9. Shareholders’ Equity and Stock-based Compensation

The Company has a 2006 Equity Incentive Plan and a 2015 Equity Incentive Plan. The 2015 Equity Incentive Plan replaced the 2006 Equity Incentive Plan and new grants may not be made under the 2006 Plan.

Under the 2015 Equity Incentive Plan, the Company may grant stock options, stock awards, stock appreciation rights, restricted stock units and other equity-based awards, although no such awards, other than stock options, had been granted as of June 30, 2017. Under all awards, the terms are fixed on the grant date. Generally, the exercise price of stock options equals the market price of the Company’s stock on the date of the grant. Options under the plans generally vest over three years, and have a maximum term of 10 years.

The Compensation Committee of the Board of Directors has established a non-employee directors’ stock fee election program, referred to as the director’s program, and a non-employee director and executive officer stock purchase program, referred to as the management purchase program, as an award under the 2015 Plan. There were no shares purchased under the director program or the management purchase program during the three and six months ended June 30, 2017 and 2016

Stock option activity during the six months ended June 30, 2017 was as follows:



			Weighted-average		Aggregate
	Number of Shares		Exercise Price		Intrinsic Value

Outstanding at December 31, 2016	1,385	$	6.54
Options forfeited or cancelled	(5)		7.40
Options granted	197		7.40
Options exercised	(46)		5.61

Outstanding at June 30, 2017	1,531	$	6.68	$	3,213

Exercisable at June 30, 2017	1,141	$	6.50	$	2,807

Available for future grant at December 31, 2016	404

Available for future grant at June 30, 2017	230

The number of shares available for future grants at June 30, 2016 does not include a total of up to 1,256 shares subject to options outstanding under the 2006 Equity Incentive Plan which will become available for grant under the 2015 Equity Incentive Plan in the event of the expiration, cancellation or surrender of such options.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of subjective assumptions, including the expected stock price volatility. Because the Company’s options have characteristics different from those of traded options, in the opinion of management, the existing models do not necessarily provide a reliable single measure of the fair value of its options. The weighted average fair value of options granted was $8.80 and $7.40 for options granted during the three and six months ended June 30, 2017. The weighted average fair value of options granted was $5.85 and $7.08 for options granted during the three and six months ended June 30, 2016.

The Company calculates expected volatility for stock options and awards using the Company’s historical volatility.

The Company currently estimates a zero percent forfeiture rate for stock options, but will continue to review this estimate in future periods.

The risk-free rates for the expected terms of the stock options and awards are based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted average remaining contractual life of options exercisable at June 30, 2017 was 4.31 years.

The Company recorded $207 and $425 of non-cash stock option expense for the three and six months ended June 30, 2017, respectively. The Company recorded $166 and $347 of non-cash stock option expense for the three and six months ended June 30, 2016, respectively. As of June 30, 2017, there was $1,309 of total unrecognized compensation costs related to non-vested awards that are expected to be recognized over a weighted-average period of 2.04 years.

The Company also has an Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan, as amended, through June 30, 2017, provides that a maximum of 300 shares may be sold under the Purchase Plan. There were 3 and 7 shares purchased under the plan for the three and six months ended June 30, 2017, respectively, and a total of 5 and 9 shares purchased for the three and six months ended June 30, 2016, respectively.