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 39,580 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, 2012, 2011 and 2010, options to purchase 61,000 shares, 35,000 shares and 19,000 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:



	2012				2011				2010
	Shares		Exercise Price*		Shares		Exercise Price*		Shares		Exercise Price*
Options outstanding at beginning of year	377,480		$	19.27	360,130		$	18.29	345,480		$	18.73
Granted	61,000		32.76		35,000		26.45		19,000		24.69
Exercised	(99,650	)	19.26		(15,650	)	12.03		(4,350	)	12.98
Canceled	(8,100	)	17.20		(2,000	)	24.69		—		—
Options outstanding at end of year	330,730		21.82		377,480		19.27		360,130		18.29
Options exercisable at end of year	192,830		$	19.48	243,180		$	19.32	209,530		$	18.86
Options available for grant at end of year	109,600				162,500				195,500

*Weighted Averages

Options outstanding and exercisable at December 31, 2012 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	104,480	4.85	$	12.39	69,480	$	12.87
$19.79 - $26.45	226,250	6.97	$	26.17	123,350	$	23.21
Total	330,730				192,830

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2012, 2011, and 2010 were $14.76, $12.50 and $11.40, respectively. As of December 31, 2012, there was $1,048,000 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:



	2012				2011				2010
	Shares		Exercise Price*		Shares		Exercise Price*		Shares		Exercise Price*
Options outstanding at beginning of year	112,800		$	18.62	102,400		$	15.62	186,000		$	14.57
Granted	—		—		30,000		26.45		—		—
Exercised	(23,100	)	13.62		(14,600	)	11.45		(78,600	)	12.52
Cancelled	—		—		(5,000	)	25.18		(5,000	)	25.18
Options outstanding at end of year	89,700		19.91		112,800		18.62		102,400		15.62
Options exercisable at end of year	38,100		$	21.91	37,400		$	19.57	30,300		$	20.79
Options available for grant at end of year	322,750				320,500				364,000

*Weighted Averages

Options outstanding and exercisable as of December 31, 2012 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	37,200	7.00	$	11.45	9,600	$	11.45
$13.96 - $19.79	—	—	—		—	—
$25.02 - $26.45	52,500	7.24	$	25.90	28,500	$	25.43
Total	89,700				38,100

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2011 were $12.50. There were no options granted in 2012 or 2010. As of December 31, 2012, there was $273,000 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 2012, 2011 and 2010 there were 23,100, 14,600, and 78,600 non-qualified options, respectively, were exercised, $315,000, $167,000, and $984,000 of cash receipts were received, respectively, and tax deductions of $284,000, $178,000, and $796,000 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:



	2012				2011				2010
	Shares		Exercise Price*		Shares		Exercise Price*		Shares		Exercise Price*
Options outstanding at beginning of year	19,750		$	22.96	9,000		$	15.86	8,000		$	11.45
Granted	—		—		13,500		26.08		3,000		24.69
Exercised	(6,125	)	21.13		(2,750	)	15.06		(2,000	)	11.45
Cancelled	(2,250	)	21.45		—		—		—		—
Options outstanding at end of year	11,375		24.24		19,750		22.96		9,000		15.86

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. The weighted-average remaining contractual life in years for 2012, 2011, and 2010 were 2.65, 3.48 and 3.33, respectively. As of December 31, 2012, there was $98,000 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.