STOCK OPTIONS

Incentive Options

On April 28, 1994, the stockholders approved the 1994 Incentive Stock Option Plan (“1994 ISO Plan”) for key employees. Each option becomes vested and exercisable for up to 20% of the total optioned shares each year after grant. Under the terms of this plan, the exercise price of the shares subject to each option granted would not be less than the fair market value of the common stock at the date the option is granted.

There are 58,030 shares outstanding under this option plan. No further option grants can be made under this plan.

On May 3, 2005, the stockholders of the Company approved the 2005 Incentive Stock Option Plan (“2005 ISO Plan”) and the Company reserved 500,000 shares of common stock for options to be issued under the 2005 ISO Plan . During the years ended December 31, 2011, 2010 and 2009, options to purchase 35,000 shares, 19,000 shares and 99,000 shares, respectively, were granted under this plan. Each option becomes vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Incentive Stock Option Plans for the periods indicated:



	2011				2010				2009
	Shares		Exercise Price*		Shares		Exercise Price*		Shares		Exercise Price*
Options outstanding at beginning of year	360,130		$	18.29	345,480		$	18.73	253,980		$	20.44
Granted	35,000		26.45		19,000		24.69		99,000		11.45
Exercised	(15,650	)	12.03		(4,350	)	12.98		—		—
Cancelled	(2,000	)	24.69		—		—		(7,500	)	20.04
Options outstanding at end of year	377,480		19.27		360,130		18.29		345,480		18.73
Options exercisable at end of year	243,180		$	19.32	209,530		$	18.86	156,780		$	18.74
Options available for grant at end of year	162,500				195,500				214,500

*Weighted Averages

Options outstanding and exercisable at December 31, 2011 were as follows:



Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining Contractual Life (yrs)*	Exercise Price*		Shares	Exercise Price*
Range of Exercise Price
$11.45 - $17.85	137,480	5.93	$	12.27	78,980	$	12.87
$19.79 - $26.45	240,000	6.35	$	23.29	164,200	$	22.42
Total	377,480				243,180

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2011, 2010, and 2009 were $12.50, $11.40 and $5.08, respectively. As of December 31, 2011, there was $816,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

Non-qualified Options

On May 7, 2009, the stockholders of the Company approved the 2009 Equity Incentive Plan and the Company reserved 400,000 shares of common stock for this plan. Options become vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Non-Qualified Stock Option Plans for the periods indicated:



	2011				2010				2009
	Shares		Exercise Price*		Shares		Exercise Price*		Shares		Exercise Price*
Options outstanding at beginning of year	102,400		$	15.62	186,000		$	14.57	226,000		$	12.62
Granted	30,000		26.45		—		—		85,000		11.45
Exercised	(14,600	)	11.45		(78,600	)	12.52		(125,000	)	8.94
Cancelled	(5,000	)	25.18		(5,000	)	25.18		—		—
Options outstanding at end of year	112,800		18.62		102,400		15.62		186,000		14.57
Options exercisable at end of year	37,400		$	19.57	30,300		$	20.79	79,000		$	15.17
Options available for grant at end of year	320,500				364,000				367,000

*Weighted Averages

Options outstanding and exercisable as of December 31, 2011 were as follows:



Non-Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining Contractual Life(yrs)*	Exercise Price*		Shares	Exercise Price*
Range of Exercise Price
$11.45 - $12.10	54,300	8.00	$	11.45	12,900	$	11.45
$13.96 - $19.79	6,000	4.00	19.79		6,000	19.79
$25.02 - $26.45	52,500	8.24	$	25.90	18,500	$	25.16
Total	112,800				37,400

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2011 and 2009 were $12.50 and $5.08, respectively. No options were granted in 2010. There were 30,000 options granted in 2011. As of December 31, 2011, there was $478,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

During 2011, 2010 and 2009, 14,600, 78,600, and 125,000 non-qualified options, respectively, were exercised, $167,000, $984,000, and $1,117,000 of cash receipts were received, respectively, and tax deductions of $178,000, $796,000, and $289,000 were realized, respectively, for the tax deductions from option exercises.

Restricted Stock Units

Following is a summary of activity in the Restricted Stock Units for the periods indicated:



	Shares		Price		Weighted-average remaining contractual term (in years)
Options outstanding at beginning of year	9,000		$	15.86
Granted	13,500		26.08		—
Vested	(2,750	)	15.06		—
Forfeited or Cancelled	—		—		—
Options outstanding at end of year	19,750		$	22.96	3.48

Restricted stock units vest 25% after one year following the award date and for an additional 25% of total awarded shares each succeeding year until fully vested. As of December 31, 2011, there was $240,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of four years.