10. 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. The EEIP continues to be administered for previously issued and outstanding options. Stockholders of the Company approved a new equity incentive plan (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 2005 Plan limits the number of options that can be awarded to an eligible individual to 200,000 per year. Stock options may not be issued at an option 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, 2011, the Company has granted, under the EEIP and the 2005 Plan, shares of restricted common stock, incentive stock option awards (for which the option price was not less than the fair market value at the date of grant) and non-statutory options (which may be granted at any option price (as permitted under the EEIP)). Options granted to date have six-month, one-year, two-year or four-year vesting periods. Through December 31, 2011, all outstanding options have been issued at market value as of the date of the grant. The Company's Incentive Plan Committee or, in the case of the 2005 Plan, any other 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. Both plans also allow limited transferability of any non-statutory stock options to legal entities that are 100% owned or controlled by the optionee or to the optionee's family trust.

Stock Options

As of December 31, 2011, there were 1,164,848 options outstanding to employees of the Company, of which 849,210 options were issued under the EEIP and 315,638 options were issued under the 2005 Plan.

No options were issued in 2011. A total of 50,000 options were granted to employees under the 2005 Plan in 2010, although 10,000 of these options were subsequently forfeited before year end. The weighted-average fair value of options granted in 2010 was $1.48. The weighted-average fair value of options granted under the 2005 Plan are estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


		2011
Weighted-average risk-free interest		2.39	%
Weighted-average expected life		5.39	yrs
Weighted-average expected volatility		65.7	%
Weighted-average expect dividends	$	0

Activity in the Company's stock-based compensation plans for employee stock options are as follows:


				Weighted -			Weighted-
	Option			Average	Options		Average
	Shares			Exercise	Exercisable		Exercise Price
				Price
Outstanding at January 1, 2010	1,212,842		$	2.63	1,183,092	$	2.47
Granted	50,000			2.30
Exercised	(46,881	)		1.09
Cancelled or forfeited	(40,000	)		7.33
Outstanding at December 31,	1,175,961		$	2.53	1,125,961	$	2.51
2010
Granted	0			0.00
Exercised	(11,113	)		0.91
Cancelled or forfeited	0			0.00
Outstanding at December 31,	1,164,848		$	2.54	1,128,848	$	2.54
2011

The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2011:

Dollar amounts in thousands


								Weighted-		Weighted-
					Intrinsic		Intrinsic	Average Life Average Life
		Options	Options		Value of		Value of	of Options		of Options
	Exercise Price:	Outstanding	Exercisable		Options		Options	Outstanding		Exercisable
					Outstanding		Exercisable	(1	)	(1	)

$	0.91	11,526	11,526	$	19	$	19	6.9		6.9
$	0.93	11,612	11,612	$	19	$	19	6.9		6.9
$	1.00	240,000	240,000	$	367	$	367	6.9		6.9
$	2.30	40,000	4,000	$	9	$	1	8.4		8.4
$	2.93	849,210	849,210	$	0	$	0	2.2		2.2
$	9.00	12,500	12,500	$	0	$	0	5.5		5.5
		1,164,848	1,128,848	$	414	$	405	3.5		3.4

(1) In years

The aggregate intrinsic value represents the difference between the Company's closing stock price of $2.53 per share as of December 31, 2011 and the exercise price multiplied by the number of options outstanding or exercisable as of that date.

No options were issued to independent directors of the Company during 2011 or 2010. As of December 31, 2011, there were 35,752 options outstanding to independent directors of the Company with a weighted-average exercise price of $6.57. During 2010, 5,000 shares were exercised by independent directors.

For the years ended December 31, 2011 and 2010, the Company recorded less than $0.1 million for stock-based compensation expense. This amount is included in general and administrative expenses.

At December 31, 2011, there was less than $0.1 million of total unrecognized compensation expense related to unvested stock options remaining to be recognized through 2014.

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, 2011 and 2010.

Restricted Stock

In 2007, the Company issued 200,000 shares of restricted common stock with a fair value of $9.00 per share to each of its Co Chief Executive Officers. The restricted stock vested ratably over a four-year period. Of the 400,000 shares issued, 160,000 shares and 120,000 shares vested during the years ended December 31, 2011 and 2010, respectively. As of December 31, 2011, there were no unvested shares remaining.

For the years ended December 31, 2011 and 2010, compensation expense related to restricted stock awards totaled $0.2 million and $0.5 million, respectively.

The impact of the amortization of all the Company's stock based compensation awards (pre-tax) to both basic and diluted earnings per share was $0.01 and $0.02 for the years ended December 31, 2011 and 2010, respectively.