Exhibit 10.5

CARDINAL HEALTH, INC.

DIRECTORS’ STOCK OPTION AGREEMENT

UNDER THE

2007 NONEMPLOYEE DIRECTORS EQUITY INCENTIVE PLAN

This agreement is entered into in Franklin County, Ohio. On [date of grant] (the
“Grant Date”), Cardinal Health, Inc., an Ohio corporation (the “Company”), has
awarded to [Director name] (“Awardee”), an option (the “Option”) to purchase [#
of shares] common shares, without par value, of the Company (the “Shares”) for a
price of $[X.XX] per share. The Option has been granted pursuant to the Cardinal
Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (the “Plan”), and
shall include and be subject to all provisions of the Plan, which are
incorporated herein by reference, and shall be subject to the following
provisions of this agreement. Capitalized terms used in this agreement which are
not specifically defined shall have the meanings ascribed to such terms in the
Plan. [INITIAL GRANT: This Option shall vest and become exercisable on the first
anniversary of the Grant Date (the “Vesting Date”), subject to the provisions of
this agreement, including those relating to the Awardee’s continued service on
the Company’s Board of Directors (the “Board”).] [ANNUAL GRANT: This Option
shall vest and become exercisable on the first anniversary of the Grant Date,
except that if the [year] Annual Meeting of Shareholders is prior to the first
anniversary of the Grant Date, then the Option shall vest on the date of the
[year] Annual Meeting of Shareholders (in either event, the “Vesting Date”),
subject to the provisions of this agreement, including those relating to the
Awardee’s continued service on the Company’s Board of Directors (the “Board”).]
Notwithstanding the foregoing, in the event of a Change of Control prior to
Awardee’s termination of service on the Board, the Option shall vest in full.
This Option shall expire on [date of expiration] (the “Grant Expiration Date”).

1. Method of Exercise and Payment of Price.

(a) Method of Exercise. At any time when all or a portion 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 shall:

(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 the 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 Exercise 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);

(iii) subject to any conditions or limitations established by the Committee,
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 Awardee for
more than six months on the date of surrender (unless this condition is waived
by the Committee), 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 Committee; or

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

2. Transferability. The Option shall be transferable (I) at the Awardee’s death,
by the Awardee by will or pursuant to the laws of descent and distribution, and
(II) by the Awardee during the 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 the Awardee, or any other
persons sharing the Awardee’s household (other than tenants or employees)
(collectively, “Family Members”), (b) a trust or trusts for the primary benefit
of the Awardee or such Family Members, (c) a foundation in which the Awardee or
such Family Members control the management of assets, or (d) a partnership in
which the 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 Committee 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 fifty percent (50%) of the voting interests are
owned by the Awardee or Family Members in exchange for an interest in that
entity shall be considered to be a transfer for consideration. Within ten days
of any transfer, the Awardee shall notify the Committee 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
Awardee’s termination of service on the Board 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 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 the Awardee to the same extent as would have been
the case of the Awardee had the Option not been transferred. The Company shall
have no obligation to notify any transferee of the Option of the Awardee’s
termination of service on the Board for any reason. The Awardee shall remain
subject to the recoupment provisions of paragraphs 5 and 6 of this agreement
following transfer of the Option.

3. Termination of Service on the Board.

(a) Termination of Service by Death. If the Awardee ceases to be a member of the
Board by reason of death, any unvested portion of the Option shall vest upon and
become exercisable in full from and after such death. The Option may thereafter
be exercised by any transferee of Awardee, if applicable, or by the legal
representative of the estate or by the legatee of Awardee under the will of
Awardee until the Grant Expiration Date.

(b) Other Termination of Service. If the Awardee ceases to be a member of the
Board for any reason other than death, any unexercised portion of the Option
which has not vested on such date of termination of service on the Board shall
automatically terminate on the date of such termination of

 

2

--------------------------------------------------------------------------------

service. Any unexercised portion of the Option which otherwise is exercisable by
the Awardee (or any transferee) shall remain exercisable until the Grant
Expiration Date; provided, however, that upon the removal of the Awardee as a
Director of the Company for cause, other than upon or after a Change of Control,
the Option (whether then held by Awardee or any transferee) shall immediately
lapse and be of no further force or effect.

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 the 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) reasonably requested by the Company.
The Option shall not be exercisable if such exercise would involve a violation
of applicable law.

5. Triggering Conduct/Competitor Triggering Conduct. As used in this agreement,
“Triggering Conduct” shall include (i) disclosing or using in any capacity other
than as necessary in the performance of duties as a Director of the Company any
confidential information, trade secrets or other business sensitive information
or material concerning the Company or its subsidiaries (collectively, the
“Cardinal Group”); (ii) violation of Company policies, including but not limited
to conduct which would constitute a breach of any certificate of compliance or
similar attestation/certification signed by Awardee; (iii) directly or
indirectly employing, contacting concerning employment, or participating in any
way in the recruitment for employment of (whether as an employee, officer,
director, agent, consultant or independent contractor), any person who was or is
an employee, representative, officer, or director of any entity in the Cardinal
Group at any time within the twelve (12) months prior to the termination of
service on the Board; (iv) any action by Awardee and/or Awardee’s
representatives that either does or could reasonably be expected to undermine,
diminish or otherwise damage the relationship between the Cardinal Group and any
of its customers, potential customers, vendors and/or suppliers that were known
to Awardee; and (v) breaching any provision of any benefit or severance
agreement with a member of the Cardinal Group. As used herein, “Competitor
Triggering Conduct” shall include, either during Awardee’s service as a Director
or within one year following Awardee’s termination of service on the Board,
accepting employment with or serving as a consultant, advisor, or any other
capacity to an entity that is in competition with the business conducted by any
member of the Cardinal Group (a “Competitor”) including, but not limited to,
employment or another business relationship with any Competitor if Awardee has
been introduced to trade secrets, confidential information or business sensitive
information during Awardee’s service as a Director of the Company and such
information would aid the Competitor because the threat of disclosure of such
information is so great that, for purposes of this agreement, it must be assumed
that such disclosure would occur. For purposes of this agreement, the nature and
extent of Awardee’s activities, if any, disclosed to and reviewed by the Audit
Committee or Nominating and Governance Committee of the Board (each, the
“Specified Committee”) prior to the date of Awardee’s termination of service on
the Board shall not, unless specified to the contrary by the Specified Committee
in a written notice given to Awardee, be deemed to be Competitor Triggering
Conduct. The Committee shall resolve in good faith any disputes concerning
whether particular conduct constitutes Triggering Conduct or Competitor
Triggering Conduct, and any such determination by the Committee shall be
conclusive and binding on all interested persons.

6. Special Forfeiture/Repayment Rules. For so long as Awardee continues as a
Director of the Company and for three years following Awardee’s termination of
service on the Board regardless of the reason, Awardee agrees not to engage in
Triggering Conduct. If Awardee engages in Triggering Conduct during the time
period set forth in the preceding sentence or in Competitor Triggering Conduct
during the time period referenced in the definition of Competitor Triggering
Conduct set forth in paragraph 5 above, then:

 

3

--------------------------------------------------------------------------------

(a) the Option (or any part thereof that has not been exercised) shall
immediately and automatically terminate, be forfeited, and shall cease to be
exercisable at any time; and

(b) the Awardee shall, within 30 days following written notice from the Company,
pay to the Company an amount equal to the gross option gain realized or obtained
by the Awardee or any transferee resulting from the exercise of such Option,
measured at the date of exercise (i.e., the difference between the market value
of the Shares underlying the Option on the exercise date and the exercise price
paid for such Shares underlying the Option), with respect to any portion of the
Option that has already been exercised at any time within three years prior to
the Triggering Conduct (the “Look-Back Period”), less $1.00. If Awardee engages
only in Competitor Triggering Conduct, then the Look-Back Period shall be
shortened to exclude any period more than one year prior to Awardee’s
termination of service on the Board, but including any period between the time
of Awardee’s termination of service on the Board and the time Awardee engaged in
Competitor Triggering Conduct. The Awardee may be released from Awardee’s
obligations under this paragraph 6 only if the Committee (or its duly appointed
designee) determines, in writing and in its sole discretion, that such action is
in the best interests of the Company. Nothing in this paragraph 6 constitutes a
so-called “noncompete” covenant. However, this paragraph 6 does prohibit certain
conduct while Awardee is associated with the Cardinal Group and thereafter and
does provide for the forfeiture or repayment of the benefits granted by this
agreement under certain circumstances, including but not limited to the
Awardee’s acceptance of employment with a Competitor. Awardee agrees to provide
the Company with at least ten (10) days written notice prior to directly or
indirectly accepting employment with or serving as a consultant, advisor, or in
any other capacity to a Competitor, and further agrees to inform any such new
employer, before accepting employment, of the terms of this paragraph 6 and of
the Awardee’s continuing obligations contained herein. No provision of this
agreement shall diminish, negate, or otherwise impact any separate noncompete or
other agreement to which Awardee may be a party, including but not limited to
any certificate of compliance or similar attestation/certification signed by
Awardee; provided, however, that to the extent that any provisions contained in
any other agreement are inconsistent in any manner with the restrictions and
covenants of Awardee contained in this agreement, the provisions of this
agreement shall take precedence and such other inconsistent provisions shall be
null and void. Awardee acknowledges and agrees that the provisions contained in
this paragraph 6 are being made for the benefit of the Company in consideration
of Awardee’s receipt of the Option, 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 this
paragraph 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, the Awardee consents to a
deduction from and set-off against any amounts owed to the Awardee by any member
of the Cardinal Group from time to time (including but not limited to amounts
owed to the Awardee as Director annual retainer fees, meeting fees or fringe
benefits) to the extent of the amounts owed to the Company by the Awardee under
this agreement.

8. Holding Period Requirement. As a condition to receipt of the Option, Awardee
hereby agrees to hold his or her After-Tax Net Profit in Shares until the first
anniversary of the exercise of all or a portion of the Option (or, if earlier,
the date of Awardee’s termination of service on the Board). “After-Tax Net
Profit” means the total dollar value of the Shares that Awardee elects to
exercise under this Option at the time of exercise, minus the total of (i) the
exercise price to purchase these Shares, and (ii) the amount of all applicable
federal, state, local or foreign income or other taxes that are expected to be

 

4

--------------------------------------------------------------------------------

incurred in connection with the exercise, determined based upon the highest
applicable marginal rate for each such tax.

9. Governing Law/Venue for Dispute Resoliton/Costs and Legal Fees. This
agreement shall be governed by the laws of the State of Ohio, without regard to
principles of conflicts of law, except to the extent superceded by the laws of
the United States of America. The parties agree and acknowledge that the laws of
the State of Ohio bear a substantial relationship to the parties and/or this
agreement and that the Option and benefits granted herein would not be granted
without the governance of this agreement by the laws of the State of Ohio. In
addition, all legal actions or proceedings relating to this agreement shall be
brought exclusively in state or federal courts located in Franklin County, Ohio,
and the parties executing this agreement hereby consent to the personal
jurisdiction of such courts. 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 the 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 Company shall be entitled to specific performance and injunctive
relief or other equitable relief, including the issuance ex parte of a temporary
restraining order, without any showing of irreparable harm or damage, such
irreparable harm being acknowledged and admitted by Awardee, and Awardee hereby
waives any requirement for the securing or posting of any bond in connection
with such remedy, without prejudice to the rights and remedies afforded the
Company hereunder or by law. In the event that it becomes necessary for the
Company 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 Committee. The parties agree that the interpretation of this
agreement shall rest exclusively and completely within the sole discretion of
the Committee. The parties agree to be bound by the decisions of the Committee
with regard to the interpretation of this agreement and with regard to any and
all matters set forth in this agreement. The Committee may delegate its
functions under this agreement to an officer of the Company designated by the
Committee (hereinafter the “designee”). In fulfilling its responsibilities
hereunder, the Committee or its designee may rely upon documents, written
statements of the parties, or such other material as the Committee or its
designee deems appropriate. The parties agree that there is no right to be heard
or to appear before the Committee or its designee and that any decision of the
Committee or its designee relating to this agreement, including without
limitation whether particular conduct constitutes Triggering Conduct or
Competitor Triggering Conduct, shall be final and binding unless such decision
is arbitrary and capricious.

11. 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.

 

5

--------------------------------------------------------------------------------

12. Notices. All notices, requests, consents and other communications required
or provided under this agreement to be delivered by Awardee to the Company shall
be in writing and shall be deemed sufficient if delivered by hand, facsimile,
nationally recognized overnight courier, or certified or registered mail, return
receipt requested, postage prepaid, and shall be effective upon delivery to the
Company at the address set forth below:

Cardinal Health, Inc.

7000 Cardinal Place

Dublin, Ohio 43017

Attention: Chief Legal Officer

Facsimile: (614) 757-2797

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 shall 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 shall be
effective upon delivery to the Awardee.

 

CARDINAL HEALTH, INC. By:     Its:    

 

6

--------------------------------------------------------------------------------

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 or she 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 or her under this agreement subject to all provisions of
the Plan and this agreement, including the provisions in the agreement regarding
“Triggering Conduct/Competitor Triggering Conduct” and “Special
Forfeiture/Repayment Rules” set forth in paragraphs 5 and 6 above; and
(c) represents that he or she understands that the acceptance of this agreement
through an on-line or electronic system, if applicable, carries the same legal
significance as if he or she manually signed the agreement. Awardee further
acknowledges receiving a copy of the Company’s most recent annual report to
shareholders and other communications routinely distributed to the Company’s
shareholders and a copy of the Plan Description dated [date of Plan Description]
pertaining to the Plan.

 

   Awardee’s Signature   Date

 

7