Document:

Exhibit 10.6

 

FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (CEO)

 

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is made as of the 8th day of March, 2016, between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates (collectively, the “Company”), and Robert Flexon (“Employee”).  A copy of the Dynegy Inc. 2012 Long Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein.  Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

 

1.                                      The Grant.  The Compensation and Human Resources Committee of the Board of Directors (the “Committee”) granted to Employee on March 8, 2016 (“Effective Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, the right and option to purchase (the “Option”), in accordance with the terms and conditions set forth in the Plan and in this Agreement, an aggregate number of shares (the “Shares”) of common stock of Dynegy, $0.01 par value per share (the “Common Stock”), at a price of [PRICE] per share (the “Exercise Price”).  Employee acknowledges receipt of a copy of the Plan, and agrees that the Option shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.  The Option shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Exercise Price is, in the judgment of the Committee, not less than one hundred percent (100%) of the Fair Market Value of a share of the Common Stock on the Effective Date.

 

2.                                      Exercise.  Subject to the provisions, limitations and other relevant provisions of the Plan and of this Agreement, and the earlier expiration of the Option as herein provided, Employee may exercise the Option to purchase some or all of the Shares as follows:

 

(a)                                 The Option shall become exercisable in three cumulative equal annual installments as follows:

 

(i)                                     on the first anniversary of the Effective Date, the right to purchase one-third of the aggregate number of Shares shall become exercisable without further action by the Committee;

 

(ii)                                  on the second anniversary of the Effective Date, the right to purchase an additional one-third of the aggregate number of Shares shall become exercisable without further action by the Committee; and

 

(iii)                               on the third anniversary of the Effective Date, the right to purchase the remaining one-third of the aggregate number of Shares shall become exercisable without further action by the Committee.

 

(b)                                 Notwithstanding any other provision of this Agreement, the unexercised portion of the Option, if any, will automatically and without notice terminate and become null and void upon the expiration of ten (10) years from the Effective Date of the Option.

 

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(c)                                  Any exercise by Employee of the Option, or portion thereof, shall be conducted by delivery of an irrevocable notice of exercise to the Company or its designee as provided in the Plan.  In no event shall Employee be entitled to exercise the Option for less than a whole Share.

 

 

(d)                                 Upon Corporate Change, if the Committee seeks to terminate the Agreement under Section XIII(b)(2) of the Plan, the Committee will comply with Section XIII(b)(3) of the Plan to assess value of the Agreement.

 

3.                                      Termination of Employment.  The Option may be exercised only while Employee remains an employee of the Company and will terminate and cease to be exercisable upon Employee’s termination of employment with the Company, except that:

 

(a)                                 if Employee shall die while in the employ of the Company, the Option awarded hereunder shall immediately vest with respect to all of the remaining Shares and become fully exercisable without further action by the Committee, and Employee’s legal representative, or the person, if any, who acquired the Option by bequest or inheritance or by reason of the death of Employee, may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date twelve (12) months after the date of death, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(b)                                 if Employee is determined to be disabled (as defined in the Company’s long term disability program or plan in which Employee is a participant or, if Employee does not participate in any such plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended, or the successor plan thereto), the Option awarded hereunder shall immediately vest with respect to all of the remaining Shares and become fully exercisable without further action by the Committee, and Employee may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date twelve (12) months after the date of such determination, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(c)                                  if Employee’s employment with the Company terminates by reason of dismissal by the Company for Cause and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date thirty (30) days after the date of termination by reason of dismissal by the Company for Cause, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(d)                                 if Employee’s employment with the Company terminates by reason of resignation by the Employee (except as otherwise provided in Section 3 (f) and (h) below) and at a time when Employee was entitled to exercise the Option, Employee may

 

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exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date thirty (30) days after the date of termination by reason of such resignation, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(e)                                  if Employee’s employment with the Company terminates by reason of Involuntary Termination, as such term is defined below, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become fully exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the date twelve (12) months after the date of such termination of employment, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(f)                                   if Employee’s employment with the Company terminates on April 30, 2018, as provided in Section 3 of his Employment Agreement, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become fully exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the last day of the option term as designated in Section 2(b) above; and

 

(g)                                  if the Employee’s employment with the Company terminates as a result of an Involuntary Termination within six months following a Corporate Change, the Option shall become fully vested and immediately exercisable in full on the effective date of the Corporate Change, and such Option shall remain exercisable from such date for the lesser of: (A) twelve (12) months from the date of such Corporate Change; (B) the remaining period of time for exercise of the Option hereunder (irrespective of any mandatory exercise period specified herein that would otherwise be triggered by the termination of employment of such Employee); or (C) such period of time (which period of time may end as early as the consummation of a Corporate Change) as the Committee may determine in connection with or in contemplation of a Corporate Change in the exercise of its discretion under the Plan, with respect to which the Committee has the discretion to, among other things, require the surrender of stock options (which surrender may be in exchange for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate Change; and

 

(h)                                 if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, beginning on the later of the termination date or original vesting date up to and including the date twelve (12) months after the later of the termination date or the date of the original vesting date, or the end of

 

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the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void.

 

(i)                                     For purposes of this Agreement:

 

“Involuntary Termination” shall have the same meaning as specified in the Dynegy Inc. Severance Plan.

 

4.                                      Registration.  The Company intends to register the Shares for issuance under the Securities Act of 1933, as amended (the “Act”), and to keep such registration effective throughout the period the Option is exercisable.  In the absence of such effective registration or an available exemption from registration under the Act, issuance of the Shares will be delayed until registration of such shares is effective or an exemption from registration under the Act is available.  The Company intends to use its best efforts to ensure that no such delay will occur.  In the event exemption from registration under the Act is available upon an exercise of the Option, Employee (or the person permitted to exercise the Option in the event of Employee’s death or incapacity), if requested by the Company to do so, will execute and deliver to the Company, in writing, such agreements and other documents containing such provisions as the Company may require to assure compliance with applicable securities laws.

 

Employee agrees that the Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws.  Employee also agrees that (a) the certificates representing the Shares, if any, may bear such legend or legends as the Committee in its sole discretion deems appropriate in order to assure compliance with applicable securities laws, and (b) the Company may refuse to register transfer of the Shares on the stock transfer records of the Company, and may give related instructions to its transfer agent, if any, to stop registration of such transfer, if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law.

 

5.                                      Employment Relationship.  For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of (a) the Company, (b) an Affiliate (as such term is defined in the Plan), or (c) a corporation (or a parent or subsidiary of such corporation) assuming or substituting a new option for the Option.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final and binding on all parties.

 

6.                                      Withholding Taxes.  By Employee’s acceptance hereof, Employee hereby (a) agrees to reimburse the Company or any Affiliate by which Employee is employed for any federal, state or local taxes required by any government to be withheld or otherwise deducted by such corporation in respect of Employee’s exercise of the Option, (b) authorize the Company or any Affiliate by which Employee is employed to withhold from any cash compensation paid to Employee or in Employee’s behalf, an amount sufficient to discharge any federal, state and local taxes imposed on the Company, or the Affiliate by which Employee is employed, and which otherwise has not been reimbursed by Employee, in respect of Employee’s exercise of the Option, and (c) agrees that the corporation by which Employee is employed, may, in its discretion, hold the stock to which Employee is entitled upon exercise of the Option, as security

 

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for the payment of the aforementioned withholding tax liability, until cash sufficient to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise which is equal to the amount to be withheld.

 

7.                                      Miscellaneous.

 

(a)                                 This grant is subject to all the terms, conditions, limitations and restrictions contained in the Plan.  In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling.  In the event of any conflict or inconsistency between the terms hereof and the terms of the Dynegy Inc. Severance Plan, including any amendments or supplements thereto, the terms hereof shall be controlling.

 

(b)                                 This grant is not a contract of employment and the terms of Employee’s employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein.  Nothing herein shall be construed to impose any obligation on the Company or on any Affiliate to continue Employee’s employment, and it shall not impose any obligation on Employee’s part to remain in the employ of the Company or of any Affiliate.

 

(c)                                  All references in this Agreement to any “corporation” shall include a corporation, a general partnership, a joint venture, a limited partnership, a business trust or any other lawful business entity.

 

(d)                                 Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered when hand delivered to Employee at his or her principal place of employment or when sent by registered or certified mail to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

 

8.                                      Amendment.  This Agreement may not be amended except by an agreement in writing signed by each of the Company and Employee consenting to such amendment. Notwithstanding the preceding, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has agreed to and accepted the terms of this Agreement*, all as of the date first above written.

 

	
 
    	
DYNEGY INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Julius Cox
    
	
 
    	
Title:
    	
Executive Vice President and CAO
    

 

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

 

6Exhibit

Exhibit 10.33

PZENA INVESTMENT MANAGEMENT, LLC
AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN
Form of Class B Unit-Based Agreement− Delayed Exchange
THIS PHANTOM DELAYED EXCHANGE CLASS B UNIT AGREEMENT  ("Agreement") is made this                  (the "Date of Grant") by and between Pzena Investment Management, LLC, a limited liability company organized under the laws of the State of Delaware (the "Company") and _________________ (the "Grantee").
WHEREAS, the Grantee's provision of services to the Company is considered by the Company to be important for its growth; 
WHEREAS, the Grantee has elected to receive a portion of Grantee’s annual bonus award in the form of restricted share units in the Company pursuant to the Pzena Investment Management, LLC Amended and Restated Bonus Plan (the “Bonus Plan”); and
WHEREAS, the Committee has approved a grant of Class B Unit-Based Awards pursuant to the Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan (the "LLC Plan") to the Grantee, according to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein set forth, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows.  All capitalized terms used but not defined herein shall have the respective meanings given such terms in the LLC Plan.
Issuance of Units
The Company hereby grants to the Grantee ___________________ (______) Phantom Class B Units (the “Phantom Delayed Exchange Units”), subject to all the terms and conditions of this Agreement and all applicable terms and conditions of the LLC Plan and the Bonus Plan.  For purposes of this Agreement, "Phantom Delayed Exchange Units" means all of such Phantom Class B Units, together with any units or other securities issued in respect of or in replacement for such units as a result of a corporate or other action such as a unit dividend, unit split, merger, consolidation, reorganization or recapitalization.
Upon receipt by the Company of a copy of this Agreement duly executed and completed by the Grantee the Grantee shall be deemed to have duly executed the Operating Agreement and the Company shall recognize the Grantee as a beneficial owner of the Phantom Delayed Exchange Units on its books and records. 

Vesting and Forfeiture of Phantom Delayed Exchange Units
All Phantom Delayed Exchange Units shall be unvested and subject to forfeiture unless and until they become vested in accordance with the provisions of Section 5.6 of the Bonus Plan.  
Following the vesting of the Phantom Delayed Exchange Units in accordance with the provisions of this Agreement, the LLC Plan and the Bonus Plan, the Grantee shall hold vested Delayed Exchange Units (the “Delayed Exchange Units”).  For purposes of this Agreement, "Delayed Exchange Units" means all of such Delayed Exchange Units, together with any units or other securities issued in respect of or in replacement for such units as a result of a corporate or other action such as a unit dividend, unit split, merger, consolidation, reorganization or recapitalization. Delayed Exchange Units shall remain subject to a Risk of Forfeiture pursuant to Sections 5.07 and 6.02 of the Operating Agreement.
		
	3.
	Transfer of Delayed Exchange Units

The Phantom Delayed Exchange Units and the Delayed Exchange Units and any beneficial interest therein, may not be sold, transferred, assigned, pledged, encumbered or otherwise disposed of by the Grantee in any way at any time (including, without limitation, by operation of law) prior to the Delayed Exchange Date (as defined below) and unless permitted pursuant to the terms and conditions of the Operating Agreement or as approved by the Managing Member.
		
	4.
	Additional Award Terms

4.1.    No Delayed Exchange Units may be exchanged pursuant to Exhibit B of the Operating Agreement until the first Exchange Date established pursuant to Exhibit B of the Operating Agreement on or after the seventh anniversary of the date such Phantom Delayed Exchange Units vest and become Delayed Exchange Units in accordance with the provisions of this Agreement and Section 5.6 of the Bonus Plan for the exchange of such Delayed Exchange Units or for exchanges of Class B Units by all Class B Members. All such Delayed Exchange Units shall be exchangeable on such Exchange Date and any subsequent Exchange Date established pursuant to such Exhibit B for the exchange of such Delayed Exchange Units or for exchanges of Class B Units by all Class B Members, irrespective of the 15% limitation referred to in paragraphs (a) and (b) of Section 2.02 of such Exhibit B.

4.2.    Any and all Delayed Exchange Units, whether or not held by the Grantee or any subsequent transferee, shall not be entitled to any benefits under the Tax Receivable Agreement, dated October 30, 2007, by and among Pzena Investment Management, Inc., the Company and the Continuing Members and Exiting Members named on the signature pages thereto, and as amended on November 12, 2012.  This Section 4.2 shall be treated as part of the Operating Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

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4.3.     Except as set forth in Section 4.2, (a) the Phantom Delayed Exchange Units shall have the right to accrue an amount equivalent to dividend payments, or any other right to receive payments or benefits in connection with any undistributed earnings of the Company as a Delayed Exchange Unit would have, pursuant to Section 5.5(c) of the Bonus Plan and (b) the Delayed Exchange Units shall have the right to receive dividend payments, the right to receive any payments or benefits in connection with any undistributed earnings of the Company, and any payments or benefits in connection with a Change in Control of the Company.  

4.4.    The Delayed Exchange Units shall not be considered held by the Grantee for purposes of determining the total number of vested and unvested Class B units held by the Grantee under Section 2.02(a)(1) of Exhibit B of the Operating Agreement.  

		
	5.
	Tax Consequences

The Company makes no representation or warranty as to the tax treatment to the Grantee with respect to the Grantee’s receipt of or exchange of the Phantom Delayed Exchange Units and the Delayed Exchange Units. 
		
	6.
	Compliance with Law

6.1.    The Grantee represents and warrants that he is acquiring the Phantom Delayed Exchange Units and the Delayed Exchange Units of his own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such Phantom Delayed Exchange Units or Delayed Exchange Units.
6.2.    The Grantee acknowledges and agrees that neither the Company nor any agent of the Company shall be under any obligation to recognize any transfer of any of the Phantom Delayed Exchange Units or the Delayed Exchange Units if, in the opinion of counsel for the Company, such transfer is in violation of the terms of this Agreement or the Operating Agreement or would result in violation by the Company of any federal or state law with respect to the offering, issuance or sale of securities.
		
	7.
	General Provisions

7.1.    This Agreement shall be governed and enforced in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.

7.2.    The Phantom Delayed Exchange Units and the Delayed Exchange Units are granted pursuant to the LLC Plan and the Bonus Plan, and the Phantom Delayed Exchange Units, Delayed Exchange Units and this Agreement are in all respects governed by the LLC Plan and the Bonus Plan and subject to all the terms and provisions thereof.  By signing this Agreement, the Grantee acknowledges having received and read a copy of the LLC Plan and Bonus Plan.  This Agreement and the applicable terms of the LLC Plan and Bonus Plan embody the complete agreement and understanding among the parties hereto with respect to 

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the subject matter hereof and thereof, and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.  Except as set forth in the LLC Plan and the Bonus Plan, this Agreement may only be modified or amended in writing signed by the Company and the Grantee.  
7.3.    The rights and obligations of each party under this Agreement shall inure to the benefit of and be binding upon such party's heirs, legal representatives, successors and permitted assigns.  The rights and obligations of the Company under this Agreement shall be assignable by the Company to any one or more persons or entities without the consent of the Grantee or any other person.  The rights and obligations of any person other than the Company under this Agreement may only be assigned in accordance with this Agreement and the LLC Plan.
7.4.    No consent to or waiver of any breach or default in the performance of any obligations hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder.  Failure on the part of any party to complain of any act or failure to act of any other party or to declare any party in default, irrespective of the duration of such failure, shall not constitute a waiver of rights hereunder and no waiver hereunder shall be effective unless it is in writing, executed by the party waiving the breach or default hereunder.
7.5.    If any provision of this Agreement shall be held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other severable provisions of this Agreement.
7.6.    The headings in this Agreement are for convenience of identification only, do not constitute a part hereof, and shall not affect the meaning or construction hereof.
7.7.    The Grantee agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.
7.8.    All disputes relating to, arising from, or connected in any manner with this Agreement shall be resolved exclusively through final and binding arbitration under the rules and auspices of JAMS pursuant to its Arbitration Rules & Procedures.  The arbitration shall be held in the Borough of Manhattan, New York, New York.  The arbitrator shall have jurisdiction to determine any claim, including the arbitrability of any claim, submitted to him/her.  The arbitrator may grant any relief authorized by law for any properly established claim. The interpretation and enforceability of this Section 7.8 shall be governed and construed in accordance with the United States Federal Arbitration Act, 9 U.S.C. § 1, et seq.  The parties acknowledge that the purpose and effect of this Section 7.8 is solely to elect private mediation and arbitration in lieu of any judicial proceeding either party might otherwise have available in the event of a dispute, controversy or claim between the parties.  Therefore, the parties hereby waive the right to have any such dispute heard by a court or jury, as the case may be, and agrees that the exclusive procedure to redress any and all 

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disputes, controversies and claims will be mediation and arbitration.  Nothing contained in this Section 7.8 shall be construed to limit or otherwise interfere in any respect with the authorities granted the Committee under the Plan, including without limitation, its sole and exclusive discretion to interpret the Plan and all awards granted thereunder (including pursuant to this Agreement).
7.9.    Nothing contained in this Agreement shall confer upon the Grantee any right with respect to the continuation of his employment or other association with the Company, or interfere in any way with the right of the Company, subject to the terms of the Grantee's separate employment or consulting agreement, if any, or provision of law or the Company's certificate of formation, as amended from time to time, at any time to terminate such employment or consulting agreement or otherwise modify the terms and conditions of the Grantee's employment or association with the Company.
7.10.    This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.  In making proof of this Agreement it shall not be necessary to produce or account for more than one such counterpart.
7.11.    Where the context requires, pronouns and modifiers in the masculine, feminine or neuter gender shall be deemed to refer to or include the other genders.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the month, day and year first set forth above.

PZENA INVESTMENT MANAGEMENT, LLC

By:    Pzena Investment Management, Inc.,
its Managing Member

By: ____________________________  
Name: 
Title: 

GRANTEE

________________________________
Name: 
Address: 
               
               
    
    

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