CARDINAL HEALTH, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
On [date of grant]
(the “Grant Date”), Cardinal Health, Inc., an Ohio
corporation (the “Company”), has awarded to [employee
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 under the Cardinal Health, Inc.
2005 Long-Term Incentive Plan (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. 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 [CLIFF ALTERNATIVE: on [vesting date]]
[INSTALLMENT ALTERNATIVE: in accordance with the following
schedule: [vesting schedule], subject [INSTALLMENT ALTERNATIVE: in
each case] to the provisions of this agreement, including those
relating to the Awardee’s continued employment with the
Company and its Affiliates. Notwithstanding the foregoing, in the
event of a Change of Control prior to Awardee’s Termination
of Employment, 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 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 equity 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 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 Price . The full exercise price for the portion of the
Option being exercised shall be paid to the Company as provided
below:
(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 an Option or otherwise), have
been owned by the Participant for more than six 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 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 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 Option 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 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 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 10 days
of any transfer, Awardee 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 Awardee shall be deemed to refer to the
transferee. The events of a Termination of Employment of Awardee
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 Company shall have no
obligation to notify any transferee of Awardee’s Termination
of Employment with the Company for any reason. 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 Awardee to the same extent as would
have been the case of Awardee had the Option not been transferred.
Awardee shall remain subject to the recoupment provisions of
paragraphs 5 and 6 of this agreement and tax withholding provisions
of Section 29 of the Plan following transfer of the
Option.
3.
Termination of Employment .
(a)
Termination of Employment by Reason of Death . If a
Termination of Employment occurs by reason of death prior to the
vesting in full of the Option, then 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 for a period of one year from the date of death or
until the Grant Expiration Date, whichever period is
shorter.
(b)
Termination of Employment by Reason of Retirement or
Disability . If a Termination of Employment occurs by reason of
Retirement or Disability prior to the vesting in full of
the
2
Option, then
any unexercised portion of the Option which has not vested on such
date of Termination of Employment will automatically be forfeited.
The Option, to the extent vested, may be exercised by Awardee (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, provided that if Awardee has at least
15 years of service with the Company and its Affiliates
(collectively, the “Cardinal Group”) at the time of
Retirement, the Option, to the extent vested, may be exercised by
Awardee (or any transferee, if applicable) until the Grant
Expiration Date. Notwithstanding the foregoing, if Awardee dies
after Retirement or Disability, but before the expiration of the
exercise period provided for by the preceding sentence, 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 Awardee under the will of Awardee from and
after such death only until the earlier of (x) the first
anniversary of the date of death or (y) the date upon which
such exercise period would have otherwise expired.
(c) Other
Termination of Employment . If a Termination of Employment
occurs by any reason other than death, Retirement or Disability,
any unexercised portion of the Option which has not vested on such
date of Termination of Employment will automatically be forfeited.
Subject to Section 16(b)(ii) of the Plan, Awardee (or any
transferee, if applicable) will have 90 days from the date of
Termination of Employment or until the Grant Expiration Date,
whichever period is shorter, to exercise any portion of the Option
that is vested and exercisable on the date of Termination of
Employment; provided, however, that if the Termination of
Employment was a Termination for Cause, as determined by the
Administrator, the Option may be immediately canceled by the
Administrator (whether then held by Awardee 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 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 or any
employment or severance agreement between the Cardinal Group and
Awardee) reasonably requested by the Company.
5.
Triggering Conduct/Competitor Triggering Conduct . As used
in this agreement, “Triggering Conduct” shall include
the following: disclosing or using in any capacity other than as
necessary in the performance of duties
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