14. Stock-Based Compensation

The Company adopted a stock plan in 1995 (the "1995 Plan"), which provided for the granting of incentive stock options, nonqualified stock options, stock awards, and opportunities to make direct purchases of stock, to employees, officers, directors and consultants of the Company. In June 2005, the 1995 Plan was terminated and the Company adopted a new plan (the "2005 Plan"). No further grants or awards were subsequently made under the 1995 Plan. A total of 907,679 options were awarded from the 1995 Plan, and as of December 31, 2013, 29,192 of these options remain outstanding and eligible for future exercise and continue to be governed by the terms of the 1995 Plan.

The 2005 Plan provided for the granting of incentive stock options, nonqualified stock options, stock awards, and opportunities to make direct purchases of stock, to employees, officers, directors and consultants of the Company. In November 2006, the 2005 Plan was terminated and the Company adopted a new plan (the "2006 Plan"). No further grants or awards were subsequently made under the 2005 Plan. A total of 1,619,134 options were awarded from the 2005 Plan, and as of December 31, 2013, 231,229 of these options remain outstanding and eligible for future exercise and continue to be governed by the terms of the 2005 Plan.

The 2006 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights. The 2006 Plan states that not more than 10,000,000 shares shall be issued under the plan. A total of 8,677,227 options have been awarded from the 2006 Plan and as of December 31, 2013, 5,941,008 of these options remain outstanding and eligible for future exercise.

Options granted under the 1995 Plan, the 2005 Plan and the 2006 Plan (the "Plans") generally vest ratably over periods of two to four years from the date of hire for new employees, or date of award for existing employees, or date of commencement of services with the Company for nonemployees, and generally expire ten years from the date of issuance. The Company's policy is to issue new shares upon the exercise of stock options.

The Company's Board of Directors granted on December 19, 2013, a stock option for the purchase of 1,150,000 shares of common stock to Joseph Shaulson in connection with his agreement to serve as a member of the Company's Board on that date and as an inducement for him to accept employment with the Company as its President and Chief Executive Officer starting in January 2014. This option was not granted under any of the Plans. The option has an exercise price equal to the fair market value of the Company's common stock at the date of grant, and it has a four-year vesting schedule in which 25%, 25% and 50% of the option vests on the 2^nd, 3^rd and 4^th anniversary dates, respectively, of Mr. Shaulson commencing employment. The Company assessed the terms of this award and determined there was no possibility that it would have to settle this award in cash and, therefore, equity accounting was applied.

A summary of the activity related to the shares of common stock covered by outstanding options under the Plans follows:

			Weighted Average Exercise Price			Aggregate Intrinsic value

Balance at December 31, 2012	5,579,042		$	6.68
Granted	1,654,315			1.64
Exercised	(7,550	)		1.82
Forfeited	(670,291	)		2.11
Expired	(354,087	)		9.26


Balance at December 31, 2013	6,201,429			5.68	6.09	$	—




Vested and expected to vest at December 31, 2013	6,009,973			5.79	6.04		—
Exercisable at December 31, 2013	3,913,834			7.49	5.18		—

The weighted average grant date fair value per share of options granted during fiscal years 2013, 2012, and 2011 was $1.14, $1.46 and $5.02, respectively. The total intrinsic value of options exercised was $2, $15 and $81 for the years ended December 31, 2013, 2012 and 2011, respectively.

A summary of information about the shares of common stock covered by outstanding and exercisable options under the Plans at December 31, 2013 follows:

	Stock Options Outstanding						Stock Options Exercisable

Range of exercise prices	Number of shares		Weighted average remaining contractual life (in years)		Weighted average exercise price per share		Number of shares		Weighted average exercise price per share
$1.27 - 1.48		240,400		9.65	$	1.41		15,610	$	1.40
1.55 - 1.55		1,045,000		7.56		1.55		600,000		1.55
1.56 - 1.69		1,038,479		6.69		1.68		358,018		1.66
1.74 - 2.46		360,014		7.41		2.09		190,189		2.11
2.66 - 2.66		866,949		6.60		2.66		380,256		2.66
2.72 - 7.25		737,997		5.15		5.98		561,599		6.12
7.31 - 9.77		668,092		5.26		8.95		602,927		8.93
10.08 - 14.49		872,086		4.07		12.49		832,823		12.42
14.53 - 23.99		342,412		3.72		18.86		342,412		18.86
24.97 - 24.97		30,000		3.39		24.97		30,000		24.97


		6,201,429		6.09		5.68		3,913,834		7.49

Expense Information for Employee Stock Option Awards

The Company recognized stock-based compensation expense, related to employee stock option awards, including awards to members of the Board of Directors, of $3,193, $3,825 and $4,621 for the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, there was approximately $3,544 of pre-tax stock-based compensation expense; net of estimated forfeitures, related to unvested awards not yet recognized which is expected to be recognized over a weighted average period of 2.02 years.

For the years ended December 31, 2013, 2012 and 2011, the Company determined the fair value of stock options using the Black-Scholes option pricing model with the following assumptions for option grants, respectively:

	Year Ended December 31,

	2013	2012	2011
Expected dividend yield	—	—	—
Risk-free rate	0.71% - 2.05%	0.67% - 1.15%	0.88% - 2.38%
Expected option term (in years)	6.0 - 6.1	5.3 - 5.5	5.5 - 5.6
Volatility	84% - 85%	84% - 87%	77% - 80%

For the years ended December 31, 2013 and 2012, the Company determined its volatility assumption based on actual market price fluctuations experienced during its trading history. For the year ended December 31, 2011 expected volatility was estimated based on the Company's historical volatility benchmarked against the historical volatilities of a peer group of similar public companies. Due to the Company's limited trading history prior to 2012, the Company believed that this approach provided additional information about future stock price movements when compared to analyzing the historical volatility of the Company on its own.

The risk-free interest rate used for each grant is equal to the U.S. Treasury yield curve in effect at the time of grant for instruments with a term similar to the expected life of the related option.

For the years ended December 31, 2013, 2012 and 2011, the expected term of the options is based upon evaluation of historical and expected future exercise behavior.

The stock price volatility and expected terms utilized in the calculation involve management's best estimates at that time, both of which impact the fair value of the option calculated under the Black-Scholes methodology and, ultimately, the expense that will be recognized over the life of the option. The accounting standard for stock-based compensation requires that the Company recognize compensation expense for only the portion of options that are expected to vest. Therefore, the Company has estimated expected forfeitures of stock options for the grants valued. In developing a forfeiture rate estimate, the Company considered its historical experience and actual forfeitures for the year. The Company will continue to evaluate its forfeiture rate as compared to the actual number of forfeitures in future periods to determine if adjustments to compensation expense may be required.

Expense Information for Non-employee Stock Option Awards

During the years ended December 31, 2011, the Company granted stock options to purchase 34,500 shares of common stock to non-employee consultants. No stock options were awarded to non-employees during the years ended December 31, 2013 and 2012, and all remaining non-employee awards were cancelled in early 2012 in connection with the Company's restructuring. Compensation expense related to non-employee options previously awarded were recognized over a period of four years and vested quarterly, contingent upon future services being provided by the consultants to the Company. The amount of non-employee stock compensation expense recorded by the Company for each of the two years ended December 31, 2012 was insignificant.