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EXCHANGE OF PREFERRED STOCK FOR COMMON STOCK AND CASH

12 Months Ended

Dec. 31, 2011

EXCHANGE OF PREFERRED STOCK FOR COMMON STOCK AND CASH

EXCHANGE OF PREFERRED STOCK FOR COMMON STOCK AND CASH

10. EXCHANGE OF PREFERRED STOCK FOR COMMON STOCK AND CASH

On September 12, 2011, the Company commenced an offer to purchase all outstanding Class B Stock for cash and Common Stock (the 2011 Exchange Offer). As of November 4, 2011, the expiration date of the 2011 Exchange Offer, Preferred Stockholders had tendered the following number of shares of Preferred Stock: 1) 27,500 shares of Series I Class B Stock; 2) 41,000 shares of Series II Class B Stock; 3) no shares of Series III Class B Stock were exchanged; 4) 5,000 shares of Series IV Class B Stock; and 5) 1,173,464 shares of Series V Class B Stock. A total of $1,308,275 and 1,246,964 shares of Common Stock were issued as consideration to participating Preferred Stockholders pursuant to the 2011 Exchange Offer. In accordance with the terms of the 2011 Exchange Offer, participating Preferred Stockholders agreed to waive all unpaid dividends in arrears associated with their tendered Preferred Stock, which resulted in a waiver of a total of $3,539,714 in unpaid dividends in arrears.

During the quarter ended December 31, 2011, the Company engaged in private sales with three Preferred Stockholders which tendered the following number of shares of Preferred Stock: 1) 13,000 shares of Series I Class B Stock; 2) 5,000 shares of Series IV Class B Stock; and 3) 12,500 shares of Series V Class B Stock. A total of $49,000 and 30,500 shares of Common Stock were issued as consideration to the three Preferred Stockholders. In accordance with the terms of the private sales, the three Preferred Stockholders agreed to waive all unpaid dividends in arrears associated with their tendered Preferred Stock, which resulted in a waiver of a total of $97,079 in unpaid dividends in arrears.

The 2011 Exchange Offer and private sales are summarized in the table below.

	Number of Preferred Stock Shares Tendered by Preferred Stockholders	Cash Outlay by Company		Number of Common Stock Shares Tendered by Company	Accrued Dividends Eliminated	Amount of Annual Dividend Reduction
Series I Class B Stock	40,500	$	60,750	40,500	$ —	$ 20,250
Series II Class B Stock	41,000	123,000		41,000	—	41,000
Series IV Class B Stock	10,000	35,000		10,000	114,575	10,000
Series V Class B Stock	1,185,964	1,138,525		1,185,964	3,478,084	379,508
Total Class B Stock	1,277,464	$	1,357,275	1,277,464	$3,592,659	$450,758