On August 14, 2003, the shareholders approved and ratified the Company’s 2003 Stock Option Plan (the 2003 Plan) authorizing the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock. On June 7, 2010, the shareholders approved and ratified an amendment and restatement of the Plan. The amendment and restatement made two substantive changes: (1) the inclusion of Directors as participants in the Plan, and (2) the ability to grant restricted stock to Directors, officers and key employees. The amendment and restatement also made other conforming, technical and other non-substantive changes. There was no change to the total number of shares subject to grant under the Plan. The amendment and restatement also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.

On June 13, 2013, the shareholders approved and ratified the Company's 2013 Stock Option and Stock Award Plan (the 2013 Plan) authorizing the grant to officers and key employees of options to purchase up to 3,000,000 shares of common stock. All options are exercisable one year from the date of grant. The option price shall not be below the fair market value at date of grant. If options granted under the Plan expire or terminate for any reason without having been exercised in full, the shares subject to, but not delivered under, such options shall become available for additional option grants under the Plan. This Plan replaced the Company's 2003 Stock Option and Award Plan, as amended, which, pursuant to its terms, terminated in 2013. The outstanding options under the 2003 Stock Option and Award Plan, as amended, remain outstanding until exercised, forfeited or expired.

The Compensation Committee determines the recipients of restricted stock awards; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s stockholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant shall be 100,000 shares.

Unless otherwise provided for in an underlying restricted stock award agreement, if a participant’s status as an employee or director of the Company is terminated by reason of death or disability, the restrictions will lapse on such date. Unless otherwise provided for in an underlying restricted stock award agreement, the Plan provides that if an individual’s status as an employee or director is terminated by reason of retirement following an involuntary termination (other than for “cause” as defined in the 2013 Plan), the restrictions will generally lapse, unless the restricted stock award is intended to constitute “performance based” compensation for purposes of Section 162(m) of the Internal Revenue Code. If a participant’s status as an employee or director terminates for any other reason, the Plan provides that a participant will generally forfeit any outstanding restricted stock awards, unless otherwise indicated in the applicable award agreement. Shares of restricted stock that are forfeited become available again for issuance under the 2013 Plan. The Compensation Committee has the authority to accelerate the time at which the restrictions may lapse whenever it considers that such action is in the best interests of the Company and of its stockholders, whether by reason of changes in tax laws, a “change in control” as defined in the 2013 Plan or otherwise.

The Company accounts for stock options in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). For the years ended December 31, 2013, 2012 and 2011, amounts charged to stock compensation expense for stock option expense, which is included in General and Administrative Expenses, totaled $411,017, $69,253 and $74,338, respectively.

During the year ended December 31, 2013, twenty-four employees were granted options to purchase a total of 392,000 shares. During the year ended December 31, 2012, fifteen employees were granted options to purchase a total of 94,000 shares. During the year ended December 31, 2011, twelve employees were granted options to purchase a total of 80,000 shares. The fair value of these options for the years ended December 31, 2013, 2012 and 2011 was approximately $556,000, $87,000 and $81,000, respectively, based on assumptions noted below and is being amortized over the 1-year vesting period. The remaining unamortized stock option expense was $202,437 as of December 31, 2013, and that amount will be expensed in 2014.

	•	The assumed dividend yield is based on the Company’s expectation of an annual dividend rate for regular dividends over the estimated life of the option.

	•	Expected volatility is based on the historical volatility of the Company’s stock over a period relevant to the related stock option grant.

	•	The risk-free interest rate utilized is the interest rate on U.S. Government Bonds and Notes having the same life as the estimated life of the Company’s option awards.

	•	Expected life of the options granted is estimated based on historical data reflecting actual hold periods.

	•	Estimated forfeiture is based on historical data reflecting actual forfeitures.

During the year ended December 31, 2013, no options were exercised. During the year ended December 31, 2012, options to one employee to purchase a total of 4,000 shares were exercised. During the year ended December 31, 2011, options to one employee to purchase a total of 10,000 shares were exercised. During the year ended December 31, 2013, options to ten employees to purchase a total of 84,000 shares expired. During the year ended December 31, 2012, options to eight employees to purchase a total of 55,000 shares expired. During the year ended December 31, 2011, options to eight employees to purchase a total of 51,000 shares expired.

	2013					2012					2011
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price

Outstanding at beginning of year		785,000		$	11.71		750,000		$	12.03		731,000		$	12.33
Granted		392,000			10.08		94,000			11.29		80,000			11.16
Exercised		-0-			-0-		(4,000	)		7.56		(10,000	)		7.56
Expired		(84,000	)		15.51		(55,000	)		15.58		(51,000	)		15.94
Outstanding at end of year		1,093,000			10.86		785,000			11.71		750,000			12.03
Options exercisable at end of year		701,000					691,000					670,000
Weighted-average fair value of options granted during the year				$	1.42				$	0.92				$	1.01

Date of Grant	Number of Employees		Number of Shares			Option Price		Expiration Date

01/09/06		1		44,200			15.62	01/09/14
01/09/06		1		5,800			17.21	01/09/14
07/21/06		9		34,000			15.15	07/21/14
01/03/07		1		44,200			15.51	01/03/15
01/03/07		1		5,800			17.06	01/03/15
07/16/07		12		51,000			14.21	07/16/15
09/20/07		2		7,000			13.19	09/20/15
01/08/08		1		42,300			11.79	01/08/16
01/08/08		1		7,700			12.97	01/08/16
09/25/08		12		43,000			7.55	09/25/16
01/07/09		1		14,000			7.12	01/07/17
01/07/09		1		61,000			6.47	01/07/17
03/03/09		1		3,000			5.42	03/03/17
06/22/09		13		53,000			7.57	06/22/17
01/08/10		1		10,900			9.13	01/08/18
01/08/10		1		14,100			8.30	01/08/18
07/27/10		12		80,000			11.40	07/27/18
08/11/10		1		6,000			11.23	08/11/18
07/05/11		12		80,000			11.16	07/05/19
08/29/12		15		94,000			11.29	08/29/20
02/28/13		1		10,000	*		10.02	02/28/21
06/26/13		24		382,000	*		10.08	06/26/21

				1,093,000

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for the options that were in-the-money. The aggregate intrinsic value of options outstanding as of December 31, 2013, 2012 and 2011 was $421,563, $602,653 and $406,673, respectively, of which $421,563, $602,653 and $406,673 relate to options exercisable. The intrinsic value of options exercised in 2013, 2012 and 2011 was $-0-, $18,000 and $28,200, respectively, determined as of the date of option exercise. The weighted-average remaining contractual term of the above options was 4.8, 3.9 and 4.1 years as of December 31, 2013, 2012 and 2011, respectively.

During 2013, the Company did not award any restricted stock grants. During 2012 and 2011, the Company awarded restricted stock grants totaling 75,000 shares and 74,000 shares, respectively, to 9 and 10 participants, respectively. The grant date fair value of restricted stock grants awarded to participants during 2012 and 2011 was $803,700 and $825,840, respectively. These grants vest over 5 years. As of December 31, 2013, there remained a total of $1,098,563 of unrecognized restricted stock compensation related to outstanding nonvested restricted stock grants awarded and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 2.7 years. For the years ended December 31, 2013, 2012 and 2011, amounts charged to stock compensation expense for restricted stock, which is included in General and Administrative Expenses, totaled $439,332, $503,991 and $220,704, respectively. During 2012, compensation costs included a one-time charge of $123,490 for restricted stock grants awarded to one participant who is of retirement age and therefore the entire amount of measured compensation cost has been recognized at grant date.

	2013						2012						2011
				Weighted-						Weighted-						Weighted-
				Average						Average						Average
				Grant Date						Grant Date						Grant Date
	Shares			Fair Value			Shares			Fair Value			Shares			Fair Value

Nonvested at beginning of year		187,470		$	10.90			130,974		$	11.14			62,299		$	11.44
Granted		-0-			-0-			75,000			10.72			74,000			11.16
Dividend Reinvested Shares		12,992			9.33			11,470			9.90			7,611			8.98
Vested		(48,170	)		(10.90	)		(29,974	)		(11.10	)		(12,936	)		(11.36	)
Forfeited		(-0-	)		(-0-	)		(-0-	)		(-0-	)		(-0-	)		(-0-	)
Nonvested at end of year		152,292		$	10.77			187,470		$	10.90			130,974		$	11.14