Stock-Based Compensation:

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. 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.

During the first six months of 2016, Holdco granted a total of 2,200.000 non-qualified stock options with certain time-vesting and performance vesting conditions under the 2014 Equity Incentive Plan. The options were granted with an exercise price equal to the grant date fair value of the underlying securities. As of June 30, 2016, a total of 2,855.846 shares were available for future stock-based award grants. The fair value of 1,100.000 time-vested options granting during the six months ended June 30, 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 1.72%, expected historic volatility assumed to be 31.5%, and expected term of 6.75 years. Expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. The average fair value of each option was $355.629.

Compensation expense of $336 and $726 was recognized in the accompanying condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2016, respectively. As of June 30, 2016, there was $5,372 of unrecognized compensation expense for unvested stock options. The expense will be recognized as a charge to earnings over a weighted average period of approximately 3.50 years.

Compensation expense of $53 and $257 was recognized in the accompanying condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2015, respectively. As of June 30, 2015, there was$3,309 of unrecognized compensation expense for unvested stock options.

As of June 30, 2016, there were 20,982.709 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 period ended June 30, 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	—
Granted	2,200.000		1,000		10 years	—
Exercised or converted	—		—		—	—
Forfeited or expired	(1,760.000	)	1,000		—	—
Outstanding at June 30, 2016	41,065.418		$	1,000	8.5 years	$	—
Exercisable at June 30, 2016	—		$	—	—	$	—

10. Stock-Based Compensation (continued):

In 2015, the Holdco 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. 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. In the first quarter of 2016, the restrictions on the remaining 100 restricted stock shares lapsed on the one year anniversary of the award date and the restricted stock shares vested.

A summary of restricted stock activity for the six months ended June 30, 2016 is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Unvested at December 31, 2015	1,600		$	1,000	1.7 years	$	—
Granted	—		—		—	—
Vested	(100	)	1,000		—	—
Forfeited	—		—		—	—
Unvested at June 30, 2016	1,500		$	1,000	1.3 years	$	—

Compensation expense of $188 and $392 was recognized in the accompanying condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2016, respectively. As of June 30, 2016, there was $875 of unrecognized compensation expense for unvested restricted stock.