STOCK BASED COMPENSATION

Under the 2012 Omnibus Equity Award Plan, the Company has granted stock options and restricted stock to certain employees, consultants and directors. Compensation expense for stock-based awards made to employees, directors and consultants in return for service is recorded in accordance with Compensation-Stock Compensation of the FASB ASC. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest. The Company recorded stock based compensation expense of $1.7 million and $5.9 million during the three and nine month periods ended September 30, 2014, respectively, and $2.1 million and $6.3 million during the three month and nine month periods ended September 30, 2013, respectively. At September 30, 2014, there was $15.8 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.7 years.

Restricted Stock—Restricted stock is granted to employees and consultants of the Company and its subsidiaries, and to non-employee members of the Company’s Board. These shares are part of the compensation plan for services provided by the employees, consultants, or Board members. The closing price of the Company’s stock on the date of grant is used to determine the fair value of the grants. The expense related to the restricted stock grants is recorded over the vesting period. There was no cash flow impact resulting from the grants.

A summary of the status of restricted stock awards as of September 30, 2014 and 2013, and the changes during the periods then ended is presented below:



	Three Months Ended September 30, 2014				Three Months Ended September 30, 2013
	Shares		Weighted- Average Fair Value at Grant Date		Shares		Weighted- Average Fair Value at Grant Date
Non-vested at beginning of the period	1,891,131		$	8.48	1,733,375		$	9.91
Granted—Restricted Stock	78,000		$	7.69	117,000		$	9.39
Forfeited during the period	(114,625	)	$	8.21	(74,875	)	$	10.03
Vested during the period	(56,000	)	$	9.43	(25,125	)	$	10.07
Non-vested at end of period	1,798,506		$	8.43	1,750,375		$	9.87



	Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013
	Shares		Weighted- Average Fair Value at Grant Date		Shares		Weighted- Average Fair Value at Grant Date
Non-vested at beginning of the period	1,560,375		$	9.81	1,305,369		$	10.09
Granted—Restricted Stock	1,013,500		$	7.21	989,500		$	9.80
Forfeited during the period	(208,825	)	$	8.64	(170,563	)	$	10.20
Vested during the period	(566,544	)	$	9.96	(373,931	)	$	10.30
Non-vested at end of period	1,798,506		$	8.43	1,750,375		$	9.87

Stock Options—The fair value of each option grant is estimated using the Black-Scholes option-pricing model using the weighted-average assumptions in the table below. This valuation model requires the Company to make assumptions and judgments about the variables used in the calculation, including the fair value of the Company’s common stock, the expected life (the period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, a risk-free interest rate and expected dividends. The expected life of options granted is derived from historical exercise behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury rates in effect at the time of grant.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
The weighted average fair value of options granted	$	2.57		$	3.39		$	2.60		$	3.54
Dividend yield	—		%	—		%	—		%	—		%
Weighted average risk free interest rate	1.71		%	1.40		%	1.56		%	0.98		%
Weighted average expected volatility	36.73		%	41.46		%	40.53		%	42.20		%
Expected life (in years)	4.6			4.6			4.6			4.6

A summary of the status of options granted as of September 30, 2014 and 2013, and the changes during the periods then ended is presented below:



	Three Months Ended September 30, 2014
	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at beginning of period	7,044,103		$	5.79	$	16,371,140
Granted	3,000		$	7.69	—
Exercised	(1,014,414	)	$	4.47	$	4,015,153
Forfeited	(110,746	)	$	9.75	—
Options outstanding at end of period	5,921,943		$	5.94	$	16,629,928



	Three Months Ended September 30, 2013
	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at beginning of period	8,595,577		$	5.24	$	36,183,544
Granted	235,000		$	9.29	—
Exercised	(522,394	)	$	0.93	$	4,188,424
Forfeited	(104,250	)	$	9.13	—
Options outstanding at end of period	8,203,933		$	5.58	$	27,187,484



	Nine Months Ended September 30, 2014
	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at beginning of period	7,536,601		$	5.53	$	17,493,907
Granted	617,000		$	7.20	—
Exercised	(1,913,943	)	$	4.17	$	7,069,999
Forfeited	(317,715	)	$	9.46	—
Options outstanding at end of period	5,921,943		$	5.94	$	16,629,928
Exercisable at end of period	4,675,592		$	5.29	$	15,958,433



	Nine Months Ended September 30, 2013
	Options		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at beginning of period	8,780,400		$	4.67	$	41,236,574
Granted	968,000		$	9.71	—
Exercised	(1,382,403	)	$	2.28	$	9,848,965
Forfeited	(162,064	)	$	8.95	—
Options outstanding at end of period	8,203,933		$	5.58	$	27,187,484
Exercisable at end of period	6,475,360		$	4.57	$	26,834,448

The weighted-average remaining contractual term of options exercisable at September 30, 2014 is 1.9 years. The following table summarizes information about options outstanding as of September 30, 2014:



	Options Outstanding		Options Exercisable
Exercise Price	Number Outstanding	Weighted- Average Remaining Contractual Life	Number Exercisable
		(in years)
$ 0.20 - $ 0.99	313,791	0.9	313,791
$ 1.00 - $ 3.99	1,306,412	1.2	1,306,412
$ 4.00 - $ 5.99	580,445	2.1	580,445
$ 6.00 - $ 8.99	2,835,207	3.1	2,012,294
$ 9.00 - $ 14.50	886,088	5.1	462,650
	5,921,943		4,675,592