CP HM Acquisition Corp. 2010 Stock Option Plan

Effective May 28, 2010, the Predecessor established the OHCP HM Acquisition Corp. 2010 Stock Option Plan, as amended (the “Predecessor Option Plan”), pursuant to which Predecessor Holdco granted non-qualified stock options for the purchase of Predecessor Holdco common stock. Immediately prior to the consummation of the Merger Transaction, there were outstanding options to purchase 44,180 shares of Predecessor Holdco common stock. In connection with the Merger Transaction, the Predecessor Option Plan was terminated, and all options outstanding thereunder were cancelled. Upon consummation of the Merger Transaction, each outstanding option to purchase shares of Predecessor Holdco common stock was converted into the right to receive, in cash, a portion of the merger consideration in the Merger Transaction.

Option holders were not required by the terms of the Predecessor Option Plan or the Predecessor Stockholders Agreement to hold the shares for any period of time following exercise. Liability classification was required because this arrangement permits the holders to put the shares back without being exposed to the risks and rewards of the shares for a reasonable period of time. Consistent with past practice, the Company elected to use the intrinsic value method to value the options. Immediately prior to the cancellation of the Predecessor Option Plan, the stock option liability was $48,517.

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 22,137.710 time-vested options outstanding as of December 31, 2016 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 2.17%, expected volatility assumed to be 31.5%, and expected term from 6.5 years to 6.75 years. The fair value of an option was $373.560.

Stock option compensation expense of $1,513, $957, and $675 was recognized in the accompanying consolidated statements of Comprehensive Loss for the years ended December 31, 2016 and December 31, 2015 and the period from June 30, 2014 through December 31, 2014, respectively. As of December 31, 2016, there was $5,121 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 three years.

As of December 31, 2016, there were 21,237.708 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 31, 2016 is presented below:



	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2015	40,625.418		$	1,000	9 years	$	—
Exercisable at December 31, 2015	—		—		—	—
Granted	4,510.000		$	1,000	—	—
Exercised or converted	—		—		—	—
Forfeited or expired	(1,760.000	)	$	1,000	—	—
Outstanding at December 31, 2016	43,375.418		$	1,000	8 years	$	—
Exercisable at December 31, 2016	—		—		—	—

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 lapse in one-half increments on each of the two anniversaries of the award date or earlier in the event of either involuntary termination of the employment by the Company without cause or by the employee for Good Reason. The restrictions on the remaining 100 restricted stock shares lapse on the one year anniversary of the award date or earlier in the event of either involuntary termination of employment by the Company without cause or by the employee for Good Reason. In the event of earlier vesting, the unvested portion of the restricted stock grant would become immediately fully vested and settled in cash at the then-current fair market value.

A summary of restricted stock activity for the year ended December 31, 2016 is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested at December 31, 2015	1,600		$	1,000
Granted	—		$	—
Vested	(850	)	$	1,000
Forfeited	—		$	—
Unvested at December 31, 2016	750		$	1,000

Compensation expense of $767 and $333 was recognized in the accompanying consolidated statements of comprehensive loss for the years ended December 31, 2015 and 2016, respectively. As of December 31, 2016, there was $500 of unrecognized compensation expense for unvested restricted stock.