Stock Options and Restricted Stock Awards

The Company has a 2007 Equity Incentive Plan (the “2007 Plan”) under which options to purchase common stock and restricted stock awards have been granted to employees, directors and consultants at exercise prices determined by the board of directors. Previously, options to purchase common stock and restricted stock awards were granted under the 2003 Stock Option Plan (the “2003 Plan”) (the 2007 Plan and the 2003 Plan collectively, the “Plans”).

Stock Options

All options granted under the Plans become exercisable over periods established at the date of grant. The option exercise price is generally not less than the estimated fair market value of the Company’s common stock at the date of grant, as determined by the Company’s management and Board of Directors. In addition, the Company has granted nonqualified stock options to a director outside of the Plans. An employee's vested options must be exercised at or within 90 days of termination to avoid forfeiture. As of September 30, 2014, all outstanding options were fully vested.

Stock option activity for the three months ended September 30, 2014 is as follows:



	Number of Options^(a)		Weighted Average Exercise Price
Options outstanding at June 30, 2014	922,809		$	10.16
Options exercised	(75,601	)	$	9.04
Options outstanding at September 30, 2014	847,208		$	10.26

(a) Includes the effect of options granted, exercised, forfeited or expired from the 2003 Plan and 2007 Plan, and options granted outside such plans.

Restricted Stock

The fair value of each restricted stock award is equal to the fair market value of the Company’s common stock at the date of grant. Vesting of restricted stock awards generally ranges from one to three years. The estimated fair value of restricted stock awards, including the effect of estimated forfeitures, is recognized on a straight-line basis over the restricted stock’s vesting period.

On August 11, 2014, the Company granted performance based restricted stock awards to certain executives. The performance based awards included grants of a maximum aggregate of 76,112 shares that vest based upon achievement of certain thresholds measuring total shareholder return during periods within fiscal 2015 compared to a pre-determined peer group of companies, and grants of a maximum aggregate of 76,112 shares that vest based upon achievement of certain thresholds measuring annual revenue growth during fiscal 2015 compared to a pre-determined peer group of companies.

Restricted stock award activity for the three months ended September 30, 2014 is as follows:



	Number of Shares		Weighted Average Fair Value
Restricted stock awards outstanding at June 30, 2014	1,276,403		$	17.37
Restricted stock awards granted	343,614		$	29.34
Restricted stock awards forfeited	(47,580	)	$	18.12
Restricted stock awards vested	(401,707	)	$	16.49
Restricted stock awards outstanding at September 30, 2014	1,170,730		$	19.33