Document:

EX-10.08

 

Exhibit 10.08

CARDINAL HEALTH, INC.

RESTRICTED SHARE UNITS AGREEMENT

     On [date of grant] (the “Grant Date”), Cardinal Health, Inc, an Ohio corporation (the
“Company”), has awarded to Robert D. Walter
(“Awardee”) [# of RSUs] Restricted Share Units (the
“Restricted Share Units” or “Award”), representing an unfunded unsecured promise of the Company to
deliver common shares, without par value, of the Company (the “Shares”) to Awardee as set forth
herein. The Restricted Share Units have been granted pursuant to the Cardinal Health, Inc. 2005
Long-Term Incentive Plan, as amended (the “Plan”), and shall be subject to all provisions of the
Plan, which are incorporated herein by reference, and shall be subject to the provisions of this
Restricted Share Units Agreement (this “Agreement”). Capitalized terms used in this Agreement
which are not specifically defined shall have the meanings ascribed to such terms in the Plan.

     1. Vesting. Subject to the provisions set forth elsewhere in this Agreement, the
Restricted Share Units shall vest in accordance with the following schedule: 33.33% of the
Restricted Share Units shall vest on the first anniversary of the Grant Date, an additional 33.33%
of the Restricted Share Units shall vest on the second anniversary of the Grant Date, and the final
33.34% of the Restricted Share Units shall vest on the third anniversary of the Grant Date (each
such vesting date, the “Vesting Date” with respect to the Restricted Share Units scheduled to vest
on such date). Notwithstanding the foregoing, in the event of a Change of Control prior to
Awardee’s Termination of Employment, the Restricted Share Units shall vest in full.

     2. Transferability. The Restricted Share Units shall not be transferable.

     3. Termination of Employment. Except as set forth below, if a Termination of
Employment occurs prior to the vesting of a Restricted Share Unit, such Restricted Share Unit shall
be forfeited by Awardee.

     (a) Termination of Employment by Reason of Death. If a Termination of Employment
occurs prior to the vesting in full of the Restricted Share Units by reason of Awardee’s death,
then any unvested Restricted Share Units shall vest in full and shall not be forfeited.

     (b) Termination of Employment by Reason of Retirement or Disability. If a Termination
of Employment occurs by reason of Retirement or Disability prior to the vesting in full of the
Restricted Share Units, then any Restricted Share Units which have not vested on such date of
Termination of Employment will, at the Company’s election, either vest immediately or continue to
vest in accordance with the original vesting schedule, provided that, in the case of Retirement,
Awardee complies with his obligation to perform consulting services as described in the Second
Amended and Restated Employment Agreement, between the Company and Awardee, dated April 17, 2006,
as subsequently amended (the “Employment Agreement”). Notwithstanding the foregoing, if Awardee
dies after Retirement or Disability, but before the Restricted Share Units are fully vested, the
provisions of Paragraph 3(a) of this Agreement shall apply.

     (c) Other Termination of Employment. For the purposes of this Paragraph 3,
Termination of Employment shall mean the termination of both the Employment Period and the
Consulting Period under the Employment Agreement, as such terms are defined in the Employment
Agreement. Upon a Termination of Employment by the Company without Cause or by the Awardee with
Good Reason, as such terms are defined in the Employment Agreement, any Restricted Share Units
which have not vested on such date of Termination of Employment will become fully vested as of such
date.

 

 

     4. Triggering Conduct/Competitor Triggering Conduct. As used in this Agreement,
“Triggering Conduct” shall mean engaging in any conduct described in Section 9(b), 9(c),
9(f) or 9(g) of the Employment Agreement. As used herein, “Competitor Triggering Conduct”
shall mean engaging in any conduct described in Section 9(d) or 9(e) of the Employment Agreement.

     5. Special Forfeiture/Repayment Rules. For so long as Awardee continues as an
Employee with the Cardinal Group and for two years following a Termination of Employment (without
regard to the Consulting Period as defined in the Employment Agreement) regardless of the reason,
Awardee agrees not to engage in Triggering Conduct. If Awardee engages in Triggering Conduct
during the time period set forth in the preceding sentence or in Competitor Triggering Conduct as
defined above, then:

     (a) any Restricted Share Units that have not yet vested or that vested within the Look-Back
Period (as defined below) with respect to such Triggering Conduct or Competitor Triggering Conduct
and have not yet been settled by a payment pursuant to Paragraph 6 hereof shall immediately and
automatically terminate, be forfeited, and cease to exist; and

     (b) Awardee shall, within 30 days following written notice from the Company, pay to the
Company an amount equal to (x) the aggregate gross gain realized or obtained by Awardee resulting
from the settlement of all Restricted Share Units pursuant to Paragraph 6 hereof (measured as of
the settlement date (i.e., the market value of the Restricted Share Units on such settlement date))
that have already been settled and that had vested at any time within two years prior to the
Triggering Conduct (the “Look-Back Period”), minus (y) $1.00. If Awardee engages only in
Competitor Triggering Conduct, then the Look-Back Period shall be shortened to exclude any period
more than one year prior to Awardee’s Termination of Employment, but including any period between
the time of Termination of Employment and the time of Awardee’s engaging in Competitor Triggering
Conduct.

     Awardee may be released from his or her obligations under this Paragraph 5 if and only if the
Administrator (or its duly appointed designee) determines, in writing and in its sole discretion,
that such action is in the best interests of the Company. Nothing in this Paragraph 5 constitutes
a so-called “noncompete” covenant. This Paragraph 5 does, however, prohibit certain conduct while
Awardee is associated with the Cardinal Group and thereafter and does provide for the forfeiture or
repayment of the benefits granted by this Agreement under certain circumstances, including, but not
limited to, Awardee’s acceptance of employment with a Competitor. Awardee agrees to provide the
Company with at least 10 days written notice prior to directly or indirectly accepting employment
with, or serving as a consultant or advisor or in any other capacity to, a Competitor, and further
agrees to inform any such new employer, before accepting employment, of the terms of this Paragraph
5 and Awardee’s continuing obligations contained herein. No provision of this Agreement shall
diminish, negate or otherwise impact any separate noncompete or other agreement to which Awardee
may be a party, including, but not limited to, any of the Certificates of Compliance with Company
Policies and/or the Certificates of Compliance with Company Business Ethics Policies; provided,
however, that to the extent that any provisions contained in any other agreement are inconsistent
in any manner with the restrictions and covenants of Awardee contained in this Agreement, the
provisions of this Agreement shall take precedence and such other inconsistent provisions shall be
null and void; provided, further, however, that the provisions of the Employment Agreement and
Paragraph 13 of this Agreement shall take precedence over this Paragraph 5(b). Awardee
acknowledges and agrees that the provisions contained in this Agreement are being made for the
benefit of the Company in consideration of Awardee’s receipt of the Restricted Share Units, in
consideration of employment, in consideration of exposing Awardee to the Company’s business
operations and confidential information, and for other good and valuable consideration, the
adequacy of which consideration is hereby expressly confirmed. Awardee further acknowledges that
the receipt of the Restricted Share Units and execution of this Agreement are voluntary actions on
the part of Awardee and

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that the Company is unwilling to provide the Restricted Share Units to Awardee without
including the restrictions and covenants of Awardee contained in this Agreement. Further, the
parties agree and acknowledge that the provisions contained in Paragraphs 4 and 5 are ancillary to,
or part of, an otherwise enforceable agreement at the time the agreement is made.

     6. Payment. Subject to the provisions of Paragraphs 4 and 5 of this Agreement, and
unless Awardee makes an effective election to defer receipt of the Shares represented by the
Restricted Share Units, on the date of vesting of any Restricted Share Unit, Awardee shall be
entitled to receive from the Company (without any payment on behalf of Awardee other than as
described in Paragraph 11) the Shares represented by such Restricted Share Unit; provided, however,
that, subject to the next sentence, in the event that such Restricted Share Units vest prior to the
applicable Vesting Date as a result of the death of Awardee or as a result of a Change of Control
or otherwise, Awardee shall be entitled to receive the corresponding Shares from the Company on the
date of such vesting. Notwithstanding the proviso of the preceding sentence, if Restricted Share
Units vest as a result of the occurrence of a Change of Control or otherwise under circumstances
where such occurrence would not qualify as a permissible date of distribution under Section
409A(a)(2)(A) of the Code, and the regulations thereunder, and where Code Section 409A applies to
such distribution, such proviso shall not apply and Awardee shall be entitled to receive the
corresponding Shares from the Company on the date that would have applied absent such proviso.
Elections to defer receipt of the Shares beyond the date of settlement provided herein may be
permitted in the discretion of the Administrator pursuant to procedures established by the
Administrator in compliance with the requirements of Section 409A of the Code.

     7. Dividend Equivalents. Awardee shall not receive cash dividends on the Restricted
Share Units but instead shall, with respect to each Restricted Share Unit, receive a cash payment
from the Company on each cash dividend payment date with respect to the Shares with a record date
between the Grant Date and the settlement of such unit pursuant to Paragraph 6 hereof, such cash
payment to be in an amount equal to the dividend that would have been paid on the Common Share
represented by such unit. Cash payments on each cash dividend payment date with respect to the
Shares with a record date prior to a Vesting Date shall be accrued until the Vesting Date and paid
thereon (subject to the same vesting requirements as the underlying Restricted Share Units award).

     8. Holding Period Requirement. If Awardee is classified as an “officer” of the
Company within the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended,
on the Grant Date, then, as a condition to receipt of the Restricted Share Units, Awardee hereby
agrees to hold, until the first anniversary of the applicable Vesting Date (or, if earlier, the
date of Awardee’s Termination of Employment), the Shares issued pursuant to settlement of such
units (less any portion thereof withheld in order to satisfy all applicable federal, state, local
or foreign income, employment or other tax).

     9. Right of Set-Off. By accepting these Restricted Share Units, Awardee consents to a
deduction from, and set-off against, any amounts owed to Awardee 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.

     10. No Shareholder Rights. Awardee shall have no rights of a shareholder with respect
to the Restricted Share Units, including, without limitation, Awardee shall not have the right to
vote the Shares represented by the Restricted Share Units.

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     11. Withholding Tax.

     (a) Generally. Awardee is liable and responsible for all taxes owed in connection
with the Restricted Share Units (including taxes owed with respect to the cash payments described
in Paragraph 7 hereof), regardless of any action the Company takes with respect to any tax
withholding obligations that arise in connection with the Restricted 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 or vesting of the Restricted Share Units or the subsequent
sale of Shares issuable pursuant to the Restricted Share Units. The Company does not commit and is
under no obligation to structure the Restricted Share Units to reduce or eliminate Awardee’s tax
liability.

     (b) Payment of Withholding Taxes. Prior to any event in connection with the
Restricted Share Units (e.g., vesting or settlement) that the Company determines may result in any
domestic or foreign tax withholding obligation, whether national, federal, state or local,
including any employment tax obligation (the “Tax Withholding Obligation”), Awardee is required to
arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner
acceptable to the Company. Unless Awardee elects to satisfy the Tax Withholding Obligation by an
alternative means that is then permitted by the 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 at the time when the Restricted Share
Units become vested and payable 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 shall not exceed the minimum required by applicable law
and regulations. The Company shall have the right to deduct from all cash payments paid pursuant
to Paragraph 7 hereof the amount of any taxes which the Company is required to withhold with
respect to such payments.

     12. Beneficiary Designation. Awardee may designate a beneficiary to receive any
Shares to which Awardee is entitled with respect to the Restricted Share Units which vest as a
result of Awardee’s death. Notwithstanding the foregoing, if Awardee engages in Triggering Conduct
or Competitor Triggering Conduct as herein defined, the Restricted Share Units subject to such
beneficiary designation shall be subject to the Special Forfeiture/Repayment Rules and the
Company’s Right of Set-Off or other right of recovery set forth in this Agreement, and all rights
of the beneficiary shall be subordinated to the rights of the Company pursuant to such provisions
of this Agreement. Awardee acknowledges that the Company may exercise all rights under this
Agreement and the Plan against Awardee and Awardee’s estate, heirs, lineal descendants and personal
representatives and shall not be limited to exercising its rights against Awardee’s beneficiary.

     13. Governing Law/Venue. This Agreement shall be governed by the laws of the State of
Ohio, without regard to principles of conflicts of law, except to the extent superceded 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 Restricted
Share Units and benefits granted herein would not be granted without the governance of this
Agreement by the laws of the State of Ohio. In addition, all legal actions or proceedings relating
to this Agreement shall be brought 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 Paragraphs 4 and 5 of this Agreement are
reasonable in nature, are fundamental for the protection of the Company’s legitimate business and
proprietary interests, and do not adversely affect Awardee’s ability to earn a living in any
capacity that does not violate such covenants. The parties further agree that in the event of any
violation by Awardee of any such covenants, the Company will suffer immediate and irreparable
injury for which there is no adequate remedy at law. In the event of any violation or attempted

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violations of the restrictions and covenants of Awardee contained in this Agreement, the
Cardinal Group shall be entitled to specific performance and injunctive relief or other equitable
relief, including the issuance ex parte of a temporary restraining order, without any showing of
irreparable harm or damage, such irreparable harm being acknowledged and admitted by Awardee, and
Awardee hereby waives any requirement for the securing or posting of any bond in connection with
such remedy, without prejudice to the rights and remedies afforded the Cardinal Group hereunder or
by law. In the event that it becomes necessary for the Cardinal Group to institute legal
proceedings under this Agreement, Awardee shall be responsible to the Company for all costs and
reasonable legal fees incurred by the Company with regard to such proceedings. Any provision of
this Agreement which is determined by a court of competent jurisdiction to be invalid or
unenforceable should be construed or limited in a manner that is valid and enforceable and that
comes closest to the business objectives intended by such provision, without invalidating or
rendering unenforceable the remaining provisions of this Agreement.

     14. Action by the Administrator. The parties agree that the interpretation of this
Agreement shall rest 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. The Administrator may delegate its functions under this Agreement to an officer of the
Cardinal Group designated by the Administrator (hereinafter the “Designee”). In fulfilling its
responsibilities hereunder, the Administrator or its Designee may rely upon documents, written
statements of the parties or such other material as the Administrator or its Designee deems
appropriate. The parties agree that there is no right to be heard or to appear before the
Administrator or its Designee and that any decision of the Administrator or its Designee relating
to this Agreement, including, without limitation, whether particular conduct constitutes Triggering
Conduct or Competitor Triggering Conduct, shall be final and binding unless such decision is
arbitrary and capricious; provided, however, that to the extent that any provisions in this
Paragraph 14 are inconsistent in any manner with the terms of Section 9(i) of the Employment
Agreement, the provisions of the Employment Agreement shall take precedence and such other
inconsistent provisions shall be null and void.

     15. Employment Agreement. Awardee acknowledges that the Restricted Share Units
granted hereunder, in tandem with the grant as of the date hereof by the Company to the Awardee of
an option in respect of [# of shares] Common Shares, satisfy in full the Company’s obligation under
Section 3(b)(iii)(B) of the Employment Agreement with respect to incentive awards required to be
made not later than September 30, [year]. Sections 3 and 5 of the Employment Agreement set forth
certain rules in respect of the treatment of restricted share units upon the Awardee’s termination
of employment, and the Employment Agreement sets forth certain rules in respect of the application
of restrictive covenants set forth in restricted share unit agreements to the Awardee. The parties
acknowledge that such rules set forth in the Employment Agreement apply to the Restricted Share
Units granted hereunder, and further acknowledge that in the event of any conflict between such
rules and the terms of this Agreement, such rules shall govern.

     16. Prompt Acceptance of Agreement. The Restricted Share Unit grant evidenced by this
Agreement shall, 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.

     17. Electronic Delivery and Consent to Electronic Participation. The Company may, in
its sole discretion, decide to deliver any documents related to the Restricted Share Unit grant
under and participation in the Plan or future Restricted Share Units that may be granted under the
Plan by electronic

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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 restricted share unit grants and the
execution of restricted share unit agreements through electronic signature.

     18. 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, facsimile, 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 Officer

Facsimile: (614) 757-2797

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 the Awardee.

	 	 	 	 	 	 	 
	 	 	CARDINAL HEALTH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

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ACCEPTANCE OF AGREEMENT

Awardee hereby: (a) acknowledges that he 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 dated [date of Plan Description]
pertaining to the Plan; (b) accepts this Agreement and the Restricted Share Units granted to him
under this Agreement subject to all provisions of the Plan and this Agreement, including the
provisions in the agreement regarding “Triggering Conduct/Competitor Triggering Conduct” and
“Special Forfeiture/
Repayment Rules” set forth in Paragraphs 4 and 5 above; (c) represents that he understands that the
acceptance of this Agreement through an on-line or electronic system, if applicable, carries the
same legal significance as if he manually signed the Agreement; (d) represents and warrants to the
Company that he is purchasing the Restricted Share Units for his own account, for investment, and
not with a view to or any present intention of selling or distributing the Restricted Share Units
either now or at any specific or determinable future time or period or upon the occurrence or
nonoccurrence of any predetermined or reasonably foreseeable event; and (e) agrees that no transfer
of the Shares delivered in respect of the Restricted Share Units shall 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.

	 	 	 	 	 
	 

	 	ROBERT D. WALTER (“Awardee”)	 	 
	 
	 

	 	 	 	 
	 

	 	Signature	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Date	 	 

7EX-10.09

 

Exhibit 10.09

CARDINAL HEALTH, INC.

Policy Regarding Shareholder Approval of Severance Agreements

Overview: Effective August 3, 2006, the Board of Directors of Cardinal Health,
Inc. (“Cardinal Health”) adopts this policy requiring that Cardinal Health obtain shareholder
approval before entering into Severance Agreements with Covered Executives that provide Severance
Benefits that exceed 2.99 times Base Salary and Bonus as defined and set forth below. If the Board
of Directors determines that it is not practical to obtain shareholder approval in advance, the
Board may seek shareholder approval after entering into such a Severance Agreement.

Effective date: August 3, 2006

Covered Executives: Officers of Cardinal Health as defined under Section 16 of
the Securities Exchange Act of 1934, as amended, at the time a Severance Agreement covered by this
Policy is approved.

Severance Agreements: Severance Agreements include any agreement that specifies
the compensation payable to a Covered Executive when Cardinal Health terminates employment without
cause or when employment is terminated following a change of control of Cardinal Health. Severance
Agreements include agreements entered into with Covered Executives (a) after the effective date of
the Policy or (b) before the effective date of the Policy, if Severance Benefits are materially
modified after the effective date of the Policy.

Base Salary and Bonus Defined: For purposes of the limit on Severance Benefits:

	 	•	 	Base salary is the annual rate of base salary in effect at termination.
	 
	 	•	 	Bonus is the target incentive amount for the year of termination under the annual and
long-term cash incentive compensation plans applicable to the Covered Executive.

Severance Benefits: For purposes of this Policy, “Severance Benefits” generally
include:

	 	•	 	Cash severance benefits.
	 
	 	•	 	The value of other special benefits or perquisites provided for periods after
termination of employment (but excluding special benefits provided under any program
generally applicable to employees).
	 
	 	•	 	Additional retirement benefits earned or vested under qualified and non-qualified
retirement plans as a result of termination.

 

 

	 	•	 	The value of any special additional benefit or additional service period “credit” under
retirement programs.

Items Excluded as Severance Benefits: For purposes of this Policy, “Severance
Benefits” do not include any benefit or payment required by law and:

	 	•	 	Amounts earned or accrued for services prior to termination (such as pro rata bonus,
unused vacation pay, etc.).
	 
	 	•	 	The value of any other benefits provided under programs generally applicable to
employees.
	 
	 	•	 	The value of “gross-up” payments made in connection with Severance Benefits, including
“gross-up” payments under Section Code 280G of the Internal Revenue Code.
	 
	 	•	 	The value of accelerated vesting of outstanding equity compensation awards, or other
changes in terms of outstanding equity compensation awards.

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