May 9 Memo from Fred Hamilton

Dear Fellow Employees:

We are quickly approaching the end of our current fiscal year (June 30, 2011). Despite efforts to reduce our operating expenses to offset the decline in revenue, sustainable revenue growth continues to elude us. As a consequence, we are compelled to take further steps to meet our operating goals. Today, we are announcing the following actions:

1. Suspension of Vacation Accruals beginning this coming Sunday, May 15, 2011 and running through July 2, 2011. This action will not impact any vacation time that you have earned or vacation time that you have planned. Further details follow below.

2. Mandatory Five-Day Furloughs to begin May 16, 2011 and to be completed by July 2, 2011. The five-day furloughs may be taken weekly or daily increments as scheduled with your supervisor. However, exempt employees who chose to take unpaid furlough days rather than vacation, the unpaid furlough days must be taken as a full-week within the same pay (calendar) week period. If you have any available vacation time, you may use up to five earned vacation days to substitute for up to all five furlough days. Further details are provided below.

With respect to the temporary suspension of vacation accruals, please understand a few important
points:

1. During the 39 day period from May 15, 2011 through and June 30, 2011, you will be earning fewer vacation days than we all had anticipated during this fiscal year. As an illustration, those employees with an annual vacation benefit of two weeks will earn 1-1/2 fewer days. Those employees with a three-week benefit will earn 2-1/4 fewer days. Those employees with a four-week benefit will earn 3 fewer days.

2. You will not lose any vacation time already earned/accrued, but not used through May 14, 2011.

3. You are encouraged to use any vacation time you have already accrued, subject to advance request to and approval by your immediate supervisor. Any vacation time used between May 1, 2011 and June 30, 2011 can be credited toward any of the five furlough days.

4. Accommodations will be made for employees with pre-approved vacations whose vacations balances are adversely impacted by this change. Specifically, with supervisor approval, those employees may be permitted to incur a negative vacation balance.

With respect to the five-day furloughs, please note the following:

1. Furlough days may be taken in weekly and/or daily increments (see Mandatory Five-Day Furlough description presented above) and all days must be scheduled in advance with your supervisor. Exempt staffers must take their furlough days during the same pay week. Exempt employees may combine vacation days with his/her furlough BUT within the same pay (calendar week).

2. Up to five furlough days may be taken as vacation days but such an option is voluntary and must also be scheduled in advance.

3. Supervisors will be asked to extend every reasonable consideration as to when an employee would prefer his/her furlough days to be scheduled and taken.

4. As a modest offset for those employees who are included in this furlough action, we are offering those employees up to five, additional paid holidays to be used during the coming fiscal year. You will be provided a list of twelve additional paid holidays from which you may chose five (5) to be scheduled and taken. Any of the five days must be scheduled and approved by the employee’s supervisor in advance. Those “bonus” holidays must be taken on the specific holiday date. However, accommodations will be made for those employees for whom that date does not coincide with a regularly scheduled work day. Lastly, an employee must be actively employed on the specific holiday date to be paid for that day (excluded are persons who are absent from work due to an unpaid leave and those who have left the employ of the company). Further details will be forthcoming from our Human Resources staff.

Although the temporary suspension of vacation accruals and the furloughs are not welcomed, they are both the less disruptive means of reducing our operating expenses. We also continued freeze the hiring for some vacancies in an effort to avoid more painful actions and have already consolidated some jobs where it has been prudent to do so. However, today's action does not preclude other cost reduction measures including and not limited to reductions-in-force. At this time such actions will likely be limited and will continue to be an expense reduction alternative until the economy and our performance measurably improves.

As expressed in the past, we regret any inconvenience this action may cause you but until our financial challenges are clearly behind us, such actions are necessary.

Thank you for your understanding, continued hard work and dedication.

Sincerely,

Fred Hamilton
Chief Executive Officer