Document:

Letter agreement, and Confidentiality and Business Protection Agreement

 Exhibit 10.01 
  
  
 [Cardinal Health Letterhead] 
 November 8, 2006 
 Mark Parrish 
 Cardinal Health 
 7000 Cardinal Place 
 Dublin, OH 43017 
 Dear Mark: 
 It is with great pleasure that I confirm in writing your promotion and the terms of your employment in your new position with Cardinal Health, Inc. (the
“Company” or “Cardinal Health”). This letter will replace your existing employment agreement dated September 2, 2005, which you agree will no longer apply: 
  

	 	1.	Your new position will be CEO Healthcare Supply Chain Services. In this position, you will be reporting directly to me. During your employment, you will also serve on the Executive
Leadership Team of Cardinal Health. The effective date of your appointment to this position is November 8, 2006. 

  

	 	2.	Your annual base salary will be $700,000.00, and your cash compensation profile will be reviewed at regular annual intervals by the Human Resources and Compensation Committee of the
Board of Directors (Compensation Committee), along with all other officers of Cardinal Health. 

  

	 	3.	You will continue to participate in our Management Incentive Plan (MIP). Your target annual incentive will be 100% of your base salary. Your base salary and incentive for the
remainder of fiscal year 2007 (ending June 30, 2007) will be ratably adjusted to reflect the compensation of your new position. 

  

	 	4.	You will also continue to participate in the Long-Term Incentive Cash Program for Fiscal Years 2006 – FY2008 (LTICP). Your target opportunity in the LTICP is your cumulative
MIP payouts during the performance period. 

  

	 	5.	Upon appointment to your new position, you will receive an award of 35,000 Cardinal Health stock options along with an award of 5,000 Cardinal Health restricted share units (RSUs).
These and the equity grants made in August 2006 will represent your fiscal year 2007 awards. Your additional award of 35,000 stock options will vest in annual installments of 25% on each of the first four anniversaries of the grant date. The
additional award of 5,000 restricted share units will vest in annual installments of 33.33% on each of the first three anniversaries of the grant date. The grant date of these awards will be November 15, 2006. You will be eligible for the next
regular annual award of stock or stock options in fiscal year 2008. Standard terms and conditions will apply to these equity awards. The RSUs awarded pursuant to this Paragraph 5 will also be subject to deferred payment if you so elect on the
enclosed election form. 

	 	

  

 Mark Parrish 
 November 8,
2006 
 Page 2 
  

	 	6.	Upon appointment to your new position, you will also be awarded a special equity award of 35,000 Cardinal Health restricted share units. This special award of RSUs will vest in full
on the third anniversary of the grant date. If you are terminated without cause or if you terminate with “good reason” (as defined in paragraph 8 below), RSUs granted under this special equity award will vest in full on the date of such
termination. The grant date of this award will also be November 15, 2006. Other than the special vesting provision described above, standard terms and conditions will apply to the special equity award. 30,000 of the RSUs under this special
equity award will also be subject to deferred payment until 6 months after your separation from employment with the Company. 

  

	 	7.	You will continue to be eligible to participate in and receive benefits under other Cardinal Health employee benefit plans and programs (e.g., plans and programs that provide
medical, life insurance and other welfare and retirement benefits as well as the Company’s savings, employee stock purchase and deferred compensation plans) to the same extent as, and on the same terms and conditions as, other similarly
situated executives of the Company. 

  

	 	8.	If your employment is terminated by the Company without cause, or if you voluntarily terminate your employment for “good reason,” (either event being a “Payment
Termination”), the Company will provide you with severance equal to the sum of twelve months of your base salary as in effect on the day immediately prior to the date of termination plus your target annual bonus for the fiscal year of the
Company in which your termination occurs, such amount to be divided into twelve (12) equal installments. Your severance will be paid in equal monthly installments over the 12 month period following the Payment Termination event. In addition, if
you are not yet age 55 at the time of a Payment Termination, you will be “bridged” to retirement by deeming the termination to occur at or after your attainment of age 55, regardless of your actual age at that time, with such a termination
qualifying as a “retirement” under the terms of your outstanding equity awards as well as other applicable plans, subject to the terms of such awards and plans, including the plans under which the equity awards were made. In addition to
the benefits of termination by reason of retirement under the terms of your outstanding equity awards and other applicable plans, the effect of a “retirement” under any equity awards that do not already provide for ratable vesting will be
to result in the ratable vesting of any unvested stock options or RSUs based on the portion of the remaining vesting period elapsed at the date of the Payment Termination. You will be considered to have “good reason” to voluntarily
terminate employment only if there is a material diminution of your duties. However, a change in your reporting relationship will not alone constitute such a diminution. If the severance payments are subject to Section 409A of the Internal
Revenue Code, Cardinal Health may delay payment of the first seven (7) months of severance payments until after six (6) months and one day from the date of your termination of employment. If payment is delayed, seven (7) installments
shall be payable, with interest as described below, as soon as administratively practicable after the date which is six (6) months after the termination date, and one (1) installment shall be payable each month thereafter for a total of
five (5) additional months, with interest credited to the first seven (7) installments as determined based on the “Prime Rate” (as published in the Wall Street Journal) to the date of payment as though one such installment were
allocated to each month between the termination date and the date of payment. 

	 	

  

 Mark Parrish 
 November 8,
2006 
 Page 3 
  

	 	9.	If any payments, distributions, accelerated vesting or other benefits (“Payments”) are provided in connection with a change in control of the Company such that they would
constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code, the Payments will be reduced to the extent necessary so that no portion of the Payments will be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code. This reduction will only occur, however, if, as a result, the net after-tax benefit to you exceeds the net after-tax benefit if no reduction is made. For this purpose, the net after-tax benefit shall
be calculated by the Company’s independent certified public accountants based on then applicable federal, state, local and foreign income and employment taxes computed at the maximum marginal rate, and the excise tax under Section 4999 of
the Internal Revenue Code. If it is determined that the Payments will be reduced, you will be permitted to decide which Payments are to be reduced. 

  

	 	10.	Employment with Cardinal Health is not for any definite period of time and is terminable, with notice, at the will of either you or the Company at any time for any reason. There
shall be no contract, express or implied, of employment. However, you agree to be bound by the terms of the attached covenants related to confidentiality and protection of the Company’s business interests. This agreement must be signed and
delivered to the Company on or before the effective date of your appointment to your new position. In addition, if any of the provisions of this letter agreement are determined to result, directly or indirectly, in a violation of Internal Revenue
Code Section 409A, they will be amended to conform to the requirements of such Code Section. 

 Mark,
congratulations on your new position. We all look forward to working with you in your new role. 
  

	
	Sincerely,
	
	/s/ R. Kerry Clark
	R. Kerry Clark

 Enclosures 
 cc: Human Resources 
 I
accept the above terms and conditions of my continued employment and acknowledge that my September 2, 2005 employment agreement is no longer in effect: 
  

					
			
	/s/ Mark W.
Parrish                                       
 	 		 	 11/9/06                    

	Mark Parrish	 		 	 Date

 Confidentiality and Business Protection Agreement 
 This Confidentiality and Business Protection Agreement (“Agreement”) is hereby entered into by and between Mark Parrish (“Executive”)
and Cardinal Health, Inc., an Ohio Corporation (the “Company”) effective as of November 8, 2006. 
 It is
hereby agreed as follows: 
 1. Consideration and Acknowledgements. The parties acknowledge that the provisions and covenants contained
in this Agreement are ancillary and material to, and in consideration of, the employment letter agreement between the parties effective as of November 8, 2006, and that the limitations contained herein are reasonable in geographic and temporal
scope and do not impose a greater restriction or restraint than is necessary to protect the goodwill and other legitimate business interests of the Company. The parties also acknowledge and agree that the provisions of this Agreement do not
adversely affect the Executive’s ability to earn a living in any capacity that does not violate the covenants contained herein. The parties further acknowledge and agree that the provisions of Section 9(a) below are accurate and necessary
because (i) this Agreement is entered into in the State of Ohio, (ii) Ohio has a substantial relationship to the parties and to this transaction, (iii) Ohio is the headquarters state of the Company, which has operations nationwide and
has a compelling interest in having its employees treated uniformly, (iv) the use of Ohio law provides certainty to the parties in any covenant litigation in the United States, and (v) enforcement of the provisions of this Agreement would
not violate any fundamental public policy of Ohio or any other jurisdiction. 
 2. Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Company and all of its subsidiaries, partnerships, joint ventures, limited liability companies, and other affiliates (collectively, the “Cardinal Group”), all secret or confidential
information, knowledge or data relating to the Cardinal Group and its businesses (including, without limitation, any proprietary and not publicly available information concerning any processes, methods, trade secrets, research, secret data, costs,
names of users or purchasers of their respective products or services, business methods, operating procedures or programs or methods of promotion and sale) that the Executive has obtained or obtains during the Executive’s employment by the
Cardinal Group and that is not public knowledge (other than as a result of the Executive’s violation of this Agreement) (“Confidential Information”). For the purposes of this Agreement, information shall not be deemed to be publicly
available merely because it is embraced by general disclosures or because individual features or combinations thereof are publicly available. The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or
after the Executive’s employment with the Cardinal Group, except with prior written consent of the applicable Cardinal Group company, or as otherwise required by law or legal process. All records, files, memoranda, reports, customer lists,
drawings, plans, documents and the like that the Executive uses, prepares or comes into contact with during the course of the Executive’s employment shall remain the sole property of the Company and/or the Cardinal Group, as applicable, and
shall be turned over to the applicable Cardinal Group company upon termination of the Executive’s employment. 
 3. Non-Recruitment
of Cardinal Group Employees, etc. Executive shall not, at any time during the Restricted Period (as defined in this Agreement), without the prior written consent of the Company, engage in the following conduct (a “Solicitation”):
(i) directly or indirectly contact, solicit, recruit or employ (whether as an employee, officer, director, agent, 

 
consultant or independent contractor) any person who was or is at any time during the previous twelve months an employee, representative, officer or director
of the Cardinal Group; or (ii) take any action to encourage or induce any employee, representative, officer or director of the Cardinal Group to cease their relationship with the Cardinal Group for any reason. A “Solicitation” does
not include any recruitment of employees within or for the Cardinal Group. The “Restricted Period” means the period of Executive’s employment with the Cardinal Group (without regard to any period during which Executive serves as a
consulting employee) and the additional period ending eighteen (18) months after the Executive’s date of termination of employment or date of retirement, as applicable. 
 4. No Competition — Solicitation of Business. During the Restricted Period, the Executive shall not (either directly or indirectly or as an
officer, agent, employee, partner or director of any other company, partnership or entity) solicit, service, or accept on behalf of any competitor of the Cardinal Group the business of (i) any customer of the Cardinal Group at the time of the
Executive’s employment or date of termination of employment, or (ii) any potential customer of the Cardinal Group which the Executive knew to be an identified, prospective purchaser of services or products of the Cardinal Group.

 5. No Competition — Employment by Competitor. During the Restricted Period, the Executive shall not invest in (other than in a
publicly traded company with a maximum investment of no more than 1% of outstanding shares), counsel, advise, or be otherwise engaged or employed by, any entity or enterprise that competes with the Cardinal Group, by developing, manufacturing or
selling any product or service of a type, respectively, developed, manufactured or sold by the Cardinal Group (each such person described, and not excepted, as a customer, potential customer or a competitor under Section 4 or this
Section 5 of this Agreement is a “Competitor”). 
 6. No Disparagement. 
 (a) The Executive and the Company shall at all times refrain from taking actions or making statements, written or oral, that (A) denigrate, disparage
or defame the goodwill or reputation of Executive or the Cardinal Group, as the case may be, or any of its trustees, officers, security holders, partners, agents or former or current employees and directors, or (B) are intended to, or may be
reasonably expected to, adversely affect the morale of the employees of the Cardinal Group. The Executive further agrees not to make any negative statements to third parties relating to the Executive’s employment or any aspect of the businesses
of Cardinal Group and not to make any statements to third parties about the circumstances of the termination of the Executive’s employment, or about the Cardinal Group or its trustees, directors, officers, security holders, partners, agents or
former or current employees and directors, except as may be required by a court or governmental body. 
 (b) The Executive further agrees
that, following termination of employment for any reason, the Executive shall assist and cooperate with the Company with regard to any matter or project in which the Executive was involved during the Executive’s employment with the Company,
including but not limited to any litigation that may be pending or may arise after such termination of employment. Further, the Executive agrees to notify the Company at the earliest opportunity of any contact that is made by any third parties
concerning any such matter or project. The Company shall not unreasonably request such cooperation of Executive and shall cooperate with the Executive in scheduling any assistance by the Executive, taking into account the Executive’s business
and personal affairs, and shall 

 
compensate the Executive for any lost wages or expenses associated with such cooperation and assistance. 
 7. Inventions. All plans, discoveries and improvements, whether patentable or unpatentable, made or devised by the Executive, whether alone or
jointly with others, from the date of the Executive’s initial employment by the Company and continuing until the end of any period during which the Executive is employed by the Cardinal Group, relating or pertaining in any way to the
Executive’s employment with or the business of the Cardinal Group, shall be promptly disclosed in writing to the Secretary of the Board and are hereby transferred to and shall redound to the benefit of the Company, and shall become and remain
its sole and exclusive property. The Executive agrees to execute any assignment to the Company or its nominee, of the Executive’s entire right, title and interest in and to any such discoveries and improvements and to execute any other
instruments and documents requisite or desirable in applying for and obtaining patents, trademarks or copyrights, at the expense of the Company, with respect thereto in the United States and in all foreign countries, that may be required by the
Company. The Executive further agrees at all times to cooperate to the extent and in the manner required by the Company, in the prosecution or defense of any patent or copyright claims or any litigation, or other proceeding involving any trade
secrets, processes, discoveries or improvements covered by this Agreement, but all necessary expenses thereof shall be paid by the Company. 
 8. Acknowledgement and Enforcement. The Executive acknowledges and agrees that: (A) the purpose of the foregoing covenants, including without limitation the noncompetition covenants of Sections 4 and 5, is to protect the
goodwill, trade secrets and other Confidential Information of the Company; (B) because of the nature of the business in which the Cardinal Group is engaged and because of the nature of the Confidential Information to which the Executive has
access, the Company would suffer irreparable harm and it would be impractical and excessively difficult to determine the actual damages of the Cardinal Group in the event the Executive breached any of the covenants of this Agreement; and
(C) remedies at law (such as monetary damages) for any breach of the Executive’s obligations under this Agreement would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under
this Agreement or threatens to commit any such breach, the Company shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to it) to temporary and permanent injunctive relief from a court of
competent jurisdiction, without posting any bond or other security and without the necessity of proof of actual damage. 
 9.
Miscellaneous. 
 (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without
reference to principles of conflict of laws. If, under any such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or
altered to conform thereto. The parties hereto irrevocably agree to submit to the jurisdiction and venue of the courts of the State of Ohio in any action or proceeding brought with respect to or in connection with this Agreement. The captions of
this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective successors and legal representatives. 

 (b) All notices and other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 
  

			
	If to the Executive:	  	At the most recent address on file for the Executive at the Company.
		
	If to the Company:	  	 Cardinal Health, Inc.
 7000 Cardinal Place

Dublin, Ohio 43017
 Attention: Chief Legal Officer

 or to such other address as either party shall have furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually received by the addressee. 
 (c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with the law. 
 (d) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. 
 IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written.

 Execution Date: November 7, 2006 
  

	
	/s/ Mark W. Parrish
	MARK PARRISH

  

			
	/s/ R. Kerry Clark
	CARDINAL HEALTH, INC.
	Execution Date: November 8, 2006
	By:	 	Kerry Clark
	Its:	 	President and Chief Executive OfficerCardinal Health, Inc. Amended and Restated Management Incentive Plan

 Exhibit 10.02 
 CARDINAL HEALTH, INC. 
 AMENDED
AND RESTATED MANAGEMENT INCENTIVE PLAN 
 Article 1. Establishment and
Purpose 
 1.1. Establishment of Plan. The Cardinal Health, Inc. Management Incentive Plan (the “Plan”) was established
and approved by the Board of Directors of the Company on August 14, 1996, and the Company’s shareholders approved the material terms of the Plan and the performance goals thereunder at the meeting of shareholders held on October 29,
1996. Subsequently, the Board of Directors approved an amendment to the Plan on September 3, 1998, and the Company’s shareholders approved the amendment at the annual meeting of shareholders held on November 23, 1998. The
Company’s shareholders re-approved the material terms of the performance goals under the Plan at the annual meeting of shareholders held on November 1, 2000. The Committee approved an amendment to the Plan on August 4, 2004, and the
Company’s shareholders approved the amendment and the material terms of the performance goals under the Plan as amended at the annual meeting of shareholders held on December 8, 2004. Section 8 of the Plan provides that the Committee
may amend the Plan at any time and that shareholder approval of such amendment will be required only if required by applicable law. In accordance with this authority, the Plan is hereby amended and restated effective as of July 1, 2006, to
provide for additional administrative provisions and to comply with Section 409A of the Code. The Plan is intended to provide for performance based compensation which is not subject to the deduction limitation rules under Section 162(m) of
the Code as in effect from time to time, and shall remain in effect until terminated by the Board or the Committee. 
 1.2. Purpose.
The primary purposes of the Plan are to: 
 (a) Advance the interests of the Company and its shareholders by providing
Employees in leadership positions with an annual bonus incentive to achieve the strategic objectives of the Company and its subsidiaries; 
 (b) Focus management on key measures that drive superior financial and management performance and that result in enhanced value of the Company; 
 (c) Provide compensation opportunities that are externally competitive and internally consistent with the Company’s strategic
objectives and total reward strategies; and 
 (d) Provide bonus opportunities that reward executives who are in positions to
make significant contributions to the overall success of the Company and its subsidiaries. 
 Article 2. Definitions 
 Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the defined meaning is intended, the term is capitalized:

 2.1. “Administrator” means the Committee or such other authorized officers of the Company to whom the power to administer the
Plan has been properly delegated. 
 2.2. “Applicable Law” means the requirements of Code Section 162(m) applicable to
performance based compensation. 
  

 2.3. “Award” means the cash bonus a Participant may earn under the Plan. 
 2.4. “Board” or “Board of Directors” means the Board of Directors of the Company. 
 2.5. “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations and rulings of general applicability issued
thereunder as in effect from time to time. 
 2.6. “Committee” means the Human Resources and Compensation Committee of the Board,
or such other committee of Directors appointed by the Board and comprised of two (2) or more individuals who are “outside directors” (as that term is defined in Section 162(m) of the Code). 
 2.7. “Company” means Cardinal Health, Inc., or any successor thereto. 
 2.8. “Covered Employee” means any Employee who is, or who is determined by the Committee to be likely to become, a “covered employee”
within the meaning of Code Section 162(m). 
 2.9. “Disability” shall have the meaning ascribed to such term in the long term
disability plan maintained by the Participant’s employer at the time that the determination regarding Disability is made hereunder. Notwithstanding the foregoing, if a payment under this Plan is subject to Code Section 409A,
“Disability” has the meaning ascribed to such term under that Code section. 
 2.10. “Earned Salary” means a
Participant’s base pay or salary earned and paid for the Performance Period or portion thereof in which the Employee was an eligible Participant in the Plan. 
 2.11. “Effective Date” of the Plan was July 1, 1996. The Effective Date of this Amended and Restated Plan is July 1, 2006. 
 2.12. “Employee” means a regular, active employee of the Company or of any subsidiary of the Company. Directors who are not employed by the
Company shall not be considered Employees under the Plan, nor shall independent contractors, leased employees, consultants or anyone else designated as not eligible to participate in the Plan by the Administrator. 
 2.13. “Final Bonus” means the actual bonus earned during a Performance Period by a Participant, as determined by the Administrator. 

2.14. “Participant” means an Employee who meets the eligibility requirements of Article 3 with respect to one or more Performance Periods.

 2.15. “Performance Criteria” shall have the meaning set forth in Article 4. 
 2.16. “Performance Period” means the twelve month period beginning on each July 1st and ending on the next succeeding June 30th during the term of the Plan, or such other time period established by the Administrator from time to time with respect to which the attainment of Performance Criteria will be determined. 
 2.17. “Plan” means this Cardinal Health, Inc. Amended and Restated Management Incentive Plan, as hereafter amended from time to time.

 2.18. “Target Award” means the amount of any Award as established by the Administrator that would be payable to a Participant
for a Performance Period if the Performance Criteria for the 

  

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Performance Period were fully (100%) achieved and no negative discretion was exercised by the Administrator in regard to that Award. 
 Article 3. Eligibility and Participation 
 3.1.
Eligibility and Participation. The Administrator shall designate, or determine the methodology and criteria for the designation of, the Employees who are eligible to receive an Award under the Plan. In general, an Employee may be designated
if such Employee is an executive officer of the Company. Only the Committee may determine the eligibility of Employees who are Covered Employees. 
 3.2. Partial Performance Period Participation. An Employee who becomes eligible after the beginning of a Performance Period may participate in the Plan for that Performance Period on a ratable basis. Such situations may include, but
are not limited to (a) new hires; or (b) when an Employee is promoted from a position which did not previously meet the eligibility criteria. The Administrator, in its sole discretion, retains the right to prohibit or allow participation
in the initial Performance Period of eligibility for any of the aforementioned Employees. If an Employee participates for only a portion of a Performance Period for any reason, the Performance Criteria previously established under the Plan for that
Performance Period shall apply to any Employees who become eligible after the beginning of the Performance Period, but his or her Award and Target Award will be prorated. Such proration shall be based on the number of days the Employee performed
services during the Performance Period while a Participant in the Plan over the total days in the Performance Period, or some similar method adopted by the Committee that results in a ratable reduction of the Award based on the partial Performance
Period applicable to the Employee. In addition, in the event a Participant changes job levels during a Performance Period, the Participant’s Award may be adjusted to reflect the amount of time at each job level during the Performance Period.
Notwithstanding anything in this Section 3.2 or in the Plan to the contrary, the participation in the Plan for a Covered Employee who becomes eligible after the beginning of the Performance Period shall comply with the provisions of Code
Section 162(m), as set forth in Article 4. 
 3.3. No Right to Participate. No Participant or other Employee shall at any time
have a right to be selected for participation in the Plan for any Performance Period, whether or not he or she previously participated in the Plan. 
 Article 4. Award Determination 
 4.1. Performance Criteria. As to each Performance Period, the Administrator will
establish in writing Performance Criteria based on one or more of the following performance measures of the Company (and/or one or more operating groups of the Company, if applicable) over the Performance Period: (i) cash flow;
(ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on
equity or average shareholders’ equity; (vii) total shareholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue; (xii) income or net income;
(xiii) operating income or net operating income; (xiv) operating profit or net operating profit (whether before or after taxes); (xv) operating margin; (xvi) return on operating revenue; (xvii) market share;
(xviii) contract awards or backlog; (xix) overhead or other expense reduction; (xx) growth in shareholder value relative to the moving average of the S&P 500 Index or a peer group index; (xxi) credit rating;
(xxii) strategic plan development and implementation; (xxiii) improvement in workforce diversity: (xxiv) customer satisfaction; (xxv) employee satisfaction; (xxvi) management succession plan development and implementation;
and (xxvii) employee retention. Except as otherwise provided herein, the extent to which the Performance Criteria are satisfied will determine the amount, if any, of the Award 

  

 3 

 
that will be earned by each Participant. The Performance Criteria may vary for different Performance Periods and need not be the same for each Participant
eligible for an Award for a Performance Period. 
 4.2. Adjustment of Performance Criteria. Once established, the Performance Criteria
shall not be changed during the Performance Period. Subject to the requirements of Code Section 162(m) with respect to Covered Employees, at the time the Award is made and Performance Criteria are established, the Administrator is authorized to
determine the manner in which the Performance Criteria will be calculated or measured to take into account certain factors over which Participants have no or limited control, including, but not limited to, market related changes in inventory value,
changes in industry margins, changes in accounting principles, and extraordinary charges to income. 
 4.3. Target Awards. For each
Performance Period established by the Administrator, the Administrator shall establish a Target Award for each Covered Employee and for all other Participants. Awards shall be earned based upon the financial performance of the Company or one or more
operating groups of the Company and the attainment of established Performance Criteria during a Performance Period; provided, however, the maximum Award that may be paid to any single Participant for any Performance Period is $7,500,000, such
maximum Award amount to be pro-rated if the Performance Period is less than a full fiscal year. Performance Criteria and Target Awards shall be established prior to the beginning of each Performance Period or as soon as practicable thereafter. If a
Participant commences participation after the beginning of a Performance Period, Performance Criteria in effect for the Participant’s position shall apply for the remaining balance of the Performance Period, unless otherwise determined by the
Administrator within 90 days of the date the Employee became a Participant. In all cases where the Participant is a Covered Employee, the Performance Criteria and Target Award shall be established in no event later than 90 days following the first
day of the Performance Period or after 25% of the Performance Period has elapsed, if earlier, and the outcome relative to the attainment of the Performance Criteria shall not be substantially certain at the time the Performance Criteria and Target
Award are established. This Section 4.3 is intended to ensure compliance with the exception from Code Section 162(m) for qualified “performance-based compensation,” and shall be construed, applied and administered accordingly
with respect to any Participant who is a Covered Employee. 
 4.4. Final Bonus Determinations. At the end of each Performance Period,
the Administrator shall certify in writing the extent to which the Performance Criteria were met during the Performance Period for any Awards for Covered Employees. If the Performance Criteria for the Performance Period are met, Covered Employees
shall be entitled to the payment of the Awards, subject to the Committee’s exercise of negative discretion to reduce any Final Bonus payable to a Covered Employee based on business objectives established for that Covered Employee or other
factors as determined by the Committee in its sole discretion. With respect to Participants who are not Covered Employees, the Administrator will determine the Final Bonus based on the Performance Criteria and other business objectives. The
Administrator may adjust (up or down) any Final Bonus for Participants who are not Covered Employees on the basis of such further considerations as the Administrator shall determine in its sole discretion. 
 Article 5. Payment of Final Bonuses 
 5.1. Form and
Timing of Payment. Each Participant’s Final Bonus shall be paid in cash, in one lump sum, subject to applicable tax and other authorized withholdings, on or before the 15th day of the third month after the end of each Performance Period. If payment is delayed due to an unforeseeable event or other administrative delays, payment
shall in no event be made later than the 15th day of the third month after the end of the taxable year of the
Participant in which the Final Bonus was earned. Other withholdings may include, but not be limited to, amounts previously elected to be deferred to a tax-qualified or non-qualified retirement or deferred compensation plan, employee stock purchase
plan or 

  

 4 

 
similar arrangement. The Administrator may permit or provide for deferred payment of any Final Bonus to a specified date or to a date not less than six
(6) months after termination of employment, in accordance with such conditions and procedures as the Administrator may specify in compliance with the requirements of Code Section 409A. 
 5.2. Unsecured Interest. No Participant or any other party claiming an interest in amounts earned under the Plan shall have any interest
whatsoever in any specific asset of the Company or any of its subsidiaries. The Plan is intended to constitute an unfunded plan for incentive compensation. To the extent that any party acquires a right to receive a cash payment under the Plan, such
right shall be equivalent to that of an unsecured general creditor of the Company. 
 Article 6. Termination of Employment 
 6.1. Termination of Employment Due to Death or Disability. In the event a Participant’s employment is terminated by reason of death or
Disability during the fourth quarter of the applicable Performance Period, the Final Bonus determined in accordance with Section 4.4 herein shall be reduced to reflect participation prior to termination only. The Final Bonus, if any, shall be
prorated based upon the length of time that the Participant was employed by the Company during the Performance Period and the progress toward achievement of the established Performance Criteria during the portion of the Performance Period during
which the Participant was employed by the Company. In the case of a Participant’s Disability, the employment termination shall be deemed to have occurred as of the date that the Administrator determines was the date on which the definition of
Disability was satisfied. The Final Bonus thus determined shall be paid as soon as practicable and reasonable following the end of the Performance Period in which employment termination occurs, and shall be made at the same time payments are made to
Participants who did not terminate employment during the applicable Performance Period. The Administrator may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of
the Participant’s death are to be paid. If no beneficiary is designated, the right of the Participant to receive any payment under this Plan will pass to the Participant’s estate. 
 6.2. Involuntary Termination of Employment. If the employment of a Participant is terminated by the Company other than for “Cause”
during the fourth quarter of the applicable Performance Period, the Final Bonus determined in accordance with Section 4.4 herein shall be reduced to reflect participation prior to termination only. The Final Bonus, if any, shall be prorated
based upon the length of time that the Participant was employed by the Company during the Performance Period and the progress toward achievement of the established Performance Criteria during the portion of the Performance Period during which the
Participant was employed by the Company. Whether an involuntary termination is for “Cause” shall be determined in the absolute discretion of the Administrator, whose decision shall be final and binding on all parties. 
 6.3. Termination of Employment for Other Reasons. In the event a Participant’s employment is terminated before the fourth quarter of the
Performance Period due to death, Disability or involuntary termination, with or without Cause, all of the Participant’s rights to any Final Bonus for that Performance Period shall be forfeited unless otherwise determined by the Administrator in
its sole discretion due to the business circumstances of the termination, such as a termination in connection with the divestiture of a business segment or subsidiary. If a Participant terminates employment for any other reason prior to the date the
Final Bonus, if any, is paid, all of the Participant’s rights to any Final Bonus for that Performance Period shall be forfeited. Except as provided in Sections 6.1 and 6.2, only Participants who are, as of the date the Final Bonus, if any, is
paid, either current, active Employees or current Employees who are on a leave of absence authorized by the Company shall be entitled to any Final Award earned for the Performance Period. 
  

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 6.4 Other Forfeiture Events. The Administrator may, in its discretion, require that all or any
portion of a Final Bonus is subject to an obligation of repayment to the Company upon the violation of a non-competition and confidentiality covenant applicable to the Participant. The Administrator may, in its discretion, also require repayment to
the Company of all or any portion of a Final Bonus if the amount of the Final Bonus was calculated based upon the achievement of certain financial results that were subsequently the subject of a financial statement restatement, the Participant
engaged in misconduct that caused or contributed to the need for the financial statement restatement, and the amount of the Final Bonus would have been lower than the amount actually awarded to the Participant had the financial results been properly
reported. This Section 6.4 shall not be the Company’s exclusive remedy with respect to such matters. This Section 6.4 shall not apply after a “change of control” of the Company as defined in the 2005 Long-Term Incentive Plan
or any successor plan thereto. 
 Article 7. Rights of Participants 
 7.1. Employment. No person shall have any claim or right to be granted an Award under this Plan and the grant of an Award shall not confer upon any Participant any right to be retained as an employee of the
Company or any of its subsidiaries, nor shall it limit or interfere in any way with the right of the Company or any subsidiary to terminate the employment of any Participant at any time or to increase or decrease the compensation of any Participant.
There is no obligation for uniformity of treatment of Participants under this Plan or otherwise. 
 7.2. Nontransferability. No right
or interest of any Participant in the Plan shall be assignable or transferable, other than by will or pursuant to the laws of descent and distribution, or subject to any lien, directly, by operation of law or otherwise, including, but not limited
to, by execution, levy, garnishment, attachment, pledge, or bankruptcy, and any attempt to take any such action shall be null and void. 
 7.3. Foreign Participants. Subject to the provisions of Section 4.3, the Administrator may, in order to fulfill the Plan purposes and without amending the Plan, modify Awards granted to Participants who are foreign nationals or
employed outside the United States to the extent necessary to recognize differences in local law, tax policy or custom. 
 Article 8. Administration

 8.1. Authority of the Administrator. 
 (a) General. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee will have full
authority to interpret the Plan and the terms of Awards made hereunder, to establish, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions for making or modifying Awards, to correct administrative
errors, and to make all other determinations necessary or advisable for the administration of the Plan. All decisions made by the Committee pursuant to the provisions hereof shall be made in the Committee’s sole discretion and shall be final
and binding on all persons. Notwithstanding any other provision of the Plan, the Committee shall not have any discretion or authority to make changes to any Award that is intended to qualify as “performance-based compensation” under Code
Section 162(m) to the extent that the existence of such discretion or authority would cause such Award not to so qualify. 
 (b) Delegation of Authority for the Day-to-Day Administration of the Plan. Except to the extent prohibited by Applicable Law, the Committee may delegate to one or more individuals the day-to-day administration of the Plan and any of
the functions assigned to it in this 

  

 6 

 
Plan, including the power to approve Awards to Employees who are not Covered Employees. Such delegation may be revoked at any time. All determinations and
decisions of any delegate as to any disputed question arising under the Plan, including questions of construction and interpretation, shall be final, binding and conclusive upon all parties. 
 8.2. Facility of Payment. If the Administrator deems any person entitled to receive any amount under the provisions of the Plan to be incapable of
receiving or disbursing the same by reason of minority, illness or infirmity, mental incompetence, or incapacity of any kind, the Administrator may, in its sole discretion, (i) apply such amount directly for the comfort, support and maintenance
of such person; (ii) reimburse any person for any such support theretofore supplied to the person entitled to receive any such payment; (iii) pay such amount to any person selected by the Administrator to disburse it for such comfort,
support and maintenance, including without limitation, any relative who has undertaken, wholly or partially, the expense of such person’s comfort, care and maintenance, or any institution in whose care or custody the person entitled to the
amount may be; or (iv) with respect to any amount due to a minor, deposit such amount to his or her credit in any savings or commercial bank of the Administrator ‘s choice, direct that such distribution be paid to the legal guardian, or if
none, to a parent of such person or a responsible adult with whom the minor maintains his or her residence, or to the custodian for such person under the Uniform Gift to Minors Act or Gift to Minors Act, if such payment is permitted by the laws of
the state in which the minor resides. Payment pursuant to this Section 8.2 shall fully discharge the Company, the Board, the Committee, the Administrator, and the Plan from further liability on account thereof. 
 Article 9. Amendments 
 The Committee, without notice,
at any time and from time to time, may modify or amend, in whole or in part, any or all of the provisions of the Plan, or suspend or terminate it entirely; provided, however, that no such modification, amendment, suspension, or termination may,
without the consent of a Participant, materially reduce the right of a Participant to a payment or distribution hereunder to which he or she has already become entitled, as determined under Articles 4 and 6 hereof. Shareholder approval of any
amendment will be required only as required by Applicable Law. No new Award may be granted during any period of suspension of the Plan or after termination of the Plan. 
 Article 10. Miscellaneous 
 10.1. Choice of Law. The Plan and all agreements hereunder shall be
governed by and construed in accordance with the laws of the State of Ohio, except as to matters pre-empted or governed by federal law. 
 10.2. Withholding Taxes. The Company shall have the right to deduct from all cash payments under the Plan any federal, state, or local taxes required by law to be withheld with respect to any Final Bonus. 
 10.3. Additional Arrangements. Nothing contained in this Plan shall prevent the Company from adopting other or additional compensation
arrangements for any Participant. 
 10.4. Gender and Number. Except where otherwise indicated by the context, any masculine term used
herein also shall include the feminine; the plural shall include the singular, and the singular shall include the plural. 
  

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 10.5. Severability. In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 
 10.6. Successors. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 
 10.7. Titles; Construction. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of
the Plan. Any reference to a section (other than to a section of the Plan) shall also include a successor to such section. 
  

			
	CARDINAL HEALTH, INC.
		
	By:	 	 /s/ Carole S. Watkins

	Title:	 	CHRO

  

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