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INTERMEDIX HOLDINGS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2010 A summary of stock option activity under the 2010 Stock Option Plan during the Successor Period is as follows (in thousands, except for exercise price and term): Predecessor During the Predecessor period, the Predecessor had several stock -based employee compensation plans as described below. The total compensation expense related to these plans was $17.8 million for the Predecessor period. This amount includes charges to compensation expense of (i) $17.4 million for the accelerated portion of the option vesting triggered by the Merger (see below and note 1) on August 23, 2010, and (ii) $0.4 million for the nonaccelerated portion of the option vesting for the Predecessor period. The accelerated vesting compensation expense was made up of $14.9 million and $2.5 million related to the Predecessor Management Incentive Units (Predecessor MI Units) and the Predecessor stock option plan, respectively. Stock -based compensation expense is shown as an individual line on the accompanying consolidated statements of operations. The allocation of stock -based expense between "Cost of revenues" and "Selling, general and administrative expenses" for the Predecessor Period is as follows (in thousands): Cost of revenues $ 1,056 Selling, general and administrative expenses 16,785 Total stock -based compensation expense $ 17,841 The Predecessor accounted for its equity -based awards using ASC Topic 718. This statement requires entities to measure compensation expense for all equity -based awards granted, modified, or settled using the fair -value measurement method and to recognize the costs in income over the requisite service period, which is generally the vesting period. The Predecessor elected to recognize these costs on a straight -line basis. The Predecessor had two types of equity -based awards; stock options granted pursuant to the Predecessor's 2005 Stock Option Plan and Class D Units of the Predecessor's Parent issued to certain executive members of management referred to as the Predecessor MI Units. 32 (Continued) Weighted Weighted average average remaining Aggregate Number exercise contractual intrinsic of options price term (years) value Granted on August 23, 2010 396 $ 118.95 6.50 $ 12,996 Exercised — — — — Cancelled or forfeited — — — — Outstanding at December 31, 2010 396 $ 118.95 6.50 $ 12,996 Exercisable at December 31, 2010 — $ — — $ — Predecessor During the Predecessor period, the Predecessor had several stock -based employee compensation plans as described below. The total compensation expense related to these plans was $17.8 million for the Predecessor period. This amount includes charges to compensation expense of (i) $17.4 million for the accelerated portion of the option vesting triggered by the Merger (see below and note 1) on August 23, 2010, and (ii) $0.4 million for the nonaccelerated portion of the option vesting for the Predecessor period. The accelerated vesting compensation expense was made up of $14.9 million and $2.5 million related to the Predecessor Management Incentive Units (Predecessor MI Units) and the Predecessor stock option plan, respectively. Stock -based compensation expense is shown as an individual line on the accompanying consolidated statements of operations. The allocation of stock -based expense between "Cost of revenues" and "Selling, general and administrative expenses" for the Predecessor Period is as follows (in thousands): Cost of revenues $ 1,056 Selling, general and administrative expenses 16,785 Total stock -based compensation expense $ 17,841 The Predecessor accounted for its equity -based awards using ASC Topic 718. This statement requires entities to measure compensation expense for all equity -based awards granted, modified, or settled using the fair -value measurement method and to recognize the costs in income over the requisite service period, which is generally the vesting period. The Predecessor elected to recognize these costs on a straight -line basis. The Predecessor had two types of equity -based awards; stock options granted pursuant to the Predecessor's 2005 Stock Option Plan and Class D Units of the Predecessor's Parent issued to certain executive members of management referred to as the Predecessor MI Units. 32 (Continued)