NOTE 4 – SHAREHOLDERS’ EQUITY

In the second quarter of fiscal 2015 the Company adopted the 2015 Incentive Plan (the “2015 Plan”). The 2015 plan replaced the Company’s 2009 Incentive Plan and authorizes the issuance of 2,500,000 shares of common stock. In addition, up to 2,034,788 shares previously subject to awards outstanding under the Company’s 2009 Incentive Plan, the 1993 Stock Incentive Plan, the Amended and Restated 1993 Stock Incentive Plan for Nonemployee Directors, the Clarity Visual Systems, Inc. 1995 Stock Incentive Plan, the Clarity Visual Systems, Inc. Non-Qualified Stock Option Plan, the 1996 Stock Incentive Plan, the 1999 Non-Qualified Stock Option Plan, as well as any individual inducement awards, which are collectively referred to as the “Prior Plans,” became available for issuance under the 2015 Plan at the time the 2015 Plan was approved to the extent that these shares cease to be subject to the original awards (such as by expiration, cancellation or forfeiture of the awards). The maximum number of shares that may be issued under the 2015 Plan is 4,534,788 shares, including shares available from the Prior Plans.

Stock Options

The 2015 Plan provides for the granting of stock options, which generally vest and become exercisable over a three-year period and expire seven to ten years after the date of grant. Options were last granted in the second quarter of fiscal 2008.

Information regarding outstanding options is as follows:


	Number of Shares			Weighted Average Exercise Price
Options outstanding at September 26, 2014		545,636		$	8.67
Granted		—			—
Exercised		(4,402	)		5.86
Forfeited		—			—
Expired		(175,622	)		9.52

Options outstanding at March 27, 2015		365,612		$	8.30

All options outstanding at March 27, 2015 were exercisable. As of March 27, 2015, the total pretax intrinsic value of options outstanding and options exercisable was $0 and the options had a weighted average remaining contractual term of 0.6 years.

Restricted Stock

The 2015 Plan provides for the issuance of restricted stock (“nonvested shares” per ASC Topic 718, “Compensation – Stock Compensation”). Shares issued generally vest over a one to three year period upon the passage of time, or upon meeting objective performance conditions.

Information regarding outstanding restricted stock awards is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock outstanding at September 26, 2014		1,521,717		$	2.08
Granted		940,144			5.11
Vested		(757,541	)		2.09
Forfeited		—			—

Restricted stock outstanding at March 27, 2015		1,704,320		$	3.72

Valuation and Expense Information

The following table summarizes share based compensation expense related to share based payment awards and employee stock purchases for the three and six months ended March 27, 2015 and March 28, 2014. The expense was allocated as follows:


	Three months ended				Six months ended
	Mar. 27, 2015		Mar. 28, 2014		Mar. 27, 2015		Mar. 28, 2014
Cost of sales	$	66	$	21	$	143	$	46

Research and development, net	$	67	$	10	$	89	$	19
Sales and marketing		161		49		352		86
General and administrative		496		294		1,150		637

Share based compensation expense included in operating expenses	$	724	$	353	$	1,591	$	742

Share based compensation expense related to employee stock options, restricted stock awards and employee stock purchase plan	$	790	$	374	$	1,734	$	788

The Company recognizes compensation expense for all share based payment awards made to its employees and directors including employee stock options, restricted stock awards and employee stock purchases related to the Employee Stock Purchase Plan, based on estimated fair values. The Company calculates the value of employee stock options on the date of grant using the Black-Scholes model. The Company values restricted stock awards at the closing price of the Company’s shares on the date of grant. As share based compensation expense recognized in the Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures were estimated based on historical and anticipated future experience.