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&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;On June&amp;#160;26, 2013, the Board of Directors and shareholders of Holdings approved the HD Supply Holdings,&amp;#160;Inc. 2013 Omnibus Incentive Plan (the &amp;#8220;Plan&amp;#8221;). The Plan provides for stock-based awards to employees, consultants and directors, including stock options, stock purchase rights, restricted stock, restricted stock units, deferred stock units, performance shares, performance units, stock appreciation rights, dividend equivalents and other stock-based awards. The Plan replaces and succeeds the HDS Investment Holding,&amp;#160;Inc. Stock Incentive Plan, as amended effective April&amp;#160;11, 2011 (the &amp;#8220;Stock Incentive Plan&amp;#8221;), and, from and after June&amp;#160;26, 2013, no further awards will be made under the Stock Incentive Plan. On July&amp;#160;2, 2013, HD Supply registered 12.5 million shares for issuance pursuant to awards under the Plan and registered 14,818,000 shares for issuance pursuant to outstanding awards under the Stock Incentive Plan as of June&amp;#160;26, 2013.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;In connection with HD Supply&amp;#8217;s initial public offering, HD Supply granted an aggregate 929,900 options to its senior management.&amp;#160; The options have an exercise price of $18.00, vest on the third anniversary of the June&amp;#160;26, 2013 grant date, and have an estimated fair value of $10.25 per option.&amp;#160; The Company expects to record approximately $9 million of stock-based compensation for the options over the options&amp;#8217; vesting period.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;On June&amp;#160;26, 2013, HD Supply granted an aggregate 331,431 shares of restricted stock to certain employees. The restricted stock vests in five equal annual installments on each of the first through fifth anniversaries of May&amp;#160;9, 2013. The Company expects to record approximately $6 million of stock-based compensation for the restricted stock over the restricted stock&amp;#8217;s vesting period.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;On July&amp;#160;2, 2013, HD Supply&amp;#8217;s non-employee directors were awarded an aggregate 41,031 restricted stock units (&amp;#8220;RSUs&amp;#8221;) pursuant to HD Supply&amp;#8217;s Board of Director Compensation Policy that became effective on the consummation of HD Supply&amp;#8217;s initial public offering on July&amp;#160;2, 2013. The RSUs vest on the earlier of (i)&amp;#160;the first anniversary of the grant date or (ii)&amp;#160;the date of the Company&amp;#8217;s next annual meeting after the grant date.&amp;#160; On a date selected by the Company that is within thirty days following the vesting date, vested RSUs will be settled into an equal number of shares of the Company&amp;#8217;s common stock, unless the director has elected to defer settlement of the RSU until termination of board service, in which case the award will be settled at service termination. The Company expects to record less than $1 million of stock-based compensation for the RSUs over the RSU&amp;#8217;s vesting period.&lt;/font&gt;&lt;/p&gt;
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