Exhibit 10.1.1

 

NEPHROGENEX, INC.
RESTRICTED STOCK UNIT GRANT NOTICE

 

Nephrogenex, Inc. (“Company”) hereby awards to Participant a Restricted Stock
Unit Award covering the number of restricted stock units (“RSUs”) set forth
below (“Award”).  This Award shall be evidenced by a Restricted Stock Unit Award
Agreement (“Agreement”).  This Award is subject to all of the terms and
conditions as set forth in this Grant Notice and in the Agreement, which is
attached hereto and incorporated in its entirety.  Capitalized terms not
explicitly defined in this Grant Notice but defined in the Agreement will have
the same definitions as in the Agreement.

 

Participant:

Pierre Legault

 

 

Date of Grant:

November 7, 2013

 

 

Number of RSUs:

156,000

 

 

Vesting Commencement Date:

October 21, 2013

 

 

Expiration Date of the RSUs:

November 6, 2023

 

Time-Based Vesting Schedule:  Subject to acceleration in certain cases described
in the Agreement, the time-based vesting schedule for the RSUs is as follows:
25% of the RSUs will vest on the one-year anniversary of the Vesting
Commencement Date, and the remaining 75% of the RSUs will vest in equal monthly
installments, on the 1st day of each calendar month, beginning with November 1,
2014 and continuing for 36 months thereafter, provided however, that to be
credited with time-based vesting, Participant must remain in Service on each
applicable vesting date.

 

Additional Terms/Acknowledgements:  By signing below, Participant acknowledges
receipt of, and understands and agrees to, this Grant Notice and the Agreement. 
Participant acknowledges his obligation to satisfy any tax withholding
obligations imposed on the Company with respect to the grant or vesting of the
RSUs, or the delivery of the underlying Common Stock, as a condition to the
receipt of any stock hereunder, including by requiring a cash payment to the
Company by Participant.

 

 

NEPHROGENEX, INC.:

PARTICIPANT:

 

 

 

 

By:

/s/ Richard J. Markham

 

/s/ Pierre Legault

Signature

 

Signature

 

 

 

Title:

11/7/13

 

Date:

November 7, 2013

 

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RSU Award No.:                               

Participant:                                        

 

NEPHROGENEX, INC.

RESTRICTED STOCK UNIT AGREEMENT

 

Pursuant to the Restricted Stock Unit Grant Notice (“Grant Notice”) and this
Restricted Stock Unit Agreement (“Agreement”), Nephrogenex, Inc. (“Company”) has
awarded Participant the number of restricted stock units (“RSUs”) indicated in
the Grant Notice (collectively, the “Award”).  Subject to adjustment and the
terms and conditions as provided in this Agreement, each RSU shall represent the
right to receive one (1) share of Common Stock as set forth in Section 3 below. 
Capitalized terms not otherwise defined in this Agreement shall have the meaning
set forth in the Company’s 2005 Stock Option Plan, as amended and restated on
August 13, 2007 (the “2005 Stock Option Plan”).  This Agreement shall be deemed
to be signed by the Company and Participant upon the signing by Participant of
the Restricted Stock Unit Grant Notice to which it is attached.

 

The details of this Award, in addition to those set forth in the Grant Notice,
are as follows.

 

1.                                      NUMBER OF RSUS AND SHARES OF COMMON
STOCK.

 

(a)                                 The number of RSUs subject to Participant’s
Award, and the number of shares of Common Stock deliverable with respect to such
RSUs, will be equitably adjusted to reflect Capitalization Adjustments. 
Participant shall receive no benefit or adjustment to the Award with respect to
any cash dividend or other distribution that does not result from any such
Capitalization Adjustment; provided, however, that this sentence shall not apply
with respect to any shares of Common Stock, if any, that are delivered to
Participant in connection with this Award after such shares have been delivered.

 

(b)                                 Any additional RSUs or shares of Common
Stock that become subject to the Award pursuant to this Section 1 shall be
subject, in a manner determined by the Board, to the same forfeiture
restrictions, restrictions on transferability, and time and manner of delivery
as applicable to the other RSUs and Common Stock covered by the Award.

 

(c)                                  Notwithstanding the provisions of this
Section 1, no fractional RSUs or rights for fractional shares of Common Stock
shall be created pursuant to this Section 1.  The Board shall, in its
discretion, determine an equivalent benefit for any fractional RSUs or
fractional shares that might be created by the adjustments referred to in this
Section 1.

 

2.                                      VESTING REQUIREMENTS AND EXPIRATION OF
RSUS.  The RSUs shall vest, if at all, as set forth below.  There are two
separate vesting requirements applicable to the RSUs (a time-based requirement
and a liquidity-based requirement).  Unless otherwise provided in this
Agreement, both of these vesting requirements must be satisfied before the
Expiration Date as a condition to any payment or delivery of shares of Common
Stock to Participant under this Award.

 

(a)                                 Time-Based Vesting Requirement.  The
time-based vesting requirement with respect to the RSUs or any installment of
the RSUs is satisfied if Participant has remained in Service from the Date of
Grant of the RSUs through the applicable vesting dates set forth in

 

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Participant’s Grant Notice.  Time-based vesting shall cease as of the date that
Participant’s Service ceases, and any RSUs that have not vested under the
time-based vesting requirement shall terminate and be forfeited back to the
Company on the date Participant’s Service terminates.  Notwithstanding any
contrary provisions of this Agreement or the Grant Notice, the time-based
vesting requirement will be deemed to be satisfied in full (i) on the effective
date of a Change in Control, or (ii) on the date Participant experiences a
Qualifying Termination.

 

(b)                                 Liquidity-Based Vesting Requirement.  The
liquidity-based vesting requirement with respect to an RSU is satisfied upon the
first to occur of (i) the effective date of a Change in Control, or (ii) the
occurrence of the Capital Increase (as defined in the Employment Agreement).

 

3.                                      DATE OF ISSUANCE.

 

(a)                                 Regular Delivery Dates.  Unless
Section 3(b) of this Agreement applies, the Company shall deliver to Participant
in respect of RSUs that have not been previously terminated or forfeited, one
(1) share of Common Stock for each RSU that has satisfied both the time-based
and liquidity-based vesting requirements in accordance with Section 2 herein,
on: (i) the effective date of a Change in Control, (ii) the occurrence of the
Capital Increase, in the case of RSUs that have satisfied the time-based vesting
requirement on or prior to that date, or (iii) in the case of RSUs that satisfy
the time-based vesting requirement after the occurrence of the Capital Increase,
the date such RSUs satisfy the time-based vesting requirement (each such
delivery date is a “Regular Delivery Date”).  As an additional condition to
Participant’s receipt of shares of Common Stock on a Regular Delivery Date,
Participant must have remained in continuous Service from the Date of Grant
through such Regular Delivery Date.  Accordingly, if Participant’s Service
terminates before a Regular Delivery Date for any installment of the RSU (and
unless Section 3(b) of this Agreement applies), then the RSU will terminate and
will be forfeited and cancelled with respect to the shares that have not yet
vested as of the date Participant’s Service terminates and those shares will not
be issued to Participant.

 

(b)                                 Notwithstanding Sections 2(b) and 3(a) of
this Agreement, the Company shall deliver to Participant on the date of
Participant’s Qualifying Termination (the “Accelerated Delivery Date”) one
(1) share of Common Stock for each RSU that has not been previously settled
under Section 3(a) above, terminated, or otherwise forfeited as of the
Accelerated Delivery Date.

 

(c)                                  The Company may settle an RSU upon a Change
in Control by delivering other consideration to Participant with a fair market
value equal in the aggregate to the value of the shares of Common Stock for
which the RSU is being settled, including but not limited shares of the capital
stock of the acquirer or surviving entity of such Change in Control or its
affiliates.  If a scheduled Delivery Date falls on a date that is not a business
day, such delivery date shall instead fall on the next following business day. 
The form of such delivery (e.g., a stock certificate or electronic entry
evidencing such shares) shall be determined by the Company.

 

(d)                                 Any RSU that has not vested by the
Expiration Date will then expire.

 

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4.                                      CONSIDERATION FOR AWARD.  This Award has
been granted in consideration of Participant’s past or future expected services
to the Company.  Subject to Section 10 below, except as otherwise provided in
the Grant Notice, Participant will not be required to make any payment to the
Company (other than the provision of past and future services for the Company)
with respect to Participant’s receipt of the Award, vesting of the RSUs, or the
delivery of the shares of Common Stock or the Cash Payment.

 

5.                                      SECURITIES LAW COMPLIANCE.  Participant
may not be issued any Common Stock under the Award unless either (i) the shares
of Common Stock are then registered under the Securities Act, or (ii) the
Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act.  The Award must also comply with other
applicable laws and regulations governing the Award, and Participant shall not
receive such Common Stock if the Company determines that such receipt would not
be in compliance with such laws and regulations.

 

6.                                      RESTRICTIVE LEGENDS.  The Common Stock
issued under the Award, if any, shall be endorsed with appropriate legends, if
any, determined by the Company.

 

7.                                      TRANSFER RESTRICTIONS.  Prior to the
time that shares of Common Stock have been delivered to Participant, Participant
may not transfer, pledge, sell or otherwise dispose of all or any portion of the
RSUs or the shares of Common Stock issuable in respect of the RSUs, except as
expressly provided in this Section 7.  For example, Participant may not use
shares that may be issued in respect of the RSUs as security for a loan, nor may
Participant transfer, pledge, sell or otherwise dispose of such shares.  Any
shares of Common Stock issued to Participant under this Agreement will be
subject to the same transfer restrictions and other limitations on sale,
disposition or transfer as described in Sections 7 through 10 of the Stock
Option Agreement between Participant and the Company dated January 23, 2013, as
amended.

 

(a)                                 Lock-Up Period.  Participant agrees that
upon receipt of the Common Stock underlying the RSUs, Participant shall not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of Common Stock or other securities of the
Company held by Participant, for a period of one hundred eighty (180) days
following the IPO Date or such longer period as necessary to permit compliance
with FINRA Rule 2711 or NYSE Member Rule 472 and similar rules and regulations
(the “Lock-Up Period”); provided, however, that nothing contained in this
Section shall prevent the exercise of a repurchase option, if any, in favor of
the Company during the Lock-Up Period.  Participant further agrees to execute
and deliver such other agreements as may be reasonably requested by the Company
and/or the underwriter(s) that are consistent with the foregoing or that are
necessary to give further effect thereto.  In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to
Participant’s shares of Common Stock until the end of such period.  The
underwriters of the Company’s stock are intended third party beneficiaries of
this Section 7(a) and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto.

 

(b)                                 Death.  Upon receiving written permission
from the Board or its duly authorized designee, Participant may, by delivering
written notice to the Company, in a form

 

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provided by or otherwise satisfactory to the Company, designate a third party
who, in the event of Participant’s death, shall thereafter be entitled to
receive any distribution of Common Stock or other consideration to which
Participant was entitled at the time of Participant’s death pursuant to this
Agreement.  In the absence of such a designation, Participant’s executor or
administrator of Participant’s estate shall be entitled to receive, on behalf of
Participant’s estate, such Common Stock or other consideration.

 

(c)                                  Certain Trusts.  Upon receiving written
permission from the Board or its duly authorized designee, Participant may
transfer the RSUs to a trust if Participant is considered to be the sole
beneficial owner (determined under Section 671 of the Code and applicable state
law) while the RSUs are held in the trust, provided that Participant and the
trustee enter into transfer and other agreements required by the Company.

 

(d)                                 Domestic Relations Orders.  Upon receiving
written permission from the Board or its duly authorized designee, and provided
that Participant and the designated transferee enter into transfer and other
agreements required by the Company, Participant may transfer the RSUs or other
consideration hereunder, pursuant to a domestic relations order that contains
the information required by the Company to effectuate the transfer.  Participant
is encouraged to discuss the proposed terms of any division of the RSUs with the
Company prior to finalizing the domestic relations order to help ensure the
required information is contained within the domestic relations order.

 

8.                                      AWARD NOT A SERVICE CONTRACT.  This
Award is not an employment or service contract, and nothing in the Award shall
be deemed to create in any way whatsoever any obligation on the part of
Participant to continue in the service of the Company or any Affiliate, or on
the part of the Company or any Affiliate to continue such service.  In addition,
nothing in this Award shall obligate the Company or any Affiliate, their
respective stockholders, boards of directors or employees to continue any
relationship that Participant might have as an Employee, Consultant or Director
of the Company or any Affiliate.

 

9.                                      UNSECURED OBLIGATION.  This Award is
unfunded, and even as to any RSUs that vest, Participant shall be considered an
unsecured creditor of the Company with respect to the Company’s obligation, if
any, to issue Common Stock or make the Cash Payment pursuant to this Agreement. 
Participant shall not have voting or any other rights as a stockholder of the
Company with respect to any Common Stock acquired pursuant to this Agreement
until such Common Stock is issued pursuant to Section 3 of this Agreement.  Upon
such issuance, Participant will obtain full voting and other rights as a
stockholder of the Company with respect to the Common Stock so issued.  Nothing
contained in this Agreement, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind or a fiduciary
relationship between Participant and the Company or any other person.

 

10.                               WITHHOLDING OBLIGATIONS.

 

(a)                                 At such time as Participant receives a
distribution of Common Stock pursuant to the Award, or at any time thereafter as
requested by the Company, Participant agrees to provide the Company an amount in
cash that is sufficient to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or any Affiliate which arise in
connection

 

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with the Award (“Withholding Taxes”).  Notwithstanding the above, the Company,
in its sole discretion, may permit a Participant to satisfy any required
withholding from the Common Stock issuable to such Participant.  If the tax
withholding obligations are satisfied through the use of shares subject to the
Award, the Company will withhold shares of Common Stock with a Fair Market Value
(measured as of the date shares of Common Stock are delivered pursuant to
Section 3) equal to the amount of such Withholding Taxes; provided, however,
that the number of such shares of Common Stock so withheld shall not exceed the
amount necessary to satisfy the Company’s required tax withholding obligations
using the minimum statutory withholding rates for federal, state, local and
foreign tax purposes, including payroll taxes, that are applicable to
supplemental taxable income.

 

(b)                                 Unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied, the Company shall have no
obligation to deliver to Participant any Common Stock.

 

11.                               NOTICES.  Any notices required to be given or
delivered to the Company under the terms of this Award shall be in writing and
addressed to the Company at its principal corporate offices.  Any notice
required to be given or delivered to Participant shall be in writing and
addressed to their address as on file with the Company at the time notice is
given.  All notices shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.

 

12.                               HEADINGS.  The headings of the Sections in
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement or to affect the meaning of this Agreement.

 

13.                               AMENDMENT.  This Agreement may be amended only
by a writing executed by the Company and Participant which specifically states
that it is amending this Agreement.

 

14.                               MISCELLANEOUS.

 

(a)                                 All covenants and agreements hereunder shall
inure to the benefit of, and be enforceable by the Company’s successors and
assigns.

 

(b)                                 Participant agrees upon request to execute
any further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of this Award.

 

(c)                                  Participant acknowledges and agrees that
Participant has reviewed the Award in its entirety, has had an opportunity to
obtain the advice of counsel prior to executing and accepting the Award and
fully understand all of its provisions.

 

(d)                                 This Agreement shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

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(e)                                  All obligations of the Company under this
Agreement shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

15.                               EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The
value of the Award subject to this Agreement shall not be included as
compensation, earnings, salaries, or other similar terms used when calculating
benefits under any employee benefit plan sponsored by the Company or any
Affiliate except as such plan otherwise expressly provides. The Company
expressly reserves its rights to amend, modify, or terminate any or all of the
employee benefit plans of the Company or any Affiliate.

 

16.                               CHOICE OF LAW.  The interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the state of New York without regard to such state’s conflicts of laws rules. 
Participant hereby submits to the jurisdiction of the state and federal courts
encompassing the location of the Company’s principal headquarters for the
resolution of any disputes or claims regarding this Agreement.

 

17.                               SEVERABILITY.  If all or any part of this
Agreement is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any Section of this
Agreement (or part of such a Section) so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.

 

18.                               SECTION 409A OF THE INTERNAL REVENUE CODE.  It
is intended that the delivery of shares in respect of the RSUs provided under
this Agreement satisfies, to the greatest extent possible, the exemption from
the application of Section 409A of the Code and the regulations and other
guidance thereunder and any state law of similar effect (collectively,
“Section 409A”) provided under Treasury Regulations Section 1.409A-1(b)(4) and
1.409A-1(b)(9), and this Agreement will be construed to the greatest extent
possible as consistent with those provisions.  To the extent not so exempt, the
delivery of shares in respect of the RSUs provided under this Agreement (and any
definitions in this Agreement and in the Grant Notice governing the Award) will
be construed in a manner that complies with Section 409A and incorporates by
reference all required definitions and payment terms.  If this Award is not
exempt from, and is therefore deemed to be deferred compensation subject to,
Section 409A, and if Participant is a “specified employee” (within the meaning
of Section 409A(a)(2)(B)(i) of the Code) as of the date of Participant’s
separation from service (within the meaning of Treasury Regulations
Section 1.409A-1(h)), than the issuance of any shares that would otherwise be
made upon the date of Participant’s separation from service or within the first
six months thereafter will not be made on the originally scheduled date(s) and
will instead be issued in a lump sum on the date that is six months and one day
after the date of Participant’s separation from service, with the balance of the
shares issued thereafter in accordance with the original issuance schedule, but
if and only to the extent that the delay in issuance of the shares is necessary
to avoid the imposition of taxation on Participant in respect of the shares
under Section 409A.  Each installment of RSUs that vests is a “separate payment”
for purposes of Treasury Regulations Section 1.409A-2(b)(2).  Notwithstanding
the above, the Company makes no representations to

 

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Participant regarding the compliance of this Agreement or the RSUs with
Section 409A, and Participant is solely responsible for the payment of any taxes
or penalties arising under Section 409A(a)(1) of the Internal Revenue Code, or
any state law of similar effect, with respect to the grant or vesting of the
RSUs or the delivery of the shares subject to this Award.

 

19.                               SURVIVAL.  Provisions of this Agreement which
by their terms must survive the termination of this Agreement in order to
effectuate the intent of the parties will survive any such termination for such
period as may be appropriate under the circumstances.

 

20.                               DEFINITIONS.  For purposes of this Agreement,
capitalized terms that are not otherwise defined shall have the following
definitions:

 

(a)                                 “Affiliate” means, at the time of
determination, any “parent” or “majority-owned subsidiary” of the Company, as
such terms are defined in Rule 405 of the Securities Act.  The Board shall have
the authority to determine the time or times at which “parent” or
“majority-owned subsidiary” status is determined within the foregoing
definition.

 

(b)                                 “Board” means the Board of Directors of the
Company.

 

(c)                                  “Capitalization Adjustment” means any
change that is made in, or other events that occur with respect to, the Common
Stock subject to this Award after the Date of Grant of the RSUs (specified in
the Grant Notice) without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company).  Notwithstanding the foregoing, the conversion of any convertible
securities of the Company shall not be treated as a transaction “without the
receipt of consideration” by the Company.

 

(d)                                 “Change in Control” means the occurrence, in
a single transaction or in a series of related transactions occurring after the
date of grant of this Award, of any one or more of the following events:

 

(i)                                    any Exchange Act Person becomes the
Owner, directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction.  Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur (A) because of a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company, or (B) because of an IPO.

 

(ii)                                there is consummated a merger, consolidation
or similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior thereto do not
Own, directly or indirectly, either (A) outstanding voting securities
representing more than fifty percent (50%) of the combined outstanding voting
power of the surviving Entity in such merger, consolidation or similar
transaction or (B) more than fifty percent (50%) of the combined outstanding
voting power of the parent of the surviving Entity in such merger,

 

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consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction; or

 

(iii)                            there is consummated a sale, lease, exclusive
license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries during any twelve month period, other
than a sale, lease, license or other disposition of all or substantially all of
the consolidated assets of the Company and its Subsidiaries to an Entity, more
than fifty percent (50%) of the combined voting power of the voting securities
of which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition.

 

Notwithstanding the above, to the extent any payment hereunder upon such Change
in Control is deferred compensation that is subject to Section 409A of the Code,
and not otherwise exempt from complying with the provisions of the statute, then
a Change in Control shall only be deemed to occur if the Change in Control also
qualifies as a change in the ownership or effective control of a corporation, or
a change in the ownership of a substantial portion of a corporation’s assets as
defined in Treasury Regulation Section 1.409A-3(i)(5).

 

(e)                                  “Common Stock” means the common stock of
the Company.

 

(f)                                   “Consultant” refers to Participant’s
status if he/she is rendering consulting or advisory services to the Company or
an Affiliate.

 

(g)                                 “Director” means Participant is rendering
services as a member of the Board.

 

(h)                                 “Disability” means a condition entitling
Participant to long-term disability benefits under any policy, plan or program
sponsored by the Company.  In the absence of any such policy, plan or program,
the term “Disability” has the meaning set forth in Section 22(e)(3) of the
Internal Revenue Code.  Notwithstanding the above, if necessary to comply with
Section 409A of the Code, a “Disability” shall have the meaning set forth in
Treasury Regulation Section 1.409A-3(i)(4).

 

(i)                                    “Employee” refers to Participant’s status
during such times as he/she is employed by the Company or an Affiliate.

 

(j)                                    “Employment Agreement” means that certain
Executive Employment Agreement between Participant and the Company dated
November 7, 2013.

 

(k)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(l)                                    “Exchange Act Person” means any natural
person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that “Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee benefit plan of the
Company or any Subsidiary of the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary of the Company,

 

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(iii) an underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company; or (v) any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of
the effective date of the Agreement, is the Owner, directly or indirectly, of
the Company’s then outstanding securities.

 

(m)                             “Fair Market Value” means, as of any date, the
value of the Common Stock determined in good faith by the Board in its
discretion.

 

(n)                                 “IPO” means the initial public offering of
the Company’s Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act.

 

(o)                                 “IPO Date” means the date upon which the
registration statement (referenced in the definition of “IPO”) is declared
effective.

 

(p)                                 “Officer” means any person designated by the
Company as an officer.

 

(q)                                 “Own,” “Owned,” “Owner,” “Ownership” means a
person or entity shall be deemed to “Own,” to have “Owned,” to be the “Owner”
of, or to have acquired “Ownership” of securities if such person or entity,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power
to vote or to direct the voting, with respect to such securities.

 

(r)                                  “Qualifying Termination” means a
termination from Service initiated by the Company without Cause (as defined in
the Employment Agreement), initiated by Participant with Good Reason (as defined
in the Employment Agreement), or a termination from Service because of
Participant’s death or Disability.  Participant’s voluntary resignation from
Service without Good Reason or the termination of Participant’s Service for
Cause will not constitute a Qualifying Termination.

 

(s)                                   “Securities Act” means the Securities Act
of 1933, as amended.

 

(t)                                    “Service” means that Participant’s
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated.  A change in the capacity in which
Participant renders service to the Company or an Affiliate as an Employee,
Director, or Consultant or a change in the entity for which Participant renders
such service, provided that there is no interruption or termination of their
service with the Company or an Affiliate, shall not terminate Participant’s
Service; provided, however, if the entity for which he is rendering service
ceases to qualify as an Affiliate, as determined by the Board in its sole
discretion, such Service shall be considered to have terminated on the date such
entity ceases to qualify as an Affiliate.  Participant’s Service shall be deemed
to continue for purposes of this Agreement while Participant is on a bona fide
leave of absence, if (i) such leave was approved by the Company in writing, or
(ii) continued crediting of Service is required by applicable law.

 

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(u)                                 “Subsidiary” means, with respect to the
Company, (i) any corporation of which more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, Owned by the Company, and (ii) any partnership,
limited liability company or other entity in which the Company has a direct or
indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%).

 

* * * * *

 

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