Exhibit 10.56

CARDINAL HEALTH, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

On August 15, 2006 (the “Grant Date”), Cardinal Health, Inc., an Ohio
corporation (the “Company”), has awarded to Robert D. Walter (“Awardee”), an
option (the “Option”) to purchase 198,762 common shares, without par value, of
the Company (the “Shares”) for a price of $66.34 per share. The Option has been
granted under the Cardinal Health, Inc. 2005 Long-Term Incentive Plan, as
amended (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 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 accordance with the
following schedule: four equal installments on each of the first four
anniversaries of the Grant Date (each, the “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
“Cardinal Group”). Notwithstanding the foregoing, in the event of a Change of
Control prior to Awardee’s Termination of Employment, the Option shall vest in
full. This Option shall expire on August 15, 2013 (the “Grant Expiration Date”).

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 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);

(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 in cash);

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(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 Cardinal
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.

3. Termination of Employment.

(a) Termination of Employment by Reason of Death. If a Termination of Employment
occurs by reason of death 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. 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) Termination of Employment by Reason of Retirement or Disability. If a
Termination of Employment occurs by reason of Retirement or Disability prior to
the vesting in full of the

 

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Option, then any unexercised portion of the Option which has not vested on such
date of Termination of Employment will, at the Company’s election, either vest
immediately or continue to vest in accordance with the original vesting
schedule, provided that, in the case of Retirement, Awardee complies with his
obligation to perform consulting services as described in the Second Amended and
Restated Employment Agreement, between the Company and Awardee, dated April 17,
2006, as subsequently amended (the “Employment Agreement”). The Option, to the
extent vested, may be exercised by Awardee (or any transferee, if applicable)
until the Grant Expiration Date. Notwithstanding the foregoing, if Awardee dies
after Retirement or Disability, but before the expiration of the exercise period
provided for by the preceding sentence, the provisions of paragraph 3(a) of this
agreement shall apply.

(c) Other Termination of Employment. For the purposes of this paragraph 3,
Termination of Employment shall mean the termination of both the Employment
Period and the Consulting Period under the Employment Agreement, as such terms
are defined in the Employment Agreement. Upon a Termination of Employment by the
Company without Cause or by the Awardee with Good Reason, as such terms are
defined in the Employment Agreement, any unexercised portion of the Option which
has not vested on such date of Termination of Employment will become fully
vested as of such date, and, in any event once vested, may be exercised by
Awardee (or any transferee, if applicable) until the Grant Expiration Date.
Notwithstanding the foregoing, if Awardee dies after such Termination of
Employment, but before the expiration of the exercise period provided for by the
preceding sentence, the provisions of paragraph 3(a) of this agreement shall
apply. Upon a Termination of Employment for Cause or by the Awardee without Good
Reason, as such terms are defined in the Employment Agreement, any portion of
the Option which has not vested on such date will automatically be forfeited,
and any portion of the Option which has vested on such date may be exercised by
Awardee (or any transferee, if applicable) until the Grant Expiration Date.

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 Cardinal Group and Awardee) reasonably requested by the Company.

5. Triggering Conduct/Competitor Triggering Conduct. As used in this agreement,
“Triggering Conduct” shall mean engaging in any conduct described in
Section 9(b), 9(c), 9(f) or 9(g) of the Employment Agreement. As used herein,
“Competitor Triggering Conduct” shall mean engaging in any conduct described in
Section 9(d) or 9(e) of the Employment Agreement.

6. Special Forfeiture/Repayment Rules. For so long as Awardee continues as an
employee with the Cardinal Group and for two years following a Termination of
Employment (without regard to the Consulting Period as defined in the Employment
Agreement) regardless of the reason, Awardee agrees not to engage in Triggering
Conduct. If Awardee engages in Triggering Conduct or in Competitor Triggering
Conduct during the time period set forth in the preceding sentence, then, as to
such portion of the Option that is unvested or that became vested within no more
than two years prior to the date Awardee engages in Triggering Conduct or
Competitor Triggering Conduct:

(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

 

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(b) Awardee shall, within 30 days following written notice from the Company, pay
the Company an amount equal to the gross option gain realized or obtained by
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 two 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
Employment, but including any period between the time of Termination of
Employment and engagement in Competitor Triggering Conduct. Awardee may be
released from Awardee’s obligations under this paragraph 6 if and only if the
Administrator (or its duly appointed designee) determines, in writing and in its
sole discretion, that such action is in the best interests of the Company.
Nothing in this paragraph 6 constitutes a so-called “noncompete” covenant. This
paragraph 6 does, however, 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, Awardee’s acceptance of employment with a
Competitor. Awardee agrees to provide the Company with at least 10 days written
notice prior to directly or indirectly accepting employment with or serving as a
consultant or advisor or in any other capacity to a Competitor, and further
agrees to inform any such new employer, before accepting employment, of the
terms of this paragraph 6 and Awardee’s continuing obligations contained herein.
No provisions of this agreement shall diminish, negate or otherwise impact any
separate noncompete or other agreement to which Awardee may be a party,
including, but not limited to, any of the Certificates of Compliance with
Company Policies and/or the Certificates of Compliance with Company Business
Ethics Policies; provided, however, that to the extent that any provisions
contained in any other agreement are inconsistent in any manner with the
restrictions and covenants of Awardee contained in this agreement, the
provisions of this agreement shall take precedence and such other inconsistent
provisions shall be null and void; provided, further, however, that the
provisions of the Employment Agreement and paragraph 13 of this agreement shall
take precedence over this paragraph 6(b). 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 by any member of the
Cardinal 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 Cardinal Group by Awardee under this agreement.

 

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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. Any manner provided for in subparagraph 1(b) hereof shall be deemed an
acceptable manner to satisfy the Tax Withholding Obligation unless otherwise
determined by the Company.

9. Holding Period Requirement. If Awardee is classified as an “officer” of the
Company within the meaning of Rule 16a-1(f) under the Securities Exchange Act of
1934, as amended, on the Grant Date, then, 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 Employment). “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, employment or other tax and other
similar fees that are withheld in connection with the exercise.

10. Governing Law/Venue. This agreement shall be governed by the laws of the
State of Ohio, without regard to principles of conflicts of law, except to the
extent 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 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
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 Cardinal Group shall be entitled to specific
performance and injunctive relief or other equitable relief, including the
issuance ex parte of a temporary restraining order, without any showing of
irreparable harm or damage, such irreparable harm being acknowledged and
admitted by Awardee, and Awardee hereby waives any requirement for the securing
or posting of any bond in connection with such remedy, without prejudice to the
rights and remedies afforded the Cardinal Group hereunder or by law. In the
event that it becomes necessary for the Cardinal Group to institute legal
proceedings under this agreement, Awardee shall be responsible to the Company

 

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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.

11. Action by the Administrator. The parties agree that the interpretation of
this agreement shall rest exclusively and completely within the sole discretion
of the Administrator. The parties agree to be bound by the decisions of the
Administrator with regard to the interpretation of this agreement and with
regard to any and all matters set forth in this agreement. The Administrator may
delegate its functions under this agreement to an officer of the Cardinal Group
designated by the Administrator (hereinafter the “designee”). In fulfilling its
responsibilities hereunder, the Administrator or its designee may rely upon
documents, written statements of the parties or such other material as the
Administrator or its designee deems appropriate. The parties agree that there is
no right to be heard or to appear before the Administrator or its designee and
that any decision of the Administrator or its designee relating to this
agreement, including without limitation whether particular conduct constitutes
Triggering Conduct or Competitor Triggering Conduct, shall be final and binding
unless such decision is arbitrary and capricious; provided, however, that to the
extent that any provision in this paragraph 11 is inconsistent in any manner
with the terms of Section 9(i) of the Employment Agreement, the provisions of
the Employment Agreement shall take precedence and such other inconsistent
provisions shall be null and void.

12. 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.

13. Employment Agreement. Awardee acknowledges that the Option granted
hereunder, in tandem with the grant as of the date hereof by the Company to the
Awardee of restricted share units in respect of 28,490 Common Shares, satisfy in
full the Company’s obligation under Section 3(b)(iii)(B) of the Employment
Agreement with respect to incentive awards required to be made not later than
September 30, 2006. Sections 3 and 5 of the Employment Agreement set forth
certain rules in respect of the treatment of stock options upon the Awardee’s
termination of employment, and the Employment Agreement sets forth certain rules
in respect of the application of restrictive covenants set forth in stock option
agreements to the Awardee. The parties acknowledge that such rules set forth in
the Employment Agreement apply to the Option granted hereunder, and further
acknowledge that in the event of any conflict between such rules and the terms
of this agreement, such rules shall govern.

14. 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.

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

 

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deemed sufficient if delivered by hand, facsimile, nationally recognized
overnight courier, or certified or registered mail, return receipt requested,
postage prepaid, and will be effective upon delivery to the Company at the
address set forth below:

Cardinal Health, Inc.

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 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.

 

CARDINAL HEALTH, INC.

By:

 

/s/ Carole S. Watkins

Its:

  Chief Human Resources Officer

 

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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 “Triggering
Conduct/Competitor Triggering Conduct” and “Special Forfeiture/ Repayment Rules”
set forth in paragraphs 5 and 6 above; and (c) 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 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 February 22, 2006 pertaining to the Plan.

 

ROBERT D. WALTER (“Awardee”)

/s/ Robert D. Walter

Signature

8-31-06

Date

 

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