Plans

The Company maintains stock incentive plans that provide for the grant of incentive and non-qualified options, stock appreciation rights ("SARs") and common stock rights covering a total of 1,712,315 shares of common stock reserved for issuance to key employees, including officers and directors, as of September 30, 2014. In connection with the IQinVision business combination, the Company assumed a total of 379,834 stock options and 262,586 SARs along with related 2001 and 2011 Stock Incentive Plan provisions. All options and SARs are issued at fair market value at the grant date and are exercisable in varying installments according to the plans. SARs provide the holder the right to receive, upon exercise, the excess of the exercise date fair market value over the grant date fair market value of a share of the Company's common stock in the form of equivalent shares of common stock at market value, cash or a combination of both. The plans allow for the payment of option exercises through the surrender of previously owned mature shares based on the fair market value of such shares at the date of surrender. Such surrendering of mature shares by holders results in an increase to treasury stock based on the stock price on date of surrender. There were 25,663 options and SARs available for grant under these plans at September 30, 2014.

Changes in outstanding stock options for the two years ended September 30, 2014 are as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at September 30, 2012	505,500			$4.33
Options granted	26,000			$2.62
Options exercised	—		—
Options forfeited	(77,500	)		$3.81
Outstanding at September 30, 2013	454,000			$4.32
Options assumed in IQinVision business combination	379,834			$2.40
Options granted	15,000			$2.62
Options exercised	—		—
Options forfeited	(85,000	)		$3.81
Outstanding at September 30, 2014	763,834			$4.31	4.6	$226,035
Exercisable at September 30, 2014	634,197			$4.57	4.1	$213,276

The weighted-average grant date fair value of options granted during the years ended September 30, 2014 and 2013 was $2.06 and $1.61, respectively. As of September 30, 2014, there was $309,213 of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options, which is expected to be recognized over a weighted-average period of 0.9 years.

Changes in outstanding SARs for the two years ended September 30, 2014 are as follows:



	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at September 30, 2012	—	—
SARs granted	—	—
SARs exercised	—	—
SARs forfeited	—	—
Outstanding at September 30, 2013	—	—
SARs assumed in IQinVision business combination	262,586		$3.11
SARs granted	—	—
SARs exercised	—	—
SARs forfeited	—	—
Outstanding at September 30, 2014	262,586		$3.11	1.6	—
Exercisable at September 30, 2014	112,357		$3.04	1.5	—

The weighted-average grant date fair value of SARs assumed in the IQinVision business combination was $1.05. As of September 30, 2014, there was $124,496 of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested SARs, which is expected to be recognized over a weighted-average period of 0.9 years.

On September 10, 2014, the Company entered into a Stock Agreement with its Chief Executive Officer (CEO) whereby he is eligible to receive up to 600,000 restricted shares of the Company’s common stock (the “Shares”) in four equal installments on each of the first four anniversaries of his employment commencement date, so long as he is then employed by the Company. Notwithstanding the foregoing, 50,000 of the Shares otherwise issuable on the first anniversary of the commencement date will instead be issued to him upon the Company’s Board of Directors’ approval of a restructuring plan for fiscal year 2015, submitted to the Board within the first ninety days of his employment, so long as he is then employed by the Company. The Shares will be granted outside of the Company’s shareholder approved equity incentive plans as an inducement material to his acceptance of employment. The fair value of this award was $2.0 million based upon the market value of Company common stock at the date of grant. As of September 30, 2014, there was approximately $2.0 million of total unrecognized compensation cost related to this award, which is expected to be recognized over the four year vesting period.