Document:

EX-10.04

 

Exhibit 10.04

CARDINAL HEALTH, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

     On April 17, 2006 (the “Grant Date”), Cardinal Health, Inc., an Ohio corporation (the
“Company”), has awarded to R. Kerry Clark (“Awardee”), an option (the “Option”) to purchase 665,000
common shares, without par value, of the Company (the “Shares”) for a price of $70.00 per share.
The Option has been granted under the Cardinal Health, Inc. 2005 Long-Term Incentive Plan, as
amended (the “Plan”), and will include and be subject to all provisions of the Plan, which are
incorporated herein by reference, and will be subject to the provisions of this agreement.
Capitalized terms used in this agreement which are not specifically defined will have the meanings
ascribed to such terms in the Plan. The Option is granted in accordance with an Employment
Agreement, dated April 17, 2006 between the Company and Awardee (the “Employment Agreement”). This
Option shall vest and become exercisable in accordance with the following schedule: 25% of the
Option shall vest on the first anniversary of the Grant Date; 25% of the Option shall vest on the
second anniversary of the Grant Date; 25% of the Option shall vest on the third anniversary of the
Grant Date; and 25% of the Option shall vest on the fourth anniversary of the Grant Date, subject
in each case to the provisions of this agreement, including those relating to the Awardee’s
continued employment with the Company and its Affiliates. Notwithstanding the foregoing, in the
event of a Change of Control prior to Awardee’s Termination of Employment, the Option shall vest in
full. This Option shall expire on April 17, 2013 (the “Grant Expiration Date”).

1. Method of Exercise and Payment of Price.

(a) Method of Exercise. At any time when all or a portion of the Option is exercisable
under the Plan and this agreement, some or all of the exercisable portion of the Option may be
exercised from time to time by written notice to the Company, or such other method of exercise as
may be specified by the Company, including without limitation, exercise by electronic means on the
web site of the Company’s third-party equity plan administrator, which will:

     (i) state the number of Shares with respect to which the Option is being exercised; and

     (ii) if the Option is being exercised by anyone other than Awardee, if not already provided,
be accompanied by proof satisfactory to counsel for the Company of the right of such person or
persons to exercise the Option under the Plan and all applicable laws and regulations.

(b) Payment of Price. The full exercise price for the portion of the Option being
exercised shall be paid to the Company as provided below:

     (i) in cash;

     (ii) by check or wire transfer (denominated in U.S. Dollars);

     (iii) subject to any conditions or limitations established by the Administrator, other Shares
which (A) in the case of Shares acquired from the Company (whether upon the exercise of an Option
or otherwise), have been owned by the Participant for more than six months on the date of surrender
(unless this condition is waived by the Administrator), and (B) have a Fair Market Value on the
date of surrender equal to or greater than the aggregate exercise price of the

 

 

Shares as to which said Option shall be exercised (it being agreed that the excess of the Fair
Market Value over the aggregate exercise price shall be refunded to the Awardee in cash);

     (iv) consideration received by the Company under a broker-assisted sale and remittance program
acceptable to the Administrator; or

     (v) any combination of the foregoing methods of payment.

2. Transferability. The Option shall be transferable (I) at Awardee’s death, by Awardee by
will or pursuant to the laws of descent and distribution, and (II) by Awardee during Awardee’s
lifetime, without payment of consideration, to (a) the spouse, former spouse, parents, stepparents,
grandparents, parents-in-law, siblings, siblings-in-law, children, stepchildren, children-in-law,
grandchildren, nieces or nephews of Awardee, or any other persons sharing Awardee’s household
(other than tenants or employees) (collectively, “Family Members”), (b) a trust or trusts for the
primary benefit of Awardee or such Family Members, (c) a foundation in which Awardee or such Family
Members control the management of assets, or (d) a partnership in which Awardee or such Family
Members are the majority or controlling partners; provided, however, that subsequent transfers of
the transferred Option shall be prohibited, except (X) if the transferee is an individual, at the
transferee’s death by the transferee by will or pursuant to the laws of descent and distribution,
and (Y) without payment of consideration to the individuals or entities listed in subparagraphs
II(a), (b) or (c), above, with respect to the original Awardee. The Administrator may, in its
discretion, permit transfers to other persons and entities as permitted by the Plan. Neither a
transfer under a domestic relations order in settlement of marital property rights nor a transfer
to an entity in which more than 50% of the voting interests are owned by Awardee or Family Members
in exchange for an interest in that entity shall be considered to be a transfer for consideration.
Within 10 days of any transfer, Awardee shall notify the Compensation and Benefits department of
the Company in writing of the transfer. Following transfer, the Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to transfer and,
except as otherwise provided in the Plan or this agreement, references to the original Awardee
shall be deemed to refer to the transferee. The events of a Termination of Employment of Awardee
provided in paragraph 3 hereof shall continue to be applied with respect to the original Awardee,
following which the Option shall be exercisable by the transferee only to the extent, and for the
periods, specified in paragraph 3. The Company shall have no obligation to notify any transferee
of Awardee’s Termination of Employment with the Company for any reason. The conduct prohibited of
Awardee in paragraphs 5 and 6 hereof shall continue to be prohibited of Awardee following transfer
to the same extent as immediately prior to transfer and the Option (or its economic value, as
applicable) shall be subject to forfeiture by the transferee and recoupment from Awardee to the
same extent as would have been the case of Awardee had the Option not been transferred. Awardee
shall remain subject to the recoupment provisions of paragraphs 5 and 6 of this agreement and tax
withholding provisions of Section 29 of the Plan following transfer of the Option.

3. Termination of Employment.

(a) Termination of Employment by Reason of Death or Disability. If a Termination of
Employment occurs by reason of death or disability (as set forth in the Employment Agreement) prior
to the vesting in full of the Option, then any unvested portion of the Option shall vest upon and
become exercisable in full from and after such death or disability. The Option may thereafter be
exercised by the Awardee or any transferee of Awardee, if applicable, or by the

2

 

legal representative of the estate or by the legatee of Awardee under the will of Awardee until the
Grant Expiration Date.

(b) Termination of Employment for Cause. If a Termination of Employment occurs by the
Company for Cause as set forth in the Employment Agreement, any unexercised portion of the Option
which has not vested on such date of Termination of Employment will automatically be forfeited and
the Option may be immediately canceled by the Administrator (whether then held by Awardee or any
transferee).

(c) Termination of Employment for Other than Good Reason. If a Termination of Employment
occurs by the Awardee without Good Reason as set forth in the Employment Agreement, any unexercised
portion of the Option which has not vested on such date of Termination of Employment will
automatically be forfeited. Subject to Section 16(b)(ii) of the Plan, Awardee (or any transferee,
if applicable) will have 90 days from the date of Termination of Employment or until the Grant
Expiration Date, whichever period is shorter, to exercise any portion of the Option that is vested
and exercisable on the date of Termination of Employment.

(d) Termination of Employment for Good Reason or by Other than Cause, Death or Disability.
If a Termination of Employment occurs by the Awardee for Good Reason or by the Company other than
for Cause, death or disability prior to the vesting in full of the Option, then any unvested
portion of the Option shall vest upon and become exercisable in full from and after such death.
The Option may thereafter be exercised by Awardee or any transferee of Awardee, if applicable,
until the Grant Expiration Date.

4. Restrictions on Exercise. The Option is subject to all restrictions in this agreement
and/or in the Plan. As a condition of any exercise of the Option, the Company may require Awardee
or his or her transferee or successor to make any representation and warranty to comply with any
applicable law or regulation or to confirm any factual matters (including Awardee’s compliance with
the terms of paragraphs 5 and 6 of this agreement or any employment or severance agreement between
the Cardinal Group and Awardee) reasonably requested by the Company.

5. Triggering Conduct/Competitor Triggering Conduct. As used in this agreement,
“Triggering Conduct” shall include the following: disclosing or using in any capacity other than as
necessary in the performance of duties assigned by the Cardinal Group any confidential information,
trade secrets or other business sensitive information or material concerning the Cardinal Group;
violation of Company policies, including conduct which would constitute a breach of any of the
Certificates of Compliance with Company Policies and/or the Certificates of Compliance with Company
Business Ethics Policies signed by Awardee; directly or indirectly employing, contacting concerning
employment, or participating in any way in the recruitment for employment of (whether as an
employee, officer, director, agent, consultant or independent contractor), any person who was or is
an employee, representative, officer or director of the Cardinal Group at any time within the 12
months prior to Awardee’s Termination of Employment; 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, potential
customers, vendors and/or suppliers that were known to Awardee; and breaching any provision of any
employment or severance agreement with a member of the Cardinal Group. As used in this agreement,
“Competitor Triggering Conduct” shall include, either during Awardee’s employment or within one
year following Awardee’s Termination of Employment, accepting employment with, or serving as a
consultant

3

 

or advisor or in any other capacity to, an entity that is in competition with the business
conducted by any member of the Cardinal Group (a “Competitor”), including, but not limited to,
employment or another business relationship with any Competitor if Awardee has been introduced to
trade secrets, confidential information or business sensitive information during Awardee’s
employment with the Cardinal Group and such information would aid the Competitor because the threat
of disclosure of such information is so great that, for purposes of this agreement, it must be
assumed that such disclosure would occur.

6. Special Forfeiture/Repayment Rules. For so long as Awardee continues as an employee
with the Cardinal Group and for three years following Termination of Employment 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 during the time period referenced in the definition of “Competitor Triggering Conduct” set
forth in paragraph 5 above, then:

(a) the Option (or any part thereof that has not been exercised) shall immediately and
automatically terminate, be forfeited, and shall cease to be exercisable at any time; and

(b) Awardee shall, within 30 days following written notice from the Company, pay the Company an
amount equal to the gross option gain realized or obtained by Awardee or any transferee resulting
from the exercise of such Option, measured at the date of exercise (i.e., the difference between
the market value of the Shares underlying the Option on the exercise date and the exercise price
paid for such Shares underlying the Option), with respect to any portion of the Option that has
already been exercised at any time within three years prior to the Triggering Conduct (the
“Look-Back Period”), less $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 engagement in Competitor Triggering Conduct. Awardee may be released from Awardee’s
obligations under this paragraph 6 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 6 constitutes a so-called “noncompete”
covenant. This paragraph 6 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 6 and
Awardee’s continuing obligations contained herein. No provisions 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. Awardee acknowledges and agrees that the restrictions contained in this agreement are being
made for the benefit of the Company in consideration of Awardee’s receipt of the Option, 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

4

 

consideration is hereby expressly confirmed. Awardee further acknowledges that the receipt of the
Option and execution of this agreement are voluntary actions on the part of Awardee and that the
Company is unwilling to provide the Option 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 5 and 6 are ancillary to, or part of, an otherwise
enforceable agreement at the time the agreement is made.

7. Right of Set-Off. By accepting this Option, 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.

8. Withholding Tax.

(a) Generally. Awardee is liable and responsible for all taxes owed in connection with the
exercise of the Option, regardless of any action the Company takes with respect to any tax
withholding obligations that arise in connection with the Option. The Company does not make any
representation or undertaking regarding the tax treatment or the treatment of any tax withholding
in connection with the exercise of the Option. The Company does not commit and is under no
obligation to structure the Option or the exercise of the Option to reduce or eliminate Awardee’s
tax liability.

(b) Payment of Withholding Taxes. Concurrently with the payment of the exercise price
pursuant to paragraph 1 hereof, Awardee is required to arrange for the satisfaction of the minimum
amount of any domestic or foreign tax withholding obligation, whether national, federal, state or
local, including any employment tax obligation (the “Tax Withholding Obligation”) in a manner
acceptable to the Company. Any manner provided for in subparagraph 1(b) hereof shall be deemed an
acceptable manner to satisfy the Tax Withholding Obligation unless otherwise determined by the
Company.

9. 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 Option 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 5 and 6 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 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

5

 

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.

10. 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.

11. Electronic Delivery and Consent to Electronic Participation. The Company may, in its
sole discretion, decide to deliver any documents related to the Option grant under and
participation in the Plan or future options that may be granted under 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 option grants and the execution
of option agreements through electronic signature.

12. 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) 757-6813

6

 

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:  	/s/ Robert D. Walter
 	 
	 	Its:  	Executive Chairman of the Board 	 

7

 

	 	 	 	 	 

ACCEPTANCE OF AGREEMENT

Awardee hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously
delivered or is provided with this agreement, and represents that he or she is familiar with and
understands all provisions of the Plan and this agreement; (b) voluntarily and knowingly accepts
this agreement and the Option granted to him or her 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 5 and 6 above; and (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.
Awardee further acknowledges receiving 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 February 22, 2006 pertaining to the Plan.

	 	 	 	 	 
	 	 	 
	 	     /s/ R. Kerry Clark
 	 
	 	Awardee’s Signature 	 
	 	 	 
	 
	 	April 17, 2006
 	 
	 	Date 	 
	 	 	 

8EX-10.05

 

Exhibit 10.05

CARDINAL HEALTH, INC.

RESTRICTED SHARE UNITS AGREEMENT

     On April 17, 2006 (the “Grant Date”), Cardinal Health, Inc, an Ohio corporation (the
“Company”), has awarded to R. Kerry Clark (“Awardee”) 110,600 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”). The Restricted Share Units are granted in
accordance with an Employment Agreement, dated April 17, 2006 between the Company and Awardee (the
“Employment 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% shall vest on
the first anniversary of the Grant Date; 33.33% shall vest on the second anniversary of the Grant
Date; and 33.34% 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. If, prior to the vesting in full of the Restricted Share Units, the
Company shall terminate Awardee’s employment other than for Cause or for death or Disability or the
Executive shall terminate Employment for Good Reason (all as set forth in the Employment
Agreement), then any unvested Restricted Share Units shall vest in full and not be forfeited.

     4. Triggering Conduct/Competitor Triggering Conduct. As used in this Agreement,
“Triggering Conduct” shall include the following: disclosing or using in any capacity other than as
necessary in the performance of duties assigned by the Company and its Affiliates (collectively,
the “Cardinal Group”) any confidential information, trade secrets or other business sensitive
information or material concerning the Cardinal Group; violation of Company policies, including
conduct which would constitute a breach of any of the Certificates of Compliance with Company
Policies and/or the Certificates of Compliance with Company Business Ethics Policies signed by
Awardee; directly or indirectly employing, contacting concerning employment, or participating in
any way in the recruitment for employment of (whether as an employee, officer, director, agent,
consultant or independent contractor), any person who was or is an employee, representative,
officer or director of the Cardinal Group at any time within the 12 months prior to Awardee’s
Termination of Employment; 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, potential customers, vendors and/or suppliers that
were known to Awardee; and breaching any provision of any employment or severance agreement with a
member of the Cardinal Group. As used in this Agreement, “Competitor Triggering Conduct” shall
include, either during Awardee’s employment or within one year following Termination of Employment,
accepting employment with or serving as a

 

 

consultant or advisor or in any other capacity to an entity that is in competition with the
business conducted by any member of the Cardinal Group (a “Competitor”), including, but not limited
to, employment or another business relationship with any Competitor if Awardee has been introduced
to trade secrets, confidential information or business sensitive information during Awardee’s
employment with the Cardinal Group and such information would aid the Competitor because the threat
of disclosure of such information is so great that, for purposes of this Agreement, it must be
assumed that such disclosure would occur.

     5. Special Forfeiture/Repayment Rules. For so long as Awardee continues as an
Employee with the Cardinal Group and for three years following Termination of Employment 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 during the time period referenced in the definition of “Competitor Triggering
Conduct” set forth in Paragraph 4 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 three 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. 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

2

 

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 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, on the
6-month anniversary of the first date on which Awardee ceases to be an employee of the Company, or,
to the extent permitted by Treasury Regulations promulgated under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) on such other date as may be approved by the
Administrator as to all or any portion of the Restricted Share Units, Awardee shall be entitled to
receive from the Company (without any payment on behalf of Awardee other than as described in
Paragraph 10 the Shares represented by such Restricted Share Units; provided, however, that,
subject to the next sentence, in the event that some or all of the Restricted Share Units vest
prior to the applicable Vesting Date as a result of a Change of Control, 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 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. Dividends. 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 earlier of the forfeiture of such unit in accordance with the terms hereof
or 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.

     8. Right of Set-Off. Subject to the terms of the Employment Agreement, 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.

     9. 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.

     10. 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

3

 

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.

     11. 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.

     12. 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
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

4

 

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.

     13. 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.

     14. 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 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.

     15. Notices. All notices, requests, consents and other communications required or
provided under this Agreement to be delivered by Awardee to the Company will be in writing and will
be deemed sufficient if delivered by hand, 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) 757-6813

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

5

 

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:  	/s/ Robert D. Walter
 	 
	 	Its:  	Executive Chairman of the Board 	 

6

 

	 	 	 	 	 

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 dated February 22, 2006
pertaining to the Plan; (b) accepts this Agreement and the Restricted Share Units granted to him or
her 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 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; (d) represents
and warrants to the Company that he or she is purchasing the Restricted Share Units for his or her
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.

	 	 	 	 	 
	 	 	 
	 	     /s/ R. Kerry Clark
 	 
	 	Awardee’s Signature 	 
	 	 	 
	 	April 17, 2006
 	 
	 	Date 	 
	 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]