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Up to $25 million, to be advanced in two tranches at up to three closings, as follows:

•        Tranche A – up to $25 million, of which $15 million shall be made available upon satisfaction of the closing conditions for the first Tranche A closing and up to $10 million shall be made available at any time up to six months following the first Tranche A closing but, in any event, prior to confirmation of Borrower’s plan of reorganization

•        Tranche B – in an aggregate principal amount equal to the aggregate principal amount of Tranche A Notes outstanding at the time of confirmation of Borrower’s plan of reorganization, to be issued in exchange for the claims represented by the Tranche A Notes. The definitive financing agreement would include a contractual right (exercisable at the time of confirmation of Borrower’s plan of reorganization) in favor of the Investors to exchange the Tranche B Notes for the claims represented by the Tranche A Notes.

Tranche A - Senior Secured Notes (the “Tranche A Notes”)

Tranche B - Senior Secured Convertible Notes (the “Tranche B Notes”)

In the event that the Borrower consummates a sale of all or substantially all of its assets or common stock during the period of time between the first closing of Tranche A and confirmation of the Borrower’s plan of reorganization at an effective price per share of common stock of at least $5.50, then concurrently with the closing of such transaction, the Investors would, in the aggregate receive a cash payment determined by the following formula: (A/B) x (C-B)

Where A = the aggregate principal amount of Tranche A Notes then outstanding;

B = $5.50; and

C = the effective price per share of common stock in the sale.

As an example, if a sale of the Borrower occurs at an effective price per common share of $7, and at the time of sale Borrower has $16m of Tranche A Notes outstanding, then concurrently with the closing of the sale transaction, Borrower would make an aggregate cash payment to the Investors of approximately $4.4 million.

The closing of Tranche A would be subject to the following conditions:

•        Completion of due diligence to the satisfaction of the Investors

•        Completion of definitive transaction documents satisfactory in form and substance to the Investors

•        Entry of a final order authorizing the issuance and sale of the Notes, and absence of pending appeals of same

•        Accuracy of the Borrower’s representations and warranties

•        Entry of a customary Financing Order containing a full waiver under Section 506(c) of the Bankruptcy Code for the Investors as DIP lenders

•      Borrower shall have developed a plan of reorganization to be funded, in part, with the proceeds of the Notes and otherwise acceptable to the Investors

All of the conditions to closing to First Closing must be satisfied or waived by the parties as of immediately prior to the bankruptcy court hearing to approve the financing, with the only remaining condition to the First Closing (including draw of Tranche A) being approval by the bankruptcy court.

•        Continued satisfaction of all conditions to the First Closing

•        Absence of a material adverse change to the business, operations or financial condition of the Borrower subsequent to the First Closing

•        Continued satisfaction of all conditions to the First Closing

•        Absence of a material adverse change to the business, operations or financial condition of the Borrower subsequent to the First Closing

•        Confirmation of Borrower’s plan of reorganization

Borrower and Investors to work collaboratively to structure the financing in order to obtain an exemption from registration under the Securities Act for the public offer and sale of the shares of common stock issuable upon conversion of the Tranche B Notes. Accordingly, Borrower will seek a bankruptcy court determination that the Tranche B Notes issued in connection with the Borrower’s plan of reorganization (as well as the shares of common stock issuable upon conversion of the Tranche B Notes) are exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”) pursuant to Bankruptcy Code Section 1145.

In the event that Borrower is not able to obtain such bankruptcy court determination, or if the Investors determine that the resale by the Investors of the Tranche B Notes and/or the shares of common stock issuable upon exercise of the Tranche B Notes must be registered under the 1933 Act, Borrower shall, promptly at such time that Borrower is once again current in its periodic filings with the Securities and Exchange Commission, file a registration statement under the 1933 Act for the registration of the resale of the Tranche B Notes and the shares of common stock issuable upon conversion of the Tranche B Notes, and shall comply with all other applicable laws relating to such registration (including, if required, qualification of an indenture with respect to the Tranche B Notes under the Trust Indenture Act of 1939, as amended), and shall use its best efforts to cause such registration statement to be declared effective by the Securities and Exchange Commission within ninety days following the date of consummation of Borrower’s plan of reorganization but in no event later than February 27, 2007. If a required registration statement has not been declared effective by the