Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) by and between CareFusion
Corporation, a Delaware corporation (the “Company”) and David L. Schlotterbeck
(the “Executive”) is effective as of the 31 day of August 2009 (the
“Agreement”).

IT IS HEREBY AGREED AS FOLLOWS:

1. Effective Date. The effective date of this Agreement (the “Effective Date”)
shall be the effective date of the spin-off of the Company from Cardinal Health,
Inc.

2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on the date of the Company’s annual meeting of stockholders next
following the third anniversary of the Effective Date (the “Employment Period”),
unless prior to such date the employment of the Executive is terminated pursuant
to this Agreement. At least one-hundred and eighty (180) days before the end of
the Employment Period, the parties will discuss either succession planning or
the potential for extension of this Agreement. If the Executive remains employed
with the Company after the end of the Employment Period without an extension of
the Agreement, he will be an employee “at-will.”

3. Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, the Executive shall serve as Chairman of the Board of Directors and
Chief Executive Officer of the Company with such authority, duties and
responsibilities as are customarily assigned to such positions. The Executive
shall report directly to the Board of Directors of the Company (the “Board”).
The Executive’s services shall be performed in San Diego, California.

(ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
his full business attention and time to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period,
it shall not be a violation of this Agreement for the Executive to (A) serve on
the board of directors of, or own shares or hold options to purchase shares in,
Virtual Radiologic, Inc., (B) subject to the approval of the Board (which shall
not be unreasonably withheld), serve on other corporate, civic or charitable
boards or committees, (C) deliver lectures, fulfill speaking engagements or
teach at educational institutions, (D) manage personal investments, so long as
such activities do not materially interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement, and (E) own shares in companies that are not competitors of the
Company.

(b) Compensation (i) Base Salary. During the Employment Period, the Company
shall pay Executive an annual base salary (“Annual Base Salary”) at a rate of
not less than $1,000,000 payable in accordance with the Company’s normal payroll
policies. The Executive’s Annual Base Salary shall be reviewed, and may be
increased but not decreased, at least annually by the

 

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Human Resources and Compensation Committee of the Board (the “Committee”)
pursuant to its normal performance review policies for senior executives. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall thereafter refer to Annual Base Salary as so increased.

(ii) Annual Bonus. With respect to each fiscal year ending during the Employment
Period, the Executive shall be eligible to receive an annual cash bonus (“Annual
Bonus”) determined and paid at the sole discretion of the Company pursuant to
terms and conditions of the Company bonus plan for which the Executive is then
eligible. Executive’s Annual Bonus target under this Agreement for any fiscal
year (the fiscal year’s “Target Bonus”) shall be an amount equal to 120% of
Executive’s Annual Base Salary. The actual Annual Bonus, which could be higher
or lower than the Target Bonus, shall be based on the attainment of performance
objectives as determined no later than 90 days after the beginning of the fiscal
year by the Committee in consultation with the Executive, and shall be paid,
subject to any effective deferral elections that may be made by the Executive
pursuant to any deferred compensation plans that the Company may maintain,
within two and one-half months following the end of the fiscal year for which
the Annual Bonus is earned. Notwithstanding anything herein to the contrary, to
the extent permitted or required by governing law, the Committee shall have
discretion to require the Executive to repay to the Company the amount of any
Annual Bonus to the extent the Committee determines that such bonus was not
actually earned by the Executive due to (A) the amount of such payment was based
on the achievement of financial results that were subsequently the subject of a
material accounting restatement that occurs within three years of such payment
(except in the case of a restatement due to a change in accounting policy or
simple error); (B) the Executive has engaged in fraud, gross negligence or
intentional misconduct; or (C) the Executive has deliberately misled the market
or the Company’s stockholders regarding the Company’s financial performance.

(iii) Retention Award. The Executive shall receive a retention award (“Retention
Award”) consisting of restricted stock units (“RSUs”) and stock options
(“Options”) to be granted in 2009 on the date that annual equity awards are
granted to employees (the “Grant Date”). The Retention Award will be determined
as follows, subject to the following terms and conditions:

A. RSUs. The number of RSUs granted will equal two million dollars ($2 million),
divided by the closing price of the Company’s common stock on the Grant Date.

B. Options. The number of Options granted will be determined by dividing two
million dollars ($2 million) by the option value per share of the Company’s
common stock (as determined by the Committee, and with the volatility determined
by the Company using the average volatility of similar medical technology
companies). The Options will be granted with an exercise price equal to the
closing price of the Company’s common stock on the Grant Date.

 

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C. Vesting. The Retention Awards will vest and become exercisable in the case of
Options, and payable in the case of RSUs, as follows; provided, however, that,
except as provided below, the Executive must remain employed through the
Employment Period (but not thereafter) and continue to comply with the
restrictive covenants set forth in Section 7 of this Agreement (the “Covenants”)
as of each applicable vesting date:

1. One-third of the Retention Award will vest on the third anniversary of the
Effective Date;

2. One-third of the Retention Award will vest on the fourth anniversary of the
Effective Date; and

3. One-third of the Retention Award will vest on the fifth anniversary of the
Effective Date.

In the event that the Executive’s employment is terminated, prior to the third
anniversary of the Effective Date, by the Company without Cause, or the
Executive terminates employment with the Company for Good Reason, then the
outstanding unvested Retention Awards will become fully vested on the
Executive’s Date of Termination but will not be exercisable or payable at that
time. Rather, the vested Retention Awards will become exercisable in the case of
Options, and payable in the case of RSUs, in equal installments on the Date of
Termination (as hereinafter defined) and the first and second anniversaries of
the Executive’s Date of Termination, without regard to compliance with the
Covenants.

All outstanding unvested Retention Awards will become fully vested and
exercisable in the case of Options, and payable in the case of RSUs, upon
Executive’s death or Disability.

All vested and unvested Retention Awards will be immediately forfeited and
terminate if Executive is terminated by the Company for Cause. All unexercised
and unpaid Retention Awards will be immediately forfeited and terminate if
Executive does not comply with the Covenants during the Restricted Period that
begins upon Executive’s termination of employment at or after the end of the
Employment Period.

D. RSU Settlement. Vested RSUs are paid in fully tradable shares of the
Company’s common stock within 30 days following the date on which they become
payable in accordance with the foregoing provisions.

E. Option Exercises. Vested Options granted as part of the Retention Award that
are or become exercisable remain exercisable for the remaining term of the
Option, subject to the provisions of Section 3(b)(iii)C above.

F. Award Agreements Control. The terms and conditions of the Retention Award
will be substantially in the form set forth in separate equity award agreements
attached hereto as Exhibit A and Exhibit B. In the event of any discrepancy
between this Agreement and the provisions of the applicable award agreements,
the provisions of the applicable award agreements

 

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other than price, vesting and exercisability provisions will control; provided
however, to the extent the provisions of the applicable award agreements that
relate to price, vesting or exercisability are more favorable to Executive than
those in this Agreement, such provisions of the applicable award agreements will
control.

(iv) Annual Equity Grants. The Executive is eligible to receive annual
equity-based grants (“Annual Equity Grants”) during the Employment Period as
determined in the discretion of the Committee. The terms and conditions of
Annual Equity Grants (other than exercisability and forfeiture, which are
described below) will be established by the Committee at the time of grant and
set forth in separate award agreements; in the event of any discrepancy between
this Agreement and the provisions of the applicable award agreements, the
provisions of the applicable award agreements will control.

Notwithstanding the foregoing, the Company will grant to Executive an Annual
Equity Grant in 2009, on the date on which annual employee grants are made, in
addition to the Retention Award, with a total value of seven million dollars ($7
million) on the date of grant. The Committee will determine the type of awards
comprising the Annual Equity Grant in its discretion. The number of Options will
be determined by dividing that portion of the seven million dollars ($7 million)
which the Committee determines will be granted in Options by the option value
per share of the Company’s common stock (as determined by the Committee, and
with the volatility determined by the Company using the average volatility of
similar medical technology companies).

All Annual Equity Grants will be subject to the following terms and conditions:

A. Vesting, Exercisability, and Forfeiture. Because the Executive is eligible
for retirement under the Company’s 2009 Long-Term Incentive Plan (the “LTIP”),
all Annual Equity Grants will be fully vested upon grant, but the Options will
be subject to restrictions on exercisability as described in the applicable
award agreements, and RSUs and performance share units (“PSUs”) will be payable
as described in the applicable award agreements.

Notwithstanding the foregoing,

(i) all outstanding Annual Equity Grants that are Options will become fully
exercisable upon termination of Executive’s employment by the Company without
Cause, Executive’s termination of employment with the Company for Good Reason,
or Executive’s death or Disability;

(ii) all outstanding Annual Equity Grants that are RSUs, other than PSUs, will
become payable upon termination of Executive’s employment by the Company without
Cause, Executive’s termination of employment with the Company for Good Reason,
or Executive’s death or Disability and under the foregoing circumstances, PSUs
will paid based on actual performance compared to target, at the same time
payment of PSUs is made to other senior executives; and

 

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(iii) all outstanding Annual Equity Grants will continue to become exercisable
or payable, as applicable, in accordance with their terms in the event of
voluntary termination by the Executive without Good Reason.

In addition, all outstanding Annual Equity Grants will become fully exercisable
and payable upon a “Change of Control” of the Company, as defined in the LTIP,
and with respect to Annual Equity Grants that are RSUs subject to Section 409A
of the Internal Revenue Code and the Treasury Regulations thereunder (“Section
409A”), provided that such “Change of Control” is also a “change in control
event” as described in Section 409A. All unexercised and unpaid Annual Equity
Grants will be immediately forfeited and terminate if Executive is terminated by
the Company for Cause.

B. Options. Annual Equity Grants that are Options will be granted with an
exercise price equal to the closing price of the Company’s common stock on the
grant date. Annual Equity Grants that are Options will remain exercisable for
the entire term of the Option unless earlier forfeited and terminated as
described above.

(v) Other Employee Benefit Plans. During the Employment Period, the Executive
and/or the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under savings and retirement
plans that are tax-qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the “Code”), in plans that are supplemental to any such
tax-qualified plans, and welfare benefit plans, practices, policies and programs
provided by the Company, but not any severance plan, practice, policy or
program, on a basis that is no less favorable than those generally applicable or
made available to other senior executives of the Company. The Executive shall be
eligible for participation in fringe benefits and perquisite plans, practices,
policies and programs (including, without limitation, expense reimbursement
plans, practices, policies and programs) on a basis that is commensurate with
his position and no less favorable than those generally applicable or made
available to most other senior executives of the Company.

(vi) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all expenses incurred by the Executive in
accordance with the Company’s policies for its senior executives.

(vii) Use of Aircraft. During the Employment Period, the Executive, and his
immediate family when accompanied by Executive, shall be entitled to personal
use of Company aircraft, subject to availability, up to a value of $100,000 per
fiscal year of the Company determined in accordance with the SEC’s rules for
valuing personal use of corporate aircraft for purposes of proxy disclosure, at
no cost and without reimbursement to the Company; provided however, that income
will be imputed to Executive for tax purposes pursuant to Company policy as
established by the Board or Committee and consistent with applicable tax
regulations. Any use in excess of the dollar value limit described above must be
approved by the Committee in advance.

(viii) Vacation. During the Employment Period, the Executive shall be entitled
to paid vacation in accordance with the plans, policies, programs and practices
of the Company as in effect with respect to other senior executives of the
Company.

 

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(c) Indemnification. Company shall indemnify and hold harmless Executive in
accordance with the provisions of the CareFusion Officer and Director
Indemnification Agreement attached hereto as Exhibit C.

(d) Rabbi Trust. Executive may defer compensation pursuant to the CareFusion
Corporation Deferred Compensation Plan, as it may be amended from time to time,
and deferrals shall be held in a rabbi trust, subject to the Company’s policies
with respect to maintaining a rabbi trust for such purpose.

4. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may provide the Executive with
written notice after such determination in accordance with Section 11(b) of this
Agreement of its intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, other than with respect to vesting and
payment of RSUs subject to Section 409A, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis
for not less than 120 consecutive days (or an aggregate period of not less than
180 days) as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the Executive’s legal
representative. For purposes of vesting and payment of RSUs, to the extent
necessary to comply with Section 409A, “Disability” shall have the meaning
provided in Section 409A.

(b) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

(i) the willful and continued failure of the Executive to perform substantially
the Executive’s duties with the Company (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board or its
representative, which specifically identifies the manner in which the Board
believes that the Executive has willfully and continuously failed to perform
substantially the Executive’s duties with the Company;

(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company or its
affiliates;

(iii) conviction of a felony; or

(iv) a material breach of Section 7 of this Agreement subject to the cure
provisions of Section 7(a).

For purposes of this Section 4(b), no act or failure to act on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s act or omission was in the best interests of the Company. Any act,
or failure to act, based upon express authority given pursuant to a resolution
duly adopted by the

 

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Board with respect to such act or omission or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board not including the Executive at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive engaged in the conduct described in
Section 4(b) (i), (ii), or (iv) above, and specifying the particulars thereof in
detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive
for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in
the absence of a written consent of the Executive:

(i) the assignment to the Executive of any duties materially inconsistent in any
respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3(a) of this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken in bad faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

(ii) any failure by the Company to comply with any of the provisions of Sections
3(a) or 3(b) of this Agreement, other than a failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

(iii) the Company requiring the Executive to be based at any office or location
more than 10 miles from that provided in Section 3(a)(i) hereof, provided that
reasonable travel required in connection with Executive’s reporting
relationships and responsibilities to the Board shall not be deemed a breach
hereof;

(iv) any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement;

(v) any failure by the Company to comply with Section 9(c) of this Agreement; or

(vi) any failure of the Board or shareholders of the Company to elect Executive
as a member of the Board, or the removal of Executive from the Board for reasons
other than those justifying or requiring such removal under the other provisions
of this Agreement.

 

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(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty (30) days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.

(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive with or
without Good Reason, the date of receipt of the Notice of Termination or any
later date specified therein within thirty (30) days of such notice, as the case
may be, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination and (iii) if the
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

(f) Resignation. Upon termination of the Executive’s employment for any reason,
the Executive agrees to resign, as of the Date of Termination, to the extent
applicable, from any positions that the Executive holds with the Company and its
affiliated companies, the Board (and any committees thereof) and the Board of
Directors (and any committees thereof) of any of the affiliated companies.

5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause or Disability. If, during the Employment Period, (i) the Company shall
terminate the Executive’s employment other than for Cause or Disability, or
(ii) the Executive shall terminate employment for Good Reason:

(i) Subject to the execution by the Executive and the Company of a release of
claims in favor of the Company, substantially in the form attached hereto as
Exhibit D, the Company shall pay to the Executive the aggregate of the following
amounts:

A. The sum of (1) the Executive’s accrued but unpaid Annual Base Salary and any
accrued vacation pay through the Date of Termination, (2) the Executive’s
business expenses that have not been reimbursed by the Company as of the Date of
Termination that were incurred by the Executive prior to the Date of Termination
in accordance with the applicable Company policy, and (3) the Executive’s Annual
Bonus earned for the fiscal year immediately preceding the fiscal year in which
the Date of Termination occurs if such bonus has not been paid as of the Date of
Termination (the sum of the

 

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amounts described in clauses (1) through (3), shall be hereinafter referred to
as the “Accrued Obligations”). The Accrued Obligations shall be paid in a lump
sum on the Date of Termination of Executive’s employment; provided that
notwithstanding the foregoing, if the Executive has made an irrevocable election
under any deferred compensation arrangement subject to Section 409A to defer any
portion of the Annual Bonus described above, then for all purposes of this
Section 5, such deferral election, and the terms of the applicable arrangement
shall apply, and such portion shall not be considered as part of the “Accrued
Obligations” but shall instead be an “Other Benefit” (as defined below).

B. A pro rata Annual Bonus for the year of termination (“Pro Rata Bonus”), based
upon the actual achievement of the performance objectives as determined by the
Committee for the fiscal year of termination, to be paid in a lump sum at the
same time as the Annual Bonus is paid to other senior executives of the Company,
but in no event later than two and one-half months following the end of the
fiscal year in which occurs the Date of Termination; provided that
notwithstanding the foregoing, if the Executive has made an irrevocable election
under any deferred compensation arrangement subject to Section 409A to defer any
portion of the Annual Bonus described above, then for all purposes of this
Section 5, such deferral election, and the terms of the applicable arrangement
shall apply, and such portion shall not be considered as part of the “Accrued
Obligations” but shall instead be an “Other Benefit” (as defined below).

(ii) The Company shall pay as severance to the Executive an amount equal to
twice the sum of (1) the Executive’s Annual Base Salary and (2) the Target Bonus
in respect of the fiscal year of termination or, if the Target Bonus has not
been established for such fiscal year, in respect of the immediately preceding
fiscal year, payable in twenty-four (24) equal monthly installments commencing
on the later of (A) thirty (30) days following the expiration of any review and
revocation period set forth in the release of claims required by this Section 5,
or (B) the first business day after the date that is six (6) months following
the Executive’s Separation from Service (as defined in Section 10).

(iii) The Company shall pay the premiums for COBRA continuation coverage for the
Executive and his eligible dependents through the earliest of: (a) the
Executive’s coverage under a health insurance plan of another employer; or
(b) eighteen (18) months following the Date of Termination.

(iv) To the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies through the Date of Termination (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”), in
accordance with the terms of such plan, program, policy or practice or contract
or agreement. As used in this Agreement, the term “affiliated companies” shall
include any company controlled by, controlling or under common control with the
Company.

 

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Notwithstanding the foregoing or anything else to the contrary in this
Agreement, payments under this Section 5(a) shall be subject to the provisions
of Section 10, including but not limited to the provisions of paragraph
(f) thereof.

(b) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period the Company shall have no further
obligations to the Executive’s legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations, (ii) the timely payment or
provision of Other Benefits in accordance with their terms, (iii) payment of the
Pro Rata Bonus, and (iv) vesting, exercisability, and payment of the awards as
described in Sections 3(b)(iii) and 3(b)(iv). Accrued Obligations shall be paid
to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash
within thirty (30) days of the Date of Termination and the Pro Rata Bonus shall
be paid to the Executive’s estate or beneficiary, as applicable, on the date
specified in Section 5(a)(i)(B). In the event of the Executive’s death after his
termination of employment, but prior to the receipt of all amounts to which he
is entitled under this Agreement, all remaining amounts to which he is entitled
shall be paid to his estate or beneficiary, as applicable.

(c) Disability. If the Executive’s employment is terminated by the Company by
reason of the Executive’s Disability during the Employment Period, the Company
shall have no further obligations to the Executive, other than for (i) payment
of Accrued Obligations, (ii) the timely payment or provision of Other Benefits
in accordance with their terms, (iii) payment of the Pro Rata Bonus, and
(iv) vesting, exercisability, and payment of the awards as described in Sections
3(b)(iii) and 3(b)(iv). Accrued Obligations shall be paid to the Executive in a
lump sum in cash on the Date of Termination and the Pro Rata Bonus shall be paid
to the Executive on the date specified in Section 5(a)(i)(B). Notwithstanding
the foregoing or anything else to the contrary in this Agreement, payments under
this Section 5(c) shall be subject to the provisions of Section 10, including
but not limited to the provisions of paragraph (f) thereof.

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated by the Company for Cause or the Executive terminates his employment
without Good Reason during the Employment Period, the Company shall have no
further obligations to the Executive other than the obligation to pay and
provide to the Executive the Accrued Obligations through the Date of Termination
to the extent theretofore unpaid.

(e) Retirement. Notwithstanding anything herein to the contrary, in the event
the Executive terminates employment due to his retirement (i.e., termination of
employment on or after the attainment of age 65), the Executive shall be
entitled to payment of the Pro Rata Bonus in Section 5(a)(i)(B).

6. Full Settlement. The Company’s obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to

 

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pay (within thirty (30) days following the Company’s receipt of an invoice from
the Executive) at any time from the Effective Date through he Executive’s
remaining lifetime, (or, if longer, through the 20th anniversary of the
Effective Date), to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest by
either party (including, as the case may be, the Company, any of its affiliates
or their respective predecessors, successors or assigns, or the Executive, his
estate, beneficiaries or their respective successors and assigns) of the
validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement); plus in each case interest on
any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code, if the Executive prevails on any material
claim made by him, and disputed by the Company under the terms of this
Agreement.

7. Covenants. (a) Introduction. The parties acknowledge that the provisions and
covenants contained in this Section 7 are ancillary and material to this
Agreement and that the limitations contained herein are reasonable in geographic
and temporal scope and do not impose a greater restriction or restraint than is
necessary to protect the goodwill and other legitimate business interests of the
Company. The parties also acknowledge and agree that the provisions of this
Section 7 do not adversely affect the Executive’s ability to earn a living in
any capacity that does not violate the covenants contained herein. The parties
also acknowledge that before Executive shall be determined to have breached any
provision or covenant contained in this Section 7, Executive shall have been
given notice of any such alleged breach and been given forty-five (45) days
after receipt of such notice of such breach to cure or remedy any such breach
that is reasonably susceptible of cure or remedy.

(b) Confidential Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company and all of its subsidiaries, partnerships, joint
ventures, limited liability companies, and other affiliates (collectively, the
“CareFusion Group”), all secret or confidential information, knowledge or data
relating to the CareFusion Group and its businesses (including, without
limitation, any proprietary and not publicly available information concerning
any processes, methods, trade secrets, intellectual property, research secret
data, costs, names of users or purchasers of their respective products or
services, business methods, operating or manufacturing procedures, or programs
or methods of promotion and sale) that the Executive has obtained or obtains
during the Executive’s employment by the CareFusion Group and that is not public
knowledge (other than as a result of the Executive’s violation of this
Section 7(b)) (“Confidential Information”). The Executive shall not communicate,
divulge or disseminate Confidential Information at any time during or after the
Executive’s employment and/or service as a consultant with the CareFusion Group,
except with prior written consent of a corporate officer of Company, or as
otherwise required by law or legal process. All records, files, memoranda,
reports, customer lists, drawings, plans, documents and the like that the
Executive uses, prepares or comes into contact with during the course of the
Executive’s employment shall remain the sole property of the Company and/or the
CareFusion Group, as applicable, and shall be turned over to the applicable
CareFusion Group company upon termination of the Executive’s employment.

 

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(c) Non-Recruitment of CareFusion Group Employees, etc. Executive understands
and agrees that any information regarding Company employees is confidential and
constitutes trade secrets. In recognition of the confidential nature of
information regarding Company employees, Executive agrees that he shall not, at
any time during the Restricted Period (as defined in this Section 7(c)), without
the prior written consent of the Company, engage in the following conduct (a
“Solicitation”): (i) directly or indirectly, contact, solicit, or recruit
(whether as an employee, officer, director, agent, consultant, or independent
contractor) any person who was or is at any time during the previous twelve
months an employee, representative, officer or director of the CareFusion Group
for the purpose of offering them employment by any other entity, business or
individual; or (ii) take any action to encourage or induce any employee,
representative, officer or director of the CareFusion Group to cease their
relationship with the CareFusion Group for any reason. A “Solicitation” does not
include any recruitment of employees within or for the CareFusion Group. The
“Restricted Period” means the period of the Executive’s employment with the
CareFusion Group and the additional period ending on (i) in the event of a
termination of employment prior to the end of the Employment Period, the second
anniversary of the Date of Termination, or (ii) in the event of a termination of
employment on or after the end of the Employment Period, the second anniversary
of the end of the Employment Period.

(d) Non-Solicitation of Business. Executive acknowledges and agrees that
Company’s customers and any information regarding Company’s customers is
confidential and constitutes trade secrets. In recognition of the confidential
and trade secret nature of information regarding Company’s customers, Executive
agrees that during the Restricted Period, the Executive shall not (either
directly or indirectly or as an officer, agent, employee, partner or director of
any other company, partnership or entity) solicit on behalf of any competitor of
the CareFusion Group the business of (i) any customer of the CareFusion Group at
the time of the Executive’s employment or Date of Termination, or (ii) any
potential customer of the CareFusion Group which the Executive knew to be an
identified, prospective purchaser of services or products of the CareFusion
Group.

(e) Employment by Competitor. During the Restricted Period, the Executive shall
not invest in (other than in a publicly traded company with a maximum investment
of no more than 1% of outstanding shares), counsel, advise, or be otherwise
engaged or employed by, any entity or enterprise that competes with the
CareFusion Group, by developing, manufacturing or selling any product or service
of a type, respectively, developed, manufactured or sold by the CareFusion
Group.

 

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(f) No Disparagement.

(i) The Executive and the Company shall at all times refrain from taking actions
or making statements, written or oral, that (A) denigrate, disparage or defame
the goodwill or reputation of Executive or the CareFusion Group, as the case may
be, or any of its trustees, officers, security holders, partners, agents or
former or current employees and directors, or (B) are intended to, or may be
reasonably expected to, adversely affect the morale of the employees of the
CareFusion Group. The Executive further agrees not to make any negative
statement to third parties relating to the Executive’s employment or any aspect
of the businesses of CareFusion Group and not to make any statements to third
parties about the circumstances of the termination of the Executive’s
employment, or about the CareFusion Group or its trustees, directors, officer,
security holders, partners, agents or former or current employees and directors,
except as may be required by a court or government body.

(ii) The Executive further agrees that, following termination of employment for
any reason, the Executive shall assist and cooperate with the Company with
regard to any matter or project in which the Executive was involved during the
Executive’s employment with the Company, including but not limited to any
litigation that may be pending or arise after such termination of employment.
Further, the Executive agrees to notify the Company at the earliest reasonable
opportunity of any contact that is made by any third parties concerning any such
matter or project. The Company shall not unreasonably request such cooperation
of Executive and shall cooperate with the Executive in scheduling any assistance
by the Executive taking into account the Executive’s business and personal
affairs and shall compensate the Executive for any lost wages or expenses
associated with such cooperation and assistance.

(g) Inventions. All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by the Executive, whether alone or jointly with
others, from the date of the Executive’s initial employment by the Company and
continuing until the end of any period during which the Executive is employed by
the CareFusion Group, relating or pertaining in any way to the Executive’s
employment with or the business of the CareFusion Group, shall be promptly
disclosed in writing to the Secretary of the Board and are hereby transferred to
and shall redound to the benefit of the Company and shall become and remain its
sole and exclusive property. The Executive agrees to execute any assignment to
the Company or its nominee, of the Executive’s entire right, title and interest
in and to any such discoveries and improvements and to execute any other
instruments and documents requisite or desirable in applying for and obtaining
patents, trademarks or copyrights, at the expense of the Company, with respect
thereto in the United States and in all foreign countries, that may be required
by the Company. The Executive further agrees, during and after the Employment
Period, to cooperate to the extent and in the manner required by the Company, in
the prosecution or defense of any patent or copyright claims or any litigation,
or other proceeding involving any trade secrets, processes, discoveries or
improvements covered by this Agreement, but all necessary expenses thereof shall
be paid by the Company.

(h) Acknowledgement and Enforcement. The Executive acknowledges and agrees that:
(A) the purpose of the foregoing covenants is to protect the goodwill, trade
secrets and other Confidential Information of the Company; (B) because of the
nature of

 

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the business in which the CareFusion Group is engaged and because of the nature
of the Confidential Information to which the Executive has access, the Company
would suffer irreparable harm and it would be impractical and excessively
difficult to determine the actual damages of the CareFusion Group in the event
the Executive breached any of the covenants of this Section 7; and (C) remedies
at law (such as monetary damages) for any breach of the Executive’s obligations
under this Section 7 would be inadequate. The Executive therefore agrees and
consents that (X) if the Executive commits any breach of a covenant under this
Section 7 during the Restricted Period upon termination of employment at or
after the end of the Employment Period, all unexercised and unpaid Retention
Awards will be immediately forfeited and terminate, and (Y) if the Executive
commits any breach of a covenant under this Section 7 or threatens to commit any
such breach at any time, the Company shall have the right (in addition to, and
not in lieu of, any other right or that may be available to it) to temporary and
permanent injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of proof of actual
damage.

(i) Similar Covenants in Other Agreements Unaffected. The Executive may be or
become subject to covenants contained in other agreements (including but limited
to stock option and restricted stock unit agreements) which are similar to those
contained in this Section 7. Further, a breach of the covenants contained in
this Section 7 may have implications under the terms of such other agreements,
including but not limited to a forfeiture of equity awards and long-term cash
compensation. The Executive acknowledges the foregoing and understands that the
covenants contained in this Section 7 are in addition to, and not in
substitution of, the similar covenants contained in any such other agreements.
The Company agrees that any forfeiture or repayment obligation under any such
agreement shall only be imposed after a determination by the Board of Directors
(after providing the Executive with reasonable notice and an opportunity to be
heard with counsel) that the Executive has violated any such covenant or has
willfully engaged in any other material misconduct which may be a basis for
forfeiture or a repayment obligation thereunder.

8. Certain Additional Payments by the Company. (a) Notwithstanding anything in
this Agreement to the contrary, in the event it shall be determined that any
payment or distribution by the Company or any of its affiliates to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 8) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, but excluding any income taxes and penalties imposed
pursuant to Section 409A, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

 

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(b) Subject to the provisions of Section 8(c), all determinations required to be
made under this Section 8, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm reasonably acceptable to the
Executive as may be designated by the Company (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive or directly to the Internal
Revenue Service, in the sole discretion of the Company, within five days of the
later of (i) the due date for the payment of any Excise Tax, and (ii) the
receipt of the Accounting Firm’s determination; provided, however, that in all
events such payment shall be made no later than the end of the Executive’s
taxable year next following the taxable year in which the Executive remits the
payment of the excise tax. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 20 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company
relating to such claim,

(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and

(iv) permit the Company to participate in any proceedings relating to such
claim;

 

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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either pay the
tax claimed to the appropriate taxing authority on behalf of the Executive and
direct the Executive to sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided, however,
that, if the Company pays such claim and directs the Executive to sue for a
refund, the Company shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of a payment by the Company of an
amount on the Executive’s behalf pursuant to Section 8(a) or 8(c), the Executive
becomes entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company’s complying with the requirements of Section 8(a)
or 8(c)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon and after taxes applicable thereto). If,
after payment by the Company of an amount on the Executive’s behalf pursuant to
Section 8(a) or 8(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then the amount of
such payment shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

9. Successors. (a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive.
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives, heirs or legatees and the Executive by
written notice to the Company may designate any beneficiary with respect to any
amounts due under this Agreement upon the Executive’s death.

(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.

 

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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

10. Code Section 409A. (a) This Agreement is intended to comply with, or
otherwise be exempt from, Section 409A. The Company and the Executive agree that
they will execute any and all amendments to this Agreement permitted under
applicable law as they mutually agree in good faith may be necessary to ensure
compliance with the distribution provisions of Section 409A or as otherwise
needed to ensure that this Agreement complies with Section 409A.

(b) Section 10(a) shall not be construed as a guarantee by the Company of any
particular tax effect to the Executive under this Agreement, however. The
Company shall not be liable to the Executive for any payment made under this
Agreement that is determined to result in an additional tax, penalty, or
interest under Section 409A, nor for reporting in good faith any payment made
under this Agreement as an amount includible in gross income under Section 409A.

(c) For purposes of Section 409A, the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments.

(d) With respect to any reimbursement of expenses of, or any provision of
in-kind benefits to, the Executive as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (1) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the
Code; (2) the reimbursement of an eligible expense shall be made no later than
the end of the year after the year in which such expense was incurred; and
(3) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.

(e) “Termination of employment,” “resignation,” or words of similar import used
in this Agreement mean, for purposes of any payments under this Agreement that
are payments of deferred compensation subject to Section 409A, the Executive’s
“separation from service” (as determined in accordance with regulations
promulgated under Section 409A using the default rule under such regulations)
(“Separation from Service”).

(f) Notwithstanding anything to the contrary in this Agreement, including but
not limited to Sections 5(a), 5(b), 5(c), 5(d) and 6, (i) any amounts and
benefits payable hereunder which constitute deferred compensation subject to
Section 409A and would otherwise be payable or provided to the Executive under
this Agreement prior to the date which is six (6) months after the Executive’s
Separation from Service shall instead be paid, with interest on any delayed
payment at the applicable federal rate provided for in

 

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Section 7872(f)(2)(A) of the Code (“Interest”), or provided on the first
business day after the date that is six (6) months following the Executive’s
Separation from Service, or, if earlier, upon the Executive’s death, and (ii) if
the Executive incurs a Separation from Service prior to his Date of Termination,
the date of his Separation from Service shall be deemed to be his Date of
Termination (or equivalent term) for purposes of determining the date of payment
or the payment commencement date under this Agreement. Notwithstanding clause
(i) of this subparagraph above, if any amount of employment taxes, within the
meaning of regulations promulgated under Section 409A, are payable prior to the
six-month anniversary of the Executive’s Separation from Service, with respect
to any deferred compensation amount, the Company shall utilize and be deemed to
have paid a portion of an such deferred compensation to the extent necessary for
the payment of such employment taxes. If payment of any portion of the
Executive’s restricted stock units is deferred pursuant to the six-month
deferral provision in clause (i) above, then (in lieu of the payment of
Interest) such restricted stock units shall be treated during such six-month
period, and adjusted for investment performance in the same manner, as
outstanding restricted stock units.

11. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws. If, under any such law, any portion of this
Agreement is at any time deemed to be in conflict with any applicable statute,
rule, regulation or ordinance, such portion shall be deemed to be modified or
altered to conform thereto. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement constitutes
the entire and only agreement of the parties with respect to the subject matter
hereof and may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other parties or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:    At the most recent address
on file at the Company; with a copy to    Mr. George L. Damoose    Procopio,
Cory, Hargreaves & Savitch LLP    530 B Street, Suite 2100    San Diego, CA
92101 If to the Company:    CareFusion Corporation    3750 Torrey View Court   
San Diego, California 92130    Attention: General Counsel;

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

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(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with the law.

(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from any amounts payable under this Agreement such Federal, state,
local or foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

(e) The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement,
except as specifically provided in a written consent pursuant to Section 4(c).

(f) Except as otherwise expressly provided herein, from and after the Effective
Time, this Agreement shall supersede any other employment, severance or change
of control agreement between the parties and between the Executive with respect
to the subject matter hereof. Any provision of this Agreement that by its terms
continues after the expiration of the Employment Period or the termination of
the Executive’s employment shall survive in accordance with its terms.

(g) The Executive hereby warrants that the Executive is free to enter into this
Agreement and to perform the services described herein. The Company hereby
warrants that this Agreement and the equity awards provided hereunder have been
duly authorized.

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.

 

/s/ David L. Schlotterbeck

David L. Schlotterbeck Date: August 31, 2009 CAREFUSION CORPORATION By  

/s/ Michael O’Halleran

Name:   Michael O’Halleran Title:   Chair, Human Resources and Compensation
Committee Date:   September 2, 2009

 

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EXHIBIT A

CAREFUSION CORPORATION

RETENTION AWARD AND NONQUALIFIED STOCK OPTION AGREEMENT

On [date of grant] (the “Grant Date”), CareFusion Corporation, a Delaware
corporation (the “Company”), has awarded to David L. Schlotterbeck (“Awardee”),
an option (the “Option”) to purchase [# of shares] shares of common stock, par
value $0.01 per share, of the Company (the “Shares”) for a price of [$X.XX] per
share. The Option has been granted under the CareFusion Corporation 2009
Long-Term Incentive Plan (the “Plan”), and will include and be subject to all
provisions of the Plan, which are incorporated herein by reference, and will be
subject to the provisions of this Nonqualified Stock Option Agreement (this
“Agreement”). Capitalized terms used in this Agreement which are not
specifically defined will have the meanings ascribed to such terms in the Plan.
This Option shall vest and become exercisable in three installments, in which
one-third of the underlying Shares shall vest on each of the third, fourth and
fifth anniversaries of August 31, 2009 (each a “Vesting Date” with respect to
the portion of the Option scheduled to vest on such date), subject in each case
to the provisions of this Agreement, including those relating to the Awardee’s
continued employment with the Company and its Affiliates (collectively, the
“CareFusion Group”). This Option shall expire on [expiration date] (the “Grant
Expiration Date”). Notwithstanding the foregoing or anything in this Agreement
to the contrary, in the event of a Change of Control prior to the Awardee’s
Termination of Employment, the Option shall vest in full and be fully
exercisable until the Grant Expiration Date without regard to the Covenants.

1. Method of Exercise and Payment of Price.

(a) Method of Exercise. At any time when all or a portion of the Option is
exercisable under the Plan and this Agreement, some or all of the exercisable
portion of the Option may be exercised from time to time by written notice to
the Company, or such other method of exercise as may be specified by the
Company, including without limitation, exercise by electronic means on the web
site of the Company’s third-party equity plan administrator, which will:

(i) state the number of whole Shares with respect to which the Option is being
exercised; and

(ii) if the Option is being exercised by anyone other than Awardee, if not
already provided, be accompanied by proof satisfactory to counsel for the
Company of the right of such person or persons to exercise the Option under the
Plan and all Applicable Laws and regulations.

(b) Payment of Price. The full exercise price for the portion of the Option
being exercised shall be paid to the Company as provided below:

(i) in cash;

(ii) by check or wire transfer (denominated in U.S. Dollars);

 

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(iii) subject to any conditions or limitations established by the Administrator,
other Shares which (A) in the case of Shares acquired from the Company (whether
upon the exercise of an Option or otherwise), have been owned by the Participant
for more than six months on the date of surrender (unless this condition is
waived by the Administrator), and (B) have a Fair Market Value on the date of
surrender equal to or greater than the aggregate exercise price of the Shares as
to which said Option shall be exercised (it being agreed that the excess of the
Fair Market Value over the aggregate exercise price shall be refunded to the
Awardee, with any fractional Share being repaid in cash);

(iv) consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Administrator; or

(v) any combination of the foregoing methods of payment.

2. Transferability. The Option shall be transferable (I) at Awardee’s death, by
Awardee by will or pursuant to the laws of descent and distribution, and (II) by
Awardee during Awardee’s lifetime, without payment of consideration, to (a) the
spouse, former spouse, parents, stepparents, grandparents, parents-in-law,
siblings, siblings-in-law, children, stepchildren, children-in-law,
grandchildren, nieces or nephews of Awardee, or any other persons sharing
Awardee’s household (other than tenants or employees) (collectively, “Family
Members”), (b) a trust or trusts for the primary benefit of Awardee or such
Family Members, (c) a foundation in which Awardee or such Family Members control
the management of assets, or (d) a partnership in which Awardee or such Family
Members are the majority or controlling partners; provided, however, that
subsequent transfers of the transferred Option shall be prohibited, except
(X) if the transferee is an individual, at the transferee’s death by the
transferee by will or pursuant to the laws of descent and distribution, and
(Y) without payment of consideration to the individuals or entities listed in
subparagraphs II(a), (b) or (c), above, with respect to the original Awardee.
The Administrator may, in its discretion, permit transfers to other persons and
entities as permitted by the Plan. Neither a transfer under a domestic relations
order in settlement of marital property rights nor a transfer to an entity in
which more than 50% of the voting interests are owned by Awardee or Family
Members in exchange for an interest in that entity shall be considered to be a
transfer for consideration. Within 10 days of any transfer, Awardee shall notify
the Compensation and Benefits department of the Company in writing of the
transfer. Following transfer, the Option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer and,
except as otherwise provided in the Plan or this Agreement, references to the
original Awardee shall be deemed to refer to the transferee. The events of a
Termination of Employment of Awardee provided in Paragraph 3 hereof shall
continue to be applied with respect to the original Awardee, following which the
Option shall be exercisable by the transferee only to the extent, and for the
periods, specified in Paragraph 3. The Company shall have no obligation to
notify any transferee of Awardee’s Termination of Employment with the CareFusion
Group for any reason. The conduct prohibited of Awardee in Paragraphs 5 and 6
hereof shall continue to be prohibited of Awardee following transfer to the same
extent as immediately prior to transfer and the Option (or its economic value,
as applicable) shall be subject to forfeiture by the transferee and recoupment
from Awardee to the same extent as would have been the case of Awardee had the
Option not been transferred. Awardee shall remain subject to the recoupment
provisions of Paragraphs 5 and 6 of this Agreement and tax withholding
provisions of Section 29 of the Plan following transfer of the Option.

 

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3. Termination of Employment; Death, Disability and Retirement.

(a) Death or Disability. If the death or Disability of Awardee occurs prior to
the vesting in full of the Option, then any unvested portion of the Option shall
vest upon and become exercisable in full from and after such death or
Disability. The Option may thereafter be exercised by the Awardee, any
transferee of Awardee, if applicable, or by the legal representative of the
estate or by the legatee of Awardee under the will of Awardee from the date of
such death or Disability until the Grant Expiration Date. For purposes of this
Agreement, “Disability” shall have the meaning ascribed to it in Section 4(a) of
Awardee’s Employment Agreement, by and between Awardee and the Company, dated as
of August 31, 2009 (the “Employment Agreement”).

(b) Termination of Employment by Reason of a Termination without Cause or a
Termination for Good Reason. If, prior to August 31, 2012, Awardee’s employment
with the Company is terminated by the Company without Cause or by Awardee for
Good Reason, then any unvested portion of the Option shall immediately vest in
full and one-third of the Option shall become exercisable on the Date of
Termination (as defined in Section 4(e) of the Employment Agreement); one-third
of the Option shall become exercisable on the first anniversary of the Date of
Termination; and one-third of the Option shall become exercisable on the second
anniversary of the Date of Termination, as described in the Employment Agreement
without regard to the Covenants. For purposes of this Agreement, “Cause” and
“Good Reason” shall have the meanings ascribed to them in Section 4(b) and
Section 4(c), respectively, in the Employment Agreement.

(c) Termination of Employment by Reason of a Termination for Cause. If there is
a Termination of Employment of Awardee by the Company for Cause, then the
Administrator shall immediately cancel the Option, whether or not any portion
thereof had previously vested.

(d) Other Termination of Employment. If, prior to August 31, 2012, a Termination
of Employment of Awardee occurs by any reason other than provided in Paragraphs
(a), (b) and (c) above, any unexercised portion of the Option which has not
vested on such date of Termination of Employment will automatically be
forfeited.

4. Restrictions on Exercise. The Option is subject to all restrictions in this
Agreement and/or in the Plan. As a condition of any exercise of the Option, the
Company may require Awardee or his or her transferee or successor to make any
representation and warranty to comply with any applicable law or regulation or
to confirm any factual matters (including Awardee’s compliance with the terms of
Paragraphs 5 and 6 of this Agreement or any employment or severance agreement
between the CareFusion Group and Awardee) reasonably requested by the Company.
The Option shall not be exercisable if such exercise would involve a violation
of any Applicable Law.

5. Covenants. As used in this Agreement, “Covenants” shall refer to Covenants as
defined in Section 3(b)(iii)(C) of the Employment Agreement.

 

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6. Special Forfeiture/Repayment Rules. During the Restricted Period (as defined
in Section 7(c) of the Employment Agreement), Awardee agrees to comply in full
with the Covenants. Except in the case of (i) a Termination of Employment of
Awardee by the Company without Cause or by Awardee for Good Reason, or (ii) a
Change of Control prior to the Awardee’s Termination of Employment which causes
the Option to vest in full and be fully exercisable until the Grant Expiration
Date without regard to the Covenants as provided in the first paragraph of this
Agreement, if Awardee commits any breach of the Covenants during the Restricted
Period, then the unexercised portion of the Option shall immediately and
automatically terminate and be forfeited as described in Section 7(h) of the
Employment Agreement.

No provisions of this Agreement shall diminish, negate or otherwise impact any
separate noncompete or other agreement (including the Employment Agreement) to
which Awardee may be a party, including, but not limited to, any certificate of
compliance or similar attestation/certification signed by Awardee. Awardee
acknowledges and agrees that the restrictions contained in this Agreement are
being made for the benefit of the Company in consideration of Awardee’s receipt
of the Option, 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 Option and execution of this Agreement are voluntary actions on the part of
Awardee and that the Company is unwilling to provide the Option 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 Paragraphs 5 and 6 are ancillary to, or part of, an otherwise
enforceable agreement at the time the agreement is made.

7. Right of Set-Off. By accepting this Option, Awardee consents to a deduction
from, and set-off against, any amounts owed to Awardee that are not treated as
“non-qualified deferred compensation” under Section 409A of the Code by any
member of the CareFusion Group from time to time (including, but not limited to,
amounts owed to Awardee as wages, severance payments or other fringe benefits)
to the extent of the amounts owed to the CareFusion Group by Awardee under this
Agreement.

8. Withholding Tax.

(a) Generally. Awardee is liable and responsible for all taxes owed in
connection with the exercise of the Option, regardless of any action the Company
takes with respect to any tax withholding obligations that arise in connection
with the Option. The Company does not make any representation or undertaking
regarding the tax treatment or the treatment of any tax withholding in
connection with the exercise of the Option. The Company does not commit and is
under no obligation to structure the Option or the exercise of the Option to
reduce or eliminate Awardee’s tax liability.

(b) Payment of Withholding Taxes. Concurrently with the payment of the exercise
price pursuant to Paragraph 1 hereof, Awardee is required to arrange for the
satisfaction of the minimum amount of any domestic or foreign tax withholding
obligation, whether national, federal, state or local, including any employment
tax obligation (the “Tax Withholding Obligation”) in a manner acceptable to the
Company, including withholding such amounts in cash from the Awardee’s wages or
other payments due to the

 

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Awardee at any time, or, in lieu thereof, to retain, or sell without notice, a
number of Shares sufficient to cover the Tax Withholding Obligation. The value
of any Shares retained for such purposes shall be based on the Fair Market
Value, as the term is defined in the Plan, of the Shares on the date of exercise
of the Option. To the extent that the Company or its Affiliate withholds any
amounts in Shares to cover the Tax Withholding Obligation, it will do so at the
minimum statutory rate. Should the Company or the Affiliate withhold any amounts
in cash or retains any Shares in excess of Awardee’s actual Tax Withholding
Obligation, the Company and/or Awardee’s employer will refund the excess amount
to the Awardee, with any fractional Share being repaid in cash, within a
reasonable period and without any interest. The Awardee authorizes the Company
or the Affiliate, or their agents (including, without limitations, any broker or
bank) to withhold cash or Shares as appropriate. Awardee agrees to pay the
Company and/or the Affiliate employing Awardee any amount of the Tax Withholding
Obligation that is not satisfied by the means described herein.

If any of the foregoing methods of collection are not allowed under Applicable
Law or if Awardee fails to comply with his or her obligations in connection with
the Tax Withholding Obligation as described in this section, the Company may
refuse to honor the exercise and refuse to deliver the Shares.

Awardee is liable and responsible for all taxes and social security owed in
connection with the Option, regardless of any action the Company takes with
respect to any Tax Withholding Obligations that arise in connection with the
Option. The Company does not make any representation or undertaking regarding
the tax and social security treatment or the treatment of any withholding in
connection with the exercise of the Option. The Company does not commit and is
under no obligation to structure the Option or the exercise of the Option to
reduce or eliminate Awardee’s tax liability.

9. Governing Law/Venue for Dispute Resolution/Costs and Legal Fees. This
Agreement shall be governed by the laws of the State of Delaware, without regard
to principles of conflicts of law, except to the extent superceded by the laws
of the United States of America. The parties agree and acknowledge that the laws
of the State of Delaware bear a substantial relationship to the parties and/or
this Agreement and that the Option and benefits granted herein would not be
granted without the governance of this Agreement by the laws of the State of
Delaware. In addition, all legal actions or proceedings relating to this
Agreement shall be brought exclusively in state or federal courts located in the
State of Delaware and the parties executing this Agreement hereby consent to the
personal jurisdiction of such courts. Awardee acknowledges that the covenants
contained in Paragraphs 5 and 6 of this Agreement are reasonable in nature, are
fundamental for the protection of the Company’s legitimate business and
proprietary interests, 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. In the event of any violation or attempted violations of
the restrictions and covenants of Awardee contained in this Agreement, the
CareFusion 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

 

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Awardee hereby waives any requirement for the securing or posting of any bond in
connection with such remedy, without prejudice to any other rights and remedies
afforded the CareFusion Group hereunder or by law. In the event that it becomes
necessary for the CareFusion 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.
Any provision of this Agreement which is determined by a court of competent
jurisdiction to be invalid or unenforceable should be construed or limited in a
manner that is valid and enforceable and that comes closest to the business
objectives intended by such provision, without invalidating or rendering
unenforceable the remaining provisions of this Agreement.

10. 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 CareFusion
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 breach of the Covenants, shall be final and binding unless such
decision is arbitrary and capricious.

11. Prompt Acceptance of Agreement. The Option 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.

12. Electronic Delivery and Consent to Electronic Participation. The Company
may, in its sole discretion, decide to deliver any documents related to the
Option grant under and participation in the Plan or future options that may be
granted under 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
option grants and the execution of option Agreements through electronic
signature.

13. 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:

CareFusion Corporation

3750 Torrey View Court

San Diego, CA 92130

Attention: General Counsel

Facsimile: 858-617-2300

 

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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 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.

14. Employment Agreement. To the extent the Employment Agreement provides for
greater benefits to Awardee with respect to (i) the vesting of the Option,
(ii) the exercisability of the Option or (iii) the price of the Option than
provided in this Agreement or in the Plan, then the terms of the Employment
Arrangement, with respect to the vesting of the Option, the exercisability of
the Option or the price of the Option, shall supersede the terms hereof to the
extent permitted by the terms of the Plan.

 

CAREFUSION CORPORATION By:  

 

Its:  

 

 

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ACCEPTANCE OF AGREEMENT

Awardee hereby: (a) acknowledges receiving a copy of the Plan, which has either
been previously delivered or is provided with this Agreement, and represents
that he is familiar with and understands all provisions of the Plan and this
Agreement; (b) voluntarily and knowingly accepts this Agreement and the Option
granted to him under this Agreement subject to all provisions of the Plan and
this Agreement, including the provisions in the Agreement regarding the
“Covenants” and “Special Forfeiture/Repayment Rules” set forth in Paragraphs 5
and 6 above; (c) acknowledges previously accepting, and voluntarily and
knowingly accepts, the terms of the equity awards of the Company and/or Cardinal
Health, Inc. that Awardee received in connection with the spin-off of the
Company from Cardinal Health, Inc., subject to all the provisions of the
applicable equity incentive plan(s) under which the award(s) was granted; and
(d) represents that he 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. Awardee further
acknowledges receiving a copy of the Company’s most recent annual report to
stockholders and other communications routinely distributed to the Company’s
stockholders and a copy of the Plan Prospectus dated [date of Plan Prospectus]
pertaining to the Plan.

 

 

Awardee’s Signature

 

Date

 

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EXHIBIT B

CAREFUSION CORPORATION

RETENTION AWARD AND RESTRICTED STOCK UNITS AGREEMENT

On [grant date] (the “Grant Date”), CareFusion Corporation, a Delaware
corporation (the “Company”), has awarded to David L. Schlotterbeck (“Awardee”)
[# of shares] Restricted Stock Units (the “Restricted Stock Units” or “Award”),
representing an unfunded unsecured promise of the Company to deliver shares of
common stock, par value $0.01 per share, of the Company (the “Shares”) to
Awardee as set forth herein. The Restricted Stock Units have been granted
pursuant to the CareFusion Corporation 2009 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 Stock Units Agreement (this “Agreement”). Capitalized terms used in
this Agreement which are not specifically defined will have the meanings
ascribed to such terms in the Plan.

1. Vesting. The Restricted Stock Units shall vest in three installments, in
which one-third of the Restricted Stock Units shall vest on each of the third,
fourth and fifth anniversaries of August 31, 2009 (each a “Vesting Date” with
respect to the portion of the Restricted Stock Units scheduled to vest on such
date), subject in each case to the provisions of this Agreement, including those
relating to the Awardee’s continued employment with the Company and its
Affiliates (collectively, the “CareFusion Group”). Notwithstanding the foregoing
or anything in this Agreement to the contrary, in the event of a Change of
Control prior to the Awardee’s Termination of Employment, the Restricted Stock
Units shall vest in full without regard to the Covenants.

2. Transferability. The Restricted Stock Units shall not be transferable.

3. Termination of Employment; Death, Disability and Retirement.

(a) General. Except as set forth below, if a Termination of Employment of
Awardee occurs prior to August 31, 2012, any unvested portion of such Restricted
Stock Units shall be forfeited by Awardee.

(b) Death or Disability. If the death or Disability of Awardee occurs prior to
the vesting in full of the Restricted Stock Units then any unvested Restricted
Stock Units shall immediately vest in full and shall not be forfeited. For
purposes of this Agreement, “Disability” shall have the meaning ascribed to it
in Section 4(a) of Awardee’s Employment Agreement, by and between Awardee and
the Company, dated as of August 31, 2009 (the “Employment Agreement”).

(c) Termination of Employment by Reason of a Termination without Cause or a
Termination for Good Reason. If, prior to August 31, 2012, Awardee’s employment
with the Company is terminated by the Company without Cause or by Awardee for
Good Reason, then any unvested Restricted Stock Units shall immediately vest in
full and shall not be forfeited, and Awardee shall receive the Shares in
accordance with the provisions of Paragraph 6(b). For purposes of this
Agreement, “Cause” and “Good Reason” shall have the meanings ascribed to them in
Section 4(b) and Section 4(c), respectively, in the Employment Agreement.

 

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(d) Termination of Employment by Reason of a Termination for Cause. If there is
a Termination of Employment of Awardee by the Company for Cause, then Awardee
shall forfeit all Restricted Stock Units, whether vested or unvested.

4. Covenants. As used in this Agreement, “Covenants” shall refer only to
Covenants as defined in Section 3(b)(iii)(C) of the Employment Agreement.

5. Special Forfeiture/Repayment Rules. During the Restricted Period (as defined
in Section 7(c) of the Employment Agreement), Awardee agrees to comply in full
with the Covenants. Except in the case of a Termination of Employment of Awardee
by the Company without Cause or by Awardee for Good Reason, if Awardee commits
any breach of the Covenants during the Restricted Period, then all unpaid
Restricted Stock Units shall immediately and automatically terminate and be
forfeited as described in Section 7(h) of the Employment Agreement,.

No provisions of this Agreement shall diminish, negate or otherwise impact any
separate noncompete or other agreement (including the Employment Agreement) to
which Awardee may be a party, including, but not limited to, any certificate of
compliance or similar attestation/certification signed by Awardee. Awardee
acknowledges and agrees that the restrictions contained in this Agreement are
being made for the benefit of the Company in consideration of Awardee’s receipt
of the Restricted Stock 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 Stock Units and execution of this Agreement
are voluntary actions on the part of Awardee and that the Company is unwilling
to provide the Restricted Stock 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 Paragraphs 4 and
5 are ancillary to, or part of, an otherwise enforceable agreement at the time
the agreement is made.

6. Payment. (a) Subject to the provisions of Paragraphs 4 and 5 of this
Agreement and Paragraphs (b), (c), (d) and (e) below, and unless Awardee makes
an effective election to defer receipt of the Shares represented by the
Restricted Stock Units, on the date of vesting of any Restricted Stock Unit,
Awardee shall be entitled to receive from the Company (without any payment on
behalf of Awardee other than as described in Paragraph 10) the Shares
represented by such Restricted Stock Unit within 30 days of such date. 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.

(b) Termination by the Company without Cause or by Awardee for Good Reason.
Notwithstanding anything herein to the contrary, in the event that such
Restricted Stock Units vest prior to the Vesting Date(s) set forth in Paragraph
1 as a result of a Termination of Employment of Awardee by the Company without
Cause or by Awardee for Good Reason, Awardee shall receive

 

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one-third of the corresponding Shares on the Date of Termination (as defined in
Section 4(e) of the Employment Agreement); one-third of the corresponding Shares
on the first anniversary of the Date of Termination; and one-third of the
corresponding Shares on the second anniversary of the Date of Termination, as
described in the Employment Agreement without regard to the Covenants.

(c) Death. Notwithstanding anything herein to the contrary, in the event that
such Restricted Stock Units vest prior to the Vesting Date(s) set forth in
Paragraph 1 as a result of Awardee’s death, Awardee’s estate shall be entitled
to receive the corresponding Shares from the Company on the date of such
vesting.

(d) Disability. Notwithstanding anything herein to the contrary, in the event
that such Restricted Stock Units vest prior to the Vesting Date(s) set forth in
Paragraph 1 as a result of the Disability of Awardee, Awardee shall be entitled
to receive the corresponding Shares from the Company on the date of such
vesting; provided, however, that where Section 409A of the Code applies to such
distribution and Awardee is a “specified employee” (determined in accordance
with Section 409A of the Code), Awardee shall be entitled to receive the
corresponding Shares from the Company on the date that is the first day of the
seventh month after Awardee’s “separation from service” with the Company
(determined in accordance with Section 409A of the Code).

(e) Change of Control. Notwithstanding anything herein to the contrary, in the
event that such Restricted Stock Units vest prior to the Vesting Date(s) set
forth in Paragraph 1 as a result of the occurrence of a Change of Control,
Awardee shall be entitled to receive the corresponding Shares from the Company
on the date of such vesting; provided, however, that if the Change of Control
occurs under circumstances that would not qualify as a permissible date of
distribution under Section 409A(a)(2)(A) of the Code and the regulations
thereunder, then Awardee shall be entitled to receive the corresponding Shares
from the Company on the Vesting Date(s) that would have otherwise applied
pursuant to Paragraph 1.

7. Dividend Equivalents. Awardee shall not be entitled to receive any cash
dividends on the Restricted Stock Units. However, to the extent the Company
determines to pay a cash dividend to holders of the Common Stock, an Awardee
shall, with respect to each Restricted Stock Unit, be entitled to 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 settlement of such unit
pursuant to Paragraph 6 hereof, such cash payment to be in an amount equal to
the dividend that would have been paid on the Common Stock represented by such
unit. Cash payments on each cash dividend payment date with respect to the
Shares with a record date prior to a Vesting Date shall be accrued until the
Vesting Date and paid thereon (subject to the same vesting requirements as the
underlying Restricted Stock Units award). Elections to defer receipt of the cash
payments in lieu of cash dividends beyond the date of settlement provided herein
may be permitted in the discretion of the Committee pursuant to procedures
established by the Company in compliance with the requirements of Section 409A
of the Code.

8. Right of Set-Off. By accepting these Restricted Stock Units, Awardee consents
to a deduction from, and set-off against, any amounts owed to Awardee that are
not treated as “non-qualified deferred compensation” under Section 409A of the
Code by any member of the CareFusion Group from time to time (including, but not
limited to, amounts owed to Awardee as wages, severance payments or other fringe
benefits) to the extent of the amounts owed to the CareFusion Group by Awardee
under this Agreement.

 

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9. No Stockholder Rights. Awardee shall have no rights of a stockholder with
respect to the Restricted Stock Units, including, without limitation, any right
to vote the Shares represented by the Restricted Stock Units.

10. Withholding Tax.

(a) Generally. Awardee is liable and responsible for all taxes owed in
connection with the Restricted Stock Units (including taxes owed with respect to
any cash payments described in Paragraph 7 hereof), regardless of any action the
Company takes with respect to any tax withholding obligations that arise in
connection with the Restricted Stock Units. The Company does not make any
representation or undertaking regarding the tax treatment or the treatment of
any tax withholding in connection with the grant or vesting of the Restricted
Stock Units or the subsequent sale of Shares issuable upon settlement of the
Restricted Stock Units. The Company does not commit and is under no obligation
to structure the Restricted Stock Units to reduce or eliminate Awardee’s tax
liability.

(b) Payment of Withholding Taxes. Prior to any event in connection with the
Restricted Stock Units (e.g., vesting or settlement) that the Company determines
may result in any domestic or foreign tax withholding obligation, whether
national, federal, state or local, including any employment tax obligation (the
“Tax Withholding Obligation”), Awardee is required to arrange for the
satisfaction of the minimum amount of such Tax Withholding Obligation in a
manner acceptable to the Company. Unless Awardee elects to satisfy the Tax
Withholding Obligation by an alternative means that is then permitted by the
Company, Awardee’s acceptance of this Agreement constitutes Awardee’s
instruction and authorization to the Company to retain on Awardee’s behalf the
number of Shares from those Shares issuable to Awardee under this Award as the
Company determines to be sufficient to satisfy the Tax Withholding Obligation as
owed when any such obligation comes due. The value of any Shares retained for
such purposes shall be based on the Fair Market Value, as the term is defined in
the Plan, of the Shares on the date of vesting of the Restricted Stock Units. To
the extent that the Company retains any Shares to cover the Tax Withholding
Obligation, it will do so at the minimum statutory rate, but in no event shall
such amount 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 7 hereof the amount of any taxes which the Company is required to
withhold with respect to such payments.

11. Governing Law/Venue for Dispute Resolution/Costs and Legal Fees. This
Agreement shall be governed by the laws of the State of Delaware, without regard
to principles of conflicts of law, except to the extent superceded by the laws
of the United States of America. The parties agree and acknowledge that the laws
of the State of Delaware bear a substantial relationship to the parties and/or
this Agreement and that the Restricted Stock Units and benefits granted herein
would not be granted without the governance of this Agreement by the laws of the
State of Delaware. In addition, all legal actions or proceedings relating to
this Agreement shall be brought exclusively in state or federal courts located
in the State of Delaware and the parties executing this Agreement hereby consent
to the personal jurisdiction of such courts. Awardee acknowledges that the
covenants

 

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contained in Paragraphs 4 and 5 of this Agreement are reasonable in nature, are
fundamental for the protection of the Company’s legitimate business and
proprietary interests, 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. In the event of any violation or attempted violations of
the restrictions and covenants of Awardee contained in this Agreement, the
CareFusion 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 any other rights and remedies afforded
the CareFusion Group hereunder or by law. In the event that it becomes necessary
for the CareFusion 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. Any provision of
this Agreement which is determined by a court of competent jurisdiction to be
invalid or unenforceable should be construed or limited in a manner that is
valid and enforceable and that comes closest to the business objectives intended
by such provision, without invalidating or rendering unenforceable the remaining
provisions of this Agreement.

12. 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 CareFusion
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 breach of the Covenants, shall be final and binding unless such
decision is arbitrary and capricious.

13. Prompt Acceptance of Agreement. The Restricted Stock 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.

14. Electronic Delivery and Consent to Electronic Participation. The Company
may, in its sole discretion, decide to deliver any documents related to the
Restricted Stock Unit grant under and participation in the Plan or future
Restricted Stock Units that may be granted under 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 Stock Unit grants and the execution of
Restricted Stock Unit agreements through electronic signature.

 

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15. 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:

CareFusion Corporation

3750 Torrey View Court

San Diego, CA 92130

Attention: General Counsel

Facsimile: 858-617-2300

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 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.

16. Employment Agreement. To the extent the Employment Agreement provides for
greater benefits to Awardee with respect to (i) the vesting of the Award or
(ii) the payment of the Award than provided in this agreement or in the Plan,
then the terms of the Employment Agreement, with respect to the vesting of the
Award or the price of the Award, shall supersede the terms hereof to the extent
permitted by the terms of the Plan.

 

CAREFUSION CORPORATION By:  

 

Its:  

 

 

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ACCEPTANCE OF AGREEMENT

Awardee hereby: (a) acknowledges receiving a copy of the Plan, which has either
been previously delivered or is provided with this agreement, and represents
that he is familiar with and understands all provisions of the Plan and this
agreement; (b) voluntarily and knowingly accepts this Agreement and the
Restricted Stock Units granted to him under this Agreement subject to all
provisions of the Plan and this Agreement, including the provisions in the
Agreement regarding the “Covenants” and “Special Forfeiture/Repayment Rules” set
forth in Paragraphs 4 and 5 above; (c) acknowledges previously accepting, and
voluntarily and knowingly accepts, the terms of the equity awards of the Company
and/or Cardinal Health, Inc. that Awardee received in connection with the
spin-off of the Company from Cardinal Health, Inc., subject to all the
provisions of the applicable equity incentive plan(s) under which the award(s)
was granted; and (d) represents that he 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. Awardee
further acknowledges receiving a copy of the Company’s most recent annual report
to stockholders and other communications routinely distributed to the Company’s
stockholders and a copy of the Plan Prospectus dated [date of Plan Prospectus]
pertaining to the Plan.

 

 

Awardee’s Signature

 

Date

 

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EXHIBIT C – INDEMNIFICATION AGREEMENT

Filed as Exhibit 10.5 to CareFusion Corporation Form 10 filed on June 26, 2009

At the following link:

http://sec.gov/Archives/edgar/data/1457543/000095012309017766/l35932a3exv10w5.htm

 

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EXHIBIT D – RELEASE AGREEMENT

RELEASE AGREEMENT

This RELEASE AGREEMENT by and between CareFusion Corporation (the “Company”) and
David L. Schlotterbeck (the “Executive”) is dated as of the      day of
        ,          (the “Release”).

Release

Executive hereby releases the Company and any of its predecessors, successors or
assigns to all or any part of its businesses (“CareFusion”) by execution of this
Release from any and all claims and causes of action that may exist, whether
known or unknown, as of the date of Executive’s execution of this Release with
the exception of any unemployment compensation claim Executive may have and any
other claims that cannot be waived by law. Executive agrees that this Release
applies to all officers, directors, employees and other representatives of
CareFusion and its affiliates and any of its predecessors, successors or assigns
to all or any part of its businesses including the Company, both individually
and in their respective capacities (collectively with CareFusion, “the
Releasees”). This Release relates to all causes of action to the extent
permitted by law, including, but not limited to, claims under CareFusion’s
policies or practices; federal and state fair employment practices or
discrimination laws; laws pertaining to breach of employment contract or
wrongful termination; age discrimination claims under the Age Discrimination and
Employment Act, 29 U.S.C. Section 621 et seq., the Uniformed Services Employment
and Reemployment Rights Act, 38 U.S.C. Section 4301 et seq.; the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et seq. and
any applicable state laws of similar intent.

In addition, Executive agrees that Executive will not initiate, bring, or
prosecute any suit, action or grievance against any of the Releasees for any
released claim in any federal, state, county or municipal court, or any arbitral
forum, except as specifically stated below. Executive further agree that if
Executive does so, Executive will be liable for the payment of all damages and
costs, including attorneys’ fees, incurred by any of the Releasees in connection
with Executive’s suit, action, or grievance. Executive also waives any right to
any relief sought in connection with such claims, including any right to
damages, attorneys’ fees, costs, and all other legal or equitable relief.

This Release and agreement not to sue does not prohibit Executive from pursuing
a lawsuit, claim, or charge to challenge the validity or enforceability of this
Release under the Age Discrimination in Employment Act (“ADEA”) or the Older
Workers Benefit Protection Act (“OWBPA”), nor does it render Executive liable
for damages or costs, including attorneys’ fees, incurred by the Releasees in
connection with a lawsuit, claim, or charge to challenge the validity or
enforceability of this Release under the ADEA or the OWBPA. This Release and
agreement not to sue also does not prohibit the Executive from filing charges
with government agencies or participating in any investigation resulting from
such charges. However, under this Release, Executive agrees not to accept any
monetary or personal relief or remedy, including but not limited to back pay,
front pay, or reinstatement, that may be awarded to Executive in connection with
such charges. In addition, this general release is not intended to bar any
claims for workers’ compensation benefits.

 

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This Release does not apply to any claims arising after Executive’s execution of
this Release or any claims relating to rights under the Employment Agreement by
and between CareFusion Corporation, a Delaware corporation, and the Executive,
dated as of the      day of July 2009, as may be amended from time to time.

Complete Release

Executive also expressly agrees that Executive has read, understands, and
intends to waive any and all rights or benefits described in Section 1542 of the
California Civil Code, which provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

Thus, notwithstanding the provisions of Section 1542, and for the express
purpose of implementing a full and complete release and discharge of CareFusion
and any of its predecessors, successors or assigns to all or any part of its
businesses, Executive expressly acknowledge that this Release is intended to
include within its effect, without limitation, all claims Executive does not
know or suspect to exist in Executive’s favor at the time of execution of this
Release, and this Release contemplates the extinguishment of any such claim(s).

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the
Company has caused this Release to be executed in its name on its behalf, all as
of the day and year first above written.

 

 

David L. Schlotterbeck Date:   CAREFUSION CORPORATION By  

 

Name:   Title:   Chair, Human Resources and Compensation Committee Date:  

 

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