<PAGE> 1
As filed with the Securities and Exchange Commission on November 16, 1995
Registration No. 33-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
Cardinal Health, Inc.
(Exact name of registrant as specified in its charter)
Ohio 31-0958666
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
655 Metro Place South, Suite 925, Dublin, Ohio 43017
(Address of Principal Executive Offices) (Zip Code)
------------------
CARDINAL HEALTH, INC.
EQUITY INCENTIVE PLAN
(Full title of the plan)
------------------
George H. Bennett, Jr.,
Executive Vice President, Secretary and General Counsel
Cardinal Health, Inc.
655 Metro Place South, Suite 925
Dublin, Ohio 43017
(Name and address of agent for service)
(614) 761-8700
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
===================================================================================================
<CAPTION>
Title of Amount Proposed Proposed Amount of
securities to to be maximum offering maximum aggregate registration
be registered registered(1) price per share(1) offering price(2) fee
- ------------- ------------- ------------------ ----------------- ------------
<S> <C> <C> <C> <C>
Common Shares,
without par
value 2,000,000 $53.56 $107,120,000 $21,424.00
===================================================================================================
(1) Also includes an indeterminable number of additional shares that may
become issuable pursuant to the anti-dilution provisions of the Plan.
(2) Estimated in accordance with Rule 457 solely for the purpose of
determining the registration fee, based on the average of the high and
low reported sale prices on November 14, 1995, of the registrant's
Common Shares as reported on the New York Stock Exchange Composite
Tape.
</TABLE>
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (e) below are incorporated by
reference in the registration statement. All documents filed by Cardinal
Health, Inc. (the "Company" or "Registrant") pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the date of the filing of this registration statement and
prior to the filing of a post-effective amendment that indicates that all
securities registered hereunder have been sold, or that de-registers all
securities then remaining unsold, shall be deemed to be incorporated by
reference in the registration statement and to be a part hereof from the date
of the filing of such documents.
(a) The Annual Report on Form 10-K of the Company for the fiscal year
ended June 30, 1995 filed with the Commission on September 21, 1995;
(b) The Company's Current Report on a Form 8-K dated August 26, 1995;
(c) The Company's Quarterly Report on Form 10-Q filed with the
Commission on November 6, 1995;
(d) The Company's Current Report on Form 8-K dated November 16, 1995;
and
(e) The description of the Company's Common Shares contained in the
Company's Registration Statement on Form 8-A dated August 19, 1994, pursuant to
Section 12 of the Exchange Act.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Shares offered hereby has been passed upon for
the Company by Baker & Hostetler, Cleveland, Ohio. Michael E. Moritz, a
partner of Baker & Hostetler, was the beneficial owner of 536,925 Common Shares
as of November 10, 1995.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
Article 6 of the Company's Restated Code of Regulations ("Code of
Regulations"), as amended, contains certain indemnification provisions adopted
pursuant to authority contained in Section 1701.13(E)of the Ohio Revised Code.
The Company's Code of Regulations provides for the indemnification of its
officers, directors, employees, and agents against all expenses with respect to
any judgments, fines, and amounts paid in settlement, or with respect to any
threatened, pending, or completed action, suit, or proceeding to which they
were or are parties or are threatened to be made parties by reason of acting in
such capacities, provided that it is determined, either by a majority vote of a
quorum of disinterested directors of the Company or the shareholders of the
Company or otherwise as provided in Section 1701.13(E) of the Ohio Revised
Code, that (a) they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interest of the Company; (b) in
any action, suit, or proceeding by or in the right of the Company, they were
not, and have not been adjudicated to have been, negligent or guilty of
misconduct in the performance of their duties to the Company; and (c) with
respect to any criminal action or proceeding, that they had no reasonable cause
to believe that their conduct was unlawful. Section 1701.13(E) provides that
to the extent a director, officer, employee, or agent has been successful on
the merits or otherwise in defense of any such action, suit, or proceeding, he
shall be indemnified against expenses reasonably incurred in connection
therewith. At present
2
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there are no material claims, actions, suits, or proceedings pending where
indemnification would be required under these provisions, and the Company does
not know of any such threatened claims, actions, suits, or proceedings which
may result in a request for such indemnification.
The Company has entered into indemnification contracts with each of its
directors and executive officers. These contracts generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations and
assure that this indemnity will continue to be provided; (ii) provide that if
the Company does not maintain directors' and officers' liability insurance, the
Company will, in effect, become a self-insurer of the coverage; and (iii)
provide that, in addition, the directors and officer shall be indemnified to
the fullest extent permitted by law against all expenses (including legal
fees), judgments, fines, and settlement amounts paid or incurred by them in any
action or proceeding, including any action by or in the right of the Company,
on account of their service as a director, officer, employee, or agent of the
Company or at the request of the Company as a director, officer, employee, or
agent of another corporation or enterprise. Coverage under the contracts is
excluded: (A) on account of conduct which is finally adjudged to be knowingly
fraudulent, deliberately dishonest, or willful misconduct; or (B) if a final
court of adjudication shall determine that such indemnification is not lawful;
or (C) in respect of any suit in which judgment is rendered for violations of
Section 16(b) of the Securities and Exchange Act of 1934, as amended, or
similar provisions of any federal, state, or local statutory law; or (D) on
account of any remuneration paid which is finally adjudged to have been in
violation of law; or (E) as to officers who are not directors, with respect to
any act or omission which is finally adjudged to have been a violation, other
than in good faith, of the Company's Standards of Business Conduct of which the
officer then most recently has received written notice. The indemnification
agreements are applicable to claims asserted after their effective date,
whether arising from acts or omissions occurring before or after their
effective date, and associated legal expenses.
<TABLE>
<CAPTION>
ITEM 8. EXHIBITS.
<S> <C>
Exhibit Number Description of Exhibit
- -------------- ----------------------
5 Opinion of Baker & Hostetler as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consents of Arthur Andersen LLP
23(c) Consent of Baker & Hostetler (included in Opinion filed as Exhibit 5 hereto)
24 Power of attorney (included on the Signature Page of this Form S-8)
99 Cardinal Health, Inc. Equity Incentive Plan
</TABLE>
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act"); (ii) to reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included
3
<PAGE> 4
in a post-effective amendment by those clauses is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 6 above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dublin, State of Ohio, on the 14th day of
November, 1995.
CARDINAL HEALTH, INC.
By: /s/ Robert D. Walter
Robert D. Walter, Chairman and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert D. Walter, George H. Bennett, Jr., and
Paul S. Williams, and each of them, severally, as his/her attorney-in-fact and
agent, with full power of substitution and resubstitution, for him/her and in
his/her name, place, and stead, in any and all capacities, to sign any and all
pre- or post-effective amendments to this Registration Statement, and to file
the same with all exhibits hereto, and other documents with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 14th day of November, 1995.
Signature Title
- --------- -----
/s/ Robert D. Walter
- ----------------------------- Chairman and Chief Executive
Robert D. Walter Officer (principal executive officer)
/s/ David Bearman
- ----------------------------- Executive Vice President and Chief
David Bearman Financial Officer (principal financial
officer and principal accounting officer)
/s/ John F. Finn Director
- -----------------------------
John F. Finn
/s/ Robert L. Gerbig Director
- -----------------------------
Robert L. Gerbig
/s/ John F. Havens Director
- -----------------------------
John F. Havens
5
<PAGE> 6
/s/ Regina E. Herzlinger Director
- --------------------------------
Regina E. Herzlinger
/s/ John C. Kane Director
- --------------------------------
John C. Kane
/s/ George R. Manser Director
- --------------------------------
George R. Manser
/s/ John B. McCoy Director
- --------------------------------
John B. McCoy
/s/ Jerry E. Robertson Director
- --------------------------------
Jerry E. Robertson
/s/ L. Jack Van Fossen Director
- --------------------------------
L. Jack Van Fossen
/s/ Melburn G. Whitmire Director
- --------------------------------
Melburn G. Whitmire
6
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
5 Opinion of Baker & Hostetler as to legality of the Common
Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consents of Arthur Andersen LLP
23(c) Consent of Baker & Hostetler (included in Opinion filed as
Exhibit 5 hereto)
24 Power of Attorney (included on the Signature Page of this Form S-8)
99 Cardinal Health, Inc. Equity Incentive Plan
</TABLE>
7
<PAGE> 1
EXHIBIT 5
November 16, 1995
Cardinal Health, Inc.
Suite 925
655 Metro Place South
Dublin, OH 43017
Gentlemen:
We have acted as counsel to Cardinal Health, Inc., an Ohio
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement") filed under the Securities
Act of 1933 (the "Act") relating to the offering of up to 2,000,000 Common
Shares, without par value (the "Common Shares"), of the Company pursuant to the
Company's Equity Incentive Plan (the "Plan").
In connection with the foregoing, we have examined: (a) the
Amended and Restated Articles of Incorporation, as amended, and Restated Code
of Regulations, as amended, of the Company, (b) the Plan, and (c) such records
of the corporate proceedings of the Company and such other documents as we
deemed necessary to render this opinion.
Based on such examination, we are of the opinion that the
Common Shares available for issuance under the Plan, when issued, delivered and
paid for in accordance with the terms and conditions of the Plan, will be
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this Opinion as Exhibit 5
to the Registration Statement and the reference to our firm in Item 5 of Part
II of the Registration Statement.
Very truly yours,
Baker & Hostetler
8
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. on Form S-8 of our report dated August 14, 1995, except
for Note 16, as to which the date is August 26, 1995 (which report expresses an
unqualified opinion and includes an explanatory paragraph relating to the
change in method of accounting for income taxes), appearing in the Annual
Report on Form 10-K of Cardinal Health, Inc. for the year ended June 30, 1995.
DELOITTE & TOUCHE LLP
Columbus, Ohio
November 13, 1995
9
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EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to incorporation by
reference in this Registration Statement on Form S-8 of our report on Whitmire
Distribution Corporation for the year ended July 3, 1993, dated September 3,
1993, included in Cardinal Health, Inc.'s Form 10-K for the year ended June 30,
1995, and to all references to our firm included in this registration
statement.
Arthur Andersen LLP
Sacramento, California
November 13, 1995
10
<PAGE> 2
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to incorporation by
reference in this registration statement on Form S-8 of our report on Medicine
Shoppe International, Inc. dated November 4, 1994, included in Cardinal Health,
Inc.'s Form 8-K dated November 16, 1995, and to all references to our firm
included in this registration statement.
Arthur Andersen LLP
St. Louis, Missouri
November 13, 1995
11
<PAGE> 1
EXHIBIT 99
EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the Cardinal Health, Inc. Equity Incentive Plan (the "Plan")
is to assist Cardinal Health, Inc. ("CAH") and its subsidiaries (CAH and its
subsidiaries, collectively, the "Company") in attracting and retaining capable
employees and directors. The Plan provides for long and short term incentives to
employees by encouraging and enabling them to participate in the Company's
future prosperity and growth. The Plan provides for equity ownership
opportunities and appropriate incentives to better match the interests of
employees and directors with those of shareholders.
These objectives will be promoted through the granting to employees of
equity-based awards (the "awards") including (i) Incentive Stock Options
("ISOs"), which are intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"); (ii) options which are not
intended to so qualify ("NQSOs") (ISOs and NQSOs are referred to together
hereinafter as "Stock Options"); (iii) Restricted Shares; (iv) Performance
Shares; (v) Performance Share Units and (vi) Incentive Compensation Restricted
Shares. Members of CAH's Board of Directors (the "Board") who do not serve as
employees of the Company ("Outside Directors") shall receive NQSOs from the Plan
only as provided herein.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Compensation and Personnel Committee
(the "Committee") of the Board which shall have the power and authority to grant
to eligible employees Stock Options, Restricted Shares, Performance Shares,
Performance Share Units and Incentive Compensation Restricted Shares. In
particular, the Committee shall have the authority to: (i) select employees of
the Company as recipients of awards; (ii) determine the number and type of
awards to be granted; (iii) determine the terms and conditions, not inconsistent
with the terms hereof, of any award; (iv) adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; (v) interpret the terms and provisions of the
Plan and any award granted and any agreements relating thereto; and (vi) take
any other actions the Committee considers appropriate in connection with, and
otherwise supervise the administration of, the Plan. All decisions made by the
Committee pursuant to the provisions hereof shall be made in the Committee's
sole discretion and shall be final and binding on all persons. Members of the
Committee shall be "disinterested persons" within the meaning of Rule 16b-3
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Committee may designate persons other than its members to carry out its
responsibilities under such conditions and limitations as it may set, other than
its authority with regard to awards granted to persons subject to Section 16 of
the Exchange Act ("Reporting Persons").
25
<PAGE> 2
SECTION 3. ELIGIBILITY.
Employees of the Company and its subsidiaries who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or subsidiary, in each case as determined by the Committee, are
eligible to be granted awards. The participants under the Plan who are not
Outside Directors shall be selected from time to time by the Committee, in its
sole discretion, from among those eligible. In addition, Outside Directors are
eligible to receive NQSOs as set forth in Section 9 ("Outside Director
Options"), and may not receive any other awards under this Plan. Members of the
Committee are eligible to receive Outside Director Options.
SECTION 4. SHARES SUBJECT TO PLAN.
The total number of the Company's common shares, without par value,
("Shares") reserved and available for distribution pursuant to awards hereunder
shall be 2,000,000 Shares, no more than 50% of which shall be granted in the
form of Restricted Shares, Incentive Compensation Restricted Shares, Performance
Shares and Performance Share Units. Such Shares may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares. The maximum number
of Shares with respect to which Stock Options, Performance Shares and
Performance Share Units may be granted to any single participant during any
single fiscal year of the Company shall be 250,000 Shares.
If any Shares that have previously been the subject of a Stock Option cease
to be the subject of a Stock Option or Outside Director Option (other than by
reason of exercise), or if any such Shares that are subject to any Restricted
Share (including any Incentive Compensation Restricted Share) or Performance
Share award granted hereunder are forfeited by the holder, or if any such Stock
Option or other award otherwise terminates without a payment being made to the
participant in the form of Shares, or if any Shares (whether or not restricted)
previously distributed under the Plan are returned to the Company in connection
with the exercise of an award (including in payment of the exercise price or tax
withholding), such Shares shall again be available for distribution in
connection with future awards under the Plan.
In the event of any stock dividend, stock split, share combination,
corporate separation or division (including, but not limited to, split-up,
spin-off, split-off or distribution to CAH shareholders other than a normal cash
dividend), or partial or complete liquidation, or any other corporate
transaction or event having any effect similar to any of the foregoing, then the
aggregate number of Shares reserved for issuance under the Plan, the limitation
on the number of Shares available under the Plan for issuance of Restricted
Shares, Incentive Compensation Restricted Shares, Performance Shares and
Performance Share Units, the limitations on the number of Shares subject to
Stock Options or Performance Shares or Performance Share Units granted to any
single participant, the number and exercise price of Shares subject to
outstanding Stock Options, the purchase price for Restricted Shares, the
financial Performance Goals, if any, of the Shares the subject of a Performance
Share or Performance Share Unit award, the number of Shares subject to a
Performance Share or Performance Share Unit award or granted by a Restricted
Share or Incentive Compensation Restricted Share award, and any other
characteristics or terms of the awards or Plan limitations as the Committee
shall deem necessary or appropriate to reflect equitably the effects of such
changes, shall be appropriately substituted for new shares or adjusted, as
determined by the Committee in its discretion. Any such adjustments made to
NQSOs shall also be made to Outside Director Options.
If any recapitalization, reorganization, reclassification, consolidation,
merger of CAH or the Company or any sale of all or substantially all of CAH's or
the Company's assets to another person or entity or other transaction which is
effected in such a way that holders of Shares are entitled to receive (either
directly or upon subsequent liquidation) stock, securities, or assets with
respect to or in exchange for Shares (each an "Organic Change") shall occur, in
lieu of the Shares issuable upon exercise of a Stock Option or Outside Director
Option or pursuant to any other award under the Plan, the Stock Option or
Outside Director Option shall thereafter be exercisable for and other awards
shall be issuable in such shares of stock, securities or assets (including cash)
as may be issued or payable with respect to or in exchange for the number of
Shares immediately theretofore acquirable pursuant to such award had such
Organic Change not taken place (whether or not such Stock Option or Outside
Director Option is then exercisable or other awards are then vested) after
giving effect to any adjustments otherwise required or permitted under this
Plan.
26
<PAGE> 3
SECTION 5. STOCK OPTIONS.
References to Stock Options in this Section 5 shall not apply to Outside
Director Options. Stock Options may be granted alone or in addition to other
awards granted under the Plan. Any Stock Options granted under the Plan shall be
in such form as the Committee may from time to time approve and the provisions
of Stock Option awards need not be the same with respect to each optionee. Stock
Options granted under the Plan may be either ISOs or NQSOs. The Committee may
grant to any optionee ISOs, NQSOs or both types of Stock Options.
Anything in the Plan to the contrary notwithstanding, without the consent
of the optionee(s) affected, no provision of this Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code or to disqualify any ISO under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan as the Committee deems appropriate. Each
Stock Option grant shall be evidenced by an agreement executed on behalf of the
Company by an officer designated by the Committee and accepted by the optionee.
Such agreement shall describe the Stock Options and state that such Stock
Options are subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, nor inconsistent with the Plan, as the
Committee may approve.
(a) Exercise Price. The exercise price per Share issuable upon exercise of
a Stock Option shall be no less than the fair market value per share on the date
the Stock Option is granted; provided, that if the optionee, at the time an ISO
is granted, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of CAH or any subsidiary, the exercise price shall
be at least 110% of the fair market value of the Shares subject to the ISO on
the date of grant. Fair market value on the date of grant shall be determined by
the Committee in good faith.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date such Stock Option is granted.
(c) Exercise of Stock Options. Stock Options shall become exercisable at
such time or times and subject to such terms and conditions (including, without
limitation, installment or cliff exercise provisions) as shall be determined by
the Committee. The Committee shall have the authority, in is discretion, to
accelerate the time at which a Stock Option shall be exercisable whenever it may
determine that such action is appropriate by reason of changes in applicable tax
or other law or other changes in circumstances occurring after the award of such
Stock Options.
(d) Method of Exercise. Stock Options may be exercised in whole or in part
by giving written notice of exercise to the Company specifying the number of
Shares to be purchased. Payment in full of the exercise price shall be paid in
cash, or such other instrument as may be permitted in accordance with rules or
procedures adopted by the Committee. If approved by the Committee, payment in
full or in part may also be made: (i) by delivering Shares already owned by the
optionee having a total fair market value on the date of such delivery equal to
the option exercise price; (ii) by the delivery of cash on the extension of
credit by a broker-dealer to whom the optionee has submitted a notice of
exercise or an irrevocable election to effect such extension of credit; or (iii)
by any combination of the foregoing. No Shares shall be transferred until full
payment therefor has been made.
(e) Transferability of Stock Options. Except as otherwise provided
hereunder, Stock Options shall be transferable by the optionee only with prior
approval of the Committee and only in compliance with the restrictions imposed
under Section 16(b) of the Exchange Act and Section 422 of the Code, if
appliable. Any attempted transfer without Committee approval shall be null and
void. Unless Committee approval of the transfer shall have been obtained, all
Stock Options shall be exercisable during the optionee's lifetime only by the
optionee or the optionee's legal representative. Without limiting the generality
of the foregoing, the Committee may, in the manner established by the Committee,
provide for the irrevocable transfer, without
27
<PAGE> 4
payment of consideration, of any Stock Option other than any ISO by an optionee
to a member of the optionee's family or to a trust or partnership whose
beneficiaries are members of the optionee's family. In such case, the Stock
Option shall be exercisable only by such transferee. For purposes of this
provision, an optionee's "family" shall include the optionee's spouse, children,
grandchildren, nieces and nephews.
(f) Termination by Death. If an optionee's employment by or service to the
Company terminates by reason of death, then, unless otherwise determined by the
Committee within five days of such death, each Stock Option held by such
optionee shall thereafter be exercisable in full and any unvested portion
thereof shall immediately vest. Each Stock Option held by such optionee may
thereafter be exercised by the legal representative of the estate or by the
legatee of the optionee under the will of the optionee, for a period of one year
(or such other period as the Committee may specify at or after grant or death)
from the date of death or until the expiration of the stated term of such Stock
Option, whichever period is shorter.
(g) Termination by Reason of Retirement. If an optionee's employment by or
service to the Company terminates by reason of retirement, then, unless
otherwise determined by the Committee within sixty days of such retirement, each
Stock Option held by such optionee may thereafter be exercised by the optionee
for a period of ninety days (or such other period as the Committee may specify
at or after grant or retirement) from the date of such termination of employment
or service, or until the expiration of the stated term of such Stock Option,
whichever period is shorter; provided, however, that, if the optionee dies
within such ninety day period (or such other period), any unexercised Stock
Option held by such optionee shall thereafter be exercisable, in full, for a
period of one year (or such other period as the Committee may specify at or
after grant or death) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is shorter. In the event of
termination of employment by reason of retirement, if an ISO is exercised after
the expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such ISO shall thereafter be treated as an NQSO. For purposes of the
Plan, retirement shall mean voluntary termination of employment by a participant
from the Company after attaining age 55 and having at least three years of
service with the Company.
(h) Other Termination of Employment. If an optionee's employment by or
service to the Company terminates for any reason other than death or retirement,
any Stock Option held by such optionee which has not vested on such date of
termination will automatically terminate on the date of such termination. Unless
otherwise determined by the Committee at or after grant or termination, the
optionee will have ninety days (or such other period as the Committee may
specify at or after grant or termination) from the date of termination to
exercise any and all Stock Options that are then exercisable on the date of
termination; provided, however, that if the termination was for Cause, any and
all Stock Options held by that optionee may be immediately canceled by the
Committee. For purposes of the Plan, "Cause" means on account of any act of
fraud or intentional misrepresentation or embezzlement, misappropriation or
conversion of assets of the Company or any subsidiary, or the intentional and
repeated violation of the written policies or procedures of the Company.
(i) Effect of Termination of Optionee on Transferee. Except as otherwise
permitted by the Committee in its absolute discretion, no Stock Option held by a
transferee of an optionee pursuant to the fourth sentence of Section 5(e) shall
remain exercisable for any period of time longer than would otherwise be
permitted under Sections 5(f), 5(g) or 5(h) without specification of other
periods by the Committee as provided in those Sections.
(j) ISO Limitations. To the extent required for "incentive stock option"
status under Section 422 of the Code, the aggregate fair market value
(determined as of the time of grant) of the Shares with respect to which ISOs
are exercisable for the first time by the optionee during any calendar year
under the Plan and any other stock option plan of the Company and its
affiliates, shall not exceed $100,000.
SECTION 6. RESTRICTED SHARES.
Restricted Shares may be granted alone or in addition to other awards
granted under the Plan. Any Restricted Shares granted under the Plan shall be
subject to the following restrictions and conditions, and shall contain such
additional terms and conditions not inconsistent with the terms of the Plan as
the Committee
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deems appropriate. The provisions of Restricted Share awards need not be the
same with respect to each recipient.
(a) Price. The purchase price for Restricted Shares shall be any price set
by the Committee and may be zero. Payment in full of the purchase price, if any,
shall be made in cash, or such other instrument as may be permitted in
accordance with rules or procedures adopted by the Committee. If approved by the
Committee, payment in full or part may also be made: (i) by delivering Shares
already owned by the grantee having a total fair market value on the date of
such delivery equal to the Restricted Share price; (ii) by the delivery of cash
on the extension of credit by a broker-dealer or an irrevocable election to
effect such extension of credit; or (iii) by any combination of the foregoing.
(b) Restricted Share Award Agreement. Each Restricted Share grant shall be
evidenced by an agreement executed on behalf of the Company by an officer
designated by the Committee. Such Restricted Share Award Agreement shall
describe the Restricted Shares and state that such Restricted Shares are subject
to all the terms and provisions of the Plan and shall contain such other terms
and provisions, consistent with the Plan, as the Committee may approve. At the
time the Restricted Shares are awarded, the Committee may determine that such
Shares shall, after vesting, be further restricted as to transferability or be
subject to repurchase by the Company upon occurrence of certain events
determined by the Committee, in its sole discretion, and specified in the
Restricted Share Award Agreement. Awards of Restricted Shares must be accepted
by a grantee thereof within a period of 30 days (or such other period as the
Committee may specify at grant) after the award date by executing the Restricted
Share Award Agreement and paying the price, if any, required under Section 6(a).
The prospective recipient of a Restricted Share award shall not have any
rights with respect to such award, unless and until such recipient has executed
an agreement evidencing the award and has delivered a fully executed copy
thereof to the Company, and has otherwise complied with the applicable terms and
conditions of such award.
(c) Share Restrictions. Subject to the provisions of this Plan and the
applicable Restricted Share Award Agreement, during a period set by the
Committee commencing with the date of such award and ending on such date as
determined by the Committee at grant (the "Restriction Period"), the participant
shall not be permitted to sell, transfer, pledge, assign or otherwise encumber
shares of Restricted Shares awarded under the Plan. In no event shall more than
10% of the Shares authorized for issuance under this Plan (as adjusted as
provided in Section 4) be granted in the form of Restricted Shares having a
restriction period of less than 3 years. The Committee shall have the authority,
in its absolute discretion, to accelerate the time at which any or all of the
restrictions shall lapse with respect to any Restricted Shares or to remove any
or all restrictions after the grant of such Restricted Shares, provided,
however, that such discretion shall be exercised subject to the limitations set
forth in the preceding sentence, excluding discretion exercised in connection
with a Grantee's termination of employment from the Company. Unless otherwise
determined by the Committee at or after grant or termination, if a participant's
employment by or service to the Company terminates during the Restriction
Period, all Restricted Shares held by such participant still subject to
restriction shall be forfeited by the participant.
(d) Stock Certificate and Legends. Each participant receiving a Restricted
Share award shall be issued a stock certificate in respect of such Restricted
Shares. Such certificate shall be registered in the name of such participant.
The Committee may require that the stock certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have lapsed,
and that, as a condition of any Restricted Share award, the participant shall
have delivered a stock power, endorsed in blank, relating to the Shares covered
by such award.
(e) Shareholder Rights. Except as provided in this Section 6, the
recipient shall have, with respect to the Restricted Shares covered by any
award, all of the rights of a shareholder of the Company, including the right to
vote the Shares, and the right to receive any dividends or other distributions
with respect to the Shares, but subject, however, to those restrictions placed
on such Shares pursuant to this Plan and as specified by the Committee in the
Restricted Share Award Agreement.
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<PAGE> 6
(f) Expiration of Restriction Period. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Shares subject to such
Restriction Period, unrestricted certificates for such shares shall be delivered
to the participant.
SECTION 7. PERFORMANCE SHARES AND PERFORMANCE SHARE UNITS.
Subject to the terms and conditions described herein, Performance Shares
and Performance Share Units may be granted to eligible participants at any time
and from time to time as determined by the Committee.
(a) Price. The purchase price for Performance Shares and Performance Share
Units shall be zero unless otherwise specified by the Committee.
(b) Performance Share Agreement. Subject to the provisions of this Plan,
all the terms and conditions of an award of Performance Shares or Performance
Share Units shall be determined by the Committee in its discretion. Each
Performance Share and Performance Share Unit shall be evidenced by an agreement
executed by the recipient of the Performance Share or Performance Share Unit and
on behalf of the Company by an officer designated by the Committee. Such
Performance Share or Performance Share Unit Award Agreement shall describe the
Performance Share or Performance Share Unit and state that such Performance
Share or Performance Share Unit is subject to all the terms and provisions of
the Plan and shall contain such other terms and provisions, not inconsistent
with the Plan, as the Committee may approve. Award of Performance Shares and
Performance Share Units must be accepted by a grantee thereof within a period of
60 days (or such other period as the Committee may specify at grant) after the
award date by executing the Performance Share or Performance Share Unit Award
Agreement, and paying the price, if any, as required under Section 7(a).
(c) Performance Periods. Any time period (the "Performance Period")
relating to a Performance Share or Performance Share Unit award shall be at
least one year in length. No more than two Performance Periods may begin in any
one fiscal year of the Company.
(d) Performance Goals. Performance Shares and Performance Share Units
shall be earned based upon the financial performance of the Company or an
operating group of the Company during a Performance Period. As to each
Performance Period, within such time as established by Section 162(m) of the
Code, the Committee will establish in writing targets for one of the following
performance measures of the Company (and/or an operating group of the Company,
if applicable) over the Performance Period ("Performance Goals"): (i) earnings,
(ii)return on capital, or (iii) any Performance Goal approved by the
shareholders of the Company in accordance with Section 162(m) of the Code. The
Performance Goals, depending on the extent to which they are satisfied, will
determine the number of Performance Shares or Performance Share Units, if any,
that will be earned by each participant. Attainment of the Performance Goals
will be calculated from the consolidated financial statements of the Company but
shall exclude (i) the effects of changes in federal income tax rates, (ii) the
effects of unusual, non-recurring and extraordinary items as defined by
Generally Accepted Accounting Principles ("GAAP"), and (iii) the cumulative
effect of changes in accounting principles in accordance with GAAP. The
Performance Goals may vary for different Performance Periods and need not be the
same for each participant receiving an award for a Performance Period. The
Committee may, in its absolute discretion, subject to the limitations of Section
11, vary the terms and conditions of any Performance Share or Performance Share
Unit award, including, without limitation, the Performance Period and
Performance Goals, without shareholder approval, as applied to any recipient who
is not a "covered employee" with respect to the Company as defined in Section
162(m) of the Code. In the event applicable tax or securities laws change to
permit the Committee discretion to alter the governing performance measures as
they pertain to covered employees without obtaining shareholder approval of such
changes, the Committee shall have sole discretion to make such changes without
obtaining shareholder approval.
(e) Earning of Performance Shares. Performance Shares shall be issued to
each recipient thereof on the later of such time as the Performance Goals are
established or the first day of the applicable Performance Period. The number of
Performance Shares awarded at such time shall be calculated based upon the
assumption that the Performance Goals for the applicable Performance Period will
be satisfied to the fullest extent. The Company, or its designated agent, shall
hold all Performance Shares issued to recipients prior to
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<PAGE> 7
completion of the Performance Period. Participants shall be entitled to all
dividends and other distributions earned in respect of such Performance Shares
and shall be entitled to vote such Performance Shares during the period from the
initial award date to the final adjustment of the Performance Shares. After the
applicable Performance Period shall have ended, the Committee shall certify in
writing the extent to which the established Performance Goals have been
achieved. Subsequently, the number of Performance Shares, if any, earned by the
recipient over the Performance Period shall be determined as a function of the
extent to which the Performance Goals for such Performance Period were achieved.
If the Performance Goals are not satisfied to the fullest extent, a recipient
may earn less than the number of Performance Shares originally awarded, or no
Performance Shares at all. In addition, whether or not the Performance Goals are
satisfied to the fullest extent, the Committee may exercise negative discretion
to reduce the number of Performance Shares or Performance Share Units to be
issued if, in the Committee's sole judgment, such negative discretion is
appropriate in order to act in the best interest of the Company and its
shareholders. The factors to be taken into account by the Committee when
exercising negative discretion include, but are not limited to, the achievement
of measurable individual performance objectives established by the Committee and
communicated to the participant no later than the ninetieth day of the
Performance Period, and competitive pay practices. Performance Shares shall be
paid in the form of Shares. Unrestricted certificates representing such number
of Shares as equals the number of Performance Shares earned under the award
shall be delivered to the participant as soon as practicable after the end of
the applicable Performance Period.
(f) Earning of Performance Share Units. An account documenting Performance
Share Units awarded shall be established for each recipient thereof on the later
of such time as the Performance Goals are established or the first day of the
applicable Performance Period. The number of Performance Share Units credited to
a recipient's account at such time shall be calculated based upon the assumption
that the Performance Goals for the applicable Performance Period will be
satisfied to the fullest extent. After the applicable Performance Period shall
have ended, the Committee shall certify in writing the extent to which the
established Performance Goals have been achieved. Subsequently, the number of
Performance Share Units, if any, earned by the recipient over the Performance
Period shall be determined as a function of the extent to which the Performance
Goals for such Performance Period were achieved, adjusted, if applicable, in
accordance with the negative discretion of the Committee. A recipient may earn
less than the number of Performance Share Units originally awarded, or no
Performance Share Units at all. Performance Share Units shall be paid in the
form of Company check, the amount of which shall be calculated by multiplying
the fair market value per Share on the last day of the Performance Period by the
number of Performance Share Units, as adjusted pursuant to the last paragraph of
Section 4.
(g) Termination of Employment or Service Due to Death or at the Request of
the Company Without Cause. In the event the employment by or service of a
participant is terminated by reason of death, or by the Company without Cause
during a Performance Period, unless determined otherwise by the Committee, the
participant or his legal representative, as applicable, shall receive a prorated
payout with respect to the Performance Shares and Performance Share Units
relating to such Performance Period. The prorated payout shall be based upon the
length of time that the participant held the Performance Shares or Performance
Share Units during the Performance Period and the progress toward achievement of
the established Performance Goals. Distribution of earned Performance Shares and
Performance Share Units, if any, shall be made at the same time payments are
made to participants who did not terminate employment during the applicable
Performance Period.
(h) Termination of Employment or Service for Other Reasons. In the event
that a participant's employment or service terminates for any reason other than
those reasons set forth in paragraph (g) of this Section 7, all Performance
Shares and Performance Share Units shall be forfeited by the participant to the
Company, except as otherwise determined by the Committee.
(i) Nontransferability. Except as otherwise provided herein, no
Performance Share or Performance Share Unit may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated. Further, a participant's rights
under the Plan shall be exercisable during the participant's lifetime only by
the participant or the participant's legal representative.
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SECTION 8. INCENTIVE COMPENSATION RESTRICTED SHARES.
Each employee participating in this Plan who also participates in the
Company's Management Incentive Plan (the "Incentive Compensation Plan") may be
eligible, in the Committee's sole discretion, to elect to receive all or a
portion of the annual incentive compensation ("Incentive Compensation") payable
to the employee under the Incentive Compensation Plan in the form of Incentive
Compensation Restricted Shares. To elect the payout of all or a portion of
annual Incentive Compensation in Incentive Compensation Restricted Shares, an
employee must complete and submit to the Committee an Incentive Compensation
Restricted Shares Election Form after the Committee has determined the factor
set forth in Section 8(c)(B) and the vesting schedule of the Incentive
Compensation Restricted Shares, but in any event, prior to the date established
by the Committee for election of such deferral. The Incentive Compensation
Restricted Shares Election Form will not be effective until accepted by the
Committee. The Incentive Compensation Restricted Shares shall be evidenced by an
Incentive Compensation Restricted Shares Agreement executed on behalf of the
Company by an officer designated by the Committee and accepted by the employee.
Such agreement shall describe the Incentive Compensation Restricted Shares and
state that such Incentive Compensation Restricted Shares are subject to all
terms and provisions, not inconsistent with the Plan, as the Committee may
approve. Terms and conditions of Incentive Compensation Restricted Shares shall
include the following:
(a) Deferral Election. Within such limits as the Committee may establish,
any portion of annual Incentive Compensation can be elected for payout in
Incentive Compensation Restricted Shares, in a dollar amount or as a percentage
of total Incentive Compensation, or as a percentage of total Incentive
Compensation with a stated maximum dollar amount.
(b) Issuance of Incentive Compensation Restricted Shares. Incentive
Compensation Restricted Shares will be issued on the same date that cash payouts
are made under the Incentive Compensation Plan, based on the fair market value
of the Shares on the date of the issuance.
(c) Number of Shares. The number of Incentive Compensation Restricted
Shares granted to an employee will equal the product of (A) that number of
Shares as have an aggregate fair market value equal to the dollar amount of the
annual Incentive Compensation to be received in the form of Incentive
Compensation Restricted Shares multiplied by (B) a factor greater than or equal
to 1.00, but less than or equal to 1.30, as determined by the Committee prior to
the date established by the Committee for the deferral election to be made.
(d) Termination of Employment Due to Death, Disability or Retirement or at
the Request of the Company Without Cause. If the employee's employment is
terminated by reason of death, disability or retirement or by the Company
without Cause, all of the restrictions applicable to unvested Incentive
Compensation Restricted Shares shall be waived and all Incentive Compensation
Restricted Shares shall be immediately vested. If the employee's employment is
terminated for any other reason, the Incentive Compensation Restricted Shares
held by that employee will be forfeited as of the date of such termination;
provided, however, that the Committee may, in its sole discretion, provide that
such Incentive Compensation Restriction Shares will not so terminate. In such
event, such Incentive Compensation Restricted Shares will vest in accordance
with the vesting schedule set forth in the Incentive Compensation Restricted
Shares Agreement or on such accelerated basis as the Committee may determine at
or after grant or termination of employment.
(e) Application of Section 6. Except to the extent inconsistent with this
Section 8, the provisions of Section 6 and all other provisions of the Plan
pertaining to Restricted Shares shall be applicable to Incentive Compensation
Restricted Shares.
SECTION 9. OUTSIDE DIRECTOR OPTIONS.
(a) Administration. Outside Directors shall be eligible to participate in
the Plan only as expressly set forth in this Section 9. The Committee shall have
no power to determine which Outside Directors will receive Outside Director
Options, the amount of such Outside Director Options, or the terms of such
Outside Director
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Options to the extent provided in subsections (b) through (i) below. None of the
provisions of Section 5 applicable to Stock Options shall be applicable to
Outside Director Options.
(b) Eligibility and Grant. Outside Director Options shall be NQSOs. All
Outside Director Options shall be evidenced by a written agreement, which shall
be dated as of the date on which an Outside Director Option is granted, signed
by an officer of the Company authorized by the Committee, and signed by the
Outside Director. Such agreement shall describe the Outside Director Options and
state that such Outside Director Options are subject to all terms and provisions
of the Plan.
(c) Vesting. All Outside Director Options shall be fully vested on the
date of grant.
(d) Number of Shares. Each individual first elected or appointed to serve
as a director of the Company at or after adjournment of the Company's annual
meeting of shareholders (an "Annual Meeting") in 1995 who is an Outside Director
shall, upon such election or appointment, automatically be granted options for
that number of Shares having a fair market value of $100,000. In addition,
commencing immediately after the adjournment of the Annual Meeting in 1995 and
continuing on an annual basis, immediately following the adjournment of each
succeeding Annual Meeting thereafter during the term of this Plan each Outside
Director whose term did not expire at that Annual Meeting and who has then
served as a director of the Company for a consecutive period of time which
includes each of the last three Annual Meetings (i.e., including the Annual
Meeting then just adjourned) shall automatically be granted additional Outside
Director Options for that number of Shares having a fair market value of
$50,000. For purposes of this Section 9, fair market value means the last sale
price of the Shares on the applicable date (or, if no sale of Shares occurs on
such date, on the next preceding date on which a sale occurred) as reported on
the New York Stock Exchange Composite Tape.
(e) Exercise Price. The exercise price per Share purchasable under an
Outside Director Option shall be equal to the fair market value on the date the
Outside Director Option is granted.
(f) Maximum Term. Each Outside Director Option shall be exercisable for
ten years from the date of grant; provided, however, that in the event an
Outside Director's service to the Company is terminated for Cause, each Outside
Director Option held by that Outside Director on the date of termination shall
be canceled effective as of such termination date.
(g) Transferability of Outside Director Options. Outside Director Options
shall be transferable to the maximum extent permissible under Rule 16b-3, as
amended from time to time.
(h) Method of Exercise. Outside Director Options may be exercised in whole
or in part by giving written notice of exercise to the Company specifying the
number of Shares to be purchased. No Shares shall be transferred until full
payment therefor has been made. Payment for exercise of an Outside Director
Option may be made (i) in cash, (ii) by delivery of Shares already owned by the
Outside Director, (iii) by delivery of cash on the extension of credit by a
broker-dealer to whom the Outside Director has submitted a notice of exercise or
an irrevocable election to effect such extension of credit, or (iv) by any
combination of the foregoing.
(i) Termination of Option. Except as otherwise provided herein, if an
Outside Director ceases to be a member of the Board for any reason, then all
Outside Director Options or any unexercised portion of such Outside Director
Options which otherwise are exercisable shall terminate unless such Outside
Director Options are exercised within six months after the date such Outside
Director ceases to be a member of the Board (but in no event after expiration of
the original term of such Outside Director Options); provided that if such
Outside Director ceases to be a member of the Board by reason of such Outside
Director's death, the six-month period shall instead be a one-year period.
(j) Applicability of Other Provisions to Outside Director Options. Except
for Section 5 and except to the extent inconsistent with the provisions of this
Section 9, all other terms applicable to Stock Options set forth in other
sections of this Plan are applicable to Outside Director Options.
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SECTION 10. CHANGE OF CONTROL PROVISIONS.
(a) Impact of Event. In the event of a "Change of Control" as defined in
Section 10(b), the following acceleration and valuation provisions shall apply:
(i) On the date that such Change of Control is determined to have
occurred, any or all Stock Options awarded under this Plan not previously
exercisable and vested shall become fully exercisable and vested;
(ii) The restrictions applicable to any or all Restricted Shares,
Incentive Compensation Restricted Shares, Performance Shares and
Performance Share Units shall lapse and such shares and awards shall be
fully vested.
(b) Definition of "Change of Control". For purposes of Section 10(a), a
"Change of Control" shall mean:
(i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 25% or more of either (x) the then outstanding common shares of CAH (the
"Outstanding CAH Common Shares") or (y) the combined voting power of the then
outstanding voting securities of CAH entitled to vote generally in the election
of directors (the "Outstanding CAH Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from CAH or any
corporation controlled by CAH, (B) any acquisition by CAH or any corporation
controlled by CAH, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by CAH or any corporation controlled by CAH or
(D) any acquisition by any corporation pursuant to a transaction which complies
with clauses (x), (y) and (z) of subsection (iii) of this Section 10(b); or
(ii) individuals who, as of the Effective Date of this Plan, constitute the
Board of CAH (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board of CAH; provided, however, that any individual becoming
a director subsequent to the Effective Date whose election, or nomination for
election by CAH's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) approval by the shareholders of CAH of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, (x) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding CAH Common Shares
and Outstanding CAH Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% (or such
lower percentage as may be determined by the Board of Directors of CAH prior to
such Business Combination) of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns CAH
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding CAH
Common Shares and Outstanding CAH Voting Securities, as the case may be, (y) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination (including any ownership that existed in the
Company or the company being acquired, if any) and (z) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members
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of the Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of CAH of a complete liquidation or
dissolution of CAH.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan; provided, however, no
amendment, alteration or discontinuation shall be made which would impair the
rights of an optionee, participant or transferee pursuant to Section 5(e) under
any award theretofore granted, without the optionee's, participant's or
transferee's consent, or which, without the approval of CAH's shareholders,
would:
(a) except as expressly provided in the Plan, increase the total number of
Shares reserved for purposes of the Plan;
(b) change the class of individuals eligible to participate in the Plan;
(c) extend the maximum option period of Stock Options or Outside Director
Options; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any award theretofore granted (except
an Outside Director Option), prospectively or retroactively; provided no such
amendment shall impair the rights of any holder without the holder's consent;
provided, further, no Stock Option may be amended so as to decrease the exercise
price of such Stock Option to reflect a decrease in the fair market value of the
underlying stock.
The provisions regarding Outside Director Options pursuant to Section 9
above shall not in any case be amended more often than once in any six-month
period other than to comply with changes in the Code or ERISA, or the rules
thereunder.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments or deliveries of Shares not
yet made by the Company to a participant, optionee or transferee, nothing
contained herein shall give any such participant, optionee or transferee any
rights that are greater than those of a general creditor of the Company. The
Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments hereunder
consistent with the foregoing.
SECTION 13. GENERAL PROVISIONS.
(a) Share Transfer and Distribution. The Committee may require each person
purchasing Shares pursuant to a Stock Option, Outside Director Option,
Performance Share, Restricted Share or Incentive Compensation Restricted Share
award under the Plan to represent to and agree with the Company in writing that
the optionee or participant is acquiring the Shares without a view to the
distribution thereof. Any certificates for such Shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All Shares or other securities delivered under the Plan shall be subject to
such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares are then
listed and any applicable federal or state securities law, and the Committee may
cause a legend or legends to be put on any certificates evidencing such Shares
to make appropriate reference to such restrictions.
The Company shall not be required to deliver any Shares or other securities
under the Plan prior to such registration or other qualification of such Shares
or other securities under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
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(b) Additional Arrangements. Nothing contained in this Plan shall prevent
the Company from adopting other or additional compensation arrangements for its
employees, consultants or Outside Directors.
(c) No Right to Award or Employment. No person shall have any claim or
right to be granted an award under this Plan and the grant of an award shall not
confer upon any participant any right to be retained as an employee or director
of CAH or any subsidiary, nor shall it interfere in any way with the right of
CAH or any subsidiary to terminate the employment or service as a director of
any of the Plan's participants at any time.
(d) Tax Withholding. The Company shall have the right to require the
grantee of Restricted Shares, Incentive Compensation Restricted Shares,
Performance Shares or Performance Share Units or other person receiving such
Shares to pay the Company the amount of any taxes which the Company is required
to withhold with respect to such Shares or, in lieu thereof, to retain, or sell
without notice, a sufficient number of Shares held by it to cover the amount
required to be withheld. The Company shall have the right to deduct from all
dividends paid with respect to Restricted Shares, Incentive Compensation
Restricted Shares, and Performance Shares the amount of any taxes which the
Company is required to withhold with respect to such dividend payments.
The Company shall also have the right to require an optionee to pay to the
Company the amount of any taxes which the Company is required to withhold with
respect to the receipt by the optionee of Shares pursuant to the exercise of a
Stock Option, or, in lieu thereof, to retain, or sell without notice, a number
of Shares sufficient to cover the amount required to be withheld.
(e) Beneficiaries. The Committee shall establish such procedures as it
deems appropriate for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(f) Laws Governing. The Plan and all awards made and action taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent superseded by federal law.
(g) Government Regulation. Notwithstanding any provisions of the Plan or
any agreement made pursuant to the Plan, the Company's obligations under the
Plan and such agreement shall be subject to all applicable laws, rules and
regulations and to such approvals as may be required by any governmental or
regulatory agencies.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date (the "Effective Date") it is
approved by the shareholders of CAH. No grants shall be made under this Plan
prior to the Effective Date.
SECTION 15. TERM OF PLAN.
No award shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date of the Plan, but awards granted prior to such
tenth anniversary may extend beyond that date.
SECTION 16. INDEMNIFICATION.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award granted
under the Plan. Each person who is or shall have been a member of the Committee
or of the Board shall be indemnified and held harmless by the Company against
and from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under or in connection
with this Plan or any award granted under this Plan and against and from any and
all amounts paid by him in settlement thereof, with the Company's approval, or
paid by him, except a judgment based upon a finding of bad faith, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be
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exclusive of any other rights of indemnification to which such person may be
entitled under the Company's Articles of Incorporation or Code of Regulations,
contained in any indemnification agreements, as a matter of law, or otherwise,
or any power that the Company may have to indemnify him or hold him harmless.
SECTION 17. SAVINGS CLAUSE.
In case any one or more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed so as to foster the
intent of this Plan.
This Plan is intended to comply in all respects with applicable law and
regulation, including Code Section 422 and, with respect to Reporting Persons,
Rule 16b-3. In case any one or more of the provisions of this Plan shall be held
to violate or be unenforceable in any respect under Code Section 422 or Rule
16b-3, then to the extent permissible by law, any provision which could be
deemed to violate or be unenforceable under Code Section 422 or Rule 16b-3 shall
first be construed, interpreted, or revised retroactively to permit the Plan to
be in compliance with Code Section 422 and Rule 16b-3. Notwithstanding anything
in this Plan to the contrary, the Committee, in its sole and absolute
discretion, may bifurcate this Plan so as to restrict, limit or condition the
use of any provision of this Plan to participants who are Reporting Persons or
covered employees as defined under Code Section 162(m) without so restricting,
limiting or conditioning this Plan with respect to other participants.
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