Document:

Document

Exhibit 10.1

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 Stock Units (the “Performance Share Units” or “Award”).  The Performance Share Units have been granted pursuant to the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (the “Plan”), and are subject to all provisions of the Plan, which are incorporated in this Agreement 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 specific performance criteria (the “Performance Goals”) for a performance period (“Performance Period”) set forth in Exhibit A attached hereto.

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), (d) or (e) or Paragraph 5, if a Termination of Employment occurs prior to the [applicable payment date in Paragraph 6(a) (the “Payment Date”)]1 / [First Payment Date (as defined in Paragraph 6(a))]2 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 by reason of Awardee’s death or Disability occurs at least 6 months after the Grant Date, then the outstanding unvested Performance Share Units for a Performance Period will vest as if Awardee had remained employed through the [First]2 Payment Date.

c.[Retirement.  If a Termination of Employment by reason of Awardee’s Retirement occurs at least 6 months after the Grant Date, then the outstanding unvested Performance Share Units for a Performance Period will vest in an amount equal to the number of Performance Share Units that would have vested if Awardee had remained employed through the [First]2 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.]3

d.Involuntary Termination with Severance.  If (i) neither Paragraph 3(c) nor Paragraph 3(e) is applicable, but Awardee has attained either (A) age 53 and at least eight years of continuous service with the Company and its Affiliates (collectively, the “Cardinal Group”), or (B) age 59 and at least four years of continuous service with the Cardinal Group, in each case including service with an Affiliate of the Company prior to the time that such Affiliate became an Affiliate of the Company, (ii) a Termination of Employment by the Cardinal 
1 For awards without deferred settlement.
2 For awards with deferred settlement.
3 This provision is an alternative that may not be included in every award agreement.

Group (other than a Termination for Cause) occurs at least 6 months after the Grant Date, and (iii) no later than 45 days after the Termination of Employment, Awardee enters into a written separation agreement and general release with the Cardinal Group (in such form as may reasonably be presented by the Company) (a “Separation Agreement”), and Awardee does not timely revoke such Separation Agreement, then the outstanding unvested Performance Share Units for a Performance Period will vest in an amount equal to the number of Performance Share Units that would have vested if Awardee had remained employed through the [First]2 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.

e.Involuntary Termination After Completion of a Performance Period.  If a Termination of Employment by the Cardinal Group (other than a Termination for Cause) occurs after the completion of a Performance Period but prior to the [First]2 Payment Date, then the Performance Share Units for the applicable Performance Period will vest as if Awardee had remained employed through the [First]2 Payment Date.

4.Special Forfeiture and Repayment Rules.  This Agreement contains special forfeiture and repayment rules intended to encourage conduct that protects 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 date the Misconduct first occurred and have not yet been paid pursuant to Paragraph 6, 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 Awardee resulting from the payment of the Performance Share Units pursuant to Paragraph 6 that had vested at any time within three years prior to the date the Misconduct first occurred 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]1 / [applicable payment date]2.

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 the Standards of Business Conduct or any successor code of conduct or other 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;

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 or employees known to Awardee; or

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

Nothing in this Agreement will prevent Awardee from testifying truthfully as required by law, prohibit or prevent Awardee from filing a charge with or participating, testifying or assisting in any investigation, hearing, whistleblower proceeding or other proceeding before any federal, state or local government agency (e.g., Equal Employment Opportunity Commission, National Labor Relations Board, Securities and Exchange Commission, etc.), or prevent Awardee from disclosing Cardinal Group’s confidential information in confidence to a federal, state or local government official for the purpose of reporting or investigating a suspected violation of law.

b.Competitor Conduct.  If Awardee engages 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 date the Competitor Conduct first occurred and have not yet been paid pursuant to Paragraph 6, 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 that had vested at any time since the earlier of one year prior to the date the Competitor Conduct first occurred 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]1 / [applicable payment date]2.

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).

      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 4 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]2 / [the First Payment Date]3, 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]1 / [the First Payment Date]2, 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 to replace or adjust the Award.  If a Substitute Award is provided, any Performance Share Units that (A) except to the extent that clause (B) applies, 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 or (B) are eligible to vest in accordance with Paragraph 3(d) as a result of Awardee’s Termination of Employment that actually occurs prior to the Change of Control, 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, Retirement or the circumstances described in Paragraph 3(d) prior to a Change of Control.

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 the time of grant or adjustment 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, (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 at or 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 and Paragraphs 6(b) and (c), 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.]1 / [The Company shall pay Performance Share Units in Shares.  Subject to the provisions of Paragraph 4, 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. Subject to the provisions of Paragraph 6(b) and (c), payment with respect to any vested Performance Share Units shall be made in three installments.  The first installment, which shall be with respect to [percentage] of the total number of vested Performance Share Units, shall be paid no later than the 60th day after the end of the Performance Period (the “First Payment Date”).  The second installment, which shall be with respect to [percentage] of the total number of vested Performance Share Units, shall be paid on the first anniversary of the last day of the Performance Period.  [The third installment, which shall be with respect to [percentage] of the total number of vested Performance Share Units, shall be paid on the second anniversary of the last day of the Performance Period.]  Notwithstanding the above, in the event of an Awardee's death after the end of the Performance Period, Awardee is entitled to receive, with respect to any Performance Shares Units which are not subject to a “substantial risk of forfeiture” as determined for purposes of Section 409A of the Code on the date of Awardee’s death, the corresponding Shares from the Company on account of any vested Performance Share Units which have not yet been paid as soon as practical following the date of death.  Payment shall be made at each of the times specified above unless the Administrator makes a finding that the number of vested Performance Share Units shall be reduced pursuant to Paragraph 4 due to Misconduct or Competitor Conduct.]2

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 such 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)(v) of the Code and the regulations thereunder, and where Section 409A of the Code applies to such distribution as a deferral of compensation, 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).  

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(a)(2)(A)(v) of the Code and the regulations thereunder), 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 employees 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]1 / [applicable payment date]2 applicable 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. [Any election to defer will be valid only if the elected payment date is a date that is later than the date payment would have otherwise occurred.]2

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 underlying the Performance Share Units if it had been outstanding between the Grant Date and the [applicable]2 payment date of any such Share (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 as soon as reasonably practicable after the [applicable]2 payment date of (and to the same extent as) the Performance Share Units to which such dividend equivalents relate.

8.Right of Set-Off.  By accepting the 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), regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Performance Share Units.  The 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 amounts being paid by the Company, 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.  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.  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 amount legally required and withholding above the minimum withholding requirements shall be available only if and to the extent that the Administrator has authorized such.  The Company has the right to deduct from all cash payments paid pursuant to Paragraph 7 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 in this Agreement 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 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 or to disqualify the Award under any Applicable Law 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.Defend Trade Secrets Act Notice.  Under the U.S. Defend Trade Secrets Act of 2016, Awardee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; (b) is made to Awardee’s attorney in relation to a lawsuit for retaliation against Awardee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  

13.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 under this Agreement, the Administrator may rely upon documents, written statements of 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, to the extent permitted under the Plan.

14.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.

15.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.

16.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:  Chief Legal and Compliance Officer

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.

17.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 by reason of specified events 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 of this Agreement to the extent permitted by the terms of the Plan.

18.Recoupment.  This Agreement will be administered in compliance with Section 10D of the Exchange Act 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 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 18 is not the Company’s exclusive remedy with respect to such matters.  Except as otherwise required by Applicable Law, this Paragraph 18 will not apply after a Change of Control.

19.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, including pursuant to Section 16(c) of the Plan.

20.Adjustments.  The number of Shares issuable for each Performance Share Unit and the other terms and conditions of the Award evidenced by this Agreement are subject to adjustment as provided in Section 16 of the Plan.

21.Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code.  This Agreement shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of Awardee).

22.No Right to Future Awards or Employment.  The grant of the Performance Share Units under this Agreement to Awardee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards.  The grant of the Performance Share Units and any payments made under this Agreement will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law.  Nothing contained in this Agreement confers upon Awardee any right to be employed or remain employed by the Company or any of its Affiliates, nor limits or affects in any manner the right of the Company or any of its Affiliates to terminate the employment or adjust the compensation of Awardee.

23.Successors and Assigns.  Without limiting Paragraph 2, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of Awardee, and the successors and assigns of the Company.

CARDINAL HEALTH, INC.

By:                                                                        
Its:                                                                         

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 “Special Forfeiture and Repayment Rules” set forth in Paragraph 4 and “Recoupment” set forth in Paragraph 18; (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]Exhibit
10.1

 

PLEASE
NOTE: CERTAIN INFORMATION INDICATED WITH [***] IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

 

SECOND
AMENDMENT TO THE

DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT

 

This
Second amendment to the Development and Commercialization Agreement (“Second
Amendment”) is entered into as of 8 November, 2021 (the “Effective Date”) and amends the Development and
Commercialization entered into on April 15, 2019 (as amended by the parties on May 3, 2019, “Agreement”) between,
Pulmatrix, Inc. a company incorporated under the laws of the State of Delaware,
and Pulmatrix Operating Company, Inc., a company incorporated under the laws of
the State of Delaware (together “Company”), and each having a principal place of business at 99 Hayden Avenue, Suite
390, Lexington, Massachusetts 02421, and Cipla Technologies, LLC, a limited liability
company organized under the laws of Delaware, and having a principal place of business at 7 Oser Avenue, Hauppauge, NY 11788 (“Cipla”).
Company and Cipla may be referred to herein as a “Party” and collectively as the “Parties”. Capitalized
terms used herein but not otherwise defined herein shall have the respective meanings given such terms in the Agreement.

 

RECITALS

 

Whereas,
prior to the date of this Second Amendment the JSC determined that it is in the best interest of the Parties to terminate the Phase 2
ABPA Study as described in the Development Plan attached to the Agreement as Exhibit II, which had been initiated around the date
of the Agreement,

 

Whereas,
the Parties now desire to initiate a new Phase 2b Clinical Study (“Phase 2b Clinical Study”), which, based upon a
recently completed 6-month inhalation toxicology study in dogs, would be of longer duration than the terminated Phase 2a clinical study
and include efficacy primary endpoints; and

 

Whereas,
in connection with the initiation of such new Phase 2b Clinical Study, the Parties wish to amend the Agreement as provided below.

 

Now,
Therefore, in consideration of the foregoing premises
and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows.

 

1.1
Recitals & Modification Requires Written Amendment. (a) The above preamble shall be an integral part of this Second Amendment.
(b) Provisions of the Agreement not expressly modified or amended by this Second Amendment shall continue to apply without any change
thereto.

 

1.2
Cipla Territory.

 

(a)
Subject to the terms of this Second Amendment, all Development and Commercialization activities with respect to the Product in India,
South Africa, Sri Lanka, Nepal, Iran, Yemen, Myanmar and Algeria (such countries, the “Cipla Territory”) will be conducted
exclusively by Cipla at Cipla’s sole cost and expense. Accordingly, each reference to the “Territory” in the
Agreement is by reference amended to exclude the Cipla Territory.

 

    	 

     

    

 

(b)
All of Cipla’s Development activities for the Product in the Cipla Territory shall be conducted pursuant to one or more plans (such
plans, a “Cipla Territory Development Plan(s)”) prepared by Cipla, which shall be substantially similar to the Development
Plan for the United States and be submitted to the JSC for any questions, provided, however, Cipla will have the final
decision with respect to the Cipla Territory Development Plan. Any Cipla Territory Development Plan in effect from time to time may be
amended upon written notice to the JSC. For clarity and notwithstanding anything contained herein to the contrary, any material difference
of the Cipla Territory Development Plan(s) from the Development Plan for the United States shall require the prior approval of the JSC.
For further clarity any differences between the Development Plan for the United States and the Cipla Territory Development Pan(s) that
are the result of local regulatory requirements of a jurisdiction within the Cipla Territory or that would not otherwise jeopardize the
success of the Development Plan for the United States shall not be deemed “material differences.”

 

(c)
Cipla is responsible for all Regulatory Filings and other regulatory matters in the Cipla Territory for the Development and Commercialization
of the Product in the Cipla Territory; however, for the avoidance of doubt, the provisions of Section 4.2, Section 4.3
and Section 4.4 of the Agreement, to the extent relevant, shall apply with equal force with respect to the Development and Commercialization
of the Product in the Cipla Territory. The Company shall use reasonable best efforts to cooperate with Cipla, at Cipla’s expense,
in preparation of Regulatory Filings, including by providing information regarding prior clinical study data, non-clinical data and CMC
information.

 

(d)
The Company and Cipla will execute an agreement that delineates the obligation of Company to maintain the global safety database with
respect to the Product (including with respect to the Cipla Territory) (“Pharmacovigilance Agreement”). The parties
will enter into such Pharmacovigilance Agreement as soon as possible after the date hereof and in event within thirty (30) days after
the date hereof.

 

(e)
Neither the Company nor the JSC shall have the right to review or approve Cipla’s Commercialization plans or activities with respect
to the Cipla Territory and all Commercialization of the Product in the Cipla Territory shall be at the sole discretion, cost and expense
of Cipla. For all purposes, Free Cash Flow, Net Sales, Cost of Goods Sold, Allowable Expenses and Working Capital under the Agreement
shall be calculated without considering any Commercialization activities for the Product in the Cipla Territory and all sales, income,
costs, expenses and/or capital expenditures related thereto.

 

(f)
All Product used in the Development or Commercialization in the Cipla Territory shall be supplied utilizing the Company’s existing
global supply chain for manufacturing of the Product. Cipla, may, at its option and at its sole cost and expense, transfer the manufacturing
of the Product for Development or Commercialization activities in the Cipla Territory to a manufacturing site designated by Cipla. Any
such manufacturing site shall be qualified under applicable laws and such site transfer shall be conducted in accordance with applicable
laws and regulations, good manufacturing practices (as defined by the International Council on Harmonization) or other mutually acceptable
criteria established by the JSC. The Company shall cooperate with Cipla in such site transfer and Cipla shall reimburse the Company for
all actual costs and expenses, and the mutually agreed cost of time spent by the Company’s employees and consultants, incurred
by the Company in connection with such site transfer to the extent that such cost is solely incurred with respect to the Cipla Territory.

 

(g)
Section 6.5 of the Agreement shall not apply with respect to any sublicense or other transfer of Cipla’s rights under the
Agreement and this Second Amendment with respect to the Cipla Territory. For clarity, (i) nothing herein impacts Cipla’s ownership
of the Assigned Assets as detailed under Section 6.1 of the Agreement; and (ii) Cipla will solely and exclusively own all of the intellectual
property rights generated with respect to the Cipla Territory, provided, that, without limiting Cipla’s absolute ownership of Assigned
Assets and the Cipla Territory intellectual property rights as stated in the foregoing sentence, the Company shall have a worldwide,
non-exclusive, royalty-free, non-transferrable, non-sublicensable license to such intellectual property rights for use in connection
with Development of the Product for the treatment of the Initial Indication. Such license shall terminate upon any termination or expiry
of the Agreement.

 

    	2

     

    

 

(h)
Subject to (x) completion of the manufacturing transfer contemplated by Section 1.2(f) and (y) Cipla beginning sourcing Product from
such alternate manufacturing site, the Company shall be entitled to a royalty equal to 2% of Net Sales from sale of the Product in the
Cipla Territory purchased from such alternate manufacturing site. Such royalty shall be payable quarterly within 120 days after the last
day of each calendar quarter. Cipla shall provide the Company with reasonable support for the calculation of such royalty upon the Company’s
request. The Company’s right to such royalty shall terminate on a country-by-country basis upon the expiration of the last to expire
patent covering the Product in a specific country in the Cipla Territory. Nothing contained herein will restrict Cipla from and Cipla
shall be fully free to either license, sell or otherwise partner with any Third Party with respect to its commercialization efforts of
the Product in the Cipla Territory.

 

1.3
New Preliminary Development Plans.

 

(a)
The Company has delivered to the JSC, and by the parties execution of this Agreement the JSC shall be deemed to have approved in accordance
with the terms of Section 2.1(e) of the Agreement, a Development Plan, including a budget of all Development Costs, for a Phase
2b Clinical Study of the Product for the treatment of ABPA, which Clinical Study shall include efficacy endpoints (the “Phase
2b Development Plan”). The Phase 2b Development Plan is attached hereto as Annex 1.

 

(b)
The Company also delivered a preliminary Development Plan, including a preliminary budget of all Development Costs for a Phase 3 Clinical
Study of the Product for ABPA (the “Phase 3 Development Plan”), which is attached hereto as Annex 2. The Phase
3 Development Plan is attached hereto The Parties acknowledge and agree that the Phase 3 Development Plan, including the preliminary
budget for the Phase 3 Development Plan, are the Company’s good faith estimate of timing and costs, however, the final Phase
3 Development Plan and budget for Phase 3 Development Plan may vary based on, among other things, the result sof the Phase 2b Clinical
Study, feedback from the FDA and/or the clinical research organization that will conduct the Phase 3 Clinical.

 

1.4
Amendments to Article 1 of the Agreement. Article 1 of the Agreement is hereby amended by adding the following definitions
thereto in appropriate alphabetical order:

 

“Second
Amendment” means the Second Amendment to this Agreement dated November 8, 2021, by and between the Parties

 

“Direct
Costs” means the dollar amount of Development Costs for the Company’s overhead costs and the time spent by the Company’s
employees and consultants on work related to activities under the Development Plan, and all ancillary costs associated with such employees
and consultants including, without limitation, rent, insurance and office expenditure.

 

“Non-Direct
Costs” means all Development Costs that are not Direct Costs.

 

In
addition, Article 1 is amended by deleting the word “consultants” from the definition of “Out-of-Pocket Costs”.

 

    	3

     

    

 

1.5
Amendment to Sectoin 3.5. Section 3.5 of the Agreement is hereby amended and restated as follows with effect from and after
the date hereof:

 

“3.5
Co-Development Contributions.

 

	 	(a)	Cost
    Sharing. After the Initial Development Funding is depleted (the “Co-Development Phase”), the Company
    and Cipla will each be responsible for sixty percent (60%) and forty percent (40%), respectively, of Direct Costs, and each will
    be responsible for fifty (50%) of Non-Direct Costs; provided, however, upon the achievement of the Development Milestones
    (as defined below) within the time frame mentioned under ‘Milestone Date’ below (or such date as proposed
    by the JSC for the Phase 3 Development Plan), Cipla shall promptly, and in any case within 30 days after the Company’s achievement
    of the relevant Development Milestone, reimburse the Company an amount equal to 10% of the aggregate Direct Costs incurred through
    the date that each such Development Milestone was achieved (and not previously reimbursed or paid by Cipla). For purposes hereof,
    the “Development Milestones” means the following:

 

	Phase
    2b Development Plan – Development Milestones	 	 
	 	 	 
	Development
    Milestone	 	Milestone
    Date
	 	 	 
	25%
    of Patients enrolled in Phase 2b Clinical Study are dosed	 	June
    30, 2023
	 	 	 
	Company
    delivers summary of key efficacy and safety data to include FEV1, IgE, ACQ-6, number of subjects withdrawn, Any severe adverse events
    related to the medication and an overall summary table of adverse events (“Topline Results”) to the JSC
    	 	June
    30, 2024

 

	Phase
    3 Development Plan – Development Milestones	 	 
	 	 	 
	Development
    Milestone	 	Milestone
    Date
	 	 	 
	25%
    of Patients enrolled in Phase 3 Clinical Study dosed	 	To
    be proposed by by JSC 
	 	 	 
	Company
    delivers Topline Results to the JSC 	 	To
    be proposed by JSC 
	 	 	 
	PDUFA	 	To
    be proposed by JSC 

 

    	4

     

    

 

	 	(b)	Funding
    Co-Development Phase. After the Initial Development Funding is depleted, Company shall, within five (5) days after the end of
    each calendar month, deliver an invoice to Cipla for the Development Costs incurred by the Company, including a breakdown of Direct
    Costs and Non-Direct Costs, for such calendar month and for which Cipla is responsible pursuant to Section 3.5(a). By not later than
    the last Business Day of the calendar month in which such invoice was delivered to Cipla, Cipla shall deliver to the Company, by
    wire transfer of immediately available funds, the invoiced amount.
	 	 	 
	 	(c)	Reserved.
	 	 	 
	 	(d)	Reserved.”

 

1.6
Amendment to Section 3.6. Section 3.6 of the Agreement is hereby amended and restated as follows with effect from and after
the date hereof:

 

“3.6
Circumstances Affecting Continuity of Development. If (i) the applicable Regulatory Authority deems the data from one or more
applicable Clinical Studies do not meet anticipated safety or efficacy endpoints and/or there is failure in Clinical Studies; (ii) a
Regulatory Authority suggests additional Clinical Studies that will have a significant financial impact on the total Development Costs;
(iii) there is change in market scenario or change in global research and development scenario or an unforeseen competitive event or
change in Applicable Law, which causes commercial or technical unviability and has a material adverse impact on the Development activities
contemplated under the Development Plan, as amended from time to time; (iv) any change in Applicable Law results in a materially adverse
market environment for the Commercialization of the Product which is not likely to abate within a period of twelve (12) calendar months;
or (v) any Development Milestone set forth in Section 3.5 above has not been achieved by the date that is nine (9) months after the applicable
Milestone Date for such Development Milestone:

 

(a)
The JSC will evaluate the cause and effect of each scenario in (i), (ii), (iii), (iv) and (v) above and make a recommendation as to the
most optimal option available to the Parties, which may include, without limitation, repeating Clinical Studies, abandoning the Development
program, or discussing new ways to monetize the Assigned Assets. Either Party may, without any binding obligation, elect to follow, or
decide against, the recommendation of the JSC. In any event, either Party may elect to terminate (a “Terminating Party”)
its obligation to fund additional costs and expenses for the Development and/or Commercialization of the Product.

 

(b)
If the non-Terminating Party wishes to continue the Development of the Product, it will have the right to purchase the rights of the
Terminating Party in the Product at Fair Market Value as may be determined by a qualified independent Third Party expert acceptable to
both Parties or based on external bid received on the Product by a Third Party and continue with the Development program either by itself
or by partnering with any third party.

 

(c)
If both Parties decide to follow the recommendation of the JSC and, thereby, abandon the Development program, the Parties shall make
Commercially Reasonable Efforts to monetize the Product and the Development program in connection with the Pulmonary Indications. The
Parties will equally share the proceeds. The events described above will not be considered an event of default or breach under this Agreement.”

 

    	5

     

    

 

1.7
COGS. Company will use its reasonable best efforts to improve upon the current Cost of Goods Sold for the Product such that
the Cost of Goods Sold in the Cipla Territory is [***] for one month’s supply of the Product containing the minimum daily
dose or yielding at least a [***] gross margin to Cipla, however, Cipla acknowledges that achieving such Cost of Goods Sold or
gross margin is partially dependent on Cipla’s ability to achieve sufficient demand for the Product required for scale and cost
efficiency. The failure to achieve any specific Cost of Goods Sold gross margin from sales of the Product in the Cipla Territory shall
not be deemed a breach of the Agreement or this Second Amendment by the Company. For the avoidance of doubt, upon completion of the manufacturing
transfer contemplated by Section 1.2(f), this Section 1.6 shall have no further force and effect.

 

1.8
Releases. Prior to the date of this Second Amendment each party alleged certain material breaches of the Agreement against
the other party. In consideration of each party’s entry into this Second Amendment, each party, on behalf of itself and its affiliates,
hereby releases the other party, and its successors and assigns, for any breaches, violations or non-compliance with the terms of the
Agreement that may have occurred prior to the date of this Second Amendment.

 

1.9
Entire Agreement. This Second Amendment, along with the Agreement, constitutes the entire agreement between the Parties with
respect to the subject matter herein, and supersedes all prior agreements, proposals, negotiations, representations or communications
relating to such subject matter. The Parties acknowledge that they have not been induced to enter into this Agreement by any representations
or promises not specifically stated herein.

 

1.10
Execution; Counterparts. This Second Amendment may be executed in multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. Facsimile signatures, including signatures in a fixed
electronic format such as PDF, shall have the same effect as originals.

 

    	6

     

    

 

IN
WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS SECOND AMENDMENT AS OF THE EFFECTIVE DATE.

 

	Pulmatrix,
    Inc.	 	Cipla
    Technologies LLC
	Pulmatrix
    Operating Company Inc. 	 	 	 
	 	 	 	 	 
	By:	/s/
    Teofilo Raad 	 	By:	/s/
    Chandru Chawla
	Name:	Teofilo
    Raad	 	Name:	Chandru
    Chawla
	Title:	Chief
    Executive Officer	 	Title:	EVP
	Date:	November
    8, 2021	 	Date:	October
    26, 2021

 

    	7

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