Form of Performance Share Units Agreement under CAH 2011 Long-Term Incentive



 Exhibit 10.4 
 CARDINAL HEALTH, INC. 
 PERFORMANCE SHARE UNITS AGREEMENT 

This Performance Share Units Agreement (this “Agreement”) is entered into in Franklin County, Ohio. On [grant date] (the
“Grant Date”), Cardinal Health, Inc, an Ohio corporation (the “Company”), has awarded to [employee name] (“Awardee”) [target # of units] performance-based share units (the “Performance Share Units” or
“Award”). The Performance Share Units have been granted pursuant to the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (the “Plan”), and are subject to all provisions of the Plan, which are incorporated herein by reference,
and are subject to the provisions of this Agreement. Capitalized terms used in this Agreement which are not specifically defined have the meanings ascribed to them in the Plan. 

1. Vesting of Performance Share Units. Subject to the provisions of this Agreement, zero to [maximum percentage] of the
Performance Share Units vest when the Administrator certifies the payout level (“Payout Level”) as a result of achievement of: (a) specific performance criteria (the “Performance Goals”) for a performance period
(“Performance Period”) set forth in Exhibit A attached hereto; and (b) Qualifying Performance Criteria set by the Administrator for a Performance Period, if the Award is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code. 
 2. Transferability. The Performance
Share Units are not transferable. 
 3. Termination of Employment. 

(a) General. Except to the extent that vesting occurs pursuant to Paragraphs 3(b), (c) and (d) and Paragraph 5, if a
Termination of Employment occurs prior to the applicable payment date in Paragraph 6(a) (the “Payment Date”) associated with a Performance Period, any Performance Share Units allocated to that Performance Period, whether vested or
unvested, are forfeited by Awardee. 
 (b) Death or Disability. If a Termination of Employment occurs prior to the
Payment Date by reason of Awardee’s death or Disability, but at least 6 months after the Grant Date, then the Performance Share Units for a Performance Period will vest as if Awardee had remained employed through the Payment Date.

 (c) Retirement. If a Termination of Employment occurs prior to the Payment Date by reason of Awardee’s
Retirement, but at least 6 months after the Grant Date, then the Performance Share Units for a Performance Period will vest, to the extent not previously vested, in an amount equal to the number of Performance Share Units that Awardee would have
received if Awardee had remained employed through the Payment Date multiplied by a fraction, the numerator of which is the number of days in the Performance Period up to the date of such Termination of Employment, and the denominator of which is the
total number of days in such Performance Period. 
 (d) Involuntary Termination After Completion of a Performance Period.
If a Termination of Employment by the Cardinal Group (as defined below), other than a Termination for Cause, occurs after the completion of a Performance Period but prior to the Payment Date, then the Performance Share Units for the applicable
Performance Period will vest as if Awardee had remained employed through the Payment Date. 







 4. Special Forfeiture and Repayment Rules. This Agreement contains special forfeiture
and repayment rules intended to encourage conduct that protects the Company’s and its Affiliates’ (collectively, the “Cardinal Group’s”) legitimate business assets and discourage conduct that threatens or harms those assets.
The Company does not intend to have the benefits of this Agreement reward or subsidize conduct detrimental to the Company, and therefore will require the forfeiture of the benefits offered under this Agreement and the repayment of gains obtained
from this Agreement, according to the rules specified below. Activities that trigger the forfeiture and repayment rules are divided into two categories: Misconduct and Competitor Conduct. 

(a) Misconduct. During employment with the Cardinal Group and for three years after the Termination of Employment for any reason,
Awardee agrees not to engage in Misconduct. If Awardee engages in Misconduct during employment or within three years after the Termination of Employment for any reason, then 

(i) Awardee immediately forfeits the Performance Share Units that have not yet vested or that vested at any time within
three years prior to the Misconduct and have not yet been paid pursuant to Paragraph 6 hereof, and those forfeited Performance Share Units automatically terminate, and 

(ii) Awardee shall, within 30 days following written notice from the Company, pay to the Company in cash an amount equal
to: (A) the gross gain to the Awardee resulting from the payment of the Performance Share Units pursuant to Paragraph 6 hereof that had vested at any time within three years prior to the date the Misconduct first occurred (as determined by the
Administrator) less (B) $1.00. The gross gain is the Fair Market Value of the Shares represented by the Performance Share Units on the Payment Date. 
 As used in this Agreement, “Misconduct” means 

(A) disclosing or using any of the Cardinal Group’s confidential information (as defined by the applicable Cardinal
Group policies and agreements) without proper authorization from the Cardinal Group or in any capacity other than as necessary for the performance of Awardee’s assigned duties for the Cardinal Group; 

(B) violation of applicable Cardinal Group policies, including but not limited to conduct which would constitute a breach
of any representation or certificate of compliance signed by Awardee; 
 (C) fraud, gross negligence or willful
misconduct by Awardee, including but not limited to fraud, gross negligence or willful misconduct causing or contributing to a material error resulting in a restatement of the financial statements of any member of the Cardinal Group; 

  
 2 








 (D) directly or indirectly soliciting or recruiting for employment or
contract work on behalf of a person or entity other than a member of the Cardinal Group, any person who is an employee, representative, officer or director in the Cardinal Group or who held one or more of those positions at any time within the 12
months prior to Awardee’s Termination of Employment; 
 (E) directly or indirectly inducing, encouraging or
causing an employee of the Cardinal Group to terminate his/her employment or a contract worker to terminate his/her contract with a member of the Cardinal Group; 

(F) any action by Awardee 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, prospective customers, vendors, suppliers and/or employees known to Awardee; and 

(G) breaching any provision of any employment or severance agreement with a member of the Cardinal Group. 

(b) Competitor Conduct. If Awardee chooses to engage in Competitor Conduct during employment or within one year after the
Termination of Employment for any reason, then 
 (i) Awardee immediately forfeits the Performance Share Units
that have not yet vested or that vested at any time within one year prior to the Competitor Conduct and have not yet been paid pursuant to Paragraph 6 hereof, and those forfeited Performance Share Units automatically terminate, and 

(ii) Awardee shall, within 30 days following written notice from the Company, pay the Company an amount equal to:
(A) the gross gain to Awardee resulting from the payment of Performance Share Units pursuant to Paragraph 6 hereof that had vested at any time since the earlier of one year prior to the date the Competitor Conduct first occurred (as determined
by the Administrator) or one year prior to the Termination of Employment, if applicable, less (B) $1.00. The gross gain is the Fair Market Value of the Shares represented by the Performance Share Units on the Payment Date. 

As used in this Agreement, “Competitor Conduct” means accepting employment with, or directly or indirectly providing services to, a
Competitor in the United States. If Awardee has a Termination of Employment and Awardee’s responsibilities to the Cardinal Group were limited to a specific territory or territories within or outside the United States during the 24 months prior
to the Termination of Employment, then Competitor Conduct is limited to that specific territory or territories. A “Competitor” means any person or business that competes with the products or services provided by a member of the Cardinal
Group for which Awardee had business responsibilities within 24 months prior to Termination of Employment or about which Awardee obtained confidential information (as defined by the applicable Cardinal Group policies or agreements). 

  
 3 








 (c) General. 

(i) Nothing in this Paragraph 4 constitutes or is to be construed as a “noncompete” covenant or other restraint
on employment or trade. The provisions of this Paragraph do not prevent, nor are they intended to prevent, Awardee from seeking or accepting employment or other work outside the Cardinal Group. The execution of this Agreement is voluntary. Awardee
is free to choose to comply with the terms of this Agreement and receive the benefits offered or else reject this Agreement with no adverse consequences to Awardee’s employment with the Cardinal Group. 

(ii) Awardee agrees to provide the Company with at least 10 days written notice prior to accepting employment with or
providing services to a Competitor within one year after Termination of Employment. 
 (iii) Awardee acknowledges
receiving sufficient consideration for the requirements of this Paragraph 4, including Awardee’s receipt of the Performance Share Units. Awardee further acknowledges that the Company would not provide the Performance Share Units to Awardee
without Awardee’s promise to abide by the terms of this Paragraph 4. The parties also acknowledge that the provisions contained in this Paragraph 4 are ancillary to, or part of, an otherwise enforceable agreement at the time this Agreement is
made. 
 (iv) Awardee may be released from the obligations of this Paragraph 4 if and only if the Administrator
determines, in writing and in the Administrator’s sole discretion, that a release is in the best interests of the Company. 

5. Change of Control. 
 (a) Valuation. In the event of a Change of Control prior to a Payment Date, the Administrator, as constituted immediately before such Change of Control, shall determine and certify the Payout Level
(the “Change of Control Payout Level”) based on (i) actual performance through the most recent date prior to the Change of Control for which achievement of the Performance Goals can reasonably be determined; and (ii) the expected
performance for the remainder of the Performance Period based on information reasonably available. 
 (b) Vesting and
Substitute Awards. 
 (i) In the event of a Change of Control prior to a Payment Date, the percentage of the
Performance Share Units determined in accordance with Exhibit A at the Change of Control Payout Level vests unless an award meeting the requirements of Paragraph 5(b)(ii) (a “Substitute Award”) is provided to Awardee in accordance
with Section 16(a) of the Plan to replace or adjust the Award. If a Substitute Award is provided, any Performance Share Units that would vest in accordance with Paragraphs 3(b) or (c) in connection with Awardee’s Retirement or
Disability if Awardee’s Termination of Employment occurred on the date of the Change of Control will vest at the time of the Change of Control. No Substitute Award will be provided in the event of Awardee’s Termination of Employment by
reason of death, Disability or Retirement prior to a Change of Control. 

  
 4 








 (ii) An award meets the conditions of this Paragraph 5(b)(ii) (and
hence qualifies as a Substitute Award) if, as determined by the Administrator as constituted immediately before the Change of Control, (A) it has a value at least equal to the value of the Performance Share Units that would vest under Paragraph
5(b)(i) if there were no Substitute Award; (B) it is paid in publicly traded equity securities of the Company or its successor in the Change of Control or another entity that is affiliated with the Company or its successor following the Change
of Control; (C) it is a restricted stock unit award with vesting and payment not conditioned on the achievement of any performance criteria or conditions; (D) it vests in full upon (1) a Termination for Good Reason by Awardee
(provided that no later than 90 days following an event otherwise permitting a Termination for Good Reason, Awardee gives notice to the Company of the occurrence of such event and the Company fails to cure the event within 30 days following receipt
of such notice), (2) a Termination of Employment by the Company or its successor in the Change of Control other than a Termination for Cause, or (3) Awardee’s death or Disability, in each case, occurring during the period of two years
after the Change of Control; (E) if Awardee is subject to U.S. federal income tax under the Code, the tax consequences to Awardee under the Code of the Substitute Award are not less favorable to Awardee than the tax consequences of the Award;
and (F) its other terms and conditions are not less favorable to Awardee than the terms and conditions of the Award (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting the generality of
the foregoing, the Substitute Award may take the form of a continuation of the Award if the modifications required by the preceding sentence are satisfied. 
 6. Payment. 
 (a) General. The Company shall pay Performance Share
Units in Shares. Subject to the provisions of Paragraph 4 of this Agreement, Awardee is entitled to receive from the Company (without any payment on behalf of Awardee other than as described in Paragraph 10) one Share for each vested Performance
Share Unit not later than the 60th day after the end of a Performance Period, except that if Awardee’s Termination of Employment occurs due to death after the end of the Performance Period, Awardee is entitled to receive the corresponding
Shares from the Company on the date of death. 
 (b) Change of Control. Notwithstanding Paragraph 6(a), to the extent
that the performance and service vesting requirements have been satisfied for the Performance Share Units on the dates set forth below, payment with respect to the Performance Share Units will be made as follows: 

(i) On the date of a Change of Control, Awardee is entitled to receive one Share for each vested Performance Share Unit,
subject to any adjustments made pursuant to Section 16(a) of the Plan, from the Company; provided, however, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and
the regulations thereunder, and where Section 409A of the Code applies to such distribution, Awardee is entitled to receive the corresponding Shares from the Company on the date that would have otherwise applied pursuant to Paragraphs 6(a),
6(b)(ii) or 6(b)(iii). 

  
 5 








 (ii) If Awardee’s separation from service occurs during the period of
two years following a Change of Control (and such Change of Control constitutes a change of control event as defined in accordance with Section 409A of the Code), Awardee is entitled to receive one Share for each vested Performance Share Unit
from the Company on the date of Awardee’s separation from service; provided, in such event that if Awardee on the date of separation from service is a “specified employee” (certain officers of the Cardinal Group within the meaning of
Section 409A of the Code determined using the identification methodology selected by the Company from time to time), Awardee is entitled to receive the corresponding Shares from the Company on the first day of the seventh month after the date
of Awardee’s separation from service or, if earlier, the date of Awardee’s death. 
 (iii) On
the date of Awardee’s Termination of Employment due to death following a Change of Control, Awardee is entitled to receive one Share for each vested Performance Share Unit from the Company on the date of death. 

(c) Elections to Defer Receipt. Elections to defer receipt of the Shares beyond the Payment Date 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. 
 7. Dividend Equivalents. Awardee is not entitled to receive cash dividends on the Performance Share Units, but will receive a dividend equivalent payment from the Company in an amount equal to the
dividends that would have been paid on each Share paid under this Agreement if it had been outstanding between the Grant Date and the payment date of any Shares represented by the Performance Share Units (i.e., based on the record date for cash
dividends). Subject to an election to defer receipt as permitted under Paragraph 6(c), the Company shall pay dividend equivalent payments in cash on the payment date of the Shares represented by the Performance Share units. 

8. Right of Set-Off. By accepting these Performance Share 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 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. 
 9. No Shareholder Rights. Awardee has no rights of a shareholder with respect to the Performance Share Units, including no right to vote any Shares represented by the Performance Share Units, until
such Shares are paid to Awardee. 
 10. Withholding Tax. 

(a) Generally. Awardee is liable and responsible for all taxes owed in connection with the Performance Share Units (including taxes
owed with respect to the 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 Performance Share Units. The


  
 6 








 
Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Performance
Share Units or the subsequent sale of Shares issuable pursuant to vested Performance Share Units. The Company does not commit and is under no obligation to structure the Performance Share Units to reduce or eliminate Awardee’s tax liability.

 (b) Payment of Withholding Taxes. Prior to any event in connection with the Performance Share Units (e.g., vesting or
payment) 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 Administrator, Awardee’s acceptance of this Agreement constitutes Awardee’s instruction and authorization to the Company to withhold 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 and when any such Tax Withholding Obligation becomes due. In the case of any amounts withheld for taxes pursuant to this provision in the form of Shares,
the amount withheld may not exceed the minimum required by applicable law and regulations. The Company has 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 is governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superseded 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 Performance Share Units 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 must 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 Paragraph 4 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 the event that it becomes necessary for the Company to institute legal proceedings under this Agreement, Awardee is responsible to the Company for all costs and reasonable legal fees incurred by the
Company in connection with the 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 the 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 rests 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. In fulfilling its responsibilities hereunder, the Administrator may rely upon
documents, written statements of 

  
 7 








 
the parties, financial reports or other material as the Administrator deems appropriate. The parties agree that there is no right to be heard or to appear before the Administrator and that any
decision of the Administrator relating to this Agreement, including whether particular conduct constitutes Misconduct or Competitor Conduct, is final and binding. The Administrator may delegate its functions under this Agreement to an officer of the
Cardinal Group designated by the Administrator. 
 13. Prompt Acceptance of Agreement. The Performance Share Units grant
evidenced by this Agreement will, 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 Performance Share Unit grant under and
participation in the Plan or future Performance Share Units that may be granted under the Plan by electronic means or to request Awardee’s consent to participate in 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 performance share unit grants and
the execution of performance share unit 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 deemed sufficient if delivered by hand, 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: General Counsel 
 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 Awardee. 
 16. Employment
Agreement, Offer Letter or Other Arrangement. To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Human Resources and Compensation Committee or the Board
of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Human Resources and Compensation Committee provides for greater benefits to Awardee with respect to vesting of the Award on Termination
of Employment than provided in this Agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Award on Termination of Employment by reason of such specified events supersede the terms hereof to the extent
permitted by the terms of the Plan. 

  
 8 








 17. Recoupment. This Agreement will be administered in compliance with
Section 10D of the Securities Exchange Act of 1934, as amended, and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the
Shares may be traded. In its discretion, moreover, the Administrator may require repayment to the Company of all or any portion of this Award if the amount of the Award was calculated based upon the achievement of certain financial results that were
subsequently the subject of a restatement of the Company’s financial statements, Awardee engaged in misconduct that caused or contributed to the need for the restatement of the financial statements, and the amount payable to Awardee would have
been lower than the amount actually paid to Awardee had the financial results been properly reported. This Paragraph 17 is not the Company’s exclusive remedy with respect to such matters. This Paragraph 17 will not apply after a Change of
Control. 
 18. Amendment. Any amendment to the Plan is deemed to be an amendment to this Agreement to the extent that
the amendment is applicable hereto; provided, however, that no amendment may impair the rights of Awardee with respect to an outstanding Performance Share Unit unless agreed to by Awardee and the Company, which agreement must be in writing and
signed by Awardee and the Company. Other than following a Change of Control, no such agreement is required if the Administrator determines in its sole discretion that such amendment either (a) is required or advisable in order for the Company,
the Plan or the Performance Share Units to satisfy any Applicable Law or to meet the requirements of any accounting standard or (b) is not reasonably likely to significantly diminish the benefits provided under the Performance Share Units, or
that any such diminishment has been adequately compensated. 
  

			
	CARDINAL HEALTH, INC.
		
	By:	 	  
	Its:	 	 



  
 9 








 ACCEPTANCE OF AGREEMENT 
 Awardee hereby: (a) acknowledges that he or she has received a copy of the Plan, 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 pertaining to the Plan; (b) accepts this Agreement and the Performance Share Units granted to him or her under this Agreement subject to all provisions of the Plan and this
Agreement, including the provisions in this Agreement regarding “Recoupment” set forth in Paragraph 17 above and “Misconduct,” “Competitor Conduct” and “Special Forfeiture and Repayment Rules” set forth in
Paragraph 4 above; (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; and
(d) agrees that no transfer of the Shares delivered in respect of the Performance Share Units may be made unless the Shares have been duly registered under all applicable Federal and state securities laws pursuant to a then-effective
registration which contemplates the proposed transfer or unless the Company has received a written opinion of, or satisfactory to, its legal counsel that the proposed transfer is exempt from such registration. 

 

	
	[
	Awardee’s Signature
	
	  
	Date]



  
 10 









 CARDINAL HEALTH, INC. 

Statement of Performance Goals 

  
 A-1