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INTERMEDIX HOLDINGS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2010 (a) 2005 Stock Option Plan Awards Pursuant to the terms of the Predecessor's 2005 Stock Option Plan (the Predecessor Option Plan) and subsequent amendments to the Predecessor Option Plan, the Predecessor was authorized to issue options to acquire up to 125,000 shares of common stock of the Predecessor to employees and service providers of the Predecessor. Certain members of the Predecessor's management and professional staff were issued ten -year options to purchase shares of common stock of the Predecessor. All stock options granted under the Predecessor Option Plan were granted with an exercise price at least equal to the underlying stock's fair value at the date of grant. The Predecessor's options vested based upon varying vesting schedules over terms of four to five years. As mentioned above, upon the consummation of the Merger unvested options were caused to immediately vest and become exercisable. The fair value of each stock option award is estimated on the date of grant using BSM option - pricing model. The weighted average grant -date value of each option grant awarded during the Predecessor period was as follows: Weighted average grant -date value of options granted $ 113.06 Assumptions: Risk -free rate of return 2.85% — 3.04% Expected life in years 6.38 Expected volatility 47.5% Expected dividend yield $ — The risk free rate of return is determined based on a yield curve of U.S. Treasury rates ranging from 5 to 7 years which is the period commensurate with the expected life of options granted. Expected life in years is calculated using the simplified method, as permitted under ASC Topic 718, given the Company's lack of historical experience with respect to the lives of options granted and post- vesting termination patterns. Since the Company has no historical basis for determining its own volatility, the expected volatility is established based on a peer group comprising companies similar to that of the Company. The expected dividend yield is zero as the Company has not paid any cash dividends and does not anticipate it will do so in the foreseeable future. 33 (Continued)