Document:

EX-10.21.2

 

Exhibit 10.21.2

OUTSIDE DIRECTORS COMPENSATION

Effective November 7, 2007

	 	 	 
	Annual Retainer

	 	$18,750 per quarter, payable
in cash or as otherwise
elected by a non-management
director (an “Outside
Director”) pursuant to the
Deferred Compensation Plan
(“Deferred Plan”).1
	 
	 	 
	Annual Option Grant2

	 	An annual option grant to
acquire common shares with a
value equal to $78,000, based
upon the Company’s standard
method for valuing stock
options for financial
accounting purposes (assuming
the option is held to term)
(the “Expected Value”); one
year cliff vest.
	 
	 	 
	Annual Restricted Share Unit Grant2

	 	An annual restricted share
unit (“RSU”) grant of the
number of RSUs equal to
$42,000 divided by the closing
price of the Company’s common
shares on the date of grant (the “Grant Date Closing
Price”); one year cliff vest.
	 
	 	 
	Initial Option Grant2

	 	Upon first appointment or
election to the Board, each
Outside Director to receive an
initial option grant to
acquire common shares with an
Expected Value of $78,000; one
year cliff vest.
	 
	 	 
	Initial Restricted Share Unit Grant2

	 	Upon first appointment or
election to the Board, each
Outside Director to receive an
initial RSU grant of the
number of RSUs equal to
$42,000 divided by the Grant
Date Closing Price; one year
cliff vest.
	 
	 	 
	Non-management Presiding Director Retainer

	 	Additional retainer is $5,000
per quarter, payable in cash
or as elected under Deferred
Plan.
	 
	 	 
	Audit Committee Chair

	 	Additional retainer is $4,500
per quarter, payable in cash
or as elected under Deferred
Plan.
	 
	 	 
	Human Resources and Compensation Committee
Chair

	 	Additional retainer is $2,500
per quarter, payable in cash
or as elected under Deferred
Plan.
	 
	 	 
	Nominating and Governance Committee Chair

	 	Additional retainer is $2,500
per quarter, payable in cash
or as elected under Deferred
Plan
	 
	 	 
	Audit Committee retainer

	 	Additional retainer is $500
per quarter for serving on
Audit Committee, payable in
cash or as elected under
Deferred Plan.
	 
	 	 
	Per meeting fee

	 	Special meeting fee for
attendance at “excess
meetings”: $1,500 for a full
day; $750 for a half day or
less. An “excess meeting” is
a meeting attended after the
Outside Director has attended
a number of meetings equal to
the number of regular
quarterly board meetings, plus
the number of regular
committee meetings associated
with regular quarterly board
meetings, plus two. An excess
meeting excludes attendance by a non-committee
member and written actions.
	 
	 	 
	 

	 	Prior to payment, any excess
meeting fees must be approved
by the Human Resources and
Compensation Committee of the
Board.
	 
	 	 
	 

	 	Total meeting fees in this
category will not exceed
$25,000 in any fiscal year.
Payable in cash or as elected
under the Deferred
Plan.
	 
	 	 
	Ad hoc Committee retainer

	 	When ad hoc committees are
formed to address
extraordinary events, the
Board will determine an annual
retainer to be paid to ad hoc
committee members based upon
expected effort required.
Total fees in this category
will not exceed $25,000 in any
fiscal year. Payable in cash
or as elected under the
Deferred Plan.

 

			
	1	 	The Company reimburses Outside Directors for
reasonable expenses incurred in the course of traveling to and from Company
Board and committee meetings and other Board-related events or Company
business. It also reimburses directors for reasonable expenses of attendance
by a director at one continuing education program a year. On May 2, 2007, the
Board approved an amendment to its director reimbursement policy
to provide that if travel, meals and other reasonable out-of-pocket expenses of
the spouse of a director are at the request and for the benefit of the Company,
with the approval of the Chairman of the Board, the spouse of a director will
be entitled to reimbursement of expenses in accordance with the policy. Other
travel by a spouse of a director is paid for by the director or spouse
individually. The Company provides a tax reimbursement to directors for income
attributed to them arising out of reimbursement of expenses for spousal travel
as provided in the policy.
	 
	2	 	Awards to be granted pursuant to the Amended
and Restated Outside Directors’ Equity Incentive Plan, as amended, or the
2007 Nonemployee Directors’ Equity Incentive Plan.EX-10.21.3

 

Exhibit 10.21.3

Other Executive Benefits

     This chart summarizes the perquisites and other benefits Cardinal Health, Inc. (the “Company”)
makes available to its named executive officers (“NEOs”) for which the Company has not otherwise
filed written plan descriptions or written agreements.

	 	 	 	 	 	 	 
	  Description of Benefit	 	 	Eligible Positions	 	 	Amount/Schedule
	 	 	 	 	 	 	 
	  Personal Use of Company
Aircraft

	 	 	Chief Executive
Officer; Executive
Chairman of the Board
	 	 	The Human Resources
and Compensation
Committee of the
Company’s Board of
Directors has
approved the use of
Company aircraft by
the Chief Executive
Officer and Executive
Chairman of the Board
for personal travel.
The Company pays the
costs associated with
the personal travel
and provides a tax
reimbursement with
respect to income
attributed to these
individuals arising
from the use of the
Company aircraft for
their personal
travel. In addition,
the executive’s
spouse and/or
dependent children
are permitted to
accompany them on the
Company aircraft, but
no tax reimbursement
is provided with
respect to the
personal travel of
the spouse and
dependent children.
	 	 	 	 	 	 	 
	 

	 	 	Other executive

officers, including

other NEOs
	 	 	The Chief Executive
Officer must
pre-approve any
proposed personal use
of the corporate
aircraft. The
Company pays the
costs associated with
the approved personal
travel.
	 	 	 	 	 	 	 
	  Physical Examination

	 	 	Executive officers,

including NEOs
	 	 	The Company pays the
costs for annual
physical examinations
for executive
officers who are not
in the Company’s
medical plan.
	 	 	 	 	 	 	 
	  Spousal Travel at Company’s Request and

  Related Tax Reimbursements
	 	 	Executive officers,

including NEOs
	 	 	If spousal travel is
at the request and
for the benefit of
the Company, the
Company will
reimburse an
executive officer for
the travel, meals and
other reasonable
out-of-pocket
expenses.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	The Company provides
a tax reimbursement
to its executive
officers for income
attributed to them
arising out of the
Company’s
reimbursement of travel
expenses if the
spousal travel is at
the request and for
the benefit of the
Company.
	 	 	 	 	 	 	 
	  Costs of Security
Systems at 

  Personal
Residence

	 	 	Executive officers,

including NEOs
	 	 	The Company
pays the cost
of a security system
at the executive’s
personal residence if
the Company recommends
the executive to
obtain an enhanced
security system.EX-10..2

 

Exhibit 10.22

MEMORANDUM OF UNDERSTANDING

     This Memorandum of Understanding (“MOU”) contains the terms of settlement in principle among
the parties (“Parties”) to the Actions identified in paragraph 1 below (“Actions”), each of which
is filed derivatively on behalf of and for the benefit of nominal defendant, Cardinal Health, Inc.
(“Cardinal”):

     1. The Actions are:

Doris
Staehr v. Robert D. Walter et al., No. 02-CV-11-639, Court of
Common Pleas, Delaware County, Ohio

Donald Bosley v. David Bing et al., No. 04 CV A07-7167, Court of Common Pleas,
Franklin County, Ohio

Sam Weitschner v. David Bing et al., No. 04 CV C08-8970, Court of
Common Pleas, Franklin County, Ohio

Green Meadow Partners, LLP v. David Bing et al., No. 04 CV H09-9891,
Court of Common Pleas, Franklin County, Ohio

Barry E. Weed v. John F. Havens, et al., No. 06 CV H09-12620, Court
of Common Pleas, Franklin County, Ohio

     2. Plaintiffs in the Actions are:

Doris Staehr

Donald Bosley

Sam Weitschner

Green Meadows Partners, LLP

Barry E. Weed

     3. Named as Individual Defendants in one or more of the Actions are:

David Bing

George C. Conrades

John F. Finn

Robert L. Gerbig

John F. Havens

J. Michael Losh

John B. McCoy

Richard C. Notebaert

Michael D. O’Halleran

David W. Raisbeck

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Jean G. Spaulding

Matthew D. Walter

Robert D. Walter

William F. Bindley

Regina E. Herzlinger

Melburn G. Whitmire

George L. Fotiades

James F. Millar

Mark Parrish

Richard J. Miller

Ronald K. Labrum

Anthony Rucci

     4. Named as Nominal Defendant in all Actions is Cardinal Health, Inc.

     5. Plaintiffs in the Bosley, Weitschner and Green Meadows cases have joined in a single,
consolidated amended complaint (the “Bosley complaint”). The complaints in the Staehr and Weed
actions remain separate from the Bosley complaint and from each other. There is, however,
substantial overlap among the Bosley complaint, the Staehr complaint and the Weed complaint.
Considered collectively, the complaints in the Actions allege claims for breach of fiduciary
duties, misappropriation of non-public information for use in personal sales of Cardinal stock,
abuse of control, gross mismanagement, waste of corporate assets, unjust enrichment. The Staehr
complaint also alleges related claims for contribution, indemnification and statutory false
statements. The claims arise out of: certain conduct in the negotiation of, pricing of, and due
diligence concerning Cardinal’s acquisition of Syncor International Corporation (“Syncor”); certain
conduct concerning the indemnification of Syncor’s former chairman, Monty Fu; certain accounting
and business performance matters that were the subject of disclosures and a financial
restatement/reclassification in 2004 by Cardinal, an allegedly related decline in the market price
of Cardinal common stock, associated inquiries by the United States Department of Justice and the
Securities & Exchange Commission, and private securities fraud class action litigation against
Cardinal and others; certain transactions in Cardinal securities and investment decisions

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undertaken by Cardinal; sales of personal Cardinal stock while allegedly in possession of
material non-public information concerning certain accounting and business performance matters; and
certain conduct concerning the timing and terms of various employee stock option grants in 2004.

     6. This MOU is being entered into only after Plaintiff Staehr has defeated defendants’ motion
to dismiss, conducted extensive discovery and filed numerous pleadings including motion practice,
and the parties have engaged in extensive settlement discussions (facilitated by an independent
mediator) and engaged in open and arm’s length discussions concerning both the merits and the
weaknesses in the claims and defenses in the Actions.

     7. In full and final settlement of all claims in the Actions,

	 	(a)	 	The Individual Defendants will cause proceeds of their
applicable D&O insurance policies totaling $70 million to be paid to Cardinal,
according to the following schedule:

	 	i.	 	$35 million no later than five business days
following the date on which the order approving the settlement by the
last of the courts required to give approval is entered; and
	 
	 	ii.	 	$35 million no later than ten business days
following either the date on which the order approving the settlement
by the last of the courts required to give approval is entered, or
April 15, 2008, whichever date is later.

	 	 	 	Cardinal and the Individual Defendants acknowledge that payment of these
insurance proceeds to Cardinal is attributable solely and exclusively to the
filing, prosecution and settlement of the Actions and would not have

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	 	 	 	been paid to Cardinal but for the filing, prosecution and settlement of the
Actions.
	 	(b)	 	$68 million of these payments is for the settlement of the
Syncor, Monty Fu, and accounting allegations asserted in the Staehr action. $2
million of these payments is for the settlement of the option granting
allegations asserted in the Bosley and the Weed actions.
	 
	 	(c)	 	Cardinal and its board of directors will adopt and implement
the following corporate governance enhancement, which shall remain in full
force and effect, without modification, alteration, rescission or adjustment,
for two years: The Audit Committee shall meet in executive session with the
Chief Financial Officer and the Chief Legal Officer no less than annually.
	 
	 	(d)	 	As to the acquisition of Syncor by Cardinal, the Individual
Defendants and Cardinal acknowledge that the Staehr action was originally
filed, pending and being prosecuted at the time of the re-negotiation of the
acquisition price of Syncor, and was a positive factor in the re-negotiation
and reduced price paid for Syncor.
	 
	 	(e)	 	After the initiation of the Staehr action, Cardinal implemented
corporate governance changes that caused Cardinal’s Institutional Shareholder
Services (“ISS”) Corporate Governance Quotient to rise from an index rating of
6.3, in October 2005, to a rating of 93.2 in May 2007. During the same time,
Cardinal also improved its internal accounting controls. The Individual
Defendants and Cardinal acknowledge that some of these changes and improvements
address issues that were raised in the Staehr

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	 	 	 	and Bosley actions and further acknowledge that the changes and improvements
were made in the context of the litigation of the Staehr and Bosley actions,
which were a positive factor in their adoption.

     8. Defendants, together with their agents, counsel, advisers, insurers, successors, assigns,
heirs and personal representatives, and all employees, agents and representatives of Cardinal shall
receive from each Plaintiff in each Action and from Cardinal a comprehensive release and covenant
not to sue, as broad as permissible under the law, covering all claims by or on behalf of Cardinal
that are or could have been asserted in the Actions that arise out of or in connection with or are
related to any of the acts, matters or transactions referred to in the Actions, provided that the
release and covenant not to sue from Cardinal shall not include any claims that Cardinal may have
for recovery of expenses advanced pursuant to written Statutorily Required Undertakings for
Repayment, as described in Ohio Revised Code § 1701.13, to the extent Cardinal may be legally
obligated to pursue such claims.

     9. Plaintiffs and their Counsel, together with their present and former partners, employees,
accountants, consultants, advisers, successors, heirs and assigns will receive a comprehensive
release and covenant not to sue from Cardinal, the Individual Defendants and their related parties
covering and releasing all claims arising out of, in connection with, or related to the
institution, prosecution or settlement of the Actions.

     10. The Defendants agree and acknowledge that the Actions were filed and prosecuted in good
faith.

     11. The intent of the Parties is that there be a single notice to shareholders bearing the
captions of the Staehr action, the consolidated Bosley/Weitschner/Green Meadow action, and the Weed
action and a joint approval process. The Parties will consult with, and seek the procedural

- 5 -

 

guidance of, the respective courts to assist in planning and scheduling the approval process,
with the intent of proceeding in one of the following manners, in descending order of preference:

	 	i.	 	Consensual, court-ordered transfer of Bosley/Weitschner/Green
Meadow and Weed to the Court of Common Pleas of Delaware County, for joint
handling with each other and with Staehr; or, if not reasonably possible, then
	 
	 	ii.	 	Agreed dismissal without prejudice of Bosley/Weitschner/Green
Meadow and Weed and their refiling in the Court of Common Pleas of Delaware
County, for joint handling with each other and with Staehr; or, if not
reasonably possible, then
	 
	 	iii.	 	Agreed amendment of Staehr for the sole purpose of encompassing
all of the claims in Bosley/Weitschner/Green Meadow and Weed, and agreed
dismissal of Bosley/Weitschner/Green Meadow and Weed in the Court of Common
Pleas of Franklin County.

     12. Cardinal agrees and acknowledges that the Staehr counsel have facilitated the settlement
of all Actions for Cardinal’s benefit.

     13. Upon approval of the settlement by the Court, there shall be a stipulated order or
stipulated orders dismissing each of the Actions in their entirety with prejudice and with each
Party to bear its own costs, except as expressly provided in this MOU.

     14. On the business day following the date on which the first $35 million payment is made to
Cardinal pursuant to paragraph 7(a) of this MOU, or (if later) then three business days following
the date on which a court order approving fees, costs and expenses is entered, Cardinal will pay to
Plaintiffs’counsel (through Robbins Umeda & Fink, LLP (“RUF”)) an amount not

- 6 -

 

more than $12 million as is approved by court order, for Plaintiffs’ attorneys fees, costs and
expenses in all the Actions combined. The Individual Defendants and Cardinal agree to the fee and
expense amount as set forth in the preceding sentence, and agree to not take any positions contrary
to $12 million being a fair and reasonable amount. Such monies shall be paid from the common fund
of $70 million which is being established for Cardinal’s benefit, and will be kept by RUF in a
segregated escrow account and not distributed to itself or anyone else until such time as the order
containing approval of fees costs and expenses becomes final (i.e., not subject to further appeal),
all subject to the obligation hereby undertaken and agreed by RUF to refund or repay to Cardinal
all or any portion of the amount plus interest at the same rate earned in escrow, if, when and to
the extent, as a result of any appeal and/or further proceedings on remand, or successful
collateral attack, the award of fees and expenses is reduced. If, when and to the extent
distribution becomes permitted, RUF shall in its sole discretion distribute monies to the
Plaintiffs’ counsel in the Bosley/Weitschner/Green Meadow action and the Weed action.

     15. The effectiveness of the settlement is not conditioned on court approval of an award of
attorneys fees and expenses, either at all or in any particular amount.

     16. The cost of printing, mailing and publishing notice of the settlement and related
administrative expenses shall be paid by Cardinal.

     17. The settlement is subject to the negotiation and execution of a definitive settlement
agreement (including notice to shareholders and other customary associated documents), approval by
all necessary courts pursuant to O.R.C.P. 23.1, and formal, final dismissal of all the Actions.
The parties agree to proceed in good faith to prepare appropriate documentation and to seek Court
approval of any settlement expeditiously.

- 7 -

 

     18. The settlement shall provide for no admission of wrongdoing or liability by the Individual
Defendants, and shall acknowledge that the Individual Defendants are entering into this settlement
solely to eliminate the uncertainties, burdens and expenses of protracted litigation. In the
settlement, Cardinal shall acknowledge that the settlement confers substantial benefits to
Cardinal, that the settlement would eliminate all remaining shareholder litigation concerning the
restatement/reclassification and the uncertainties, burdens and expenses associated with the
litigation, that the settlement is in Cardinal’s and Cardinal’s shareholders best interests, and
that the settlement is fair, reasonable and adequate to Cardinal and it’s shareholders. The
settlement shall recite that Plaintiffs’ counsel believe the settlement is fair, reasonable and
adequate, and in the best interests of Cardinal and its shareholders.

     19. Plaintiffs shall have the opportunity to conduct reasonable confirmatory discovery. To
the extent reasonably possible, and subject to the possible need to conduct limited separate
inquiries owing to certain features of their Actions, Plaintiffs will participate in confirmatory
interviews being conducted by Plaintiffs’ counsel in In re Cardinal Health, Inc. Securities
Litigation, No. C2-04-575 (S.D. Ohio), and Cardinal will endeavor to facilitate that participation.
Plaintiffs shall also be permitted to review specific documents concerning the allegations in the
Actions, which documents will be agreed to at a later time.

     20. The MOU may be executed in counterpart, by facsimile or other electronic transmission, and
each counterpart shall be deemed one and the same instrument.

     21. The Parties will cooperate regarding the timing of the joint announcement of the MOU and
the settlement, and will exchange draft press releases regarding the MOU and the settlement.

     22. The MOU is to be governed in all respects by Ohio law.

- 8 -

 

     23. The counsel executing the MOU have been duly empowered and authorized to sign it on behalf
of the respective Parties they represent.

     24. Subject to the O.R.C.P. 23.1 requirement of Court approval, the MOU is binding on the
parties. The only other contingencies that would permit any party not to proceed with the
settlement are specified in the MOU.

     25. Any condition set forth in the MOU may be waived in writing by the Party entitled to
enforce it.

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Agreed to as of the 29th day of June, 2007:

	 	 	 	 	 	 	 
	/s/ Marc M. Umeda
 

Marc M. Umeda 

Robbins Umeda & Fink, LLP

610 West Ash Street, Suite 1800

San Diego, CA 92101 

Telephone: 619/525-3990

	 	 
	 	/s/ Marc M. Umeda w/ permission
 

Joshua M. Lifshitz

Bull & Lifshitz, LLP

18 East 41st Street

New York, NY 10017

Telephone: 212/213-6222
	 	  
	 
	 	 	 	 	 	 
	David Futscher

Parry Deering Futscher & Sparks, PSC

411 Garrard Street 

Covington, KY 41012-2168

Telephone: 859/291-9000

Jack Landskroner 

Landskroner Grieco Madden Ltd.

1360 West 9th Street, Suite 400

Cleveland, OH 44113

Telephone: 216/522-9000

	 	 	 	Brian M. Felgoise

Law Offices of Brian M. Felgoise, P.C.

261 Old York Road – P.O. Box 706

Jenkintown, PA 19046

Telephone: 215/ 886-1900

Laurence D. Paskowitz

Paskowitz & Associates

60 East 42nd Street – 46th Floor

New York, NY 10165

Telephone: 212/685-0969	 	 
	 
	 	 	 	 	 	 
	Counsel for Plaintiff 

Doris Staehr

	 	 	 	Frank E. Todaro

The Law Firm of Frank Todaro

471 East Broad Street, Suite 1303

Columbus, OH 43215	 	 
	/s/ Eric L. Zagar
 

Eric L. Zagar

	 	 
	 	Telephone: 614/242-4333	 	 
	Schiffrin & Barroway, LLP

280 King of Prussia Road

Radnor, PA 19087 

Telephone: 610/667-7706

	 	 	 	Counsel for Plaintiffs Donald Bosley,

Green Meadow Partners, LLP and

Sam Weitschner	 	 
	 
	 	 	 	 	 	 
	Paul W. Leithart, II, Esq.

Strip, Hoppers, Leithart, McGrath

   & Terlecky Co., LPA

575 S. Third Street

Columbus, OH 43215

Telephone: 614/228-6345

Counsel for Plaintiff Barry E. Weed
	 	 	 	 	 	 

- 10 -

 

	 	 	 	 	 	 	 
	/s/ Ivan K. Fong
 

Ivan K. Fong 

Executive Vice President

Chief Legal Officer and Secretary

Cardinal Health, Inc.

7000 Cardinal Place 

Dublin, OH 43017 

Telephone: 614/757-7768

	 	 
	 	/s/ John M. Newman, Jr.
 

John M. Newman, Jr.

Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114

Telephone: 216/586-3939
	 	 
	 
	 	 	 	 	 	 
	For Nominal Defendant

Cardinal Health, Inc.

	 	 	 	Counsel for Defendants David Bing, George
C. Conrades, John F. Finn, Robert L. Gerbig
John F. Havens, J. Michael Losh, John B.
McCoy, Richard C. Notebaert, Michael D.
O’Halleran, David W. Raisbeck, Jean G.
Spaulding, Matthew D. Walter, Robert D. Walter, George L. Fotiades, Mark Parrish, Ronald
K. Labrum and Anthony Rucci	 	 
	/s/ Arthur S. Greenspan
 

Arthur S. Greenspan

Richards Kibbe & Orbe LLP

One World Financial Center

New York, NY 10281-1003

	 	 
	 	 	 	 
	Telephone 212/530-1816

	 	 	 	/s/ Thomas L. Long
 

Thomas L. Long
	 	 
	Roger P. Sugarman

Kegler, Brown, Hill & Ritter

65 East State Street, Suite 1800

Columbus, OH 43215

Telephone: 614/462-5400 

Counsel for Defendant 

Richard J. Miller

	 	 	 	Baker Hostetler LLP

Capitol Square, Suite 2100

65 East State Street

Columbus, OH 43215

Telephone: 614/228-1541

Counsel for Defendants as above, and also

William F. Bindley, Regina E. Herzlinger

and Melburn G. Whitmire	 	 

- 11 -

 

	 	 	 
	/s/ James J. Benjamin, Jr.
 

James J. Benjamin, Jr.

	 	 
	Akin, Gump, Strauss, Hauer & Feld, LLP
	 	 
	590 Madison Avenue
	 	 
	New York, NY 10022-2524
	 	 
	Telephone: 212/872-1000
	 	 
	 
	 	 
	Robert H. Nichols
	 	 
	Schottenstein, Zox & Dunn Co., LPA
	 	 
	250 West Street
	 	 
	P.O. Box 165020
	 	 
	Columbus, OH 43215
	 	 
	Telephone: 614/462-2700
	 	 
	 
	 	 
	Counsel for Defendant
	 	 
	James F. Millar
	 	 

- 12 -

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