Stock-Based Compensation

The Company’s 2006 Stock Incentive Plan, as amended and restated (the “2006 Plan”) in May 2008, authorizes the Company to issue up to 3,000,000 shares of common stock to employees, non-employee directors and consultants pursuant to awards of stock options, stock appreciation rights, restricted stock, in payment of performance shares or other stock-based awards. In April 2015, the Company further amended the 2006 Plan to increase the aggregate number of shares of Common Stock issuable under the 2006 Plan by 500,000 shares to a total of 3,500,000.

Under the 2006 Plan, stock options must be granted at a price not less than the fair market value of the stock on the date the option is granted, generally are not subject to re-pricing, and will not be exercisable more than ten years after the date of grant. Options granted under the 2006 Plan generally qualify as “non-qualified stock options” under the U.S. Internal Revenue Code. Certain options granted under the Company’s 2004 Common Stock Option Plan, as amended (the “2004 Plan”), generally qualified as “incentive stock options” under the U.S. Internal Revenue Code; the exercise price of a stock option is equal to the fair market value of the Company’s common stock on the option grant date. As of June 30, 2015, there were 669,105 shares available to be issued under the 2006 Plan.

At June 30, 2015, the Company had no stock options outstanding under the 2004 Plan while the 2006 Plan had 984,666 stock options outstanding and 376,201 shares of restricted stock outstanding.

Effective December 31, 2014, the Company’s Board of Directors adopted a stockholder rights plan (the "Rights Plan"). Pursuant to the Rights Plan, the Board of Directors declared a dividend distribution of one preferred share right (a "Right") for each share of Common Stock held as of January 12, 2015. Each Right entitled the holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock (the "Preferred Shares") at an initial exercise price of $15, subject to certain adjustments. On March 24, 2015, the Company entered into a nomination and standstill agreement (the “Nomination and Standstill Agreement"). Pursuant to the Nomination and Standstill Agreement, the Company agreed to redeem, effective immediately, the rights issued pursuant to the Rights Plan. Pursuant to the terms of the Rights Plan, the Company paid a redemption price to the holders of the rights equal to $0.01 per right in cash, or $246, on April 20, 2015.

Stock Option Awards

The Company did not grant any stock options during the six months ended June 30, 2015.

Total compensation expense related to stock options is classified within payroll and related on the condensed consolidated statements of operations. There was no compensation expense related to stock options in the three months ended June 30, 2015. In the six months ended June 30, 2015, compensation costs related to stock options was not material and was fully recognized in February 2015. In the three and six months ended June 30, 2014, total compensation costs related to stock options was $106 and $212, respectively.

Restricted Stock Awards

On March 2, 2015, the Company issued 207,000 shares of restricted stock to employees. The fair value for these awards was $6.68 per share, representing the closing stock price on the date of grant. These shares will vest 25% per year over four years on the anniversary dates of the respective grants.

The total compensation expense, classified within payroll and related on the condensed consolidated statements of operations, related to restricted stock was $136 and $528 for the three and six months ended June 30, 2015, respectively, versus $368 and $676 for the comparable prior-year periods. In the three months ended June 30, 2015, the Company adjusted the forfeiture estimates to reflect actual forfeitures. The actual forfeitures experienced in the first half of 2015 differ from the Company's previous estimate mainly due to the termination of its Chief Executive Officer and President in June 2015. The impact of forfeiture adjustment reduced stock-based compensation expense by $275 for the three and six months ended June 30, 2015.

As of June 30, 2015, a total of $1,865 in unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of 2.9 years.

Stock Grants

In the six months ended June 30, 2015, the Company issued shares of common stock to members of the Company’s Board of Directors in respect of their annual retainer. The total fair value of the shares issued was expensed upon the date of grant. The total compensation expense, classified within general and administrative expenses, related to Board of Director common stock grants was $445 and $245 for the six months ended June 30, 2015 and 2014, respectively. There was no compensation expense related to Board of Director common stock grants for the three months ended June 30, 2015 and 2014.

Total shares issued to members of the Company's Board of Directors during the six months ended June 30, 2015 were:



Grant Date	Number of Shares	Price Per Share		Aggregate Grant Date Fair Value
February 2, 2015	35,764	$	6.85	$	245
March 24, 2015	31,845	$	6.28	$	200