HMAN Group Holdings Inc. 2014 Equity Incentive Plan

Effective June 30, 2014, Holdco established the HMAN Group Holdings Inc. 2014 Equity Incentive Plan (the “2014 Equity Incentive Plan”), pursuant to which Holdco may grant options, stock appreciation rights, restricted stock, and other stock-based awards for up to an aggregate of 44,021.264 shares of its common stock. Effective December 5, 2016, the number of shares was increased to 45,445.418. The 2014 Equity Incentive Plan is administered by a committee of the Holdco board of directors. Such committee determines the terms of each stock-based award grant under the 2014 Equity Incentive Plan, except that the exercise price of any granted options and the grant price of any granted stock appreciation rights may not be lower than the fair market value of one share of common stock of Holdco as of the date of grant.

The fair value of 23,126.492 time-vested options outstanding as of December 30, 2017 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: dividend yield equaling 0%, risk-free interest rate from 1.27% to 2.26%, expected volatility assumed to be 31.5%, and expected term from 5.75 years to 6.25 years. The fair value of an option in whole dollars was $351.61.

In the year ended December 30, 2017, the Company modified the vesting period of the outstanding awards, reducing the vesting period to four years from five years. The modification of the vesting term resulted in $687 of additional expense for the year ended December 30, 2017.

Stock option compensation expense of $1,984, $1,513, and $957 was recognized in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 30, 2017, December 31, 2016, and December 31, 2015, respectively. As of December 30, 2017, there was $3,016 of unrecognized compensation expense for unvested common options. The expense will be recognized as a charge to earnings over a weighted average period of approximately 1.67 years.

As of December 30, 2017, there were 20,406.168 performance-based stock options outstanding that ultimately vest depending upon satisfaction of conditions that only arise in the event of a sale of the Company. No compensation expense will be recognized on these stock options unless it becomes probable the performance conditions will be satisfied.

A summary of stock option activity for the year ended December 30, 2017 is presented below:



	Number of Shares		Weighted Average Exercise Price Per Share (in whole dollars)		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2016	43,375.418		$	1,000	8 years
Exercisable at December 31, 2016	—		—		—
Granted	8,720.000		$	1,000	—
Exercised or converted	—		—		—
Forfeited or expired	(8,562.758	)	$	1,000	—
Outstanding at December 30, 2017	43,532.660		$	1,000	8 years
Exercisable at December 30, 2017	—		—		—

No options were exercised in the years ended December 30, 2017, December 31, 2016, or December 31, 2015. The aggregate intrinsic value of options outstanding as of December 30, 2017 was $6,878.

During the year ended December 31, 2015, the Company also granted a total of 1,600 shares of restricted stock under the 2014 Equity Incentive Plan. The shares were granted at the grant date fair value of the underlying common stock securities. The restrictions on 1,500 restricted stock shares lapsed in one-half increments on each of the two anniversaries of the award date. The restrictions on the remaining 100 restricted stock shares lapsed on the one year anniversary of the award date.

During the year ended December 30, 2017, the Company granted 425 shares of restricted stock under the 2014 Equity Incentive Plan. The shares were granted at the grant date fair value of the underlying common stock securities. The restrictions lapse upon change in control of the Company.

A summary of restricted stock activity for the year ended December 30, 2017 is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value (in whole dollars)
Unvested at December 31, 2016	750		$	1,000
Granted	425		$	861
Vested	(750	)	$	1,000
Forfeited	(150	)	$	861
Unvested at December 30, 2017	275		$	861

Compensation expense of $500, $767, and $333 was recognized in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 30, 2017 and December 31, 2016 and 2015, respectively.