EMPLOYEE STOCK PLANS

In May of 2007, our stockholders approved the 2007 Omnibus Incentive Compensation Plan to provide incentives and awards for directors, officers, and employees. “Awards” as defined in the Plan includes, with limitations, stock options (including restricted stock options), restricted stock awards, stock appreciation rights, performance shares, stock awards and cash awards, all on a stand-alone, combination, or tandem basis. The 2007 Omnibus Incentive Compensation Plan replaces the 1997 Stock Incentive Plan, which expired February of 2007. A total of 525,000 of our common shares authorized were reserved for issuance under the Plan, of which 99,226 were available to be granted as of December 31, 2015.

Stock Options – The 339,376 options outstanding at December 31, 2015 were all issued under the 2007 Omnibus Incentive Compensation Plan. All options outstanding at December 31, 2015 are incentive stock options with a term of ten years, 296,874 of which vest 20% each year on the anniversary date of the grant and 42,502 of which vest 16.67% each year. The following table summarizes activity relating to stock options:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2012	307,845		$	13.36
Granted	131,280		15.82
Exercised	(6,155	)	11.10
Forfeited or expired	(328	)	20.88
Outstanding at December 31, 2013	432,642		$	14.13
Granted	17,500		18.99
Exercised	(49,560	)	12.97
Forfeited or expired	(42,509	)	16.24
Outstanding at December 31, 2014	358,073		$	14.28
Granted	5,000		13.17
Exercised	(7,655	)	12.97
Forfeited or expired	(16,042	)	17.73
Outstanding at December 31, 2015	339,376		$	14.13	6.98	$	—
Exercisable at December 31, 2013	70,457		$	14.81
Exercisable at December 31, 2014	109,691		13.98
Exercisable at December 31, 2015	162,679		13.81		6.79	$	—

A summary of changes in unvested options for the period ended December 31, 2015 is as follows:



	Number of Options		Weighted Average Grant Date Fair Value
Unvested options outstanding, beginning of year	248,382		$	4.93
Granted	5,000		3.17
Vested	(72,685	)	4.87
Forfeited	(4,000	)	5.59
Unvested options outstanding, end of year	176,697		$	4.89

As of December 31, 2015 there was a total of $682,000 in unrecognized compensation cost related to nonvested share-based compensation arrangements. The total amount of options expensed during the years ended December 31, 2015, 2014 and 2013 was $336,000, $442,000 and $308,000, respectively.

The fair value of each option granted is estimated on the grant date using the Black-Scholes Option Pricing Model. This model requires management to make certain assumptions, including the expected life of the option, the risk free rate of interest, the expected volatility, and the expected dividend yield. The risk free rate of interest is based on the yield of a U.S. Treasury security with a similar term. The expected volatility is based on historic volatility over a term similar to the expected life of the options. The dividend yield is based on the current yield at the date of grant. The following assumptions were made in estimating the fair value of the options granted in 2015 and 2014:



	2015			2014
Risk free rate of interest	1.5		%	1.7		%
Expected volatility	37.4		%	39.2		%
Dividend yield	2.8		%	1.9		%
Average expected life (in years)	5			5
Weighted-average grant-date fair value	$	3.17		$	5.77

The total intrinsic value of the options exercised was $10,000, $217,000, and $41,000 for the years ended December 31, 2015, 2014, and 2013, respectively.

Restricted Stock Awards – On August 17, 2015, the Compensation Committee of the Board of Directors of the Company made grants of 11,250 shares of restricted stock under the Company’s 2007 Omnibus Incentive Compensation Plan to certain executives of the Company. The restricted shares of stock, which are subject to the terms of a Restricted Stock Grant Agreement between the Company and each recipient, will fully vest on the third anniversary of the grant date. Prior to vesting, the recipient will be entitled to vote the shares and receive dividends, if any, declared by the Company with respect to its common stock. Compensation expense for restricted stock is based on the fair value of the restricted stock awards at the time of the grant, which is equal to the market value of the Company’s common stock on the date of grant. The value of the restricted stock grants that are expected to vest is amortized monthly into compensation expense over the three year vesting period.

The restricted shares had a fair value of $13.92 per share on the date of issuance. For the year ended December 31, 2015 and 2013, compensation expense of $19,000 and $21,000, respectively, was recognized related to non-vested restricted stock awards. There was no compensation expenses related to these awards in 2014. As of December 31, 2015, there was $137,000 of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan.

The following table summarizes activity relating to non-vested restricted stock awards:



		2015
Balance at beginning of year		—
Granted		11,250
Forfeited		—
Vested		—
Balance at end of year		11,250