Note 12 – Stock Option Plans

In October, 1995, the Company’s Board of Directors and stockholders approved the 1995 Long Term Incentive Plan (the “1995 Plan”). The 1995 Plan provided for grants of “incentive stock options” or nonqualified stock options, and awards of restricted stock, to executives and key employees, including officers and employee Directors. The 1995 Plan is administered by the Compensation Committee of the Board of Directors, which determines the optionees and the terms of the options granted under the 1995 Plan, including the exercise price, number of shares subject to the option and the exercisability thereof, as well as the recipients and number of shares awarded for restricted stock awards; provided, however, that no employee may receive stock options or restricted stock awards which would result, separately or in combination, in the acquisition of more than 100 shares of Common Stock of the Company under the 1995 Plan. The exercise price of incentive stock options granted under the 1995 Plan must be equal to at least the fair market value of the Common Stock on the date of grant. With respect to any optionee who owns stock representing more than 10% of the voting power of all classes of the Company’s outstanding capital stock, the exercise price of any incentive stock option must be equal to at least 110% of the fair market value of the Common Stock on the date of grant, and the term of the option may not exceed five years. The term of all other incentive stock options granted under the 1995 Plan may not exceed ten years. The aggregate fair market value of Common Stock (determined as of the date of the option grant) for which an incentive stock option may for the first time become exercisable in any calendar year may not exceed $100. The exercise price for nonqualified stock options is established by the Compensation Committee, and may be more or less than the fair market value of the Common Stock on the date of grant.

Stockholders have previously approved a total of 1,150 shares of common stock for issuance under the 1995 Plan, as amended to date. The 1995 Plan expired by its terms on November 30, 2005.

In May, 1998, the stockholders of the Company approved the Amended and Restated 1996 Director Option Plan (the “Amended 1996 Plan”). Under the Amended 1996 Plan, Directors who were not then currently employed by the Company or any subsidiary of the Company and had not been so employed within the preceding six months were eligible to receive options from time to time to purchase the number of shares of Common Stock determined by the Board in its discretion; provided, however, that no Director was permitted to receive options to purchase more than 5 shares of Common Stock in any one calendar year. The exercise price for such shares was the fair market value thereof on the date of grant, and the options vested as determined in each case by the Board of Directors. Options granted under the Amended 1996 Plan must be exercised within 10 years from the date of grant. A maximum of 200 shares of Common Stock are subject to issuance under the Amended 1996 Plan, as amended. The plan is administered by the Board of Directors. The Amended 1996 Plan expired by its terms on January 2, 2006.

In May 2005, the stockholders of the Company approved the 2005 Employee Equity Incentive Plan (the “Employee Plan”), which initially authorized the Compensation Committee of the Board of Directors (the “Committee”) to grant a maximum of 500 shares of equity based and other performance based awards to executive officers and other key employees of the Company. In May 2007, the stockholders of the Company approved an amendment to the Employee Plan to increase the maximum number of equity based and other performance awards to 1,100. In May 2010, the stockholders of the Company approved an amendment to the Employee Plan to increase the maximum number of equity based and other performance awards to 1,600. The Committee determines the recipients and the terms of the awards granted under the Employee Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

In May 2005, the stockholders of the Company approved the 2005 Director Equity Incentive Plan (the “Director Plan”). The Director Plan authorizes the Board of Directors (the “Board”) to grant a maximum of 200 shares of equity based and other performance based awards to non employee directors of the Company. In May 2010, the stockholders of the Company approved an amendment to the Director Plan to increase the maximum number of equity based and other performance awards to 400. The Board determines the recipients and the terms of the awards granted under the Director Plan, including the type of awards, exercise price, number of shares subject to the award and the exercisability thereof.

The following tables summarize information about stock options outstanding for the years ended December 31, 2013 and 2012:

	1995 Plan (#)		Weighted- Average Exercise Price ($)		1996 Plan (#)		Weighted- Average Exercise Price ($)		2005 Employee Plan (#)		Weighted- Average Exercise Price ($)		2005 Director Plan (#)		Weighted- Average Exercise Price ($)
Shares under option:
Options outstanding at January 1, 2012		61		3.84		80		3.10		1,001		1.86		277		1.51
Granted		-		-		-		-		288		1.05		52		1.05
Exercised		-		-		-		-		-		-		-		-
Forfeited		-		-		(50)		3.16		(64)		1.88		(80)		1.55
Options outstanding at December 31, 2012		61		3.84		30		3.00		1,225		1.67		249		1.40
Granted		-		-		-		-		300		1.00		50		1.00
Exercised		-		-		-		-		(1)		0.76		-		-
Forfeited		-		-		(10)		2.05		(42)		0.99		-		-
Options outstanding at December 31, 2013		61		3.84		20		3.48		1,482		1.56		299		1.34
Options exercisable at December 31, 2013		61		3.84		20		3.48		926		1.81		249		1.40
Weighted-average fair value of options granted during:
2012		-				-			$	0.72			$	0.72
2013		-				-			$	0.67			$	0.67

Total options available for grant were 219 and 501 at December 31, 2013 and December 31, 2012, respectively.

	Options Outstanding							Options Exercisable
Range of Exercise Prices ($)		Number of Options Outstanding at 12/31/13		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price ($)		Number Exercisable at 12/31/13		Weighted- Average Exercise Price ($)

1995 Plan: 3.84			61		1.2		3.84		61		3.84

1996 Plan: 2.05 to 3.85			20		0.9		3.48		20		3.48

2005 Employee Plan: 0.76 to 3.84			1,482		5.8		1.56		926		1.81

2005 Director Plan: 0.76 to 1.98			299		6.5		1.34		249		1.40

The exercisable options under each of the Plans at December 31, 2013 had an intrinsic value of $0.

In August 2012, the Company issued a warrant to purchase 100 shares of common stock of the Company to Adaptive Micro-Ware, Inc., an Indiana corporation (“AMW”). The warrant was granted as partial consideration in connection with a commercial licensing and manufacturing agreement between the Company and AMW. The warrant is exercisable at $1.09 per share, and the warrant vested one-third (1/3) on May 23, 2013 and vests another one-third (1/3) on each of May 23, 2014 and 2015. The fair value of the warrant was not deemed to be material.