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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                <td valign="bottom">
                    <p align="justify"><font size="2">Accounting for the December 2009 Financing:</font></p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify"><font size="2">Current accounting standards require analysis of the each of the financial instruments issued in the December 2009 financing for purposes of classification and measurement in our financial statements.</font></p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify"><font size="2">The Series D Preferred Stock is a hybrid financial instrument that, as described in the Overview, above, embodies the risks and rewards typically associated with both equity and debt-type instruments. Accordingly, the Company is required to evaluate the features of this contract to determine its nature as either an equity-type contract or a debt-type contract. The Series D Preferred Stock is generally more akin to a debt-type contract,
                    principally due to its redemption feature and the associated participation feature that behaves similarly to a coupon on indebtedness. As a result, the embedded conversion feature and those other features that have risks associated with debt require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. The principal accounting concept requires bifurcation of the embedded derivatives from the host contract in these instances
                    when the embedded feature and the host contracts have risks that are not clearly and closely related. Certain exemptions to this rule, such as the traditional conventional convertible exemption and the common-stock-indexed exemption were not available to us because the Series D Preferred Stock is not indexed, as that term is defined, to our common stock. Accordingly, the conversion feature, along with certain other features that have risks of equity, required bifurcation and
                    classification in their compound form in liabilities as a derivative financial instrument. Derivative financial instruments are required to be measured at fair value both at inception and an ongoing basis. As more fully discussed below, the Company has used the Monte Carlo simulation technique to value the compound embedded derivative, because that model affords the flexibility to incorporate all of the assumptions that market participants would likely consider in
                    determining the value for purposes of trading the hybrid contract. Further, due to the redemption feature, the Company is required to carry the host Series D Preferred Stock outside of stockholders’ equity and the discount resulting from the initial allocation requires accretion through charges to retained earnings, using the effective method, over the period from issuance to the redemption date.</font></p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify"><font size="2">The Company has concluded that the Warrants require classification in stockholders’ equity. The principal concepts underlying accounting for warrants provide a series of conditions, related to the potential for net cash settlement, which must be met in order to achieve equity classification. Our conclusion is that the Warrants are indexed to our common stock and met all of the conditions for equity classification. Notwithstanding, the
                    Company was required to measure the fair value of the Warrants on the inception date to provide a basis for allocating the net proceeds to the various financial instruments issued in the December 2009 financing. As more fully discussed below, the Company has used the Black-Scholes-Merton valuation technique, because that method embodies, in our view, all of the assumptions that market participants would consider in determining the fair value of the Warrants for purposes of a
                    sale or exchange.</font></p>
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                    <p align="justify">&nbsp;</p>
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                    <p align="justify"><font size="2">Our accounting required our allocation of the proceeds to the individual financial instruments comprising the December 2009 financing. As it relates to the financial instruments sold to the Management Buyers, the Company was required to recognize as compensation expense the amount that the fair value of the share-linked financial instruments (i.e. Series D Preferred Stock and Warrants) exceeds the proceeds that the Company received. Those
                    financial instruments subject to allocation are identified as the Secured Notes, Series D Preferred Stock, Compound Embedded Derivatives (“CED”) and the Warrants. Other than the compensatory amounts, current accounting concepts generally provide that the allocation is, first, to those instruments that are required to be recorded at fair value; that is, the CED, and the remainder based upon relative fair values. </font></p>
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        </tbody></table>
<table>
<tbody><tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p><font>Accounting for the December 2009 Financing:</font></p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p><font>Current accounting standards require analysis of the each of the financial instruments issued in the December 2009 financing for purposes of classification and measurement in our financial statements.</font></p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p><font>The Series D Preferred Stock is a hybrid financial instrument that, as described in the Overview, above, embodies the risks and rewards typically associated with both equity and debt-type instruments. Accordingly, the Company is required to evaluate the features of this contract to determine its nature as either an equity-type contract or a debt-type contract. The Series D Preferred Stock is generally more akin to a debt-type contract,
                    principally due to its redemption feature and the associated participation feature that behaves similarly to a coupon on indebtedness. As a result, the embedded conversion feature and those other features that have risks associated with debt require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. The principal accounting concept requires bifurcation of the embedded derivatives from the host contract in these instances
                    when the embedded feature and the host contracts have risks that are not clearly and closely related. Certain exemptions to this rule, such as the traditional conventional convertible exemption and the common-stock-indexed exemption were not available to us because the Series D Preferred Stock is not indexed, as that term is defined, to our common stock. Accordingly, the conversion feature, along with certain other features that have risks of equity, required bifurcation and
                    classification in their compound form in liabilities as a derivative financial instrument. Derivative financial instruments are required to be measured at fair value both at inception and an ongoing basis. As more fully discussed below, the Company has used the Monte Carlo simulation technique to value the compound embedded derivative, because that model affords the flexibility to incorporate all of the assumptions that market participants would likely consider in
                    determining the value for purposes of trading the hybrid contract. Further, due to the redemption feature, the Company is required to carry the host Series D Preferred Stock outside of stockholders’ equity and the discount resulting from the initial allocation requires accretion through charges to retained earnings, using the effective method, over the period from issuance to the redemption date.</font></p>
</td>
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<tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p><font>The Company has concluded that the Warrants require classification in stockholders’ equity. The principal concepts underlying accounting for warrants provide a series of conditions, related to the potential for net cash settlement, which must be met in order to achieve equity classification. Our conclusion is that the Warrants are indexed to our common stock and met all of the conditions for equity classification. Notwithstanding, the
                    Company was required to measure the fair value of the Warrants on the inception date to provide a basis for allocating the net proceeds to the various financial instruments issued in the December 2009 financing. As more fully discussed below, the Company has used the Black-Scholes-Merton valuation technique, because that method embodies, in our view, all of the assumptions that market participants would consider in determining the fair value of the Warrants for purposes of a
                    sale or exchange.</font></p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p> </p>
</td>
<td>
<p><font>Our accounting required our allocation of the proceeds to the individual financial instruments comprising the December 2009 financing. As it relates to the financial instruments sold to the Management Buyers, the Company was required to recognize as compensation expense the amount that the fair value of the share-linked financial instruments (i.e. Series D Preferred Stock and Warrants) exceeds the proceeds that the Company received. Those
                    financial instruments subject to allocation are identified as the Secured Notes, Series D Preferred Stock, Compound Embedded Derivatives (“CED”) and the Warrants. Other than the compensatory amounts, current accounting concepts generally provide that the allocation is, first, to those instruments that are required to be recorded at fair value; that is, the CED, and the remainder based upon relative fair values. </font></p>
</td>
</tr>
</tbody></table>