8.	STOCK-BASED COMPENSATION

The following costs related to the Company’s stock compensation plans were included in the unaudited consolidated statements of income:

	Three Months Ended March 31,
	2014		2013
Cost of revenues	$	1,403	$	779
Selling, general and administrative expenses		1,805		1,797
Total	$	3,208	$	2,576

On March 5, 2014, the Company completed acquisition of Netsoft (See Note 2). As a result, the Company issued 2,289 shares of non-vested (“restricted”) common stock (the “Closing Shares”). The shares vest 33.33% on each of the first, second and third anniversaries of the closing date. Upon termination of the recipient’s services with the Company with Cause or without Good Reason (in each case, as defined in the escrow agreement), any unvested shares will be forfeited. The fair value of the restricted shares at the time of grant was $84. In addition, the Company agreed to issue additional shares of restricted stock as part of the earn-out payment. Following the first anniversary of the closing date, the company will calculate the excess of the Earn-Out EBITDA over an estimated amount and issue up to 16,349 shares of restricted stock (the “Earn-Out Shares”). The Earn-Out Shares, if issued, will be subject to the same terms and conditions as the Closing Shares. As of March 31, 2014, the Company estimated a total of 16,349 Earn-Out shares to be issued with an estimated fair value of $598.

2012 Non-Employee Directors Compensation Plan—On January 11, 2012, the Company approved the 2012 Non-Employee Directors Compensation Plan (“2012 Directors Plan”), which will be used to issue equity grants to its non-employee directors. The Company authorized 600,000 shares of common stock to be reserved for issuance under the plan. The 2012 Directors Plan will expire after ten years and will be administered by the Company’s Board of Directors.

2012 Long-Term Incentive Plan — On January 11, 2012, the Company approved the 2012 Long-Term Incentive Plan (“2012 Plan”), which will be used to issue equity grants to employees. As of March 31, 2014, 6,409,034 shares of common stock remained available for issuance under the 2012 Plan. This includes (i) any shares that were available for issuance under the 2006 Plan (as defined below) as of its discontinuance date and that became available for issuance under the 2012 Plan and (ii) any shares that were subject to outstanding awards under the 2006 Plan and have expired or terminated or were cancelled between the discontinuance date of the 2006 Plan and December 31, 2013 and therefore became available for issuance under the 2012 Plan. In addition, up to 2,339,987 shares that are subject to outstanding awards as of March 31, 2014 under the 2006 Plan and that expire or terminate for any reason prior to exercise or that would otherwise have returned to the 2006 Plan’s share reserve under the terms of the 2006 Plan will be available for awards to be granted under the 2012 Plan.

During the three months ended March 31, 2014, the Company issued a total of 2,311,000 shares underlying stock options under the 2012 Plan with an aggregate grant-date fair value of $31,284 and a vesting period of generally four years from the time of grant.

In addition, on March 27, 2014, the Board of Directors of the Company approved the grants of 65,000 restricted share units (“RSUs”) to certain key management personnel under the 2012 Plan, effective as of March 31, 2014. The RSUs are generally scheduled to vest one-fourth on each of the first, second, third and fourth anniversaries of the grant date, subject to the terms of the 2012 Plan and applicable RSU award agreement, including the termination provisions. In the event of the participant’s termination of service for any reason, unvested RSUs are forfeited as of the date of such termination without any payment to the participant. The fair value of the RSUs at the time of grant was $1,829.

2006 Stock Option Plan — Effective May 31, 2006, the Board of Directors of the Company adopted the 2006 Stock Option Plan (the “2006 Plan”). The Company’s stock option plan permitted the granting of options to directors, employees, and certain independent contractors. The Compensation Committee of the Board of Directors generally had the authority to select individuals who were to receive options and to specify the terms and conditions of each option so granted, including the number of shares covered by the option, the exercise price, vesting provisions, and the overall option term. In January 2012, the 2006 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2006 Plan and any shares that are subject to an option that was previously granted under the 2006 Plan and that will expire or terminate for any reason prior to exercise will become again available for issuance under the 2012 Plan. All of the options issued pursuant to the 2006 Plan expire ten years from the date of grant.

Stock option activity under the Company’s plans is set forth below:

	Number of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at January 1, 2014		5,823,536		$	13.99	$	122,003
Options granted		2,311,000			32.14		1,756
Options exercised		(323,592	)		6.75		(8,462	)
Options forfeited/cancelled		(58,741	)		18.17		(865	)
Options outstanding at March 31, 2014		7,752,203		$	19.67	$	102,562
Options vested and exercisable at March 31, 2014		3,008,362		$	9.76	$	69,613
Options expected to vest		4,269,150		$	25.72	$	30,670

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line method over the service period (generally the vesting period). Additionally, the Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses a combination of historical data and other factors to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. There were no material changes with respect to the assumptions used in the Black-Scholes option valuation model during the three months ended March 31, 2014, as compared with the assumptions disclosed in Part II. Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Summary of restricted stock activity as of March 31, 2014, and changes during the three months then ended is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock outstanding at January 1, 2014		344,928		$	18.74
Restricted stock granted		2,289			36.57
Restricted stock vested		(3,520	)		14.67
Unvested restricted stock outstanding at March 31, 2014		343,697		$	18.90

As of March 31, 2014, total unrecognized compensation cost related to non-vested share-based compensation awards was $57,589. That cost is expected to be recognized over the next two years using the weighted average method.