8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 17, 2006

Cardinal Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

Ohio
(State or Other Jurisdiction of Incorporation)

1-11373	31-0958666
(Commission File Number)	(IRS Employer Identification
	Number)

7000 Cardinal Place, Dublin, Ohio 43017
(Address of Principal Executive Offices, Including Zip Code)

(614) 757-5000
(Registrant’s Telephone Number, Including Area Code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement
	Item 1.02 Termination of a Material Definitive Agreement
	Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
	Item 7.01 Regulation FD Disclosure
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX 10.01 Employment Agreement
EX-10.02 Second Amended Restated Agreement
EX-10.03 Separation Agreement
EX-10.04 Nonqualified Stock Option
EX-10.05 Restricted Share Units Agreement
EX-99.01 Press Release

Item 1.01 Entry into a Material Definitive Agreement

Employment and Equity Award Agreements between the Company and R. Kerry Clark

     On April 17, 2006, in connection with the appointment of R. Kerry Clark as the President and Chief Executive Officer of Cardinal Health, Inc. (the “Company”), the Company entered into an Employment Agreement with Mr. Clark that is filed with this report as Exhibit 10.01. The material terms of Mr. Clark’s Employment Agreement are summarized in Item 5.02 below. The Company is also filing Nonqualified Stock Option and Restricted Share Units Agreements, each dated as of April 17, 2006, entered into between the Company and Mr. Clark as Exhibits 10.04 and 10.05 to this report.

Second Amended and Restated Employment Agreement between the Company and Robert D. Walter

     On April 17, 2006, the Company appointed Robert D. Walter Executive Chairman of the Board of the Company. In connection with that appointment, the Company entered into the Second Amended and Restated Employment Agreement with Mr. Walter (the “Walter Agreement”) that is filed with this report as Exhibit 10.02. This Agreement replaces the First Amended and Restated Employment Agreement, dated February 1, 2004. The Walter Agreement provides generally that after April 17, 2006:

• Mr. Walter will be Executive Chairman of the Board of the Company until June 30, 2008 (he was Chairman of the Board and Chief Executive Officer through April 17, 2006).

• He will receive an annual base salary of $900,000, reduced from his annual base salary prior to April 17, 2006 of $1,111,000.

• He will receive a target annual bonus of 150% of his annual base salary (for the 2006 fiscal year, he will receive a blended bonus based on targets of: (a) 300% of his higher annual base salary from July 1, 2005 to April 17, 2006, and (b) 150% of his new annual base salary from April 17, 2006 to June 30, 2006).

• He will receive two annual stock incentive grants, each with an expected value on the grant date of 700% of his annual base salary. The first grant will be made on or prior to September 30, 2006 and the second grant will be made on or prior to September 30, 2007. The value of these grants will consist of 70% in stock options and 30% in restricted share units and these grants will vest no later than the termination of his employment period (with the ability to exercise the stock option grants until the end of their term).

• Upon termination of the employment period, he will receive either: (a) continued vesting of his unvested stock options and restricted share units granted prior to April 17, 2006 in accordance with their original terms during a period of time when he will be treated as a consulting employee (with the ability to exercise his stock options until the end of their terms); or (b) immediate vesting of his unvested stock options and restricted share units granted prior to April 17, 2006 and ability to exercise his stock options until the end of their terms.

• He will receive other benefits and perquisites (including personal use of company-owned aircraft and related tax gross-up) generally applicable to the Company’s most senior executives.

• During his employment and for two years afterward, he will not:

o recruit employees from the Company;

o solicit customers and potential customers of the Company for a competitor; or

o invest in, counsel or be employed by a competitor of the Company (other than (a) an entity with annual revenues of 10% or less of the Company’s revenues that is controlled by his immediate family, or (b) after his employment ends, certain roles with a diversified enterprise that may compete with one or more businesses of the Company as long as he recuses himself from the competitive components of the enterprise).

     Immediately following the end of Mr. Walter's employment as Executive Chairman of the Board (unless his employment is terminated (a) by the Company for cause, death or disability, or (b) by Mr. Walter without good reason), Mr. Walter will provide consulting services to the Company for five years. The Company will pay him $1,000,000 per year for such consulting services, which will be the only compensation he is entitled to receive from the Company for such services. He will provide up to 20% of his business time and attention with respect to such consulting services.

     Under the Walter Agreement, Mr. Walter may terminate his employment for good reason, including a change in control or assignment of duties materially inconsistent with his position. If (a) Mr. Walter terminates his own employment for good reason, or (b) the Company terminates Mr. Walter’s employment other than for cause, death or disability, he will receive:

(i) earned but unpaid salary and unpaid annual bonus from the prior fiscal year;

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(ii)	a prorated portion of his recent average bonus (based on the average bonus earned in the three previous fiscal years, but not less than his annual target bonus);
(iii)	two times the sum of his annual salary then in effect and recent average bonus (or three times such sum if a change of control has occurred within the last three years);
(iv)	each of the two future stock incentive grants to which he is entitled, before his date of termination;
(v)	immediate vesting of his unvested stock options and restricted share units and the ability to exercise his stock options until the end of their terms; and
(vi)	other benefits to which he is entitled pursuant to existing Company programs and plans.

If Mr. Walter’s employment is terminated by death or disability, he will receive:

(i)	earned but unpaid salary and unpaid annual bonus from the prior fiscal year;
(ii)	a prorated portion of his recent average bonus (based on the average bonus earned in the three previous fiscal years, but not less than his annual target bonus);
(iii)	in the case of death, immediate vesting of his unvested stock options and restricted share units and ability to exercise his stock options until the end of their terms, or, in the case of disability, either (a) immediate vesting of his unvested stock options and restricted share units and ability to exercise his stock options until the end of their terms, or (b) continued vesting of his unvested stock options and restricted share units in accordance with their original terms during a period of time when Mr. Walter will be treated as a consulting employee (with the ability to exercise his stock options until the end of their terms); and
(iv)	other benefits to which he is entitled pursuant to existing Company programs and plans.

     Upon termination of Mr. Walter’s employment generally for any other reason, he will receive earned but unpaid salary and unpaid annual bonus from the prior fiscal year, but no portion of his bonus for the fiscal year.

     If any payments made to Mr. Walter would be subject to the excise tax imposed on “parachute payments” by the Internal Revenue Code of 1986, as amended (the “Code”), the Company will “gross-up” his compensation for all such excise taxes and any federal, state and local taxes applicable to such gross-up payment (including any penalties and interest). The Walter Agreement requires both Mr. Walter and the Company to take actions to avoid the imposition of the additional tax under Section 409A of the Code relating to certain deferred compensation. If Mr. Walter suffers adverse tax consequences as a result of the vesting of any award, then the Company will hold him harmless for any taxes above what he would otherwise have paid.

     The Company will reimburse Mr. Walter for all reasonable attorney’s fees and expenses incurred in connection with the negotiation of the Walter Agreement.

Separation Agreement between the Company and George L. Fotiades

     On April 17, 2006, the Company and George L. Fotiades entered into a Separation Agreement (the “Fotiades Separation Agreement”) that is filed with this report as Exhibit 10.03. The material terms of the Separation Agreement are summarized in Item 1.02 below. As described below, the Fotiades Separation Agreement amends an outstanding option grant to purchase 225,000 shares that was granted on February 1, 2004.

Item 1.02 Termination of a Material Definitive Agreement

Termination of Employment Agreement between the Company and George L. Fotiades

     On April 17, 2006, the Company and George L. Fotiades entered into the Fotiades Separation Agreement. The Fotiades Separation Agreement provides that Mr. Fotiades’ employment with the Company will terminate on May 19, 2006. The termination will be treated as a “without cause” termination under his Employment Agreement, dated February 1, 2004, as amended (the “Fotiades Employment Agreement”). Under the terms of the Fotiades Employment Agreement, he will receive:

• two times the sum of his annual base salary (currently $790,000 per year) plus his annual target bonus (140% of his annual base salary) to be paid in equal monthly installments over 24 months after his termination;

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• his option to purchase 225,000 shares granted on February 1, 2004, which would have vested on January 31, 2007, will remain outstanding until its expiration date on February 1, 2014; and

• his option to purchase 250,000 shares granted on November 18, 2002, which vested on November 18, 2005, will remain outstanding until its expiration date on November 18, 2012.

In order to effectuate the intent of the Fotiades Employment Agreement, and in accordance with the Company’s Amended and Restated Equity Incentive Plan, as amended, the Fotiades Separation Agreement accelerated the vesting of the option granted in February 2004 to a date immediately prior to his termination of employment.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

(b), (c) and (d)

     On April 17, 2006, the Board of Directors of the Company appointed R. Kerry Clark as the President and Chief Executive Officer of the Company. The Board also appointed Robert D. Walter Executive Chairman of the Board. Mr. Walter had been Chairman of the Board and Chief Executive Officer of the Company. Finally, George L. Fotiades ceased to be President and Chief Operating Officer of the Company. The material terms of the Walter Agreement and Fotiades Separation Agreement are summarized in Items 1.01 and 1.02 above.

     Prior to joining the Company, Mr. Clark, 53, was Vice Chairman of the Board-P&G Family Health and a director of The Procter & Gamble Company, which markets consumer products in over 140 countries. He joined Procter & Gamble in 1974 and served in numerous positions before assuming his current position in 2004. He is also a director of Textron Inc.

     Mr. Clark has been elected to the Board of Directors of the Company for a term that expires at the Company’s 2007 annual meeting of shareholders and has also been elected as a member of the Board’s Executive Committee.

     In connection with the appointment of Mr. Clark, the Company entered into an Employment Agreement with him (the “Clark Agreement”). The Clark Agreement has an employment term from April 17, 2006 through June 30, 2009 and provides generally that:

• Mr. Clark will be President and Chief Executive Officer of the Company.

• He will become Chairman of the Board prior to June 30, 2009 (but he may terminate his employment for good reason if the Company fails to appoint him Chairman of the Board on or before June 30, 2008).

• He will receive an annual base salary of not less than $1,400,000.

• He will receive a target annual bonus of 160% of his annual base salary (for the 2006 fiscal year, he will receive his target bonus prorated for his time with the Company and for the 2007 fiscal year, he will receive a minimum bonus of $1,120,000).

• He will receive an initial grant of 110,600 restricted share units (vesting equally over three years) and an option to purchase 665,000 shares at an exercise price of $70.00 per share (vesting equally over four years and expiring on April 17, 2013).

• He will receive annual stock incentive grants with an expected value on the grant date of 600% of his annual salary, beginning in the 2008 fiscal year.

• He will participate in the long-term incentive cash program for the three-year period ending June 30, 2008 prorated for his time with the Company.

• He will receive other benefits and perquisites on a basis that is commensurate with his position.

• During his employment and for two years afterward, he will not:

o recruit employees from the Company;

o solicit customers and potential customers of the Company for a competitor; or

o invest in, counsel or be employed by a competitor of the Company.

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     Under the Clark Agreement, Mr. Clark may terminate his employment for good reason, including assignment of duties materially inconsistent with his position, failure of the Company to comply with certain provisions, or the failure of the Company to appoint him Chairman of the Board on or before June 30, 2008. If (a) Mr. Clark terminates his own employment for good reason, or (b) the Company terminates Mr. Clark’s employment other than for cause, death or disability, Mr. Clark will receive:

(i)	earned but unpaid salary and unpaid annual bonus from the prior fiscal year;
(ii)	a prorated portion of his target bonus;
(iii)	his salary and target bonus through June 30, 2009, but no less than 1.5 times his annual salary and target bonus (payable over 24 months);
(iv)	immediate vesting of his initial stock option and restricted share units grant and ability to exercise his stock options until the end of their terms;
(v)	medical and dental benefits for him and his dependents through June 30, 2009; and
(vi)	other benefits to which he is entitled pursuant to existing Company programs and plans.

If Mr. Clark’s employment is terminated by death or disability, he will receive:

(i)	earned but unpaid salary and unpaid annual bonus from the prior fiscal year;
(ii)	a prorated portion of his target bonus;
(iii)	immediate vesting of his initial stock option and restricted share units grant and ability to exercise his stock options until the end of their terms;
(iv)	medical and dental benefits for him and his dependents through June 30, 2009; and
(v)	other benefits to which he is entitled pursuant to existing Company programs and plans.

If the Company terminates Mr. Clark’s employment for cause or if Mr. Clark terminates his own employment without good reason, he will receive earned but unpaid salary and unpaid annual bonus from the prior fiscal year, but no portion of his bonus for the fiscal year.

     If any payments made to Mr. Clark would be subject to the excise tax imposed on “parachute payments” by the Code, the Company will “gross-up” his compensation for all such excise taxes and any federal, state and local taxes applicable to such gross-up payment (including any penalties and interest).

     The Company will reimburse Mr. Clark on an after-tax basis for all reasonable expenses incurred in connection with the relocation of his primary residence to Dublin, Ohio (including his temporary living expenses prior to relocation) and the negotiation of the Clark Agreement.

Item 7.01 Regulation FD Disclosure

     The Company issued a press release on April 17, 2006, which is being furnished as Exhibit 99.01 to this report.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

10.01	Employment Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
10.02	Second Amended and Restated Employment Agreement, dated April 17, 2006, between Cardinal Health, Inc. and Robert D. Walter.
10.03	Separation Agreement, dated April 17, 2006, between Cardinal Health, Inc. and George L. Fotiades.
10.04	Nonqualified Stock Option Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
10.05	Restricted Share Units Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
99.01	Press release issued by Cardinal Health, Inc. on April 17, 2006, and furnished with this report.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Cardinal Health, Inc. (Registrant)
Date: April 18, 2006	By:	/s/ Ivan K. Fong
		Name:	Ivan K. Fong
		Title:	Executive Vice President, Chief Legal Officer and Secretary

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EXHIBIT INDEX

10.01	Employment Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
10.02	Second Amended and Restated Employment Agreement, dated April 17, 2006, between Cardinal Health, Inc. and Robert D. Walter.
10.03	Separation Agreement, dated April 17, 2006, between Cardinal Health, Inc. and George L. Fotiades.
10.04	Nonqualified Stock Option Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
10.05	Restricted Share Units Agreement, dated April 17, 2006, between Cardinal Health, Inc. and R. Kerry Clark.
99.01	Press release issued by Cardinal Health, Inc. on April 17, 2006, and furnished with this report.

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EX-10.01

Exhibit 10.01

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT by and between Cardinal Health, Inc., an Ohio corporation (the “Company”) and R. Kerry Clark (the “Executive”) is dated as of the 17th day of April, 2006 (the “Agreement”).

     IT IS HEREBY AGREED AS FOLLOWS:

     1. Effective Date. The “Effective Date” shall mean the date hereof.

     2. Employment Period. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on June 30, 2009, unless prior to such date the employment of the Executive is terminated pursuant to this Agreement (the “Employment Period”).

     3. Terms of Employment. (a) Position and Duties. (i) (A) During the Employment Period, the Executive shall serve as President and Chief Executive Officer of the Company with such authority, duties and responsibilities as are customarily assigned to such position. The Executive shall report directly to the Board of Directors of the Company (the “Board”). The Executive shall serve on the Board, and prior to the end of the Employment Period shall be named Chairman of the Board; and (B) the Executive’s services shall be performed in Dublin, Ohio.

          (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote his full business attention and time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) continue to serve on the board of directors of Textron, Inc. and, subject to the approval of the Board, serve on other corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not materially interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

          (iii) No later than August 31, 2007, the Executive shall establish and maintain his primary residence in the Dublin, Ohio area and will relocate his family and possessions to such primary residence.

          (b) Compensation (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”) at a rate of not less than $1,400,000 payable in accordance with the Company’s normal payroll policies. The Executive’s Annual Base Salary shall be reviewed, and may be increased but not decreased, at least annually

by the Board pursuant to its normal performance review policies for senior executives. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.

          (ii) Annual Bonus. With respect to each fiscal year ending during the Employment Period, the Executive shall be eligible to receive an annual bonus (“Annual Bonus”) determined and paid at the sole discretion of the Company pursuant to terms and conditions of the Company bonus plan for which Executive is then eligible. Executive’s Annual Bonus target under this Agreement shall be equal to not less than 160% of the Executive’s Annual Base Salary (the “Reference Bonus”). The actual Annual Bonus, which could be higher or lower than the Reference Bonus, shall be based on the attainment of performance objectives as determined no later than 90 days after the beginning of the fiscal year by the Human Resources and Compensation Committee of the Board (the “Committee”) in consultation with the Executive, and shall be paid, subject to any effective deferral elections that may be made by the Executive pursuant to any deferred compensation plans that the Company may maintain, within two and a half months following the end of the fiscal year for which the Annual Bonus is earned. Notwithstanding the foregoing, for the period from the Effective Date through June 30, 2006, the Executive shall receive a bonus equal to the product of (x) $2,240,000 and (y) a fraction, the numerator of which is the number of days from the Effective Date until June 30, 2006, and the denominator of which is 365. For fiscal year 2007, the Executive’s Annual Bonus shall be no less than $1,120,000.

          (iii) Equity-Based Grants and Long-Term Incentives. On the Effective Date, the Company shall grant the Executive 110,600 restricted stock units (the “Initial RSUs”) and 665,000 Company stock options (the “Initial Options”) with a strike price of $70, all in accordance with the terms of the Company’s Restated and Amended Equity Incentive Plan (the “LTIP”). For each fiscal year thereafter, commencing with the August 2007 award Executive shall receive a target long-term incentive award of 600% of his Annual Base Salary in accordance with the terms of the LTIP. The Executive shall also be eligible to participate in the Company’s Long-Term Incentive Cash Plan.

          (iv) Other Employee Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under savings and retirement plans that are tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), in plans that are supplemental to any such tax-qualified plans, and welfare benefit plans, practices, policies and programs provided by the Company, but not any severance plan, practice, policy or program, on a basis that is no less favorable than those generally applicable or made available to other senior executives of the Company. The Executive shall be eligible for participation in fringe benefits and perquisite plans, practices, policies and programs (including, without limitation, expense reimbursement plans, practices, policies and programs) on a basis that is commensurate with his position and no less favorable than those generally applicable or made available to other most senior executives of the Company.

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          (v) Expenses. The Company shall reimburse the Executive on an after-tax basis for all reasonable expenses incurred in connection with the relocation of his primary residence to Dublin, Ohio, and his temporary living expenses prior to such relocation, and the negotiation of this Agreement. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all expenses incurred by the Executive in accordance with the Company’s policies for its senior executives.

          (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company as in effect with respect to the senior executives of the Company.

     4. Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may provide the Executive with written notice in accordance with Section 10(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 120 consecutive days or longer (or an aggregate period of 180 days or longer) as a result of incapacity due to mental or physical illness[ which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative].

     (b) Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

          (i) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or its representative, which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or

          (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or its affiliates, or

          (iii) conviction of a felony or any crime involving dishonesty or moral turpitude or guilty or nolo contendere plea by the Executive with respect thereto; or

          (iv) a material breach of Section 8 of this Agreement.

For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s act or omission was in the best interests of the

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Company. Any act, or failure to act, based upon express authority given pursuant to a resolution duly adopted by the Board with respect to such act or omission or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (not including the executive) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii), or (iv) above, and specifying the particulars thereof in detail.

     (c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Executive:

          (i) the assignment to the Executive of any duties materially inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

          (ii) any failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

          (iii) the Company requiring the Executive to be based at any office or location more than 35 miles from that provided in Section 3(a)(i)(B) hereof, provided that reasonable travel required in connection with Executive’s reporting relationships and responsibilities to the Board shall not be deemed a breach hereof;

          (iv) any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this agreement;

          (v) any failure by the Company to comply with Section 9(c) of this Agreement; or

          (vi) the failure of the Company to appoint the Executive Chairman of the Board on or before June 30, 2008.

     (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific

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termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive with or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

     (f) Resignation. Upon termination of the Executive’s employment for any reason, the Executive agrees to resign, as of the Date of Termination, to the extent applicable, from any positions that the Executive holds with the Company and its affiliated companies, the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the affiliated companies.

     5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive shall terminate employment for Good Reason:

          (i) subject to the execution by the Executive and the Company of a mutual release of claims in favor of the Company, the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

   A. the sum of (1) the Executive’s accrued Annual Base Salary and any accrued vacation pay through the Date of Termination, (2) the Executive’s business expenses that have not been reimbursed by the Company as of the Date of Termination that were incurred by the Executive prior to the Date of Termination in accordance with the applicable Company policy, and (3) the Executive’s Annual Bonus earned for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs if such bonus has not been paid as of the Date of Termination (the sum of the amounts described in clauses (1) through (3), shall be hereinafter referred to as the “Accrued Obligations”); and

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   B. the product of (1) the Reference Bonus, and (2) a fraction, the numerator of which is the number of days from July 1 in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is 365 (the “Pro Rata Bonus”); and

          (ii) the Company shall pay to the Executive in 24 equal monthly installments, the amount equal to the product of (1) a fraction, the numerator of which is the number of days from the Date of Termination until June 30, 2009 and the denominator of which is 365, and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Reference Bonus; provided that such amount shall not be less than 1.5 times the sum of the Annual Base Salary and the Reference Bonus; and

          (iii) the Initial RSUs and the Initial Stock Options shall vest and become immediately exercisable, as the case may be and all vested stock options held by the Executive shall be exercisable for the remainder of their term, without regard to any provisions relating to earlier termination of the stock options based on termination of employment (the “Equity Benefits”); and

          (iv) until June 30, 2009, the Company shall continue to provide medical and dental benefits to the Executive and his eligible dependents as if the Executive remained an active employee of the Company (collectively “Welfare Benefits”); and

          (v) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”). As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

Notwithstanding the foregoing provisions of this Section 5(a), to the extent required in order to comply with Section 409A of the Code, cash amounts that would otherwise be payable under this Section 5(a) during the six-month period immediately following the Date of Termination shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A.

     (b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for (i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus, (iv) the Welfare Benefits and (v) the Equity Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall be paid to the Executive’s estate or beneficiary, as applicable, on the date specified in Section 5(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(b)

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shall include death benefits for which the Company pays as in effect on the date of the Executive’s death and the continued provision of the Welfare Benefits. The applicable period of health benefit continuation under COBRA shall begin on the Date of Termination. In the event of the Executive’s death after his termination of employment, but prior to the receipt of all amounts to which he is entitled under this Agreement, all remaining amounts to which he is entitled shall be paid to his estate or beneficiary, as applicable.

     (c) Disability. If the Executive’s employment is terminated by the Company by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for (i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus, (iv) the Welfare Benefits and (v) the Equity Benefits, provided, that to the extent required in order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under this Section 5(c) shall be paid, with Interest, or provided to the Executive on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall be paid to the Executive’s estate or beneficiary, as applicable, on the date specified in Section 5(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and the continued provision of Welfare Benefits. The applicable period of health benefit continuation under COBRA shall begin on the Date of Termination.

     (d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (i) the Accrued Obligations through the Date of Termination and (ii) Other Benefits, in each case to the extent theretofore unpaid. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination, provided, that to the extent required in order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under this sentence of Section 5(d) shall be paid, with Interest, or provided to the Executive on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A.

     6. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest by either party (including, as the case may be, the Company, any of its affiliates or their respective predecessors, successors or assigns, or the Executive, his estate, beneficiaries or their respective successors and assigns) of the validity or

7

enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement); plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code, if the Executive prevails on any material claim made by him, and disputed by the Company under the terms of this Agreement.

     7. Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company or any of its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 7) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to Section 409A, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     (b) Subject to the provisions of Section 7(c), all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young LLC or such other nationally recognized certified public accounting firm reasonably acceptable to the Executive as may be designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the Company to the Executive or directly to the Internal Revenue Service, in the sole discretion of the Company, within five days of the later of (i) the due date for the payment of any Excise Tax, and (ii) the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 7(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

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     (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

          (i) give the Company any information reasonably requested by the Company relating to such claim,

          (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

          (iii) cooperate with the Company in good faith in order effectively to contest such claim, and

          (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 7(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the Executive to sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to

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settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

     (d) If, after the receipt by the Executive of a payment by the Company of an amount on the Executive’s behalf pursuant to Section 7(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 7(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon and after taxes applicable thereto). If, after payment by the Company of an amount on the Executive’s behalf pursuant to Section 7(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

     8. Covenants. (a) Introduction. The parties acknowledge that the provisions and covenants contained in this Section 8 are ancillary and material to this Agreement 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 Section 8 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 10(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 within the United States, (iv) the use of Ohio law provides certainty to the parties in any covenant litigation in the United States, and (v) enforcement of the provision of this Section 8 would not violate any fundamental public policy of Ohio or any other jurisdiction.

     (b) 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 Section 8(b)) (“Confidential Information”). For the purpose of this Section 8(b), 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

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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.

     (c) Non-Recruitment of Cardinal Group Employees, etc. Executive shall not, at any time during the Restricted Period (as defined in this Section 8(c)), 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 on the second anniversary of the Executive’s Date of Termination or date of retirement, as applicable.

     (d) 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, 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.

     (e) 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 8(d) or this Section 8(e) is a “Competitor”).

     (f) No Disparagement

          (i) The Executive and the Company shall at all times refrain from taking action or making statement, 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 statement 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,

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officer, security holders, partners, agents or former or current employees and directors, except as may be required by a court or government body

          (ii) 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 arise after such termination of employment. Further, the Executive agrees to notify the Company at the earliest reasonable 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.

     (g) 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 ole 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, during and after the Employment Period, 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.

     (h) Acknowledgement and Enforcement. The Executive acknowledges and agrees that: (A) the purpose of the foregoing covenants, including without limitation the noncompetition covenants of Section 8(d) and (e), 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 Section 8; and (C) remedies at law (such as monetary damages) for any breach of the Executive’s obligations under this Section 8 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 8 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

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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. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives, heirs or legatees and the Executive by written notice to the Company may designate any beneficiary with respect to any amounts due under this Agreement upon the Executive’s death.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

     10. 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 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 and 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 parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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If to the Executive:	At the most recent address
	on file at the Company.
With a copy to:	Mayer, Brown, Rowe & Maw LLP
	71 South Wacker Drive
	Chicago, IL 60606
	Attention: Herbert W. Krueger
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) Notwithstanding any other provision of this Agreement, the Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     (e) 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, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement, except as specifically provided in a written consent pursuant to Section 4(c).

     (f) Except as otherwise expressly provided herein, from and after the Effective Time, this Agreement shall supersede any other employment, severance or change of control agreement between the parties and between the Executive with respect to the subject matter hereof . Any provision of this Agreement that by its terms continues after the expiration of the Employment Period or the termination of the Executive’s employment shall survive in accordance with its terms.

     (g) If any compensation or benefits provided by this Agreement may result in the application of Section 409A of the Code, the Company shall, in consultation with the Executive, modify the Agreement in the least restrictive manner necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A or in order to comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under

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such statutory provisions and without any diminution in the value of the payments to the Executive.

     (h) The Executive hereby warrants that the Executive is free to enter into this Agreement and to perform the services described herein. The Company hereby warrants that this Agreement and the equity awards provided hereunder have been duly authorized.

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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

R. KERRY CLARK
/s/ R. Kerry Clark
CARDINAL HEALTH, INC.
By /s/ Robert D. Walter
Name:	Robert D. Walter
Title:	Executive Chairman of the Board

EX-10.02

Exhibit 10.02

SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) by and among Cardinal Health, Inc., an Ohio corporation (the “Company”), and Robert D. Walter (the “Executive”), amends and restates, as of April 17, 2006, that certain Employment Agreement originally dated November 20, 2001 and previously amended and restated on February 1, 2004 between the Company and the Executive.

     The Company has determined that because of the unique nature of the Executive’s services to the Company it is in its best interests and those of its shareholders to assure that the Company will have the continued dedication of the Executive, and to provide the Company with the continuity of management the Company considers crucial to ensuring the Company’s continued success.

     Therefore, in order to accomplish these objectives, the Board of Directors (the “Board”) and the Company have caused the Company to enter into this Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Effective Date. The “Effective Date” shall mean November 20, 2001.

     2. Employment Period.

     The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on June 30, 2008, unless prior terminated in accordance with this Agreement, which shall be referred to herein as the “Employment Period.”

     3. Terms of Employment.

     (a) Position and Duties.

     (i) During the Employment Period (A) on or prior to April 17, 2006 the Executive shall serve as the Chairman and Chief Executive Officer of the Company with such authority, duties and responsibilities as are commensurate with such position and as may be consistent with such position, reporting directly to the Board; (B) subsequent to April 17, 2006, the Executive shall serve as the Executive Chairman of the Board with such authority, duties and responsibilities as are commensurate with such position and as may be consistent with such position, reporting directly to the Board. The Executive’s services shall be performed at such locations selected by the Executive, consistent with his obligations under Section 3(a)(ii) of this Agreement.

     (ii) During the Employment Period and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially

all of his attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive on or prior to April 17, 2006, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to April 17, 2006 shall thereafter be deemed not to interfere with the performance of the Executive’s responsibilities to the Company.

     (b) Compensation.

     (i) Base Salary. During the Employment Period, the Executive shall receive a salary at an annualized rate, which shall be referred to as the “Annual Base Salary,” of: (A) no less than $1,111,000.00 as Chairman and Chief Executive Officer of the Company for that portion of the Employment Period on or prior to April 17, 2006; and (B) $900,000.00 for that portion of the Employment Period subsequent to April 17, 2006.

     During the Employment Period, the Annual Base Salary shall be reviewed at the time that the salaries of all of the executive officers of the Company are reviewed. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase except as expressly set out above and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as modified pursuant to this paragraph 3(b)(i).

     (ii) Annual Bonus. The Executive shall receive a bonus at an annualized rate, which shall be referred to as the “Annual Bonus,” determined as follows: (A) for the fiscal year 2006, a target Annual Bonus of 300% of his Annual Base Salary for the period from July 1, 2005 through April 17, 2006 and a target Annual Bonus of 150% of his reduced Annual Base Salary for that portion of the Employment Period from April 17, 2006 through June 30, 2006, (with such target Annual Bonuses to be blended pursuant to the Company’s standard policy and paid out based on performance criteria previously established by the Board); (B) for the fiscal year 2007, a target Annual Bonus of 150% of the Executive’s Annual Base Salary (to be paid out based on performance criteria to be established by the mutual agreement of the Company and the Executive); and (C) for the fiscal year 2008, a target Annual Bonus of 150% of the Executive’s Annual Base Salary (with such actual Annual Bonus to be calculated and paid at the same time and as the same percentage of his target Annual Bonus as the percentage of the Chief Executive Officer’s actual bonus is of the Chief Executive Officer’s target Annual Bonus).

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     (iii) Incentive Awards. The Executive shall be eligible for equity and non-equity awards under the Company’s stock incentive and other long-term incentive compensation plans (A) for that portion of the Employment Period on or prior to April 17, 2006 as determined by the Board or an appropriate committee of the Board, consistent with past practice and CEO competitive pay practices, provided that during that portion of the Employment Period on or prior to April 17, 2006 the Executive shall receive an annual stock option award with a value of no less than 3,000% of Annual Base Salary in terms of “dollars at work;” and (B) for that portion of the Employment Period subsequent to April 17, 2006, the Executive shall receive two annual stock incentive grants on the same schedule as other senior Company executives; provided, however, that the Executive shall receive the first of the two stock incentive grants not later than September 30, 2006 and shall receive the second of the two stock incentive grants not later than September 30, 2007; and, provided further, that the Executive shall receive each of these two stock incentive grants before his Date of Termination if the Executive’s employment is terminated other than for Cause or he terminates employment for Good Reason. Each of these two stock incentive grants shall have an expected value as of the grant date equal to 700% of the Executive’s Annual Base Salary (calculated based on the Company’s standard valuation method) and shall consist of 70% stock options and 30% restricted stock units.

     (iv) Retirement Benefits. The Executive shall be eligible to participate in any supplemental executive retirement program established by the Company during the Employment Period.

     (v) Deferrable Restricted Share Unit Award. As of November 20, 2001, the Executive was granted 150,000 shares of deferrable restricted stock units of the Company (“Restricted Share Unit Award”), which may be settled only in Company common stock, in accordance with the form of grant attached hereto as Exhibit A. Except as otherwise provided herein and in such deferrable restricted stock unit agreement, stock subject to such Restricted Share Unit Award will not be distributable until the later to occur of (A) the Executive’s 62^nd birthday or (B) the first date on which the Executive ceases to be a “covered employee” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, of the Company, or such earlier date as may be approved by the Board. To the extent that dividends are paid on Company common stock after November 20, 2001 and prior to the date that the Company common stock subject to a Restricted Share Unit Award is issued to the Executive, the Executive shall be entitled to a cash payment in an amount equal to the dividends that he would have been entitled to receive had he been the owner of such unissued shares on the date such dividends are paid. Such cash payment shall be made at the same time as payment of dividends are made to other shareholders of Company common stock. The issuance of any Company common stock pursuant to a Restricted Share Unit Award shall be subject to the satisfaction of any and all conditions necessary for the issuance of such shares under applicable law.

     (vi) Vesting of Certain Awards. (A) As of February 1, 2004, the Executive agreed, (x) with respect to the Restricted Share Unit Award, to an extension of the vesting date from June 30, 2004 to January 15, 2006, and (y) with respect to the options

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granted to the Executive on November 19, 2001, to an extension of the grant vesting date from November 19, 2004 to January 15, 2006. The Restricted Share Units Agreement dated November 20, 2001, between the Company and the Executive (the “2001 RSU Agreement”) and the Nonqualified Stock Option Agreement dated November 19, 2001 between the Company and the Executive (the “2001 Option Agreement”), respectively, are hereby amended to reflect the vesting date extensions described in the preceding sentence. Except as expressly modified herein, the 2001 RSU Agreement and the 2001 Option Agreement remain unchanged; and (B) any stock incentive awards granted prior to April 17, 2006 shall vest and become exercisable consistent with the terms of such grant and the Company’s customary practices for senior executives; provided, however, that upon termination of the Employment Period the Company shall cause any unvested stock options, restricted stock and restricted share units held by the Executive or a permitted transferee (whether granted under this Agreement or otherwise) to either (x) continue to vest in accordance with their original terms during the Consulting Period (referred to in Section 5(e) below); or (y) vest immediately as of the termination of the Employment Period, and in either event, with all such stock options, once vested, remaining exercisable by the Executive or his heirs, successors or assigns until the end of the option term, regardless of whether the Executive remains employed; and (C) any stock incentive awards granted after April 17, 2006 shall provide for: (x) full vesting of all such awards no later than the termination of the Employment Period, and (y) exercisability of any such stock option, once vested, by the Executive or his heirs, successors, or assigns until the end of the option term regardless of whether the Executive remains employed.

     (vii) Other Benefits. During the Employment Period, the Executive shall be entitled to participate in all employee pension, welfare, perquisites, fringe benefit, and other benefit plans, practices, policies and programs generally applicable to the most senior executives of the Company on a basis and on terms no less favorable than that provided to the Executive immediately prior to April 17, 2006.

     (viii) Expenses. During the Employment Period and the Consulting Period, the Executive shall be entitled to receive prompt reimbursement for all expenses incurred by the Executive in accordance with the Company’s policies for its senior executives.

     (ix) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company as in effect with respect to the senior executives of the Company.

     4. Termination of Employment.

     (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 11(a) of this Agreement of its intention to terminate the Executive’s

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employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30^th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive calendar days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

     (b) Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

     (i) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or its representative, which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or

     (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or its affiliates, or

     (iii) conviction of a felony or guilty or nolo contendere plea by the Executive with respect thereto; or

     (vi) a material breach of Section 9 of this Agreement.

For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s act or omission was in the best interests of the Company. Any act, or failure to act, based upon express authority given pursuant to a resolution duly adopted by the Board with respect to such act or omission or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (not including the Executive) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii), (iii) or (iv) above, and specifying the particulars thereof in detail. The definition of “Cause” hereunder shall supersede any provision of any Plan or Agreement (as hereafter defined) that provides for a Forfeiture or Payment (as hereafter defined) upon the Executive’s violation of a Company policy or similar such conduct under such Plan or Agreement.

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     (c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Executive:

     (i) the assignment to the Executive of any duties materially inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

     (ii) any failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

     (iii) the Company requiring the Executive to be based at any office or location more than 10 miles from that provided in Section 3(a)(i)(B) hereof, provided that reasonable travel required in connection with Executive’s reporting relationships and responsibilities to the Board shall not be deemed a breach hereof;

     (iv) any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement;

     (v) any failure by the Company to comply with and satisfy Section 10(b) of this Agreement; OR

     (vi) the occurrence of a Change of Control (as hereinafter defined).

     (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

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     (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, subject to the provisions of Section 5(d), the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

     5. Obligations of the Company upon Termination.

     (a) Good Reason; Other Than for Cause. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive shall terminate employment for Good Reason:

     (i) except as specified below, the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

     A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination and any Annual Bonus for the fiscal year prior to the Date of Termination to the extent not theretofore paid, and (2) the product of (x) the average Annual Bonus paid to the Executive in respect of the three completed fiscal years prior to the Date of Termination, provided that such amount shall not be less than Executive’s Annual Bonus at target hereunder (the “Recent Average Bonus”), and (y) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is 365, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1) and (2), shall be hereinafter referred to as the “Accrued Obligations”); and

     B. the amount equal to the product of (x) two, or if the Date of Termination is within three years after a Change of Control, three and (y) the sum of (I) the Executive’s Annual Base Salary and (II) the Recent Average Bonus; and

     (ii) any stock options, restricted stock and restricted share units held by the Executive or a permitted transferee (whether granted under this Agreement or otherwise) shall vest immediately (with all such stock options remaining exercisable by the Executive or his heirs, successors or assigns until the end of the option term); and

     (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliates (such amounts and benefits, the “Other Benefits”) in accordance with the terms and normal procedures of each such plan, program, policy or practice; provided that Executive and his eligible dependents

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shall continue to participate in the Company’s welfare benefit plans for the period during which severance is measured commencing on the Date of Termination.

For purposes of this Agreement, “Change of Control” shall mean any of the following events:

     (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of either (x) the then outstanding common shares of the Company (the “outstanding Company Common Shares”) or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company or any corporation controlled by the Company, (B) any acquisition by the Company or any corporation controlled by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation that is a Non-Control Acquisition (as defined in (iii) below); or

     (ii) the individuals who, as of April 17, 2006 constitute the Board of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of the Company provided, however, that any individual becoming a director subsequent to April 17, 2006 whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

     (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition by the Company of assets or shares of another corporation (a “Business Combination”), unless such Business Combination is a Non-Control Acquisition. A “Non-Control Acquisition” means a Business Combination where, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation a corporation which as a result of such transaction owns the Company all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as

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their ownership immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination (including any ownership that existed in the Company or the company being acquired, if any) and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

     (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

     (b) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay or provide to the Executive an amount equal to the amount set forth in clause (1) of Section 5(a)(i)(A) above, and the timely payment or provision of the Other Benefits, in each case to the extent theretofore unpaid, and subject also to the provisions of Sections 3(b)(vi) and 5(d).

     (c) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of the Other Benefits. Additionally, any stock options, restricted stock and restricted share units held by the Executive or a permitted transferee (whether granted under this Agreement or otherwise) shall vest immediately (with all such stock options remaining exercisable by the Executive or his heirs, successors or assigns until the end of the option term); and Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination.

     (d) Disability; Retirement. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. Additionally, unless the award agreement with respect to an individual stock option, restricted stock or restricted share unit award otherwise provides for immediate and full vesting, for purposes of the vesting of any stock options, restricted stock or restricted share units held by the Executive or a permitted transferee (whether granted under this Agreement or otherwise), if the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period or the Executive’s employment is terminated by reason of the Executive’s retirement at any time

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after June 30, 2004, the Executive shall be treated as a consulting employee and any such stock options, restricted stock or restricted share units shall continue to vest in accordance with their original vesting schedule (with all such stock options, once vested, remaining exercisable by the Executive or his heirs, successors or assigns until the end of the option term). If the Executive shall die after termination by reason of his retirement or Disability, all stock options, restricted stock and restricted share units held by the Executive or a permitted transferee (whether granted under this Agreement or otherwise) shall vest immediately (with all such stock options remaining exercisable by the Executive or his heirs, successors or assigns until the end of the option term). With respect to the provision of Other Benefits upon the Executive’s Disability, the term Other Benefits as utilized in this Section 5(d) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits as in effect at any time thereafter generally with respect to senior executives of the Company.

(e) Consulting Period.

     Immediately following the end of the Employment Period (unless the Executive’s employment is terminated for Cause or the Executive terminates his employment without Good Reason, or dies or is Disabled) and for a period of five years thereafter (the “Consulting Period”), the Executive shall, when and as requested by the Chief Executive Officer of the Company and subject to his reasonable availability, provide services and advice to the Company as a consultant and shall participate in external activities and events for the benefit of the Company not to take up more than 20% of the Executive’s business time and attention. The Consulting Period shall terminate without further liability to the Company in the event that it is determined that the Executive is in violation of Section 9(c), (d) or (e), as determined pursuant to the procedures set out in Section 9(i), whether or not during the Restricted Period.

     During the Consulting Period, the Executive shall receive annual compensation of $1,000,000, payable monthly, which shall be referred to herein as “Consulting Period Compensation.” The Consulting Period Compensation shall be the only compensation the Executive receives from the Company for his performance of services as a consultant. If, during the Consulting Period, the Company shall terminate the Executive’s consulting arrangement for any reason (unless the Executive’s consulting arrangement is terminated for Cause or the Executive terminates his employment without Good Reason, or dies or is Disabled, with the definitions of “Cause,” “Good Reason,” and “Disabled” to be adjusted to reflect the facts of his consulting arrangement), the Company shall pay the Executive in a lump sum in cash within 30 days after such termination date the sum of (1) the Executive’s Consulting Period Compensation through such termination date to the extent not theretofore paid, and (2) all compensation the Executive would have received during the remainder of the Consulting Period had his consulting arrangement not been terminated.

(f) Certain Additional Agreements under Section 409A.

     (i) In the event the payment of any amounts by the Company to or for the benefit of the Executive would be treated as non-qualified deferred compensation under Section 409A of the Code, such payment shall be delayed for six (6) months after the date of the Executive’s separation from service if required in order to avoid additional tax under Section 409A of the Code. If the Executive dies within six (6) months following a

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separation from service, any such delayed payments shall not be further delayed, and shall be immediately payable to the Executive’s estate.

     (ii) The Company shall not take any action that would expose any payment or benefit to the Executive under this Agreement or under any plan, arrangement or other agreement to the additional tax imposed under Section 409A of the Code, unless (A) the Company is obligated to take the action under an agreement, plan or arrangement to which the Executive is a party, (B) the Company advises the Executive in writing that the action may result in the imposition of the additional tax, and (C) the Executive subsequently requests the action in a writing that acknowledges that he shall be responsible for any effect of the action under Section 409A of the Code. The Company shall hold the Executive harmless for any action it may take in violation of this paragraph.

     (iii) It is the parties’ intention that the benefits and rights to which the Executive could become entitled in connection with the termination of employment covered under this Agreement comply with Section 409A of the Code. If the Executive or the Company believes, at any time, that any of such benefit or right does not so comply, he or it shall promptly advise the other party and shall negotiate reasonably and in good faith to amend the terms of such arrangement such that it complies (with the most limited possible economic effect on the Executive and on the Company).

     (iv) Without limitation on the foregoing, if the Executive suffers any adverse tax consequences as a result of the vesting of any award or the extension of the excercisability of any option on the shares of the Company, the Company shall hold the Executive harmless for any and all taxes in excess of those that would be paid absent those adverse tax consequences; provided that the Company and the Executive cooperate to the maximum extent possible to minimize any such adverse tax consequences.

     6. Non-exclusivity of Rights. Except as specifically provided, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company, or any of its affiliates and for which the Executive may qualify, nor, subject to Section 11(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company, or its affiliates. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or its affiliates at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. As used in this Agreement, the terms “affiliated companies” and “affiliates” shall include any company controlled by, controlling or under common control with the Company.

     7. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the

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Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), if the Executive prevails on any material claim made by him, and disputed by the Company under the terms of this Agreement.

     8. Certain Additional Payments by the Company. If at any time for any reason any payment or distribution (a “Payment”) by the Company or any other person or entity to or for the benefit of the Executive is determined to be a “parachute payment” (within the meaning of Section 280G (b) (2) of the Code), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with or arising out of his employment with the Company or a change in ownership or excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive ( the “Excise Tax”), then within a reasonable period of time after such determination is reached the Company shall pay to the Executive an additional payment (the “Gross-Up Payment”) in an amount such that the net amount retained by the Executive, after deduction of any Excise Tax on such Payment and any federal, state or local income or employment tax or other taxes and Excise Tax on the Gross-Up Payment, shall equal the amount of such Payment (including any interest or penalties with respect to any of the foregoing). All determinations concerning the application of the foregoing shall be made by a nationally recognized firm of independent accountants (together with legal counsel of its choosing) selected by the Company after consultation with the Executive (which may be the Company’s independent auditors), whose determination shall be conclusive and binding on all parties. The fees and expenses of such accountants and counsel (including counsel for the Executive) shall be borne by the Company. If such independent auditors determine that no Excise Tax is payable by the Executive, it shall furnish the Executive with an opinion that the Executive has substantial authority not to report any Excise Tax on his Federal income tax return. In the event the Internal Revenue Service assesses the Executive an amount of Excise Tax in excess of that determined in accordance with the foregoing, the Company shall pay to the Executive an additional Gross-Up Payment, calculated as described above in respect of such excess Excise Tax, including a Gross-Up Payment in respect of any interest or penalties imposed by the Internal Revenue Service with respect to such excess Excise Tax.

     9. Covenants.

     (a) Introduction. The parties acknowledge that the provisions and covenants contained in this Section 9 are ancillary and material to this Agreement 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 Section 9 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

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Section 11(a) below are accurate and necessary because (i) the Company is headquartered in Ohio, which has operations nationwide and has a compelling interest in having its employees treated uniformly, (ii) the use of Ohio law provides certainty to the parties in any covenant litigation in the United States, and (iii) enforcement of the provision of this Section 9 would not violate any fundamental public policy of Ohio or any other jurisdiction.

     (b) 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 Section 9(b))(“Confidential Information”). For the purposes of this Section 9(b), 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 confidential 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.

     (c) Non-Recruitment of Cardinal Group Employees, etc. Executive shall not, at any time during the Restricted Period (as defined in this Section 9(c)), 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 six month 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 consultant) and for two years thereafter.

     (d) 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, 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.

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     (e) 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 (other than an entity or enterprise with annual revenues of 10% or less of the Company’s revenues controlled by or on behalf of any of the Executive’s immediate family, and which such foregoing exception shall apply for the purpose of the covenant of this Section 9(e) as well as any covenant or other limitation under any restricted stock, stock option or other stock incentive held by Executive) that competes with the Cardinal Group in any material way, 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 9(d) or this Section 9(e) is a “Competitor”); provided, however, that during the portion of the Restricted Period following the Employment Period, the Executive shall not be restricted from a role with a diversified entity or enterprise that may do or seek to do business with, or is in competition with, one or more businesses in the Cardinal Group, so long as the Executive appropriately recuses himself from decisions and activities directly associated with such competitive components of the entity or enterprise.

     (f) No Disparagement

     (i) 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.

     (ii) The Executive further agrees that, following termination of employment and to the extent not covered by his services to be performed during the Consulting Period, 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 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 compensate the Executive for any services in excess of those required by him during the Consulting Period as a result of this paragraph 9(f)(ii) or any services after the expiration of the Consulting Period. The

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Company shall compensate the Executive for any such cooperation and assistance at a rate equivalent to his Consulting Period Compensation.

     (g) 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.

     (h) Acknowledgement and Enforcement. The Executive acknowledges and agrees that: (A) the purpose of the foregoing covenants, including without limitation the noncompetition covenants of Sections 9(d) and (e), 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 Section 9; and (C) remedies at law (such as monetary damages) for any breach of the Executive’s obligations under this Section 9 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 9 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.

     (i) Any provision of any agreement between the Company (or other member of the Cardinal Group) and the Executive or of any plan, program, policy or practice of the Company (or other member of the Cardinal Group) affecting the Executive, (including, without limitation, any stock option grant agreement, restricted stock agreement and the Restricted Share Unit Award agreement) (collectively, “Plan or Agreement”) to the contrary notwithstanding, (x) no covenant or other restriction under any such Plan or Agreement respecting the Executive’s conduct (which is sometimes referred to therein as “Triggering Conduct” or “Competitor Triggering Conduct”) shall be enforceable, to cause a forfeiture or obligation to pay an amount realized by Executive (or his permitted transferees thereunder) as provided under such Plan or Agreement (a “Forfeiture or Payment”), except as a result of any breach of such covenant or

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restriction by the Executive prior to the second anniversary of the date on which the Executive’s rights under such Plan or Agreement shall have vested (or to the extent of such vesting) (except that the last day of the Restricted Period shall be substituted for such second anniversary (only if the Restricted Period expires before such second anniversary) respecting any grant of restricted stock made to the Executive prior to April 17, 2006); and (y) the definition of a “Solicitation” at Section 9(c) and of a “Competitor” at Section 9(e) hereof shall supersede any definition of such conduct that is less beneficial to the Executive under such a covenant or restriction under any such Plan and Agreement. In furtherance thereof, (i) no such covenant or restriction shall be enforceable to cause a Forfeiture or Payment against the Executive (or his permitted transferees) under any Plan or Agreement to the extent that the Executive’s rights thereunder vested two or more years prior to April 17, 2006, (ii) the Executive shall not be subject to any Forfeiture or Payment under any such Plan or Agreement until he shall have been afforded Due Process (as hereafter defined), and (iii) any such Plan or Agreement entered into after the Effective Date shall be subject to the provisions of this Section 9(i) and to the definition of “Cause” under Section 4(c) hereof unless such Plan or Agreement specifically refers to this Section 9(i) or Section 4(c) as the case may be and specifically states that the provisions of this Section 9(i) or the definition of “Cause” under Section 4(c) shall not apply. “Due Process” shall mean: (A) the Executive has been given not less than 60 days prior written notice of such conduct (“Conduct Notice”) by the Board, (B) upon such notice to the Executive, the Executive is given an opportunity, together with counsel, to be heard before the Board at a meeting of the Board called and held for the purpose of reviewing such conduct, (C) in the good faith opinion of the Board at such meeting and delivery of a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (not including the Executive) finding that the Executive is guilty of such conduct, (D) the Executive fails to cure such conduct, if it is capable of cure, on or before the later of the 60th day following the Conduct Notice or the 14^th day after delivery of such resolution, and (E) the Company shall promptly pay all professional fees incurred by the Executive to defend such allegation of a breach of such covenant or restriction (unless such three-quarters majority of the Board adopts such resolution in which case the provisions of Section 7 hereof shall govern any subsequent dispute resolution proceedings or settlement of the parties).

     j. The Company shall reimburse the Executive for all reasonable attorney’s fees and expenses incurred in connection with the negotiation of this Agreement.

     10. Successors.

     (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     (b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business and/or assets to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

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     As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

     11. 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. 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 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:

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. Except as otherwise specifically provided herein, 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.

     (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     (e) 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, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 4 of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

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     (f) From and after the Effective Date, this Agreement shall supersede any other employment, severance or change of control agreement between the parties and any other Plan or agreement with respect to the subject matter hereof. In the case of any conflict between the terms of this Agreement (the “Terms”) and the provisions of any such employment, severance or change of control agreement or any other Plan or agreement as in effect from time to time (the “Provisions”), the Executive’s rights and the Company’s obligations shall be established by whichever of the Terms or Provisions would be more beneficial to the Executive.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, 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: April 17, 2006

/s/ Robert D. Walter
ROBERT D. WALTER

/s/ John B. McCoy
CARDINAL HEALTH, INC.
Execution Date: April 17, 2006
By: John B. McCoy

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EX-10.03

Exhibit 10.03

Separation Agreement

     This Separation Agreement (“Agreement”) is made and entered into this 17th day of April, 2006 (the “Execution Date”), by and between George L. Fotiades (the “Executive”) and Cardinal Health, Inc. (the “Company”).

WITNESSETH:

     WHEREAS, the Executive has been employed as the President and Chief Operating Officer of the Company in accordance with the Employment Agreement dated February 1, 2004 (the “Employment Agreement”); and

     WHEREAS, the Company and the Executive have mutually agreed to terminate the employment relationship and desire to enter into this Agreement to specify the terms and conditions of the termination of the Executive’s employment.

     NOW, THEREFORE, in consideration of the above premises and mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. DATE OF SEPARATION.

The Executive will cease to be an employee of the Company effective on May 19, 2006 (the “Termination Date”). During the period prior to the Termination Date, Executive will continue to provide all services required under the Employment Agreement, except that Executive will no longer be President and Chief Operating Officer of the Company.

2. RESIGNATION FROM COMPANY POSITIONS.

As of the Termination Date, the Executive shall tender his resignation as an officer and director of each of the Company’s subsidiaries for which he serves. Also, as of the Termination Date, the Executive shall resign as a trustee, plan administrator and fiduciary for any Company sponsored plan, trust or other arrangement in which he held such a position, as well as from any and all Company positions to which the Executive was elected or appointed, including any and all positions in which the Executive was charged with fiduciary responsibility.

3. EFFECT OF TERMINATION UNDER EMPLOYMENT AGREEMENT.

The termination of Executive’s employment on the Termination Date will qualify as a termination without Cause under Section 4(c) of the Employment Agreement, entitling Executive to the compensation set forth in that Subsection of the Employment Agreement and to no further compensation or benefits under the Employment Agreement. This Agreement shall be deemed to be notice of termination by the Company to the Executive under Section 4(a) of the Employment Agreement. The Employment Agreement shall

remain in full force and effect, including the Covenants in Section 5 of the Employment Agreement.

4. EFFECT OF TERMINATION UNDER OPTION AGREEMENT AND AMENDMENT TO 2004 OPTION AGREEMENT

The termination will qualify as a termination without Cause following a change in corporate structure or personnel of the Company which results in Executive ceasing to report directly to Robert D. Walter prior to termination under Section 3(b)(ii) of the Nonqualified Stock Option Agreements dated November 18, 2002 and February 1, 2004 (the “Option Agreements”). In order to satisfy the intent of the Option Agreement dated February 1, 2004, the Option to purchase 225,000 shares of common stock of the Company under that Option Agreement shall vest and become exercisable on the date that is immediately prior to the Termination Date. The remaining terms of the Option Agreements shall remain in full force and effect, including the provisions regarding “Triggering Conduct/Competitive Triggering Conduct.”

5. RETURN OF COMPANY DOCUMENTS AND PROPERTY.

The Executive hereby agrees, represents and warrants that, as of the Termination Date, he shall have returned to the Company all documents (including copies and computer records thereof) of any nature which relate to or contain proprietary or confidential information concerning Company, its customers, or employees, and any and all property of the Company which has been in his possession, including, except as otherwise herein provided, any computers, computer programs or limited use software licenses in his possession. The Executive confirms that all confidential information is and shall remain the exclusive property of the Company. All business records, papers and documents kept or made by the Executive relating to the business of the Company shall be and remain the property of the Company, except for such papers customarily deemed to be the personal copies of the Executive. Information in the public domain or information that is commonly known by or available to the public through the Company’s press releases, public documents, annual reports, SEC filings or other public filings shall not be considered proprietary or confidential information.

5. RELEASE.

(i) General. In consideration of the benefits set forth in this Agreement, including the amendment to the 2004 Option Agreement, the Executive for himself, his heirs, administrators, representatives, executors, successors and assigns collectively “Releasors”) does hereby irrevocably and unconditionally release, acquit and forever discharge the Company, its subsidiaries and affiliates and their respective current and former shareholders, subsidiaries, parents, affiliates, divisions, trustees, partners, agents, directors, officers and employees, including without limitation, all persons acting by, through, under or in concert with any of them (collectively, “Releasees”), and each of them from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights,

demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever arising out of or relating to his employment relationship, or the termination of that relationship, with the Company and its subsidiaries and affiliates, known or unknown, whether in law or equity and whether arising under federal, state or local law and in particular including any claim for discrimination based upon race, color, ethnicity, sex, age (including the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), national origin, religion, disability, or any other unlawful criterion or circumstance, which the Executive and Releasors had, now have, or may have in the future against each or any of the Releasees from the beginning of the world until the date hereof relating to the Executive’s employment with the Company and its subsidiaries and affiliates (“Claims”).

(ii) Exclusions from Release. Anything herein to the contrary notwithstanding, nothing herein shall release the Company from any claims or damages based on (A) any right or claim that arises after the date hereof, (B) any right the Executive may have under the Employment Agreement or this Agreement and under any applicable plan, policy, program or other agreement or arrangement with the Company, including his outstanding option agreements or (C) the Executive’s rights to indemnification under the Company’s Code of Regulations and the indemnity agreement between the Company and the Executive. The parties agree that this Agreement shall not affect the rights and responsibilities of the U.S. Equal Employment Opportunity Commission (hereinafter “EEOC”) to enforce ADEA and other laws. In addition, the parties agree that this Agreement shall not be used to justify interfering with the Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that the Executive knowingly and voluntarily waives all rights or claims that arose prior to the date hereof that the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC (“EEOC Claims”).

(iii) ADEA Rights. The Executive acknowledges that: (A) this entire Agreement is written in a manner calculated to be understood by him; (B) he has been advised to consult with an attorney before executing this Agreement; (C) he was given a period of twenty-one days within which to consider this Agreement; and (D) to the extent he executes this Agreement before the expiration of the twenty-one-day period, he does so knowingly and voluntarily and only after consulting his attorney. The Executive shall have the right to cancel and revoke this Agreement during a period of seven days following the date hereof, and this Agreement shall not become effective, and no money shall be paid hereunder, until the day after the expiration of such seven-day period. The seven-day period of revocation shall commence upon the date hereof. In order to revoke this Agreement, the Executive shall deliver to the Company’s Chief Legal Officer, prior to the expiration of said seven-day period, a written notice of revocation. Upon such revocation, this Agreement shall be null and void and of no further force or effect.

6. GOVERNING LAW.

This Agreement shall be construed in accordance with, and governed by, the laws of the State of Ohio, except to the extent that the laws of the United States shall otherwise apply.

7. ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions.

8. COUNTERPARTS.

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Execution Date.

/s/ George L. Fotiades  

George L. Fotiades

 

CARDINAL HEALTH, INC. 

BY: /s/ Robert D. Walter  

     Robert D. Walter, 

     Executive Chairman of the Board 

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

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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

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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

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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 

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EX-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 

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EX-99.01

Exhibit 99.01

7000 Cardinal Place
Dublin,OH 43017

www.cardinalhealth.com

FOR IMMEDIATE RELEASE

Contacts:

Media:	Jim Mazzola	Investors:	Jason Strohm
	(614) 757-3690		(614) 757-7542
	jim.mazzola@cardinal.com		jason.strohm@cardinal.com

CARDINAL HEALTH APPOINTS R. KERRY CLARK
PRESIDENT, CEO AND DIRECTOR

Former vice chairman of Procter & Gamble looks to expand Cardinal Health’s
international presence and grow company’s segment leadership

Robert D. Walter to remain chairman

DUBLIN, Ohio, April 17, 2006 — Cardinal Health, Inc., the leading provider of products and services supporting the health care industry, announced today the appointment of R. Kerry Clark as president, chief executive officer and a member of Cardinal Health’s board of directors. Clark succeeds Robert D. Walter as chief executive, effective today. Walter, the company’s founder, long-time chief executive officer, and a major shareholder, will continue as chairman of the board and work closely with Clark to shape the company’s future.

Clark, 53, has been vice chairman of the board of The Procter & Gamble Company since 2002 and most recently responsible for its $20 billion Global Family Health business, which includes pharmaceuticals and over-the-counter medicines. He has considerable strategic, operational, and corporate management experience, having held leadership positions in North America and Asia during his 32 years with Procter & Gamble.

“Kerry brings broad, international experience and high performance standards from one of the most respected companies in the world,” Walter said. “His skill set is highly relevant to Cardinal Health’s mission to build upon our market segment leadership and capitalize on the company’s considerable opportunities for growth around the world. He is also a perfect fit with Cardinal Health’s culture, sharing our focus on performance and strong values. I am very excited about our prospects under Kerry’s leadership and remain passionate in helping the company achieve its future goals.”

Walter cited other key factors in Clark’s appointment: his years of senior operational experience, including expanding P&G’s business internationally in both developed and developing markets; his management of broad-based and complex businesses on a global basis; his application of best practices in supply chain management; leadership and talent development; leading the

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worldwide selling organization to new business models with leading customers; innovation and success in bringing new products to market; and direction of P&G’s global excellence program, which resulted in more effective shared business services in information technology, human resources, facility and property management, and other areas.

“This is an exciting, challenging time in all parts of the global health care industry,” Clark said. “Cardinal Health truly has many competitive advantages to address complex issues facing its customers. That is a tribute to Bob Walter’s continuing legacy of building a great organization over the past 35 years. The company today is in a very strong position with marketplace momentum, and with opportunities for improvement parallel to ones we addressed at P&G. I look forward to working with Bob and a very talented management team here.”

The company also announced today that George L. Fotiades, president and chief operating officer, will leave the company following a transition period. “In his role as president and COO the past two years, George helped lead us through a period of significant change,” Walter said. “His focus on execution and driving the company’s customer-focused integration programs, such as One Cardinal Health, has helped position the company for stronger growth in the future. We thank him for his leadership and appreciate his contributions.”

Background on Clark

In his most recent position, Clark held several key corporate responsibilities while also leading P&G’s Global Family Health business. P&G’s Global Family Health business, which is comprised of the company’s pharmaceutical, personal health, baby care, tissues and towels, oral health, and pet care businesses, accounted for a third of P&G’s annual sales in its last fiscal year, and employed more than 20,000 people in 80 countries.

Clark started his career in marketing with P&G Canada in 1974. During the next 17 years he ascended to greater responsibility in various management positions in P&G’s businesses, including four years in Japan as marketing director. In 1991 he was named vice president and general manager for Laundry Products for the U.S. In 1995 he was appointed group vice president of P&G and during the next several years led the rapid growth of the company’s Laundry and Cleaning Products business, including the development of Swiffer and Febreze, two of P&G’s most successful brands in the past decade.

In 1998 he was appointed an executive vice president of Procter & Gamble and again was posted in Asia as president of that region in addition to managing the company’s global feminine protection business. He returned to the U.S. in 2000 when he was named president-Global Market Development Organization and had all regions except Latin America reporting to him. His leadership and integration of regional sales and marketing operations was a key factor in accelerating P&G’s worldwide growth. He also completed corporate assignments in global business services, which added value across the enterprise by outsourcing functions such as IT, human resources and property management.

A native of Ottawa in Ontario, Canada, Clark graduated from Queen’s University in 1974 with a bachelor of commerce degree. He is a director of Textron Inc., a global multi-industry company serving the general aviation, aerospace, defense, and industrial and commercial finance markets. He is a trustee and past chairman of the board for the Cincinnati Zoo. He is on the board of the Greater Cincinnati United Way and also chaired the Alexis de Tocqueville Society in 2005.

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About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $75 billion, global company serving the health care industry with a broad portfolio of products and services. It manufactures, packages, and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Through this diverse offering, Cardinal Health delivers integrated health care solutions that help customers reduce their costs, improve efficiency and deliver better care to patients. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com.

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Conference Call
Cardinal Health will host a conference call at 4:30 p.m. Eastern Daylight Time (EDT) to discuss Clark’s appointment. To access the discussion, go to the Investors page at www.cardinalhealth.com or dial 706-634-5100, passcode 8136310. An audio replay will also be available at the Investors page of www.cardinalhealth.com.

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health’s Form 10-K, Form 8-K and Form 10-Q reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: the costs, difficulties, and uncertainties related to the implementation of organizational changes and the integration of acquired businesses; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; difficulties and uncertainties related to changes of chief executive officers and other management; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by or settlement discussions with any regulatory authority or any legal and administrative proceedings; the impact of previously announced restatements; difficulties or delays or increased costs in implementing its global restructuring program, including facility rationalizations, and global expansion plans; difficulties in opening new facilities or fully utilizing existing capacity; difficulties and uncertainties associated with business model transitions; and general economic and market conditions. Cardinal Health undertakes no obligation to update or revise any forward-looking statement.