Exhibit 10.18.1

October 7, 2005

Mr. Ivan K. Fong

3 Cherry Lane

Westport, CT 06880

Dear Ivan,

It is with great pleasure that I confirm in writing our offer of employment to
you. All of us who have met with you enthusiastically believe you represent an
exceptional fit with Cardinal Health (together with its successors and assigns,
the “Company”) and a superb addition to the executive management team. The major
provisions of your offer are:

 

1. The position is Executive Vice President, Chief Legal Officer and Secretary
reporting directly to me. During your employment, you will also serve on the
Executive Committee of Cardinal Health.

 

2. Your annual base salary will be $500,000, and your cash compensation profile
will be reviewed along with all other officers of Cardinal Health at regular
annual intervals with the Human Resources and Compensation Committee of the
Board of Directors (Compensation Committee). Your annual base salary will not be
decreased without your prior written consent. You will be paid a one-time gross
cash sign-on bonus of $225,000 which will be paid within your first 90 days of
employment.

 

3.

You will be eligible to participate in our Management Incentive Plan (MIP). Your
target annual incentive will be 90% of your base salary. Your incentive for the
remainder of fiscal year 2006 (ending June 30, 2006) will be guaranteed to be
paid at no less than 50% of target, with such amount prorated from your start
date through the end of such fiscal year. Any bonus amounts shall be paid to you
no later than 2 and 2 1/2 months after the end of your taxable year in which
they are earned.

 

4.

You will receive a stock option grant along with a grant of restricted share
units (RSU’s) effective on your start date – a grant of 45,000 option shares,
along with a grant of 7,400 RSU’s representing your fiscal year 2006 grants. The
options will vest in four equal annual installments of 25% on each anniversary
of the grant date, and will expire on the anniversary of the grant date in 2012.
The RSU’s will vest in three equal annual installments of 33.33% on each
anniversary of the grant

 

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date. In addition, you will receive a grant of 6,000 RSU’s effective on your
start date, which will vest on the first anniversary of the grant date. You will
be eligible for the next regular annual grant of stock or stock options in
fiscal year 2007, expected to be granted in August, 2006. The targeted dollars
at work used for future equity grants will be in keeping with market trends and
commensurate with similarly situated executives. All stock options listed in
this paragraph 4 will be granted at the price of the Company’s stock at the
close of market on your start date.

 

5. If your employment is terminated without “Cause” (as defined herein), within
your first 5 years of employment, the Company will provide you with severance
equal to the sum of one (1) times your base annual salary and target bonus
opportunity. If your employment is terminated without Cause after your fifth
anniversary of employment, the Company will provide you with severance equal to
twelve months of your base salary. In either case, such amount will be paid in a
lump sum on the 1st day of the month following the month in which such
termination occurs, provided that if it is determined pursuant to Section 409A
of the Internal Revenue Code and its implementing regulations (“Section 409A”)
that a termination of your employment pursuant to the third paragraph of
paragraph 6 hereof is not an involuntary termination as contemplated by
Section 409A, the lump sum payment shall be made on the 1st day of seventh month
following the month in which your termination occurred. In addition, the Company
shall continue to provide you and your eligible dependents, at the same cost you
were paying as an employee, with health and welfare benefits for one year
following your termination date.

 

6. In addition, in the event your employment terminates without Cause, or you
die or become disabled during employment, 25% of your equity awards granted in
paragraph 4 above shall, to the extent unvested, vest on your termination date,
with any RSUs payable to you (or your estate, as the case may be) within 30 days
of your termination date and with all vested stock options remaining exercisable
for no less than 3 years following your termination date (but not beyond their
original terms). This vesting is in addition to any vesting under the applicable
plan or award agreement. In this event, you (or your estate, as the case may be)
shall be entitled to payment of any sign-on award and/or any guaranteed bonus
(without regard to whether your employment is terminated before the end of the
performance period or the payment date), any earned but unpaid bonus for
performance periods that have ended prior to your termination date and any
unreimbursed business or relocation expenses. You (or your estate, as the case
may be) shall also be entitled to any rights, entitlements or benefits pursuant
to any applicable plan, policy, program or arrangement of, or other agreement
with, the Company. In addition, if such termination occurs within the first 24
months of your employment, the Company shall pay up to $25,000 to relocate you
and your family, if such relocation occurs within 12 months of such termination,
to a location of your choice in the United States consistent with the relocation
package the Company provided you to relocate to Columbus, Ohio and any
reimbursements pursuant to this paragraph shall be made by the Company no later
than the end of second calendar year following the year in which your
termination occurs.

 

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For purposes of this agreement, “Cause” shall mean: (A) your willful gross
neglect or willful gross misconduct in the performance of your duties for the
Company which demonstrably and materially injures the Company, (B) your willful
embezzlement, misappropriation or conversion of the Company’s property for your
own personal use, (C) your conviction of (or plea of nolo contendere to) a
felony (other than a minor traffic violation) or a crime involving moral
turpitude or (D) your willful and repeated violation of the Company’s written
policies, after written warning from the Company setting forth the policies
being so violated; provided that no act, or omission, by you shall be deemed to
be willful if you had a good faith belief that it was in, or not opposed to, the
best interests of the Company.

You will be able to terminate your employment and have such termination treated
as a termination without Cause by the Company if any of the following occurs
without your prior written consent: (1) you are not elected or reelected as
Executive Vice President and Chief Legal Officer of the Company or you are
removed from any such position, (2) you no longer report directly to the Chief
Executive Officer, (3) you no longer hold exclusively the top legal position in
the Company, (4) the Company materially breaches this agreement or (5) a
successor to all or substantially all of the business assets of the Company
fails to expressly assume the Company’s obligations under this agreement, either
contractually or as a matter of law, within 15 days after such sale, transfer or
other disposition.

 

7. You are eligible to participate in the Cardinal Health Profit Sharing,
Retirement and Savings Plan (including a 401(k) feature) on the first day of the
month following one full calendar month of employment (provided you work 20
hours a week or more). You may contribute up to 50% of your pre-tax earnings to
the Plan (subject to IRS maximum). Cardinal Health matches employee
contributions at a rate equal to 100% for each dollar contributed up to 3% of
pay and then 50% on the next 2% of pay. In addition, the Company has an annual
defined contribution of 3%. Employees are immediately 100% vested in matching
contributions and 100% vested in the defined contributions after three years of
continuous service. Enrollment information will be sent to you by our Plan
administrator, prior to your eligibility date.

 

8. You will be eligible to participate in the Cardinal Health Deferred
Compensation Plan (Non-Qualified Plan) that complements our 401(k) Plan and
enables the highly compensated employee to continue to save over and above the
IRS limits in the 401(k) qualified plan. You may contribute up to 20 percent of
your total eligible compensation. Cardinal Health matches dollar for dollar on
the first 3 percent and 50 cents on the next 2 percent of salary deferred
between $210,000 and $310,000. These matching dollars vest immediately. The
Company also contributes a 3 percent annual contribution for eligible
compensation earned between $210,000 and $310,000. In addition, the Company
provides a social security integration contribution of 3 percent for eligible
compensation between $90,000 and $310,000. These 3 percent company contributions
vest after 3 years of service.

 

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9. You will be eligible to participate in the Cardinal Health Employee Stock
Purchase Plan at the beginning of the next offering period under the terms
specified in the Plan. You have the opportunity to purchase Cardinal Health
stock at a 15% discount through after-tax payroll deductions. There are two
offering periods each year, January – June and July – December. Enrollment
information will be provided to you prior to the next eligible offering period
after your employment date.

 

10. You and your eligible dependents will be eligible for participation in our
group benefits program on your date of hire. This program includes coverage for
medical, dental, vision, life insurance, accidental death and dismemberment,
short-term and long-term disability.

 

11. Your first day of employment will be mutually agreed to upon acceptance of
this offer.

 

12. The Company shall reimburse you for all reasonable business-related expenses
in accordance with Company policy, including any expenses incurred by you in
connection with maintaining your legal credentials. The Company also agrees to
reimburse you up to $10,000 for the legal and other professional fees and
expenses incurred by you in connection with negotiating your employment
arrangements with the Company. Finally, we view your participation in
professional associations and membership on the boards of certain non-profit
legal groups as business-related activities.

 

13. You will be eligible for the Company’s executive relocation program, which
will be forwarded to you as soon as possible. The Company also agrees to work
with you to cover certain relocation expenses that you have discussed with the
Company, and the reimbursement of such expenses shall be grossed up for taxes in
the same manner as contemplated by the relocation program. In addition, your
spouse will receive spousal career assistance, at the Company’s expense, through
Lee Hecht Harrison, which she can begin any time in the first twelve months of
your start date.

 

14. The Company agrees to enter into an indemnification agreement with you on
the same terms and conditions that it has entered into such agreements with
other senior executives of the Company.

 

15.

Your employment with Cardinal Health is terminable with or without notice at the
will of either you or the Company at any time for any reason. There shall be no
contract, express or implied, of employment. Upon termination of employment, you
shall have no obligation to mitigate damages or to seek other employment and
there shall be no offset by the Company against any amounts or entitlements

 

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due hereunder on account of any compensation or entitlements that you may
receive from subsequent employment or on account of any claims the Company may
have against you. There shall be no post-termination restrictions on your
activities following termination of employment except as otherwise provided in
our standard form of stock option and restricted share unit agreements, copies
of which have been provided to you.

 

16. The Company represents and warrants that there are no legal impediments to
its entering into and performing its obligations under this agreement.

 

17. This agreement is binding upon, and inures to the benefit of, the parties
and their heirs (in your case), successors and assigns. This agreement shall be
governed by the law of the State of Ohio, without reference to principles of
conflicts of law. The obligations and rights of a party under this agreement
shall not be assigned by such party to any other person or entity, without the
other party’s prior written consent. In the event of any inconsistency between
any provision of this agreement and any provision of any Company plan, policy,
program, arrangement or other agreement, the provision most favorable to you
shall govern. This agreement may not be modified or terminated except in a
writing signed by you and an authorized officer of the Company; provided,
however, that in 2005 and 2006, if any modification is deemed necessary, in the
reasonable opinion of the Company’s and/or your counsel, to comply with
Section 409A or any regulations or similar guidance issued by the Treasury or
the Internal Revenue Service with respect to Section 409A, the Company and you
agree to modify such provision but only to the extent necessary to comply with
Section 409A. Any waiver of any provision of this agreement will only be
effective if such waiver is in writing, specifically referencing the provision
being waived and signed by the party against whom the waiver is being enforced.
In the event of your death, your beneficiaries or estate, as the case may be,
shall be entitled to any payments due to you hereunder.

 

18. Any controversy, dispute or claim arising out of or relating to this
agreement shall be resolved by binding arbitration to be held in Columbus, Ohio
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The Company agrees to
reimburse you legal fees and other costs and expenses incurred by you in
connection with any dispute hereunder if you substantially prevail with respect
to the subject matter of such dispute.

 

19. Once signed by me, this agreement shall be irrevocable by the Company from
the date first written above, provided that you execute and deliver this letter
to me within 8 days of the date first written above.

 

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Ivan, I understand you may have some follow up questions once you have had the
opportunity to review the details of this offer. Please feel free to call Carole
Watkins at 614-757-7425 or Tony Rucci at 614-757-7575 to discuss any specific
questions on the offer. In addition, you can reach me at 614-757-7700.

 

Sincerely,

/s/ Robert D. Walter

Robert D. Walter Chairman and Chief Executive Officer

 

cc: Tony Rucci

  Carole Watkins

I accept the above offer of employment:

 

/s/ Ivan K. Fong

            October 12, 2005 Ivan K. Fong         Date

 

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