Exhibit 10.71

CARDINAL HEALTH, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

 

Grant Date:    July 27, 2004 Exercise Price:    $44.00 per share Grant Vesting
Date:    July 27, 2007 Grant Expiration Date:    July 27, 2014

Cardinal Health, Inc., an Ohio corporation (the “Company”), has granted to J.
Michael Losh (“Grantee”), an option (the “Option”) to purchase 210,000 common
shares, without par value, of the Company (the “Shares”) for a total purchase
price of $9,240,000, (i.e., the equivalent of $44.00 for each full Share). The
Option has been granted under the Cardinal Health, Inc. Amended and Restated
Equity 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. Subject to the terms of this agreement, this
Option shall be exercisable at any time on or after July 27, 2007, and prior to
July 27, 2014.

 

By:   /s/ Robert D. Walter Robert D. Walter Chairman and CEO

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1. Method of Exercise and Payment of Price.

(a) Method of Exercise. At any time when the Option is exercisable under the
Plan and this agreement, the Option may be exercised from time to time by
written notice to the Company 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 Grantee, 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 Option shall be paid to
the Company as provided in the Plan.

2. Transferability. The Option shall be transferable (I) at Grantee’s death, by
Grantee by will or pursuant to the laws of descent and distribution, and (II) by
Grantee during Grantee’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 Grantee, or any other persons sharing
Grantee’s household (other than tenants or employees) (collectively, “Family
Members”), (b) a trust or trusts for the primary benefit of Grantee or such
Family Members, (c) a foundation in which Grantee or such Family Members control
the management of assets, or (d) a partnership in which Grantee 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 Grantee.
The Human Resources and Compensation Committee of the Board of Directors of the
Company (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 50% of the voting interests are owned by Grantee
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, Grantee
shall notify the Stock Option Administrator 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 Grantee shall be deemed to refer to the transferee. The events of
termination of services of Grantee provided in paragraph 3 hereof shall continue
to be applied with respect to the original Grantee, following which the Option
shall be exercisable by the transferee for the periods, specified in paragraph
3. The Company shall have no obligation to notify any transferee of Grantee’s
termination of

 

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employment with the Company for any reason. The conduct prohibited of Grantee in
paragraphs 5 and 6 hereof shall continue to be prohibited of Grantee 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 Grantee to the same extent as would have been the
case of Grantee had the Option not been transferred. Grantee shall remain
subject to the recoupment provisions of paragraphs 5 and 6 of this agreement and
tax withholding provisions of Section 13(d) of the Plan following transfer of
the Option.

3. Termination of Relationship.

(a) Termination by Death or Disability. If Grantee’s provisions of services to
the Company and its subsidiaries (collectively, the “Cardinal Group”) terminates
by reason of death or disability (as defined in the Plan), then, any unvested
portion of the Option shall vest upon Grantee’s termination of provision of
services and become exercisable in full through the Grant Expiration Date (the
“Exercise Period”). The Option may following Grantee’s death be exercised by any
transferee of Grantee, if applicable, or by the legal representative of the
estate or by the legatee of Grantee under the will of Grantee. Grantee’s
services as a member of the Board of Directors of the Company will be treated as
the provision of services under this agreement.

(b) Voluntary Termination of Services Prior to the Grant Vesting Date or For
Cause. If Grantee’s provision of services to the Cardinal Group terminates prior
to the Grant Vesting Date as a result of Grantee’s Voluntary termination of
services (subject to Section 10 of the Plan regarding acceleration of the
vesting of the Option upon a Change of Control) or terminates at any time for
Cause, the Option will automatically terminate on the date of such termination.
If the vesting of the Option is accelerated upon a Change of Control, the Option
will remain exercisable through the expiration of the Exercise Period.

(c) Other Termination of Services. If Grantee’s provision of services to the
Cardinal Group terminates for any reason other than pursuant to the termination
described in paragraphs 3(a) and (b) above, then (i) if such termination is
prior to the Grant Vesting Date, any unvested portion of the Option shall vest
upon Grantee’s termination of provision services and (ii) following any such
termination of provision of services, the Option shall become exercisable in
full through the expiration of the Exercise Period. Notwithstanding the
foregoing, if Grantee dies after the Option vests but before the expiration on
the Exercise Period, the Option may be exercised by any transferee of the Option
if applicable, or by the legal representative of the estate or by the legatee of
Grantee under the will of Grantee following Grantee’s death, through the
expiration of the Exercise Period.

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 Grantee or his or her transferee or successor to make any
representation and

 

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warranty to comply with any applicable law or regulation or to confirm any
factual matters (including Grantee’s compliance with the terms of paragraphs 5
and 6 of this agreement or any employment or severance agreement between any
member of the Cardinal Group and Grantee) reasonably requested by the Company.

5. Triggering Conduct/Competitor Triggering Conduct. As used in this agreement,
“Triggering Conduct” shall include disclosing or using in any capacity other
than as necessary in the performance of duties assigned by the Cardinal Group
any confidential information, trade secrets or other business sensitive
information or material concerning the Cardinal Group; violation of Company
policies, including conduct which would constitute a breach of any of the
Certificates of Compliance with Company Policies and/or the Certificates of
Compliance with Company Business Ethics Policies signed by Grantee; 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 the Cardinal Group at any
time within the 12 months prior to the termination of Grantee’s provision of
services to the Cardinal Group; any action by Grantee and/or his or her
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 Grantee; and breaching any provision of any employment or severance agreement
with a member of the Cardinal Group. As used in this agreement, “Competitor
Triggering Conduct” shall include, either during Grantee’s provision of services
or within one year following Grantee’s termination of provision of services to
the Cardinal Group, accepting employment with or serving as a consultant or
advisor or in 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 Grantee has been introduced to trade secrets, confidential
information or business sensitive information during Grantee’s provision of
services to the Cardinal Group 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.

6. Special Forfeiture/Repayment Rules. For so long as Grantee continues to
provide services to the Cardinal Group and for three years following Grantee’s
termination of provision of services to the Cardinal Group regardless of the
reason, Grantee agrees not to engage in Triggering Conduct. If Grantee 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:

(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) Grantee 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
Grantee 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 Grantee engages
only in Competitor Triggering Conduct, then the Look-Back Period shall be
shortened to exclude any period more than one year prior to Grantee’s
termination of employment with the Cardinal Group, but including any period
between the time of Grantee’s termination and engagement in Competitor
Triggering Conduct. Grantee may be released from Grantee’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. This paragraph 6 does, however, prohibit
certain conduct while Grantee 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, Grantee’s acceptance of employment with a Competitor. Grantee 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
Grantee’s continuing obligations contained herein. No provisions of this
agreement shall diminish, negate or otherwise impact any separate noncompete or
other agreement to which Grantee 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 Grantee
contained in this agreement, the provisions of this agreement shall take
precedence and such other inconsistent provisions shall be null and void.
Grantee acknowledges and agrees that the restrictions contained in this
agreement are being made for the benefit of the Company in consideration of
Grantee’s receipt of the Option, in consideration of employment, in
consideration of exposing Grantee 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. Grantee further
acknowledges that the receipt of the Option and execution of this agreement are
voluntary actions on the part of Grantee and that the Company is unwilling to
provide the Option to Grantee without including the restrictions and covenants
of Grantee 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. 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

 

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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. Grantee 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 Grantee’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 Grantee 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 Grantee 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 Grantee, and Grantee 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, Grantee 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.

8. Action by the Committee. The parties agree that the interpretation of this
agreement shall rest exclusively and completely within the good faith province
and 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 Cardinal Group
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.

9. Prompt Acceptance of Agreement. The Option grant evidenced by this agreement
shall, at the discretion of the Committee, be forfeited if this agreement is not
executed by

 

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Grantee and returned to the Company within 90 days of the Grant Date set forth
on the first page of this agreement.

10. Electronic Delivery. 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 or
to request Grantee’s consent to participate in the Plan by electronic means.
Grantee hereby consents to receive such documents by electronic delivery and, if
requested, 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.

 

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ACCEPTANCE OF AGREEMENT

Grantee 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; and (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. Grantee further acknowledges receiving a copy of
the Company’s most recent Annual Report and other communications routinely
distributed to the Company’s shareholders and a copy of the Plan Description
dated November 17, 2003 pertaining to the Plan.

 

/s/ J. Michael Losh Signature J. Michael Losh Print Name     Grantee’s Social
Security Number 7/27/04 Date

 

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