EXHIBIT 10.05
CARDINAL HEALTH, INC.
RESTRICTED SHARE UNITS AGREEMENT
On [grant date] (the "Grant Date"), Cardinal Health, Inc, an Ohio
corporation (the "Company"), has awarded to [employee 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. 2005 Long-Term 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 provisions of this Restricted Share Units Agreement
(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. Subject to the provisions set forth elsewhere in this
Agreement, the Restricted Share Units shall vest [CLIFF VESTING ALTERNATIVE: on
[vesting date] (the "Vesting Date")] [INSTALLMENT VESTING ALTERNATIVE: in
accordance with the following schedule: [vesting schedule] (each such vesting
date, the "Vesting Date" with respect to the Restricted Share Units scheduled to
vest on such date)]. Notwithstanding the foregoing, in the event of a Change of
Control prior to Awardee's Termination of Employment, the Restricted Share Units
shall vest in full.
2. Transferability. The Restricted Share Units shall not be transferable.
3. Termination of Employment. Except as set forth below, if a Termination
of Employment occurs prior to the vesting of a Restricted Share Unit, such
Restricted Share Unit shall be forfeited by Awardee. If a Termination of
Employment occurs prior to the vesting in full of the Restricted Share Units by
reason of Awardee's death, then any unvested Restricted Share Units shall vest
in full and shall not be forfeited.
4. Agreement Not to Disclose or Use Confidential Information, Trade
Secrets or Other Business Sensitive Information. The parties acknowledge and
agree that the Company and its Affiliates (collectively, the "Cardinal Group")
is the sole and exclusive owner of Confidential Information, Trade Secrets or
Other Business Sensitive Information (as hereinafter defined) and that the
Cardinal Group has legitimate business interests in protecting such information.
The parties further acknowledge and agree that the Cardinal Group has invested,
and continues to invest, considerable amounts of time and money in obtaining,
developing and preserving the confidentiality of such information. Further, the
parties agree that, because of the trust and fiduciary relationship arising
between Awardee and the Cardinal Group, Awardee owes the Cardinal Group a
fiduciary duty to preserve and protect such information from any and all
unauthorized disclosure and use. Accordingly, Awardee shall not, either directly
or indirectly, disclose such information to any third party whatsoever and shall
not use such information in any manner, except as authorized in the reasonable
performance of Awardee's duties while employed by the Cardinal Group.
"Confidential Information, Trade Secrets or Other Business Sensitive
Information" shall include any such information as defined by applicable law and
any information about the business of the Cardinal Group and its customers that
is not generally known to, or readily ascertainable by, the public, including,
but not limited to, financial information and models, customer lists, business
plans or strategies, marketing and sales plans or strategies, the identity,
compensation and qualifications of employees of the Cardinal Group, sources of
supply, pricing policies, operational methods, product specification or
technical processes, new product information, formulation techniques, customer
contacts, profit or cost information, research and development information or
other information that the Cardinal Group has developed or compiled.
5. Delivery of Company Property. Awardee recognizes and agrees that all
documents, magnetic media, computer disks, desktop and laptop computers and
other tangible items that were provided by the Cardinal Group and/or that
contain Confidential Information, Trade Secrets or Other Business Sensitive
Information as defined above are the sole and exclusive property of the Cardinal
Group. Upon request by the Cardinal Group, Awardee shall promptly and
immediately return to the Cardinal Group all such documents, media, disks,
desktop and laptop computers and other tangible items. Upon the Termination of
Employment with the Cardinal Group, Awardee shall promptly and immediately
return to the Cardinal Group any and all such documents, media, disks, desktop
and laptop computers or other tangible items, without request by the Cardinal
Group. Awardee shall not take any such information or make/retain copies of such
information for any purpose whatsoever except as is necessary for the reasonable
performance of Awardee's duties while employed by the Cardinal Group.
6. Other Covenants. Except as modified by Paragraph 10 below, Awardee
hereby covenants and agrees that, in consideration of the grant hereunder,
Awardee shall not, either directly or indirectly, on Awardee's own behalf or on
any other's behalf, engage in or assist others in any of the following
activities:
(a) Awardee shall not engage in any action or conduct that is a
violation of the policies of the Cardinal Group, including conduct that
would constitute a breach of any of the Certificates of Compliance with
Company Policies and/or the Certificates of Compliance with Company
Business Ethics Policies executed by Awardee;
(b) During Awardee's employment with the Cardinal Group and for 12
months following the Termination of Employment for any reason, Awardee
shall not, either directly or indirectly, employ, contact concerning
employment, or participate in any manner 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 Cardinal Group at any time
within the 12 months prior to the Termination of Employment with the
Cardinal Group;
(c) Awardee shall not at any time during employment with the
Cardinal Group nor at any time thereafter disparage the Cardinal Group or
any of its employees, officers, representatives, services or products;
(d) During Awardee's employment with the Cardinal Group and for 12
months following the Termination of Employment for any reason, Awardee
shall not engage in any action or conduct 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 or suppliers that were known to Awardee in
the performance of Awardee's job duties while employed with the Cardinal
Group;
(e) During Awardee's employment with the Cardinal Group and for 12
months following the Termination of Employment for any reason, Awardee
shall not solicit or accept business of the same type as that in which
Awardee was employed by the Cardinal Group from any customer, potential
customer, vendor or supplier of the Cardinal Group that was known to
Awardee in the performance of Awardee's job duties while employed with the
Cardinal Group, nor shall Awardee during such time period solicit or
accept such business within any geographic area in which Awardee was
assigned or for which Awardee had any managerial responsibility;
(f) During Awardee's employment with the Cardinal Group and for 12
months
2
following the Termination of Employment for any reason, Awardee shall not
accept employment with or serve 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 Cardinal Group within a geographic area in which
Awardee was assigned or for which Awardee had any managerial
responsibility; and
(g) Awardee shall not breach or violate any provision of any
employment or severance agreement that Awardee has with any member of the
Cardinal Group.
7. Inevitable Disclosure. The parties specifically acknowledge and agree
that the provisions of this Agreement are reasonable in light of the fact that,
in the event that Awardee would become employed or otherwise associated with a
competitor of the Cardinal Group, it would be inevitable that Awardee would
disclose Confidential Information, Trade Secrets or Other Business Sensitive
Information as defined above to such competitor. The parties acknowledge and
agree that Awardee has been introduced by the Cardinal Group to such
Confidential Information, Trade Secrets or Other Business Sensitive Information
as defined above and that such information would aid the competitor and that the
threat of such inevitable disclosure is so great that, for purposes of this
Agreement, it must be assumed that such disclosure would occur.
8. Covenants Are Independent Elements. The parties acknowledge that the
obligations and covenants set forth in Paragraphs 4 through 7 above and, if
applicable, Paragraph 10 below are essential independent elements of this
Restricted Share grant and that, but for Awardee agreeing to comply with them,
the Cardinal Group would not have granted such Restricted Share Units to
Awardee. The parties agree and acknowledge that the provisions contained in
Paragraphs 4 through 7 above and, if applicable, Paragraph 10 below are
ancillary to, or part of, an otherwise enforceable agreement at the time the
agreement is made with regard to such paragraphs. The existence of any claim by
Awardee against the Cardinal Group, whether based on this Agreement or
otherwise, shall not operate as a defense to the enforcement of the covenants
contained in Paragraphs 4 through 7 above and, if applicable, Paragraph 10
below. The covenants contained in Paragraphs 4 through 7 above and, if
applicable, Paragraph 10 below will remain in full force and effect whether
Awardee is terminated by the Cardinal Group or voluntarily resigns.
9. Assignment of Covenants. The rights of the Cardinal Group under this
Agreement shall inure to the benefit of, and be binding upon, its successors and
assigns. Any successor or assign of the Cardinal Group is authorized to enforce
the covenants contained in this Agreement. Any successor or assign of the
Cardinal Group is authorized by the parties to enforce the covenants contained
herein as if the name of such successor or assign shall replace the Cardinal
Group throughout this Agreement and any consent and/or notice, written or
otherwise, is hereby waived and deemed unnecessary by Awardee.
10. California Specific Modifications. This paragraph shall supercede and
modify certain of the covenants, obligations and restrictions of Awardee set
forth in Paragraph 6 above in the event that, and only during such time that,
Awardee's principal employment with the Cardinal Group is in the State of
California. In the event that any of the provisions contained in Subparagraphs
6(d) through (f) above are inconsistent with the provisions of this Paragraph 10
with regard to the State of California, then the provisions contained in
Subparagraphs 6(d) through (f) shall not apply and the following provisions
shall apply instead:
(a) Within the geographic area in which Awardee was assigned or for
which Awardee had any managerial responsibility, Awardee shall not, during
Awardee's employment with the Cardinal Group and for 12 months following
Termination of Employment for any reason, solicit or actually transact
business with any existing customer of the Cardinal Group of
3
which Awardee's knowledge of the existence of that customer or of that
customer's purchasing habits, product preferences or commercial practices
exists because of Awardee's receipt of Confidential Information, Trade
Secrets or Other Business Sensitive Information from the Cardinal Group;
and
(b) Regardless of geographic area, Awardee shall not, during the
period of Awardee's employment with the Cardinal Group and for 12 months
following Termination of Employment for any reason, solicit business from
any customers of the same type as the business of the Cardinal Group at
the time of the Termination of Employment with the Cardinal Group whose
identities are not already within the public domain if Awardee directly
serviced such customers, was assigned to such customers, was responsible
for such customers or otherwise had personal contact with such customers
during the 12-month period immediately preceding expiration of Awardee's
employment with the Cardinal Group.
In the event that Awardee is reassigned to any other state within the United
States of America other than the State of California or to any other country,
then all of the provisions of Paragraph 6 above shall apply in full force and
effect and the provisions of this Paragraph 10 shall not apply.
11. Reasonableness of Restrictions Contained in Agreement. Awardee
acknowledges that the covenants contained in this Agreement are reasonable in
nature, are fundamental for the protection of the legitimate business and
proprietary interests of the Cardinal Group, are necessary to protect the
goodwill between the Cardinal Group and its customers, and do not adversely
affect Awardee's ability to earn a living in any capacity that does not violate
such covenants. The parties further agree that in the event of any violation by
Awardee of any such covenants, the Company will suffer immediate and irreparable
injury for which there is no adequate remedy at law.
12. Special Forfeiture/Repayment Rules. If Awardee engages in conduct that
is in violation of the covenants and restrictions contained in this Agreement,
then Awardee shall be subject to the following special forfeiture/repayment
rules in addition to any other remedy that the Cardinal Group may have:
(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 conduct that
is in violation of the covenants and restrictions contained in this Agreement
and have not yet been settled by a payment pursuant to Paragraph 13 hereof shall
immediately and automatically terminate, be forfeited, and cease to exist; and
(b) Awardee shall, within 30 days following written notice from the
Company, pay to the Company an amount equal to (x) the aggregate gross gain
realized or obtained by Awardee resulting from the settlement of all Restricted
Share Units pursuant to Paragraph 13 hereof (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 conduct by Awardee that is in violation of the covenants and
restrictions contained in this Agreement (the "Look-Back Period"), minus (y)
$1.00.
Awardee may be released from Awardee's obligations under this Paragraph 12
if and only if the Administrator (or its duly appointed designee) determines, in
writing and in its sole discretion, that such action is in the best interests of
the Company. Awardee agrees to provide the Company with at least 10 days written
notice prior to directly or indirectly accepting employment with or serving as a
consultant or 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 Agreement and Awardee's continuing obligations
4
contained herein. No provision of this Agreement shall diminish, negate or
otherwise impact any separate noncompete or other agreement to which Awardee may
be a party, including, but not limited to, any of the Certificates of Compliance
with Company Policies and/or the Certificates of Compliance with Company
Business Ethics Policies; provided, however, that to the extent that any
provisions contained in any other agreement are inconsistent in any manner with
the restrictions and covenants of Awardee contained in this Agreement, the
provisions of this Agreement shall take precedence and such other inconsistent
provisions shall be null and void. Awardee acknowledges and agrees that the
restrictions and covenants of Awardee contained in this Agreement are being made
for the benefit of the Company in consideration of Awardee's receipt of the
Restricted Share Units, in consideration of employment, in consideration of
exposing Awardee to the Company's business operations and confidential
information, and for other good and valuable consideration, the adequacy of
which consideration is hereby expressly confirmed. Awardee further acknowledges
that the receipt of the Restricted Share Units and execution of this Agreement
are voluntary actions on the part of Awardee and that the Company is unwilling
to provide the Restricted Share Units to Awardee without including the
restrictions and covenants of Awardee contained in this Agreement. Further, the
parties agree and acknowledge that the provisions contained in Paragraph 6 and,
if applicable, Paragraph 10 are ancillary to, or part of, an otherwise
enforceable agreement at the time the agreement is made.
13. Payment. Subject to the provisions of Paragraphs 4 through 7 and, if
applicable, Paragraph 10, on the [VESTING PAYMENT ALTERNATIVE: date of vesting
of any Restricted Share Unit] [DEFERRED PAYMENT ALTERNATIVE:
[___-month][___-year] anniversary of the first date on which Awardee ceases to
be an Employee of the Company (unless such cessation does not constitute a
"separation from service" within the meaning of Section 409A(a)(2)(B)(i) of the
Code, and the regulations thereunder, in which case the settlement contemplated
by this paragraph shall occur on the first date that does so constitute a
"separation from service")], Awardee shall be entitled to receive from the
Company (without any payment on behalf of Awardee other than as described in
Paragraph 17) the Shares represented by [VESTING PAYMENT ALTERNATIVE: such
Restricted Share Unit] [DEFERRED PAYMENT ALTERNATIVE: any then-vested Restricted
Share Units; provided, however, that, subject to the next sentence, in the event
that some or all of the Restricted Share Units vest prior to the [INSTALLMENT
VESTING ALTERNATIVE: applicable] Vesting Date as a result of the death of
Awardee or as a result of a Change of Control, Awardee shall be entitled to
receive the corresponding Shares from the Company on the date of such vesting.
Notwithstanding the proviso of the preceding sentence, if Restricted Share Units
vest as a result of the occurrence of a Change of Control under circumstances
where such occurrence would not qualify as a permissible date of distribution
under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, such
proviso shall not apply and Awardee shall be entitled to receive the
corresponding Shares from the Company on the date that would have applied absent
such proviso]. Elections to defer receipt of the Shares beyond the date of
settlement provided herein may be permitted in the discretion of the
Administrator pursuant to procedures established by the Administrator in
compliance with the requirements of Section 409A of the Code.
14. Dividends. Awardee shall not receive cash dividends on the Restricted
Share Units but instead shall, with respect to each Restricted Share Unit,
receive a cash payment from the Company on each cash dividend payment date with
respect to the Shares with a record date between the Grant Date and the earlier
of the forfeiture of such unit in accordance with the terms hereof or the
settlement of such unit pursuant to Paragraph 13 hereof, such cash payment to be
in an amount equal to the dividend that would have been paid on the Common Share
represented by such unit.
15. Right of Set-Off. By accepting these Restricted Share Units, Awardee
consents to a deduction from, and set-off against, any amounts owed to Awardee
by any member of the Cardinal Group from time to time (including, but not
limited to, amounts owed to Awardee as wages, severance payments
5
or other fringe benefits) to the extent of the amounts owed to the Cardinal
Group by Awardee under this Agreement.
16. No Shareholder Rights. Awardee shall have no rights of a shareholder
with respect to the Restricted Share Units, including, without limitation,
Awardee shall not have the right to vote the Shares represented by the
Restricted Share Units.
17. Withholding Tax. The Company shall have the right to require Awardee
to pay to the Company the amount of any taxes which the Company is required to
withhold with respect to the Restricted Share Units (including the amount of any
taxes which the Company is required to withhold with respect to the cash
payments described in Paragraph 14 hereof) or, in lieu thereof, to retain, or
sell without notice, a sufficient number of Shares to cover the amount required
to be withheld. In the case of any amounts withheld for taxes pursuant to this
provision in the form of Shares, the amount withheld shall not exceed the
minimum required by applicable law and regulations. The Company shall have the
right to deduct from all cash payments paid pursuant to Paragraph 14 hereof the
amount of any taxes which the Company is required to withhold with respect to
such payments.
18. Beneficiary Designation. Awardee may designate a beneficiary to
receive any Shares to which Awardee is entitled with respect to the Restricted
Share Units which vest as a result of Awardee's death. Notwithstanding the
foregoing, if Awardee engages in conduct that is in violation of the covenants
and restrictions contained in this Agreement, the Restricted Share Units subject
to such beneficiary designation shall be subject to the Special
Forfeiture/Repayment Rules and the Company's Right of Set-Off or other right of
recovery set forth in this Agreement, and all rights of the beneficiary shall be
subordinated to the rights of the Company pursuant to such provisions of this
Agreement. Awardee acknowledges that the Company may exercise all rights under
this Agreement and the Plan against Awardee and Awardee's estate, heirs, lineal
descendants and personal representatives and shall not be limited to exercising
its rights against Awardee's beneficiary.
19. Governing Law/Venue. This Agreement shall be governed by the laws of
the State of Ohio, without regard to principles of conflicts of law, except to
the extent superseded by the laws of the United States of America. The parties
agree and acknowledge that the laws of the State of Ohio bear a substantial
relationship to the parties and/or this Agreement and that the Restricted Share
Units and benefits granted herein would not be granted without the governance of
this Agreement by the laws of the State of Ohio. In addition, all legal actions
or proceedings relating to this Agreement shall be brought in state or federal
courts located in Franklin County, Ohio, and the parties executing this
Agreement hereby consent to the personal jurisdiction of such courts. In the
event of any violation or attempted violations of the restrictions and covenants
of Awardee contained in this Agreement, the Cardinal Group shall be entitled to
specific performance and injunctive relief or other equitable relief, including
the issuance ex parte of a temporary restraining order, without any showing of
irreparable harm or damage, such irreparable harm being acknowledged and
admitted by Awardee, and Awardee hereby waives any requirement for the securing
or posting of any bond in connection with such remedy, without prejudice to the
rights and remedies afforded the Cardinal Group hereunder or by law. In the
event that it becomes necessary for the Cardinal Group to institute legal
proceedings under this Agreement, Awardee shall be responsible to the Company
for all costs and reasonable legal fees incurred by the Company with regard to
such proceedings.
20. Severability. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision or portion of
this Agreement shall be determined by a court of competent jurisdiction to be
invalid or unenforceable as
6
written, it is the intent and desire of the parties that the court shall modify
the language of such provision or portion of this Agreement to the extent
necessary to make it valid and enforceable. If no such modification by the court
is possible, this Agreement shall be deemed amended to delete therefrom only the
provision or portion thus determined to be invalid or unenforceable. Such
modification or deletion is to apply only with respect to the operation of such
provision in the particular jurisdiction in which such court determination is
made.
21. Action by the Administrator. The parties agree that the interpretation
of this Agreement shall rest exclusively and completely within the sole
discretion of the Administrator. The parties agree to be bound by the decisions
of the Administrator with regard to the interpretation of this Agreement and
with regard to any and all matters set forth in this Agreement. The
Administrator may delegate its functions under this Agreement to an officer of
the Cardinal Group designated by the Administrator (hereinafter the "Designee").
In fulfilling its responsibilities hereunder, the Administrator or its Designee
may rely upon documents, written statements of the parties or such other
material as the Administrator or its Designee deems appropriate. The parties
agree that there is no right to be heard or to appear before the Administrator
or its Designee and that any decision of the Administrator or its Designee
relating to this Agreement, including, without limitation, whether particular
conduct constitutes a violation of the covenants, obligations and restrictions
of Awardee set forth in Paragraphs 4 through 6 and, if applicable, Paragraph 10
above, shall be final and binding unless such decision is arbitrary and
capricious.
22. Prompt Acceptance of Agreement. The Restricted Share Unit grant
evidenced by this Agreement shall, at the discretion of the Administrator, be
forfeited if this Agreement is not manually executed and returned to the
Company, or electronically executed by Awardee by indicating Awardee's
acceptance of this Agreement in accordance with the acceptance procedures set
forth on the Company's third-party equity plan administrator's web site, within
90 days of the Grant Date.
23. Electronic Delivery and Consent to Electronic Participation. The
Company may, in its sole discretion, decide to deliver any documents related to
the Restricted Share Unit grant under and participation in the Plan or future
Restricted Share Units that may be granted under the Plan by electronic means or
to request Awardee's consent to participate in the Plan by electronic means.
Awardee hereby consents to receive such documents by electronic delivery and to
participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company,
including the acceptance of restricted share unit grants and the execution of
restricted share unit agreements through electronic signature.
24. Notices. All notices, requests, consents and other communications
required or provided under this Agreement to be delivered by Awardee to the
Company will be in writing and will be deemed sufficient if delivered by hand,
facsimile, nationally recognized overnight courier, or certified or registered
mail, return receipt requested, postage prepaid, and will be effective upon
delivery to the Company at the address set forth below:
Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chief Legal Officer
Facsimile: (000)000-0000
All notices, requests, consents and other communications required or provided
under this Agreement to be delivered by the Company to Awardee may be delivered
by e-mail or in writing and will be deemed
7
sufficient if delivered by e-mail, hand, facsimile, nationally recognized
overnight courier, or certified or registered mail, return receipt requested,
postage prepaid, and will be effective upon delivery to the Awardee.
CARDINAL HEALTH, INC.
By: ________________________________
Its: _______________________________
8
ACCEPTANCE OF AGREEMENT
Awardee hereby: (a) acknowledges that he or she has received a copy of the
Plan, a copy of the Company's most recent annual report to shareholders and
other communications routinely distributed to the Company's shareholders, and a
copy of the Plan Description dated [date of Plan Description] pertaining to the
Plan; (b) accepts this Agreement and the Restricted Share Units granted to him
or her under this Agreement subject to all provisions of the Plan and this
Agreement, including the obligations and covenants set forth in paragraphs 4
through 7 above and, if applicable, paragraph 10 above; (c) represents that he
or she understands that the acceptance of this Agreement through an on-line or
electronic system, if applicable, carries the same legal significance as if he
or she manually signed the Agreement; (d) represents and warrants to the Company
that he or she is purchasing the Restricted Share Units for his or her own
account, for investment, and not with a view to or any present intention of
selling or distributing the Restricted Share Units either now or at any specific
or determinable future time or period or upon the occurrence or nonoccurrence of
any predetermined or reasonably foreseeable event; and (e) agrees that no
transfer of the Shares delivered in respect of the Restricted Share Units shall
be made unless the Shares have been duly registered under all applicable Federal
and state securities laws pursuant to a then-effective registration which
contemplates the proposed transfer or unless the Company has received a written
opinion of, or satisfactory to, its legal counsel that the proposed transfer is
exempt from such registration.
[________________________________
Awardee's Signature
________________________________
Awardee's Social Security Number
________________________________
Date]
9
