Document:

EX-10.02

 

Exhibit 10.02

[ON CARDINAL HEALTH LETTERHEAD]

August 3, 2006

Mr. Jeffrey W. Henderson

[ number and street ]

[ city, state, zip ]

Subject: Amendment to Employment Offer Letter Agreement (“Letter Agreement”)

Dear Jeff:

The purpose of this letter is to supplement and amend the Letter Agreement signed by you and
Cardinal Health, Inc. (the “Company”) dated April 13, 2005, in accordance with resolutions
approved by the Human Resources and Compensation Committee of the Board of Directors at its
meeting on August 1, 2006. The following are the additional or revised terms governing your
employment by the Company:

     1. In addition to the options and restricted share unit awards under paragraph 4 of the
Letter Agreement, you will be granted 8,000
Restricted Share Units (RSUs) pursuant to the stock awards feature of the 2005 Long-Term Incentive
Plan, as amended (the “LTIP”) effective as of August 15, 2006. The 8,000 RSUs will not require
payment of any purchase price for the shares and will vest in three equal annual installments of
one-third each year beginning on the first anniversary of the grant date, consistent with the
terms of such grant and the Company’s customary practices for senior executives.

     2. Paragraph 11 of the Letter Agreement is amended by adding the following after the first
sentence: “If your employment is involuntarily terminated by the Company without cause between
August 30, 2007 and April 17, 2008, in lieu of the severance provided in the preceding sentence,
you will receive a lump sum cash payment within no more than 2 1/2 months after your termination
date equal to the sum of your annual base salary at the rate in effect on the date of termination
and your annual bonus target for the Company’s 2008 fiscal year; in addition, your option to
purchase 48,077 shares of the Company’s stock (granted on April 18, 2005) and 15,000 of the RSUs
granted under paragraph 4 of the Letter Agreement that are then unvested shall become immediately
vested. These severance benefits are subject to the Company’s Policy Regarding Shareholder
Approval of Severance Agreements (the “Policy”), which requires shareholder approval of certain
agreements to provide “Severance Benefits” that exceed 2.99 times “Base Salary” and “Bonus,” as
such terms are defined in the Policy. If the severance benefits herein require shareholder
approval under the Policy, you agree that the benefits under this provision will be reduced to an
amount not exceeding 2.99 times “Base Salary” and “Bonus” unless such approval is obtained.”

     In addition, the following is added to paragraph 11 of the Letter Agreement before the last
sentence of that paragraph: “You may also voluntarily resign from your employment with the
Company by providing written notice of such resignation within the 10 days immediately
following June 30, 2007, effective 60 days after the date of the notice. Provided that the
Company does not have grounds to terminate your employment for gross misconduct at the time of the
notice or during the 60 day period thereafter, you will receive a lump sum cash payment within no
more than 2 1/2 months after your termination date equal to the sum of your annual base salary at
the rate in effect on the date of termination and your annual bonus target for the

 

 

Company’s 2008
fiscal year; in addition, 15,000 of the RSUs granted under paragraph 4 of the Letter Agreement
that are then unvested shall become immediately vested.”

     3. Except as specifically amended by the provisions of this amendment, all terms of the
Letter Agreement are unmodified and remain in full force and effect.

My signature below represents the Company’s agreement to these amendments to the Letter Agreement.
Please sign where indicated below to accept and agree to this amendment to your Letter Agreement.

Sincerely,

/s/ R. Kerry Clark

R. Kerry Clark

President and Chief Executive Officer

I accept and agree to the above amendment to my Letter Agreement:

/s/ Jeffrey W. Henderson       

JEFFREY W. HENDERSON

Date: August 5, 2006

2EX-10.03

 

Exhibit 10.03

CARDINAL HEALTH, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

     On [date of grant] (the “Grant Date”), Cardinal Health, Inc., an Ohio corporation (the
“Company”), has awarded to [employee name] (“Awardee”), an option (the “Option”) to purchase [# of
shares] common shares, without par value, of the Company (the “Shares”) for a price of [$X.XX] 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. This Option shall vest and become exercisable [CLIFF
ALTERNATIVE: on [vesting date]] [INSTALLMENT ALTERNATIVE: in accordance with the following
schedule: [vesting schedule], subject [INSTALLMENT ALTERNATIVE: 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
[date of expiration] (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. If a Termination of Employment occurs by
reason of death 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 any transferee of Awardee, if applicable, or by the legal representative
of the estate or by the legatee of Awardee under the will of Awardee for a period of one year from
the date of death or until the Grant Expiration Date, whichever period is shorter.

(b) Termination of Employment by Reason of Retirement or Disability. If a Termination of
Employment occurs by reason of Retirement or Disability prior to the vesting in full of the

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Option, then any unexercised portion of the Option which has not vested on such date of Termination of
Employment will automatically be forfeited. The Option, to the extent vested, may be exercised by
Awardee (or any transferee, if applicable) until the earlier of the fifth anniversary of the date
of such Retirement or Disability or the Grant Expiration Date, provided that if Awardee has at
least 15 years of service with the Company and its Affiliates (collectively, the “Cardinal Group”)
at the time of Retirement, the Option, to the extent vested, may be exercised by Awardee (or any
transferee, if applicable) until the Grant Expiration Date. Notwithstanding the foregoing, if
Awardee dies after Retirement or Disability, but before the expiration of the exercise period
provided for by the preceding sentence, the Option, to the extent vested, may be exercised by any
transferee of the Option, if applicable, or by the legal representative of the estate or by the
legatee of Awardee under the will of Awardee from and after such death only until the earlier of
(x) the first anniversary of the date of death or (y) the date upon which such exercise period
would have otherwise expired.

(c) Other Termination of Employment. If a Termination of Employment occurs by any reason
other than death, Retirement or Disability, 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; provided, however, that if the Termination of Employment was a
Termination for Cause, as determined by the Administrator, the Option may be immediately canceled
by the Administrator (whether then held by Awardee or any transferee).

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. Holding Period Requirement. If Awardee is classified as an “officer” of the Company
within the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, on the
Grant Date, then, as a condition to receipt of the Option, Awardee hereby agrees to hold his or her
After-Tax Net Profit in Shares until the first anniversary of the exercise of all or a portion of
the Option (or, if earlier, the date of Awardee’s Termination of Employment). “After-Tax Net
Profit” means the total dollar value of the Shares that Awardee elects to exercise under this
Option at the time of exercise, minus the total of (i) the exercise price to purchase these Shares,
and (ii) the amount of all applicable federal, state, local or foreign income, employment or other
tax and other similar fees that are withheld in connection with the exercise.

10. 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

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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 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.

11. 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.

12. Prompt Acceptance of Agreement. The Option grant evidenced by this agreement shall, at
the discretion of the Administrator, be forfeited if this agreement is not manually executed and
returned to the Company, or electronically executed by Awardee by indicating Awardee’s acceptance
of this agreement in accordance with the acceptance procedures set forth on the Company’s
third-party equity plan administrator’s web site, within 90 days of the Grant Date.

13. 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.

14. 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

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certified or registered mail, return receipt requested, postage prepaid, and will be effective upon
delivery to the Company at the address set forth below:

Cardinal Health, Inc.

7000 Cardinal Place

Dublin, Ohio 43017

Attention: Chief Legal Officer

Facsimile: (614) 757-2797

All notices, requests, consents and other communications required or provided under this agreement
to be delivered by the Company to Awardee may be delivered by e-mail or in writing and will be
deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier,
or certified or registered mail, return receipt requested, postage prepaid, and will be effective
upon delivery to the Awardee.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	CARDINAL HEALTH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

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ACCEPTANCE OF AGREEMENT

Awardee hereby: (a) acknowledges 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 [date of Plan Description] pertaining to the Plan.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	[	 	 	 	 
	 

	 	 	 	 	 
	 	 	Awardee’s Signature	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Awardee’s Social Security Number	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Date]	 	 

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