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Stock and Stock-based Compensation

Employee Stock Purchase Plan

The Company issued 14,252 and 15,372 shares of Company stock during 2011 and 2010, respectively, in connection with an Employee Stock Purchase Plan that commenced in April 2008.

Restricted Stock Units

During 2011 and 2010, the Board of Directors approved the grants of approximately 215,000 and 230,000 restricted stock units ("RSU"s) to members of management and key employees as part of the 2007 Employee Stock Incentive Plan. In May 2010, the stockholders of the Company approved amendments to the 2007 Employee Stock Incentive Plan to increase the number of shares available for issuance under the plan from 300,000 shares to 800,000 shares of stock. The number of RSUs awarded is generally subject to the substantial achievement of budgeted performance and other individual metrics in the year granted. The RSUs do not have voting rights of the common stock, and the shares of common stock underlying the RSUs are not considered issued and outstanding until actually vested and issued. In addition, the awards convert to common stock on a one to one basis in 25% increments over four years from the grant date subject to a continuing employment obligation.

The following table summarizes the activity for unvested restricted stock units for the years ended December 31, 2011 and 2010:


	Units			Weighted Average Fair Value Per RSU
Unvested restricted stock units at December 31, 2009		132,915		$	2.41
Awarded		123,760		$	2.26
Vested		(36,718	)	$	2.51
Forfeited		(18,314	)	$	2.36

Unvested restricted stock units at December 31, 2010		201,643		$	2.41
Awarded		208,738		$	2.91
Vested		(61,292	)	$	2.62
Forfeited		(28,025	)	$	2.19

Unvested restricted stock units at December 31, 2011		321,064		$	2.71

Compensation expense of approximately $260,000 and $176,000 was recorded in the years ended December 31, 2011 and 2010, respectively, to reflect the fair value of the original RSU's granted or anticipated to be granted less forfeitures, amortized over the portion of the vesting period occurring during the period. The fair value of the RSUs was based on the closing price of our common stock as reported on the NASDAQ Stock Market ("NASDAQ") on the grant date. Based upon the fair value on the grant date of the number of shares awarded or expected to be awarded, it is anticipated that approximately $600,000 of additional compensation cost will be recognized in future periods through 2015. The weighted average period over which this additional compensation cost will be expensed is 2.6 years.

During February 2012, the Board of Directors approved the grants of approximately 285,000 RSUs in conjunction with the Plan, of which, approximately 227,000 units are subject to 2012 fiscal performance measures.

Stock Options

The Company recognizes compensation expense related to stock options in accordance with the Financial Accounting Standards Board ("FASB") standard regarding share-based payments, and as such, has measured the share-based compensation expense for stock options granted during the year ended December 31, 2008 based upon the estimated fair value of the award on the date of grant and recognizes the compensation expense over the award's requisite service period. The weighted average fair values were calculated using the Black Scholes-Merton option pricing model. There were no options issued in 2011 or 2010.

Details of stock option activity during the years ended December 31, 2011 and 2010 follows:


	2011			2011 Weighted Average Exercise Price		2010			2010 Weighted Average Exercise Price
Outstanding at beginning of year		61,285		$	4.29		274,007		$	8.47
Options granted		—			—		—			—
Options exercised		—			—		—			—
Options forfeited		(5,430	)		4.09		(6,502	)		4.09
Options expired		—			—		(206,220	)		9.75

Outstanding at end of year		55,855			4.31		61,285			4.29

Exercisable at end of year		48,611		$	4.34		44,083		$	4.37

A summary of outstanding stock options as of December 31, 2011 follows:


Number of Options		Expires	Remaining Contractual Life (Years)		Weighted Average Exercise Price		Intrinsic Value
	26,880	2012		0.1 years	$	4.55	$	—
	28,975	2013		1.1		4.09		—

	55,855				$	4.31

Compensation expense of approximately $16,000 was recorded in the years ended December 31, 2011 and 2010, respectively, which is included in selling and administrative expenses in the consolidated statements of operations. As of December 31, 2011, there was approximately $17,000 of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted average period of 1.1 years.

Board of Directors Compensation

Directors who are not employees of the Company and who do not have a compensatory agreement providing for service as a director of the Company receive a retainer fee payable quarterly. Eligible directors may elect to defer 50% to 100% of their retainer fee, which may be used to acquire common stock of the Company at the fair market value on the date the retainer fee would otherwise be paid, acquire stock units equivalent to the fair market value of the Company's common stock on the date the retainer fee would otherwise be paid, or be paid in cash. During the years ended December 31, 2011 and 2010, directors of the Company elected to defer retainer fees to acquire approximately 8,400 and 10,800, respectively, stock units. Compensation expense of approximately $27,000 was recorded in each of the year ended December 31, 2011 and 2010, which is included in general and administrative expenses in the consolidated statements of operations.