NOTE 8: STOCK BASED COMPENSATION

The Company has a shareholder approved long-term incentive plan (the LTIP) to assist the Company and its affiliates in attracting, motivating and retaining selected individuals to serve as employees, directors, consultants and advisors of the Company and its affiliates by providing incentives to such individuals through the ownership and performance of the Companys common stock. There are 1.1 million shares of common stock authorized for issuance under the LTIP. Shares available for grant under the LTIP may be authorized and unissued shares or shares that have been reacquired by the Company and are designated as treasury shares. As of September 30, 2015 and December 31, 2014, 382,198 and 420,392 shares of the Companys common stock were available for grant under the LTIP. The LTIP permits the issuance by the Company of awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units and performance shares. The exercise price per share of the Companys common stock purchasable under any stock option or stock appreciation right may not be less than 100% of the fair market value of one share of common stock on the date of grant. The term of any stock option or stock appreciation right may not exceed ten years. The LTIP also provides plan participants with a cashless mechanism to exercise their stock options. Issued restricted stock, stock options and restricted stock units are subject to vesting restrictions.

On August 21, 2015, the Compensation Committee of the Board of Directors of the Company (the "Committee") approved amendments to the vesting terms of unvested equity grants for all employees with outstanding grants under the LTIP. All existing employee equity grant award agreements were amended to provide that all such awards vest immediately upon a change in control of the Company. On the same day, the Committee took further action so that all awarded, but unvested restricted stock of non-employee directors vested effective as of the close of business on Monday, August 24, 2015. As a result of these two changes, the Company recorded an additional $0.2 million in compensation expense during the third quarter of 2015 relating to the accelerated vesting for the three and nine months ended September 30, 2015.

Restricted Stock Awards

Stock-based compensation expense for restricted stock awards was $0.7 million and $0.7 million for the nine months ended September 30, 2015 and 2014, respectively, and was recorded within selling, general, and administrative expenses. Restricted stock awards are amortized over their respective vesting periods of two or three years. The Company records stock-based compensation for grants of restricted stock awards on a straight-line basis.

The following table summarizes the restricted common stock activity for the nine months ended September 30, 2015:


	For the nine months ended
	September 30, 2015
				Weighted
				Average Fair
	Shares			Value

Balance - nonvested at December 31, 2014	124,578		$	9.84
Granted	80,452			7.37
Vested	(91,262	)		9.27
Forfeited	(3,365	)		9.94
Balance - nonvested at September 30, 2015	110,403		$	8.52

The total grant-date fair value of restricted stock vested for the nine months ended September 30, 2015 was $0.8 million. As of September 30, 2015, $0.6 million of total unrecognized compensation expense related to restricted common stock is expected to be recognized over a weighted average period of approximately 2.0 years.

Stock Options

The following tables summarize stock option activity for the nine months ended September 30, 2015, along with stock options exercisable at the end of the period:


	For the nine months ended
	September 30, 2015

					Weighted
				Weighted	Average
				Average	Contractual
Options	Shares			Exercise Price	Life (Years)

Outstanding - Beginning of period	327,003		$	12.18
Forfeited or expired	(22,655	)		11.02
Outstanding - End of period	304,348		$	12.26	6.11

Vested and Expected to Vest at September 30, 2015	295,218
Exercisable at September 30, 2015	260,555

The fair value of the stock-based awards was estimated using the Black-Scholes model. No options were granted during the nine months ended September 30, 2015.

As of September 30, 2015, the amount of unrecognized compensation expense related to stock options awards was de minimis.

Stock-based compensation expense resulting from stock options granted to employees was de minimis for the nine months ended September 30, 2015 and 2014 and was recorded within selling, general, and administrative expenses.

Shareholder Rights Plan

On September 2, 2014, in connection with an unsolicited, non-binding acquisition proposal, the Company's Board of Directors (the "Alteva Board") adopted a Stockholder Rights Plan that provides for the distribution of one right for each share of common stock outstanding. Each right entitles the holder to purchase one one-thousandth (1/1000^th) of a share of Series A Junior Participating Preferred Stock, par value of $0.01 per share, of the Company (the "Preferred Stock") at a price of $22.20 per one-thousandth of a share of Preferred Stock, subject to adjustment. The rights generally become distributed and exercisable at the discretion of the Alteva Board following a public announcement that 20% or more of the Company's common stock has been acquired or an intent to acquire has become apparent. By its terms, the Stockholder Rights Plan expired on September 1, 2015.

Share Repurchase Program

On August 25, 2014, the Alteva Board authorized a repurchase program for up to $3.0 million of its common stock. Share purchases may take place in open market transactions or in privately negotiated transaction and may be made from time to time depending on market conditions, share price, trading volume and other factors. The repurchase program authorized by the Alteva Board does not require the Company to acquire a specific number of shares, and may be terminated, suspended, or modified at any time. The timing and actual number of shares repurchased, if any, will depend on a variety of factors including the market price of the Companys common stock, regulatory, legal and contractual requirements, and other market factors. The share repurchase is expected to be funded from available cash on hand.

On May 14, 2015, the stock repurchase program was terminated by the Company's Board of Directors in connection with approving the special cash dividend of $2.60 per outstanding common share (see Note 10).

As of September 30, 2015, the Company repurchased 11,057 shares under the repurchase program at a value of $0.1 million. Shares were purchased on the open market at the prevailing days stock price, plus transaction costs.