<table>
 <tbody><tr style="FONT-SIZE:1PX">
 <td width="5%" valign="TOP">
 <p>&nbsp;</p>
 </td>
 <td width="95%" valign="TOP">
 <p>&nbsp;</p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2">As of December 31, 2008, the Company was not in
 compliance with the Consolidated Debt Service Coverage Ratio and Consolidated
 Leverage Ratio covenants. In addition, as a result of the restatement of the
 Company’s financial statements, the Company breached its financial reporting
 obligations under the Credit Agreement. On April 28, 2009, the Company and
 the Lender entered into a letter agreement pursuant to which the Lender
 agreed to enter into an amendment and waiver to the Credit Agreement under
 which (i) the Lender waives the Company’s past non-compliance with the
 financial covenants and reporting obligations, (ii) indefinitely suspends the
 revolving credit facility, (iii) requires the Company to maintain deposits
 with the Lender at all times in an amount not less then the outstanding
 balance of the term loan as cash-collateral therefor, and (iv) suspends the
 Company’s obligation to comply with the financial covenants in the future
 during the period in which the revolving credit facility is suspended and the
 term loan is fully cash-collateralized.</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="2">(5)</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2"><u>Accounting for Stock-Based Compensation</u></font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2"><i><u>Stock
 Options</u></i></font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2">On September 18, 2008, the Company’s stockholders
 approved the Company’s 2008 Employee Stock Purchase Plan (“Stock Purchase
 Plan”), which is intended to qualify as an “employee stock purchase plan”
 under Section 423 of the Code. The
 Stock Purchase Plan provides eligible employees of the Company with an opportunity
 to purchase shares of Common Stock through regular payroll deductions at a
 discount to the market price. The Company has authorized the issuance of up
 to 300,000 shares of Common Stock under the Stock Purchase Plan, which has
 not yet been implemented.
 Accordingly, all 300,000 shares of Common Stock authorized for
 issuance the Stock Purchase Plan remain available for purchase thereunder.</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2">Under the Company’s 1992 Stock Option Plan (the
 “1992 Plan”), employees of the Company and its affiliates and members of the
 Board of Directors were granted options to purchase shares of common stock of
 the Company. The 1992 Plan was
 amended on May 11, 1999 to increase the maximum number of shares of common
 stock for which options may be granted to 1,500,000 shares. The 1992 Plan terminated in 2002, although
 options issued thereunder remain exercisable until the termination dates
 provided in such options. Options
 granted under the 1992 Plan were either intended to qualify as incentive
 stock options under the Internal Revenue Code of 1986, or non-qualified
 options. Grants under the 1992 Plan
 were awarded by a committee of the Board of Directors, and are exercisable
 over periods not exceeding ten years from date of grant. The option price for incentive stock options
 granted under the 1992 Plan must be at least 100% of the fair market value of
 the shares on the date of grant, while the price for non-qualified options
 granted to employees and employee directors is determined by the committee of
 the Board of Directors. At December
 31, 2008, there were 20,625 options issued under the 1992 Plan, expiring from
 April 2009 through April 2011 that remain outstanding. </font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 </tr>
 <tr>
 <td valign="TOP">
 <p><font size="1">&nbsp;</font></p>
 </td>
 <td valign="TOP">
 <p><font size="2">On July 1, 2002, the Company established the 2002
 Long-Term Incentive Plan (the “2002 Plan”) providing for the grant of options
 or other awards, including stock grants, to employees, officers or directors
 of, or consultants to, the Company or its subsidiaries to acquire up to an
 aggregate of 750,000 shares of Common Stock.
 In September 2005, the 2002 Plan was amended to increase the number of
 shares of common stock available under the plan to 1,250,000. In September 2008, the 2002 Plan was
 amended to increase the number of shares of common stock available under the
 plan to 1,650,000. Options granted under
 the 2002 Plan may either be intended to qualify as incentive stock options
 under the Internal Revenue Code of 1986, or may be non-qualified
 options. Grants under the 2002 Plan
 are awarded by a committee of the Board of Directors, and are exercisable over
 periods not exceeding ten years from date of grant. The option price for incentive stock options granted under the
 2002 Plan must be at least 100% of the fair market value of the shares on the
 date of grant, while the price for non-qualified options granted is
 determined by the Committee of the Board of Directors. At December 31, 2008, there were 297,500
 options issued under the 2002 Plan, expiring from April 2011 through
 September 2017 that remain outstanding.
 Any option under the 2002 Plan that is not exercised by an option
 holder prior to its expiration may be available for re-issuance by the
 Company. As of December 31, 2008, the
 Company had 504,210 shares of common stock available for grant of awards
 under the 2002 Plan.</font></p>
 </td>
 </tr>
</tbody></table>
<table>
<tbody><tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>As of December 31, 2008, the Company was not in
 compliance with the Consolidated Debt Service Coverage Ratio and Consolidated
 Leverage Ratio covenants. In addition, as a result of the restatement of the
 Company’s financial statements, the Company breached its financial reporting
 obligations under the Credit Agreement. On April 28, 2009, the Company and
 the Lender entered into a letter agreement pursuant to which the Lender
 agreed to enter into an amendment and waiver to the Credit Agreement under
 which (i) the Lender waives the Company’s past non-compliance with the
 financial covenants and reporting obligations, (ii) indefinitely suspends the
 revolving credit facility, (iii) requires the Company to maintain deposits
 with the Lender at all times in an amount not less then the outstanding
 balance of the term loan as cash-collateral therefor, and (iv) suspends the
 Company’s obligation to comply with the financial covenants in the future
 during the period in which the revolving credit facility is suspended and the
 term loan is fully cash-collateralized.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font>(5)</font></p>
</td>
<td>
<p><font><u>Accounting for Stock-Based Compensation</u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font><i><u>Stock
 Options</u></i></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>On September 18, 2008, the Company’s stockholders
 approved the Company’s 2008 Employee Stock Purchase Plan (“Stock Purchase
 Plan”), which is intended to qualify as an “employee stock purchase plan”
 under Section 423 of the Code. The
 Stock Purchase Plan provides eligible employees of the Company with an opportunity
 to purchase shares of Common Stock through regular payroll deductions at a
 discount to the market price. The Company has authorized the issuance of up
 to 300,000 shares of Common Stock under the Stock Purchase Plan, which has
 not yet been implemented.
 Accordingly, all 300,000 shares of Common Stock authorized for
 issuance the Stock Purchase Plan remain available for purchase thereunder.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>Under the Company’s 1992 Stock Option Plan (the
 “1992 Plan”), employees of the Company and its affiliates and members of the
 Board of Directors were granted options to purchase shares of common stock of
 the Company. The 1992 Plan was
 amended on May 11, 1999 to increase the maximum number of shares of common
 stock for which options may be granted to 1,500,000 shares. The 1992 Plan terminated in 2002, although
 options issued thereunder remain exercisable until the termination dates
 provided in such options. Options
 granted under the 1992 Plan were either intended to qualify as incentive
 stock options under the Internal Revenue Code of 1986, or non-qualified
 options. Grants under the 1992 Plan
 were awarded by a committee of the Board of Directors, and are exercisable
 over periods not exceeding ten years from date of grant. The option price for incentive stock options
 granted under the 1992 Plan must be at least 100% of the fair market value of
 the shares on the date of grant, while the price for non-qualified options
 granted to employees and employee directors is determined by the committee of
 the Board of Directors. At December
 31, 2008, there were 20,625 options issued under the 1992 Plan, expiring from
 April 2009 through April 2011 that remain outstanding. </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>On July 1, 2002, the Company established the 2002
 Long-Term Incentive Plan (the “2002 Plan”) providing for the grant of options
 or other awards, including stock grants, to employees, officers or directors
 of, or consultants to, the Company or its subsidiaries to acquire up to an
 aggregate of 750,000 shares of Common Stock.
 In September 2005, the 2002 Plan was amended to increase the number of
 shares of common stock available under the plan to 1,250,000. In September 2008, the 2002 Plan was
 amended to increase the number of shares of common stock available under the
 plan to 1,650,000. Options granted under
 the 2002 Plan may either be intended to qualify as incentive stock options
 under the Internal Revenue Code of 1986, or may be non-qualified
 options. Grants under the 2002 Plan
 are awarded by a committee of the Board of Directors, and are exercisable over
 periods not exceeding ten years from date of grant. The option price for incentive stock options granted under the
 2002 Plan must be at least 100% of the fair market value of the shares on the
 date of grant, while the price for non-qualified options granted is
 determined by the Committee of the Board of Directors. At December 31, 2008, there were 297,500
 options issued under the 2002 Plan, expiring from April 2011 through
 September 2017 that remain outstanding.
 Any option under the 2002 Plan that is not exercised by an option
 holder prior to its expiration may be available for re-issuance by the
 Company. As of December 31, 2008, the
 Company had 504,210 shares of common stock available for grant of awards
 under the 2002 Plan.</font></p>
</td>
</tr>
</tbody></table>