Compensation Committee granted performance options to acquire up to an aggregate of 1,332,000 shares of the Company's common stock to certain officers and employees of the Company pursuant to the 2009 Plan. The performance stock options each have an exercise price of $8.32 per share, a contractual life of 6 years, and vested or will vest in three tranches of 25%, 35% and 40% in each of the three years ended December 31, 2012, 2013 and 2014, provided that the recipient has met the certain performance criteria, and the recipient continues to be an employee of, or service provider to, the Company or its subsidiaries at the time of the relevant vesting dates.

Share-based compensation arrangement by share-based payment award, description

20.	SHARE-BASED COMPENSATION

Stock Options

The Company has two stock option plans: the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2003 Stock Incentive Plan (the “2003 Plan”). The Company applies authoritative guidance issued by the Financial Accounting Standards Board regarding share-based payments in accounting for the 2009 Plan and the 2003 Plan, which requires that compensation for services that a corporation receives through share-based compensation plans to be based on the fair value of options on the date of grant.

(1) 2009 Stock Incentive Plan

On August 27, 2010, options to purchase 84,000 shares were granted to directors of the Company for their services provided for the period from August 1, 2010 through July 31, 2012, that vest in four equal amounts on each three-month anniversary of the grant date until all such shares are fully vested. The options have an exercise price of $7.25 and a contract life of 3 years. The fair value of the option award was estimated on the date of grant using the Black-Scholes option valuation model to be $164,516. The valuation was based on the assumptions noted in the following table.

Expected volatility	54	%
Expected dividends	0	%
Expected term (in years)	0.81
Risk-free rate	0.22	%

On July 29, 2011, the Compensation Committee granted performance options to acquire up to an aggregate of 1,332,000 shares of the Company’s common stock to certain officers and employees of the Company pursuant to the 2009 Plan. The performance stock options each have an exercise price of $8.32 per share, a contractual life of 6 years, and vested or will vest in three tranches of 25%, 35% and 40% in each of the three years ended December 31, 2012, 2013 and 2014, provided that the recipient has met the certain performance criteria, and the recipient continues to be an employee of, or service provider to, the Company or its subsidiaries at the time of the relevant vesting dates.

The fair value of the option award was estimated on the date of grant using the Black-Scholes option valuation model to be $6,643,504. The valuation was based on the assumptions noted in the following table.

Expected volatility	77	%
Expected dividends	0	%
Expected term (in years)	5.15
Risk-free rate	2.60	%

During the three months ended March 31, 2013 and 2012, there was $478,514 and $1,099,319 compensation cost related to 2009 Plan recognized in general and administrative expenses.

(2) 2003 Stock Incentive Plan

Effective May 7, 2003, the Company adopted and approved its 2003 Plan, which reserved 3,000,000 shares of common stock for issuance under the Plan. The Plan allows the Company to issue awards of incentive non-qualified stock options, stock appreciation rights, and stock bonuses to directors, officers, employees and consultants of the Company which may be subject to restrictions.

No stock appreciation rights have been issued, and therefore none have been recognized, under the 2003 Plan.

A summary of option activity under the 2009 and 2003 Plans as of March 31, 2013 and movement during the three months ended March 31, 2013 was as follows:

	Options			Weighted average grant date fair value		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual term
				US$		US$		US$
Outstanding as of January 1, 2013		1,054,000			4.85		8.27		—		4.40
Granted		—
Exercised		—
Forfeited or expired		(15,000	)		4.99		8.32				—
Outstanding as of March 31, 2013		1,039,000			4.85		8.27		—		4.15
Exercisable as of March 31, 2013		295,750			4.60		8.15		—		3.69

The intrinsic values of options as of March 31, 2013 and January 1, 2013 were zero since the per share market values of the Company’s common stock of $7.25 and $6.78, respectively, were lower than the exercise price per share of the options.

A summary of the status of the Company’s non-vested options as of March 31, 2013 and movements during the three months ended March 31, 2013 was as follows:

	Options			Weighted average grant date fair value
				US$
Non-vested as of January 1, 2013		754,500			4.99
Granted		—
Vested		—
Forfeited or expired		(11,250	)		4.99
Non-vested as of March 31, 2013		743,250			4.99

As of March 31, 2013, there was a total of $1,507,807 of unrecognized compensation cost related to non-vested share-based compensation granted under the 2003 Plan and 2009 Plan. The cost is expected to be recognized over 21 months. To the extent the actual forfeiture rate is different from the original estimate, actual share-based compensation cost related to these awards may be different from the expectation.