STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE B—STOCK BASED COMPENSATION

Stock Options

Compensation expense related to stock options and restricted stock awards recognized in operating results (general and administrative expenses) was approximately $0.4 and $0.4 million for the three months ended September 30, 2011 and September 30, 2010, respectively, and approximately $1.1 and $1.9 million for the nine months ending September 30, 2011 and September 30, 2010 respectively.

The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model:

	Nine months ended September 30,
	2011		2010
Dividend yield	0	%	0	%
Expected volatility	74.5	%	77.8	%
Risk-free interest rate	1.2	%	1.6	%
Expected life	3.5 years		3.5 years

			Weighted		Weighted
			Average		Average	Aggregate
	Number		Exercise		Remaining	Intrinsic Value
	of Options		Price		Term (in years)	(in thousands)
Outstanding at December 31, 2010	3,541,703		$	4.80
Granted	143,000		3.92
Exercised	(155,935	)	0.79
Forfeited or expired	(380,199	)	12.48
Outstanding at September 30, 2011	3,148,569		$	4.03	2.46	$	2,143
Exercisable at September 30, 2011	1,817,399		$	5.60	2.01	$	1,216

The total intrinsic value of options exercised during the nine months ended September 30, 2011 and 2010 were approximately $487,000 and $495,000 respectively.

As of September 30, 2011 total unrecognized stock-based compensation expense related to non-vested stock options was approximately $1.0 million, which we expect to recognize over a weighted average period of 1.6 years.

Restricted Shares

Restricted share activity as of September 30, 2011 was as follows:

	Shares		Weighted Average Fair Value
Outstanding at December 31, 2010	28,373		$	11.15
Granted	662,562		4.22
Vested	(36,248	)	9.67
Forfeited	(38,558	)	4.22
Outstanding at September 30, 2011	616,129		$	4.22

Restricted stock awards for executive officers and employees vest ratably over three years. Fair value of our restricted shares is based on our closing stock price on the date of grant.  As of September 30, 2011, total unrecognized stock-based compensation expense related to non-vested restricted shares was $2.3 million, which is expected to be recognized over a weighted average period of approximately 2.4 years.