Exhibit 10.7

 

2005 STOCK OPTION TERMS

FOR AN INCENTIVE STOCK OPTION (ISO)

UNDER THE ACCREDO HEALTH, INCORPORATED 2002 LONG-TERM INCENTIVE PLAN

As amended and restated effective August 18, 2005

 

This is a summary of the terms applicable to the stock option specified on this
document. Different terms may apply to any other grant under the Accredo Health,
Incorporated 2002 Long-Term Incentive Plan.

 

Employee Name:      Employee ID:      # of Options:      Grant Type:   

Incentive Stock Option (ISO)

Grant Code:   

ANNL

Option Price:      Grant Date:   

September 16, 2005

Expiration Date:   

September 16, 2015

Vesting Date    Portion that Vests

September 16, 2006

  

First 25%

September 16, 2007

  

Second 25%

September 16, 2008

  

Third 25%

September 16, 2009

  

Balance

 

I. GENERAL INFORMATION

 

This stock option to purchase shares of common stock of Medco Health Solutions,
Inc. (Medco) becomes exercisable in equal installments (subject to rounding
process) on the Vesting Dates indicated in the accompanying box. This stock
option expires on its Expiration Date, which is the day before the tenth
anniversary of the Grant Date. If your employment with Accredo Health,
Incorporated and/or its subsidiaries (Company) ends for any reason, your right
to exercise this stock option will be determined according to the terms in
Section II.

 

II. TERMINATION OF EMPLOYMENT

 

A. General Rule. If your employment is terminated for any reason other than
those specified in paragraphs B-E, the portion of this stock option that is
unvested will expire on the date your employment ends; the portion of this stock
option that is vested will expire three months after the date your employment
ends, but in no event later than the original Expiration Date.

 

B. Retirement. If you retire from service with the Company, the portion of this
stock option that is unvested will vest immediately upon your retirement.
Whether already vested on the date of your retirement or vested as a result of
your retirement, this stock option will expire three months after the date of
your retirement, but in no event later than its original Expiration Date.

 

C. Disability. If your employment with the Company is terminated by reason of
disability, the portion of this stock option that is unvested will vest
immediately upon the date your employment terminates. Whether already vested on
the date of your termination or vested as a result of your termination as by
reason of disability, this stock option will expire the day before the first
anniversary of your termination date, but in no event later than its original
Expiration Date.

 

D. Termination for Cause. If your employment is terminated for cause (as defined
below), all options granted under this Plan which have not yet vested and all
options which have not yet been exercised (whether or not vested) shall be
forfeited upon termination of employment.

 

“Cause” shall mean any of the following acts by the grantee, as determined by
the Board: gross neglect of duty, prolonged absence from duty without the
consent of the Company, intentionally engaging in any activity that is in
conflict with or adverse to the business or other interests of the Company, or
willful misconduct, misfeasance or malfeasance of duty which is reasonably
determined to be detrimental to the Company.

 

E. Death. If you die during your employment with the Company, the portion of
this stock option that is unvested will vest immediately upon the date of your
death. Whether already vested on the date of your death or vested as a result of
your death, this stock option will expire the day before the first anniversary
of your death, but in no event later than its original Expiration Date. If you
die during the three month period described in paragraphs (A) and (B) above or
during the one year period described in paragraph (C) the portion of this stock
option that is vested will expire the day before the first anniversary of your
death, but in no event later than its original Expiration Date.

 

F. Change in Control. If your employment is terminated within two years
following a Change in Control, unless the termination is due to death,
retirement, termination for cause or resignation (other than a resignation from
a declined reassignment to a job that is not reasonably equivalent in
responsibility or compensation, or that is not in the same geographic area, as
determined by the Committee), any Awards which are unexercised, unvested,
unearned and/or unpaid shall automatically become one hundred percent vested or
payable immediately upon such termination of employment. Options shall expire if
not exercised within two years of the date of such termination of employment
(but in no event after the expiration of the option period).

 

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2005 STOCK OPTION TERMS

FOR AN INCENTIVE STOCK OPTION (ISO)

UNDER THE ACCREDO HEALTH, INCORPORATED 2002 LONG-TERM INCENTIVE PLAN

As amended and restated effective August 18, 2005

 

III. Incentive Stock Options

 

Options granted or accelerated hereunder in excess of the $100,000 limit
specified in Section 7.2 (d) of the Plan shall automatically become
Non-Qualified stock options.

 

IV. Transferability

 

Awards granted under this Plan shall not be transferable or assignable other
than by will or the laws of descent and distribution and shall be exercisable
during the grantee’s lifetime only by the grantee.

 

V. Restrictions on Competitive Employment and Against Solicitation and
Inducement

 

You acknowledge and agree that as a condition to this grant you have executed
and are bound by the terms of a Restrictive Covenant and Confidentiality
Agreement and a Proprietary Rights Agreement with Medco or one of its
subsidiaries (together, the Restrictive Agreements), the terms of which are
incorporated into this grant. You acknowledge receipt of a copy of the
Restrictive Agreements. If you violate either of the Restrictive Agreements,
this grant will be forfeited immediately. If this grant is vested and sold prior
to or during the 12 month period after your termination of employment for any
reason, you will be considered a constructive trustee of any value or income
received as a result of such sale and shall return such value or income promptly
to the Company if you violate any aspect of the Restrictive Agreements. This
grant shall not be affected by the termination of either of the Restrictive
Agreements. In the event either agreement is terminated, the restrictions
contained therein shall continue to apply for purposes of this grant.

 

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