(9) Performance Shares, Stock Options, Other Forms of Compensation, and Common Share Repurchases

Stock-based Compensation

Effective May 5, 2015, we adopted a 2015 Equity Plan (the “2015 Plan”), pursuant to which we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. We also maintain an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). Together, the 2015 Plan and 2005 Plan are referred to herein as the “Plans.” Under the 2015 Plan, an aggregate of 103,800 shares of our Company’s common stock remained unreserved and available for issuance at October 2, 2016. The 2005 Plan prohibits the granting of incentives after May 12, 2015, the tenth anniversary of the date such Plan was approved by the Company’s shareholders. Nonetheless, the 2005 Stock Incentive Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated.

We recognized stock-based compensation expense in our consolidated statements of operations for the three and nine months ended October 2, 2016 and September 27, 2015, respectively, as follows:

		Three Months Ended				Nine Months Ended
			October 2,		September 27,		October 2,		September 27,
(in thousands)			2016		2015		2016		2015
Performance Stock Units		$	---	$	(24)	$	---	$	12
Stock Options⁽¹⁾⁽²⁾			157		(15)		209		241
Restricted Stock and
	Restricted Stock Units		15		15		45		45
		$	172	$	(24)	$	254	$	298

⁽¹⁾The three and nine months ended September 27, 2015 included the recapture of previously recorded stock-based compensation of approximately $105,000 due to employee departures.
⁽²⁾The nine months ended October 2, 2016 included the recapture of previously recorded stock-based compensation of approximately $126,000 due to the departure of our previous CFO.

Stock Options

Below is detail related to recent stock option activity associated with certain key employees:
		Option Details
Named Executive	Title*	Date	Event	Number	Term	Vesting period
					(in years)

Edward H. Rensi	CEO	1/15/2015	Grant⁽¹⁾	75,000	5	Annually over three years
Edward H. Rensi	Director	7/11/2015	Forfeiture⁽¹⁾	(20,000)
Brett D. Heffes	Director	7/13/2015	Forfeiture⁽¹⁾	(20,000)
David J. Mastrocola	Director	7/15/2015	Forfeiture⁽¹⁾	(20,000)
Abelardo Ruiz	COO	8/31/2015	Grant	71,324	5	Monthly over four years
Adam J. Wright	CEO	1/1/2016	Grant	50,000	10	Monthly over two years
Richard A. Pawlowski	CFO	1/15/2016	Grant	6,000	1.21	Three variable installments
Alfredo Martel	CMO	2/12/2016	Grant	35,000	5	Monthly over four years
Richard A. Pawlowski	CFO	4/11/2016	Forfeiture⁽¹⁾	(78,000)
Dexter Newman	CFO	4/11/2016	Grant	70,000	10	Monthly over four years
Ananda Gala	Director	5/3/2016	Grant	20,000	10	Monthly over five years
Bryan Wolff	Director	5/3/2016	Grant	20,000	10	Monthly over five years
Edward H. Rensi	CEO	6/18/2016	Forfeiture⁽¹⁾	(75,000)
Edward H. Rensi	Director	7/11/2016	Expiration⁽¹⁾	(25,000)

* Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), Chief Marketing Officer (CMO)
See footnote 18, Subsequent Events, for additional information
⁽¹⁾These stock option grants were part of the 2005 Plan rather than the 2015 Plan.

The compensation expense for stock option grants is recognized under general and administrative expense in our consolidated statements of operations through the applicable service period.

Other options granted to certain non-officer employees vest in equal annual installments over a period of four years and expire either five or ten years from the grant date. Compensation expense equal to the grant date fair value is generally recognized for these awards over the vesting period.

Options granted to certain non-employees in exchange for future services either vest in monthly installments over a period of approximately two years or are granted monthly and vest immediately, and expire five years from the grant date. Expense equal to the current fair value is recognized over the vesting period, with the value being marked to market in each accounting period for any unvested portions of the awards.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation method with the assumptions noted in the table below. Due to a lack of recent historical share option exercise experience, the Company uses a simplified method for estimating the expected life, as outlined in Accounting Standards Codification 718, calculated using the following formula: (vesting term + original contract term)/2. Expected volatilities are based on the movement of the Company’s common stock price over the most recent historical period equivalent to the expected life of the option. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. maturities over the expected life at the time of grant.

Information regarding our Company’s stock options is summarized below:

(number of options in thousands)			Number of Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life in Years
(number of options in thousands)			Number of Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life in Years
Options outstanding at January 3, 2016			507		$	16.66			5.3
	Granted		53			17.66
	Forfeited		(53)			32.02
Options outstanding at April 3, 2016			507		$	13.95			5.2
	Granted		206			5.60
	Forfeited		(3)			28.53
	Expired		(26)			32.05
Options outstanding at July 3, 2016			684		$	10.65			5.9
	Granted		46			5.82
	Exercised		(6)			5.90
	Forfeited		(78)			12.17
	Canceled or expired		(10)			31.05
Outstanding at October 2, 2016			636		$	10.00			6.3

Options exercisable at October 2, 2016			242		$	11.40			4.5

Weighted-average values and assumptions for valuing grants made:

		Nine Months Ended October 2, 2016			Fiscal 2015
Weighted average fair value of options granted		$	2.16		$	4.90
Expected life (in years)			5.7			3.3
Expected stock volatility			41.3	%		51.2	%
Risk-free interest rate			1.3	%		1.9	%