant
Expiration Date.
(b) Other Termination of
Service . If the Awardee ceases to be a member of the Board for
any reason other than death, any unexercised portion of the Option
which has not vested on such date of termination of service on the
Board shall automatically terminate on the date of such termination
of
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service. Any unexercised portion of the
Option which otherwise is exercisable by the Awardee (or any
transferee) shall remain exercisable until the Grant Expiration
Date; provided, however, that upon the removal of the Awardee as a
Director of the Company for cause, other than upon or after a
Change of Control, the Option (whether then held by Awardee or any
transferee) shall immediately lapse and be of no further force or
effect.
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 Awardee 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 matters (including Awardee’s compliance with the
terms of paragraphs 5 and 6 of this agreement) reasonably requested
by the Company. The Option shall not be exercisable if such
exercise would involve a violation of applicable law.
5. 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
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