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 shares of its common stock. Effective December 5, 2016, the number of shares was increased to 45,445. Effective August 10, 2018, the number of shares within the stock option pool increased to 50,000. 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 25,046 time-vested options outstanding as of December 29, 2018 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 3.17%, expected volatility assumed to be 31.5%, and expected term of 6.25 years. The fair value of an option in whole dollars was $341.39.

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 $1,590, $1,984, and $1,513 was recognized in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 29, 2018, December 30, 2017, and December 31, 2016, respectively. As of December 29, 2018, there was $3,129 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 2.06 years.

As of December 29, 2018, there were 22,496 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 29, 2018 is presented below:



	Number of Shares	Weighted Average Exercise Price Per Share (in whole dollars)		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 30, 2017	42,653	$	1,000	8 years
Exercisable at December 30, 2017	—	—		—
Granted	9,130	$	—	—
Exercised or converted	200	—		—
Forfeited or expired	4,041	$	—	—
Outstanding at December 29, 2018	47,542	$	1,036	7 years
Exercisable at December 29, 2018	14,796	$	1,000	6 years

In the fiscal year ended December 29, 2018, 200 options were exercised and no options were exercised in the fiscal years ended December 30, 2017 or December 31, 2016. The aggregate intrinsic value of options outstanding as of December 29, 2018 was $6,564.

As of December 30, 2017, there were 275 shares of restricted stock outstanding under the 2014 Equity Incentive Plan. No such shares were granted in the year ended December 29, 2018. 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. The number of unvested shares of restricted stock was 275 as of December 29, 2018 and December 30, 2017. The weighted average grant date fair value of unvested restricted stock was $861 as of December 29, 2018 and December 30, 2017.

Restricted stock compensation expense of $0, $500, and $767 was recognized in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 29, 2018, December 30, 2017, and December 31, 2016, respectively.