9.STOCK-BASED COMPENSATION

The board of directors of the Company adopted an Employees’ Equity Incentive Plan (the “EEIP”) in April 1994. The EEIP expired in April 2004. All outstanding options from the EEIP have been issued and the Company no longer administers the plan. Stockholders of the Company approved a new equity incentive plan (as amended, the “2005 Plan”) at the 2005 annual meeting of stockholders. The 2005 Plan provides for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, all as defined in the 2005 Plan. The 2005 Plan provides for the issuance of up to 2,000,000 shares of common stock to eligible individuals through the various forms of permitted awards. The Company may not issue stock options at an exercise price lower than fair market value at the date of grant. All stock options must have an exercise period not to exceed ten years. Through December 31, 2014, the Company has granted, under the 2005 Plan, shares of incentive stock option awards (for which the exercise price was not less than the fair market value at the date of grant) and non-qualified options. Options granted to date have six-month, one-year, three-year or four-year vesting periods. Through December 31, 2014, the Company has issued all outstanding options at market value as of the date of the grant. Any committee as delegated by the board of directors has the power and discretion to, among other things, prescribe the terms and conditions for the exercise of, or modification of, any outstanding awards in the event of merger, acquisition or any other form of acquisition other than a reorganization of the Company under the United States Bankruptcy Code or liquidation of the Company. The 2005 Plan also allows limited transferability of any stock options to legal entities that are 100% owned or controlled by the optionee or to the optionee’s family trust.

Stock Options

Activity in the Company’s stock-based compensation plan for employee stock options was as follows:




Options	Option Shares		Weighted -Average Exercise Price	Weighted -Average Remaining Contractual Term	Options Exercisable		Weighted-Average Exercise Price
Outstanding at January 1, 2013	919,848	$	2.94	1.58	895,348	$	2.96
Granted	0		0.00
Exercised*	(849,210)		2.93
Cancelled or forfeited	0		0.00
Outstanding at December 31, 2013	70,638	$	3.03	5.40	56,638	$	3.21
Granted	1,365,000		5.05
Exercised**	(3,296)		0.91
Cancelled or forfeited	(2,500)		9.00
Outstanding at December 31, 2014	1,429,842	$	4.95	9.74	406,092	$	4.71

*849,210 options were exercised and 249,647 shares were issued through net share settlement in 2013, as a result there was no cash consideration or intrinsic value for the options.

**3,296 options were exercised for cash consideration of $3,000 in 2014. The intrinsic value of the options exercised was $19,000.

The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2014:

Dollar amounts in thousands



Exercise Price:	Options Outstanding	Options Exercisable		Intrinsic Value of Options Outstanding		Intrinsic Value of Options Exercisable	Weighted-Average Life of Options Outstanding (1)	Weighted-Average Life of Options Exercisable (1)
$0.91	8,230	8,230	$	34	$	34	3.9	3.9
$0.93	11,612	11,612		48		48	3.9	3.9
$2.30	35,000	35,000		96		96	5.4	5.4
$5.05	1,365,000	341,250		0		0	10.0	10.0
$9.00	10,000	10,000		0		0	2.5	2.5
	1,429,842	406,092	$	139	$	139	9.7	9.1
(1) In years

The aggregate intrinsic value represents the difference between the Company’s closing stock price of $5.05 per share as of December 31, 2014 and the exercise price multiplied by the number of options outstanding or exercisable as of that date.

Activity in the Company’s stock-based compensation plan for non-vested employee stock options was as follows:


Nonvested Options	Options		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2013	24,500	$	1.28
Granted	0		0.00
Vested	(10,500)		1.28
Forfeited	0		0.00
Nonvested at December 31, 2013	14,000	$	1.19
Granted	1,365,000		2.62
Vested	(355,250)		2.56
Forfeited	0		0.00
Nonvested at December 31, 2014	1,023,750	$	2.62

The total fair value for options vested for each of the years ended December 31, 2014 and 2013 was less than $0.1 million.

There were 75,000 options issued to independent directors of the Company during 2014. As of December 31, 2014, there were 130,000 options outstanding to independent directors of the Company with a weighted-average exercise price of $5.84. During 2014, independent directors did not exercise any options.

The weighted-average fair value of options granted are estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


Assumptions for 2013 Awards
Weighted-average risk-free interest rate	1.31%
Weighted-average expected life	5.4 yrs
Weighted-average expected volatility	63.6%
Weighted-average expect dividends	$0


Assumptions for 2014 Awards
Weighted-average risk-free interest rate	1.68%
Weighted-average expected life	4.4 yrs
Weighted-average expected volatility	62.3%
Weighted-average expect dividends	$0

The Company recorded stock-based compensation expense of $1.0 million for the year ended December 31, 2014 and less than $0.1 million for the year ended December 31, 2013. This amount is included in general and administrative expenses.

At December 31, 2014, there was $2.7 million of total unrecognized compensation expense related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.0 years.

Cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified as financing cash flows on the Company’s consolidated statement of cash flows. No excess tax benefits were recorded for the years ended December 31, 2014 and 2013.