(8) Share-Based Compensation

The following table summarizes share-based compensation expense related to share-based awards recognized in 2013, 2012 and 2011:

	Years Ended December 31,
	2013		2012		2011
Share-based compensation expense included in the statement of operations:
Software and other	$	20	$	-	$	-
Professional services		91		90		45
Maintenance		44		40		186
Sales and marketing		1,243		1,805		1,460
Product research and development		498		451		36
General and administrative		2,749		3,400		2,181
Restructuring and other expenses		194		-		-
Share-based compensation expense, net of tax	$	4,839	$	5,786	$	3,908

The expense in restructuring and other expenses of $194 relates to the acceleration of certain stock options held by a former executive officer.

Share-Based Compensation Plans

We maintain three share-based employee compensation plans, including our employee stock purchase plan (ESPP), and one director option plan under which we grant restricted stock awards and options to acquire shares of our common stock to certain employees, non-employees, non-employee directors and to existing stock option holders in connection with the consolidation of option plans following an acquisition.

Our 2005 Equity Incentive Plan (EIP) provides for awards of common stock, non-statutory stock options, incentive stock options, stock unit and performance unit grants and stock appreciation rights to eligible participants. On June 18, 2013, an amendment was approved by our shareholders to increase the number of shares of common stock authorized for issuance under the 2005 EIP by 2,000,000 to 18,500,000 shares. This increase was preceded by another approval on June 2, 2011 to increase the number of shares of common stock authorized for issuance by 3,000,000 to 16,500,000 shares of our common stock. Under the terms of the 2005 EIP, incentive stock option grants are limited to 5.0 million shares. Also, under the EIP, new stock option grants have an exercise price equal to the fair market value of our common stock at the date of grant with limited exceptions. The majority of the options issued under the 2005 EIP vest over a three or four-year period. As of December 31, 2013, non-statutory stock options to purchase 8,898,290 shares of our common stock were outstanding under this plan.

Upon approval of the 2005 EIP, we stated that we did not plan to issue any more options under our other stock option plans. Our 1998 Director Stock Option Plan, for our non-employee directors, provided for the granting of options to purchase a maximum of 300,000 shares of our common stock. In addition, our Board of Directors adopted an equity compensation plan in connection with our acquisition of a company in 2003. As of December 31, 2013, non-statutory stock options to purchase 20,000 shares of our common stock were outstanding under these plans.

Stock Options

We use the Black-Scholes option pricing model to estimate the fair value of stock option awards on the date of grant utilizing the assumptions noted in the following table. We expense the cost of stock option awards on a straight-line basis over the vesting period. Expected volatilities are based on the historical volatility of our stock and other factors. We use historical data to estimate option exercises and employee terminations within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods during the contractual life of the option is based on the U.S. Treasury rates in effect at the grant date.

	Years Ended December 31,
	2013			2012			2011
Dividend yield		0			0	%		0	%
Expected volatility		65	%		65	%		100	%
Risk–free interest rate		0.3% - 1.0	%		0.3% - 0.8	%		0.6% - 1.8	%
Expected term (in years)		3.0			3.0			4.0
Weighted–average grant date fair value	$	1.99		$	3.51		$	3.37

The assumptions above are based on multiple factors, including the historical exercise patterns of employees in relatively homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercise patterns for these same homogeneous groups, and the volatility of our stock price. ASC Topic No. 718, Compensation-Stock Compensation, requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

At December 31, 2013, there was $10,137 of unrecognized compensation cost related to stock option share-based payments. We expect this compensation cost to be recognized over a weighted-average period of 2.5 years.

Stock option activity for the year ended December 31, 2013 was as follows:

						Weighted-Average
						Remaining
	Number			Weighted-		Contractual		Aggregate
	of			Average		Term		Intrinsic
	Options			Exercise Price		(In Years)		Value
Options outstanding, December 31, 2011		9,191,034		$	3.14		5.2	$	17,860
Options granted		4,455,000			5.19
Options exercised		(190,269	)		3.62			$	506
Options forfeited and expired		(1,283,313	)		5.60
Options outstanding, December 31, 2012		12,172,452		$	3.63		4.1	$	3,767
Options granted		1,120,000			3.19
Options exercised		(902,500	)		1.37			$	1,238
Options forfeited and expired		(3,471,662	)		4.37
Options outstanding, December 31, 2013		8,918,290		$	3.51		2.5	$	2,391

Options exercisable, December 31, 2013		6,185,165		$	3.06		1.8	$	2,391
Options exercisable, December 31, 2012		5,545,382		$	2.50		3.4	$	3,765
Options exercisable, December 31, 2011		4,215,920		$	2.78		4.6	$	10,381

We received cash proceeds of $1,236 from the exercise of stock options in 2013 and $688 in 2012.

The following table summarizes information about stock options outstanding at December 31, 2013:

Options Outstanding								Options Exercisable
				Weighted–
				average
				remaining		Weighted–				Weighted–
		Number of		contractual life		average		Number of		average
Range of exercise prices		shares		in years		exercise price		shares		exercise price
$	0.00 - $2.48		1,945,000		2.1	$	1.09		1,938,750	$	1.09
$	2.48 - $4.97		4,647,324		2.1		3.09		3,241,699		3.13
$	4.97 - $7.46		2,274,272		3.6		6.13		953,022		6.05
$	7.46 - $9.95		-		0.0		-		-		-
$	9.95 - $12.44		1,694		3.3		10.81		1,694		10.81
$	12.44 - $14.92		-		0.0		-		-		-
$	14.92 - $17.41		20,000		0.4		16.19		20,000		16.19
$	17.41 - $19.90		30,000		1.4		17.50		30,000		17.50
			8,918,290		2.5	$	3.51		6,185,165	$	3.06

Restricted Stock Awards

In 2013, we granted restricted stock awards to employees under the 2005 EIP. A restricted stock award is an award of shares of our Common Stock that is subject to time-based vesting during a specified period, which is generally three years. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the vesting of the awards. Participants have full voting and dividend rights with respect to shares of restricted stock.

We expense the cost of the restricted stock awards, which is determined to be the fair market value of the restricted stock awards at the date of grant, on a straight-line basis over the vesting period. For these purposes, the fair market value of the restricted stock award is determined based on the closing price of our Common Stock on the grant date.

The following table presents a summary of the activity for our restricted stock awards:

					Weighted-Average
					Remaining
	Number		Weighted-Average		Vesting
	of		Grant-date		Term
	Shares		Fair Value		(In Years)
Restricted stock outstanding, December 31, 2012		-	$	-		-
Restricted stock granted		2,100,000		2.47		-
Restricted stock vested		-		-		-
Restricted stock forfeited		-		-		-
Restricted stock outstanding, December 31, 2013		2,100,000	$	2.47		2.9

During 2013, we granted 2,100,000 shares of restricted stock at a weighted-average grant date fair value of $2.47 per share that vest over a 3 year term. During 2012, we granted 505,038 shares of restricted stock at a weighted-average grant date fair value of $3.62 per share of which all were vested upon issuance in 2012.

Other information pertaining to option and vested restricted stock activity was as follows:

	Years Ended December 31,
	2013		2012		2011
Total fair value of restricted stock awards vested	$	-	$	1,591	$	-

Employee Stock Purchase Plan

We maintain an ESPP that allows eligible employees to purchase shares of our common stock through payroll deductions of up to 10% of eligible compensation on an after-tax basis. The eligible employees receive a 5% discount from the market price at the end of each calendar quarter. There is no stock-based compensation expense associated with our ESPP.

Employees contributed $253, $353, and $294, during the years ended December 31, 2013, 2012, and 2011, respectively, to purchase shares of our common stock under the employee stock purchase plan.