  Recent studies have shown that strong correlations are observed between the
low frequencies (1-10 Hz) of quasiperiodic oscillations (QPOs) and the spectral
power law index of several Black Hole (BH) candidate sources, in low hard
state, steep power-law (soft) state and in transition between these states. We
provide a model, that identifies and explains the origin of the QPOs and how
they are imprinted on the properties of power-law flux component. We argue the
existence of a bounded compact coronal region which is a natural consequence of
the adjustment of Keplerian disk flow to the innermost sub-Keplerian boundary
conditions near the central object and that ultimately leads to the formation
of a transition layer (TL) between the adjustment radius and the innermost
boundary. The model predicts two phases or states dictated by the photon
upscattering produced in the TL: (1) hard state, in which the TL is optically
thin and very hot (kT ~ 50 keV) producing photon upscattering via thermal
Componization; the photon spectrum index Gamma~1.7 for this state is dictated
by gravitational energy release and Compton cooling in an optically thin shock
near the adjustment radius; (2) a soft state which is optically thick and
relatively cold (kT~5 keV); the index for this state, Gamma~2.8 is determined
by soft-photon upscattering and photon trapping in converging flow into BH.
