EX-10.1



 






Exhibit 10.1




AGREEMENT




     This Agreement (hereafter “Agreement”) is hereby entered into between Nancy Pedot
(“Executive”), and Party City Corporation, a Delaware corporation (“Company”).



     WHEREAS, Executive has been an employee and a director of Company;



     WHEREAS, Executive and Company have been parties to an Employment Agreement dated as of
December 23, 2004 by and between Company and Executive (as amended to date, the “Employment
Agreement”), under which Executive’s employment relationship with Company has terminated pursuant
to Sections 7(a)(iv) and 7(b)(ii) thereof;



     WHEREAS, Executive has resigned as a director of Company; and



     WHEREAS, Executive and Company wish to fully and finally resolve all matters between them;



     THEREFORE, in exchange for the good and valuable consideration set forth herein, the adequacy
of which is specifically acknowledged, Executive and Company (“the parties”) hereby agree as
follows:



     1. Termination of Employment and Directorship. Executive hereby confirms her
resignation as director and member of the board of directors of Company (the “Board”) and member of
the Executive Committee of the Board, effective March 30, 2005 (the “Effective Date”), and
Executive and Company hereby agree and acknowledge that Executive’s employment by the Company
terminated on the Effective Date.



     2. Salary and Benefit Continuation.




	 	a.	 	Company shall continue to pay Executive at the rate of $600,000
per annum for fifty-two weeks, by installments in accordance with the Company’s
regular payroll practices, beginning immediately after the Effective Date;
provided, however, that any balance of such payments that would otherwise be
due to Executive on or after March 10, 2006 shall be paid to Executive in a
lump sum no later than March 10, 2006 (it being the parties’ intent that
payment of such amount will be accelerated).






	 	b.	 	During the period April 1, 2005 through and including June 30,
2006, Company shall provide coverage for the Executive and her dependents under
Company’s medical and dental benefits plans provided to senior executives of
the Company and shall pay the Company portion of the insurance premiums for
coverage, subject to the Executive’s payment of the applicable employee portion
of such premiums. Executive shall have the opportunity to elect COBRA
continuation health care coverage for a period beginning no earlier than July
1, 2006 and continuing for so long as otherwise required by law. To the extent
provided by the terms of the applicable employee benefit plans, Executive will be offered the opportunity
to convert her group benefits to individual coverage at non-group rates.





 









 





     3. Accrued Vacation Pay. On the Closing, Company will pay Executive for her accrued
but unused vacation the sum of $23,076.92.



     4. Reimbursement of Expenses and Other Benefits. Company shall pay or cause to be
paid to or for the benefit of Executive all of her benefits accrued under Company’s employee
benefit plans as of the Effective Date. Company will reimburse Executive for business expenses
incurred during her employment totaling $23,073.89. Such reimbursement will be made to Executive
in a lump sum on the Closing.



     5. Stock Options. Schedule A attached hereto shows all of Executive’s stock options;
such Schedule reflects, among other things, that 32,055 of the 150,000 non-qualified stock options
to purchase common stock of Company granted to Executive on January 12, 2004 and scheduled to vest
and become exercisable on January 12, 2006 have vested, and are fully exercisable, as of March 31,
2005. Such options, and all other options that were vested and exercisable as of such date, all as
scheduled on Schedule A, shall remain exercisable until March 31, 2006.



     6. Stock Purchase Plan. Schedule B attached hereto shows all Company stock purchased
by Executive pursuant to the Party City Corporation Employee Stock Purchase Plan.



     7. No Other Payments. Except as otherwise referred to in this Agreement, Company
shall make no other payments or provide any benefits to Executive.



     8. Consultation. For 90 days following the Effective Date (the “Consulting Period”)
Executive will continue to make herself available to the Company for reasonable part-time
consultation on senior-level projects and to respond to appropriate questions within her knowledge,
provided that Executive’s obligation to so consult shall not exceed more than 10 hours per month
(or 30 hours in the aggregate) and shall be provided at such times as are reasonably convenient to
Executive.



     9. General Release of Claims by Executive. Executive hereby agrees, for Executive,
Executive’s spouse and child or children (if any), Executive’s heirs, beneficiaries, devisees,
executors, administrators, attorneys, personal representatives, successors and assigns, forever to
release, discharge, and covenant not to sue Company, any of Company’s past, present, or future
parent, affiliated, related, and/or subsidiary entities, and all of their past and present
directors, shareholders, officers, general or limited partners, employees, agents, and attorneys,
and agents and representatives of such entities, and employee benefit plans in which Executive is
or has been a participant by virtue of her employment with Company, from any and all claims, debts,
demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges,
complaints, obligations, promises, agreements, controversies, suits, expenses, compensation,
responsibility and liability of every kind and character whatsoever (including attorneys’ fees and
costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or
unsuspected, which Executive has or may have had against such entities based on any events or
circumstances arising or occurring on or prior to the Effective Date arising directly or
indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a)
Executive’s



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employment with Company or the termination thereof or (b) [the Executive’s status at
any time as a holder of any securities of Company, and] any and all claims arising under federal,
state, or local laws relating to employment, [or securities,] including without limitation claims
of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation,
or liability in tort, claims of any kind that may be brought in any court or administrative agency,
any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the
Securities Exchange Act of 1934, [the Sarbanes-Oxley Act,] the New Jersey Law Against
Discrimination, the New Jersey Conscientious Employee Protection Act, and similar state or local
statutes, ordinances, and regulations, provided, however, notwithstanding anything to the contrary
set forth herein, that this General Release shall not extend to (i) benefit claims under employee
pension benefit plans in which Executive is a participant by virtue of her employment with Company
or to benefit claims under employee welfare benefit plans for occurrences (e.g., medical care,
death, or onset of disability) arising after the execution of this Agreement by Executive, (ii) any
obligation assumed under this Agreement by any party hereto, (iii) any rights of indemnification
Executive may have as against Company, and (iv) in defense of (including the right to assert
counterclaims and third party claims) any action brought by the Company or any other party entitled
to the benefit of this general release.



     10. Release of Age Discrimination Claims; Periods for Review and Reconsideration.




	 	a.	 	Executive understands that this Agreement includes a release of
claims arising under the Age Discrimination in Employment Act (ADEA).
Executive understands and warrants that she has been given a period of
twenty-one (21) days to review and consider this Agreement. Executive is
hereby advised to consult with an attorney prior to executing the Agreement.
By her signature below, Executive warrants that she has had the opportunity to
do so and to be fully and fairly advised by that legal counsel as to the terms
of the Agreement. Executive further warrants that she understands that she may
use as much or all of her 21-day period as she wishes before signing, and
warrants that she has done so.






	 	b.	 	Executive further warrants that she understands that she has
seven (7) days after signing this Agreement to revoke the Agreement by notice
in writing to Vice President, General Counsel and Secretary, Party City
Corporation 400 Commons Way, Rockaway, New Jersey 07866. This Agreement shall
be binding, effective, and enforceable upon both parties upon the expiration of
this seven-day revocation period without General Counsel having received such
revocation, but not before such time (the “Closing”).





     11. Restrictive Covenants.




	 	a.	 	Noncompetition. During the six month period following
the Effective Date (the “Restriction Period”), Executive shall not, directly or
indirectly, whether as a principal, partner, employee, agent, consultant, shareholder
(other than shares purchased prior to the effective date of this Agreement




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	 	 	 	or as a holder, or a member of a group which is a holder, of not in excess
of five percent (5%) of the outstanding voting shares of any publicly traded
company) or in any other relationship or capacity be affiliated with any
business corporation, partnership, enterprise or entity in any geographic
area, which competes with Company Business (as defined below). For purposes
of this Agreement, “Company Business” means the sale of party goods,
including costumes.






	 	b.	 	Confidentiality. Unless specifically authorized in
writing by Company to do so, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from an appropriate
government agency, Executive shall not disclose (i) any non-public information
pertaining to Company disclosed or made available to Executive or known by
Executive as a direct or indirect consequence of or through employment by
Company, or (ii) any other information related to Company’s referral sources,
business practices, strategies, trade secrets, operating methods, techniques,
products, processes, services or other operations (individually or collectively
“Operations”), including, but not limited to, information relating to research,
development, inventions, accounting, engineering or marketing of such
Operations and including any such information of any third party which Company
is under an obligation to keep confidential (individually or collectively,
“Confidential Information”) to any third person unless such Confidential
Information has been previously disclosed to the public by Company or is in the
public domain (other than by reason of Executive’s breach of this Section 11 or
breach prior to entering into this Agreement of Section 8(b) of the Employment
Agreement). Notwithstanding the foregoing, if Executive is required by an
order of a court having competent jurisdiction or under subpoena from an
appropriate government agency to disclose Confidential Information, Executive
shall provide Company with prompt written notice of such requirement and shall
assist Company to seek a protective order or other appropriate remedy
protecting its interests. In any event, Executive will furnish only that part
of the Confidential Information that is required to be disclosed by the court
order or subpoena and will use reasonable efforts to obtain reliable assurances
that confidential treatment will be accorded to any Confidential Information so
furnished.






	 	c.	 	Nonsolicitation of Employees. During the twelve-month
period following the Effective Date, Executive shall not directly or indirectly
solicit, encourage or induce any employee of the Company Group to terminate
employment with the Company Group, and shall not directly or indirectly, either
individually or as owner, agent, employee, consultant or otherwise, offer
employment to any person who is or was employed by the Company Group unless
such person shall have ceased to be employed by the Company Group for a period
of at least six months.




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	 	d.	 	Company Property. Executive acknowledges that she has
delivered to Company all property of the Company Group, including all credit
cards, keys or entry cards, automobile and other machinery, all computers, cell
phones or other electronic equipment and all memoranda, notes, records,
reports, manuals, drawings and blueprints, including electronic versions,
concerning the Company’s Business (and all copies thereof) in Executive’s
possession or under her control.






	 	e.	 	Developments the Property of the Company. Executive
acknowledges that all discoveries, inventions, ideas, technology, formulas,
designs, software, programs, algorithms, products, systems, applications,
processes, procedures, methods and improvements and enhancements conceived,
developed or otherwise made or created or produced by Executive alone or with
others, and in any way relating to the Company’s Business, whether or not
subject to patent, copyright or other protection and whether or not reduced to
tangible form, at any time through the Effective Date (“Developments”), are the
sole and exclusive property of the Company. Executive agrees to, and hereby
does, assign to Company, without any further consideration, all of Executive’s
right, title and interest throughout the world in, and to, any Developments.
Executive agrees that all such Developments that are copyrightable may
constitute works made for hire under the copyright laws of the United States
and, as such, acknowledges that Company is the author of any such Developments
and owns all of the rights comprised in the copyright of any such Developments
and Executive hereby assigns to Company without any further consideration all
of the rights comprised in the copyright and other proprietary rights Executive
may have in any such Developments to the extent that it might not be considered
a work made for hire. Executive hereby represents and warrants that she has
made and maintained adequate and current written records of any Developments
and has disclosed any Developments fully, and in writing, to the Company.






	 	f.	 	Protection of Legitimate Business Interests. Executive
acknowledges that (i) Executive’s position with the Company required the
performance of services which are special, unique and extraordinary in
character and placed her in a position of confidence and trust with the
customers and employees of Company, through which, among other things, she has
obtained knowledge of Company’s technical information and know-how and become
acquainted with its customers, in which matters Company has substantial
proprietary interests, (ii) the restrictive covenants in this Section 11 are
necessary in order to protect and maintain such proprietary interests and other
legitimate business interests of Company, and (iii) Company would not have
entered into this Agreement unless such covenants were included herein.






	 	g.	 	Injunctive Relief and Other Remedies with Respect to
Covenants. Executive acknowledges and agrees that the covenants and
obligations of Executive with respect to noncompetition, nonsolicitation, confidentiality,




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	 	 	 	Company property, developments and nondisparagement relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause Company irreparable injury for
which adequate remedies are not available at law. Therefore, Executive
agrees that Company shall (i) be entitled to an injunction, restraining
order or such other equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the covenants and
obligations contained in this Section 11 and (ii) have no further obligation
to make any payments to Executive hereunder following any material violation
of the covenants and obligations contained in this 11. These remedies are
cumulative and are in addition to any other rights and remedies Company may
have at law or in equity. Executive (x) acknowledges and agrees that the
covenants set forth in this Section 11 are reasonable and valid in
geographical and temporal scope and in all other respects and (y) represents
that her economic means and circumstances are such that such covenants will
not prevent her from providing for herself and her family on a basis
satisfactory to her.






	 	h.	 	Non-Disparagement. Executive shall not at any time
after the date hereof disparage the Company Group or any of its officers,
directors, shareholders or any of their respective affiliates. Company agrees
that the Board and the executive officers of Company shall not at any time
after the date hereof disparage the Executive. The obligations of Executive
and Company under this Section 11(h) shall not apply to truthful disclosures
that are required by applicable law, regulation or order of a court or
governmental agency.






	 	i.	 	Notifications. Executive agrees that prior to becoming
employed by any entity during the Restriction Period, she will (i) provide
notice to Company of such employment and (ii) provide copies of Section 11(a),
(b) and (c) of this Agreement to such prospective employer. Executive further
agrees that Company may provide notice to such prospective employer of
Executive’s obligations under this Agreement, including, without limitation,
Executive’s obligations pursuant to this Section 11.





     12. Taxes. To the extent any taxes may be due on the payments to Executive provided
in this Agreement beyond any withheld by Company, Executive agrees to pay them herself. Executive
further agrees to provide any and all information pertaining to Executive upon request as
reasonably necessary for Company and other entities released herein to comply with applicable tax
laws.



     13. Trading of Company Stock. Executive confirms that she has been advised of her
Section 16 reporting obligations during the six-month period following the Effective Date.



     14. No Admission. By executing this Agreement, Company and Executive are not
admitting any liability or wrongdoing, and the considerations exchanged herein do not constitute



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an admission of any liability, error, contract violation, or violation of any federal, state,
or local law or regulation.



     15. Severability. Except as otherwise specified below, should any portion of this
Agreement be found void or unenforceable for any reason by a court of competent jurisdiction, the
court should attempt to limit or otherwise modify such provision so as to make it enforceable, and
if such portion cannot be modified to be enforceable, the unenforceable portion shall be deemed
severed from the remaining portions of this Agreement, which shall otherwise remain in full force
and effect. If any portion of this Agreement is so found to be void or unenforceable for any
reason in regard to any one or more persons, entities, or subject matters, such portion shall
remain in full force and effect with respect to all other persons, entities, and subject matters.
This paragraph shall not operate, however, to sever either party’s obligation to provide the
binding release to all entities intended to be released hereunder. In the event Executive should
in the future contend that Executive’s release of claims is for any reason void, imperfect, or
incomplete, Executive may not pursue any claim against Company (or any other party intended to be
released herein) to establish the invalidity of the release or premised (in whole or in part) on
the invalidity of the release before or without repaying to Company, to the extent permitted by
law, the full amount of such cash payments she has received, less the reasonable value of services
actually provided pursuant to this Agreement, and applicable statutes of limitations shall be
deemed to run in regard to Executive’s claims without regard to the parties’ entry into this
Agreement. The preceding sentence shall not operate to limit the scope or effect of Executive’s
covenant not to sue.



     16. Approval and Authority. Executive and Company understand and agree that all terms
of this Agreement are contractual and are not a mere recital, and represent and warrant that they
are competent to covenant and agree as herein provided. Company has full power and authority to
enter into this Agreement and to carry out the terms of this Agreement. The execution, delivery
and performance of this Agreement by Company have been duly and properly authorized by all
necessary corporate actions. This Agreement constitutes the valid and binding obligation of
Company enforceable in accordance with its terms.



     17. Indemnification. Company hereby confirms and agrees with respect to any and all
matters arising out of or in connection with Executive’s prior employment by Company or Executive’s
engagement as a consultant hereunder, that Executive shall continue to be entitled to receive the
benefits of all indemnification provisions contained in the Certificate of Incorporation and
By-Laws of the Company, as in effect on the Effective Date, notwithstanding any changes therein
made after such Date, to the fullest extent permitted by applicable law at the time of the
assertion of any liability against Executive, including without limitation, advancement of expenses
as permitted by Section 145(e) of the Delaware General Corporation Law.



     18. Miscellaneous.




	 	a.	 	Executive understands, agrees and represents that the covenants
made herein and the releases herein executed may affect rights and liabilities
of substantial extent. Executive represents and warrants that in negotiating
and executing this Agreement Executive has had an adequate opportunity to
consult with competent legal counsel of her choosing concerning the





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	 	 	 	meaning and effect of each term and provision hereof, and that there are no
representations, promises, or agreements between Company and Executive other
than those expressly set forth in writing herein.






	 	b.	 	The parties have carefully read this Agreement in its entirety;
fully understand and agree to its terms and provisions; and intend and agree
that it is final and binding on all parties.






	 	c.	 	This Agreement shall be binding on, and shall inure to the
benefit of, the Company and any person or entity that succeeds to the interests
of the Company (regardless of whether such succession does or does not occur by
operation of law) by reason of the sale of all or a portion of the Company’s
stock, a merger, consolidation or reorganization involving the Company or a
sale of the assets of the business of the Company (or portion thereof) or
similar transaction. This Agreement shall inure to the benefit of the
Executive’s heirs, executors, administrators and legal representatives.






	 	d.	 	This Agreement, together with all Employee Stock Option
Agreements entered into by Executive and Company (which Option Agreements
shall, to the extent necessary to conform to the provisions of this Agreement,
be deemed to be so amended hereby) constitute the entire agreement between the
parties hereto with respect to the matters referred to herein, and supersedes
any and all prior agreements including, without limitation, the Employment
Agreement.






	 	e.	 	Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or her rights hereunder on any
occasion or series of occasions.





[Remainder of page left blank intentionally]




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     IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed the foregoing
on the dates shown below.



	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By:  	/s/  Nancy Pedot	 
	 	 	Nancy Pedot 	 
	 	 	Date:  	July 20, 2005	 
	 



	 	 	 	 	 
	 	PARTY CITY CORPORATION

 	 
	 	By:  	/s/  Gregg A. Melnick	 
	 	 	 	 
	 	 	Title:  	Chief Financial Officer	 
	 	 	Date:  	August 1, 2005	 
	 




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Schedule A



	 	 	 	 	 	 	 	 	 
	Party City Corporation

	 	PERSONNEL SUMMARY
	 	Page:	 	1

	 

	 	AS OF 3/31/2005
	 	File:	 	Persnl

	 

	 	 	 	Date:
	 	3/28/2005
	 

	 	ID is equal to ###-##-####
	 	Time:	 	11:42:34 AM







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Option	 	 	Option	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name	 	ID	 	 	Number	 	 	Date	 	 	Plan/Type	 	 	Shares	 	 	Price	 	 	Exercised	 	 	Vested	 	 	Cancelled	 	 	Unvested	 	 	Outstanding	 	 	Exercisable	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PEDOT, NANCY
	 	 	###-##-####	 	 	 	00000810	 	 	 	11/15/2000	 	 	1999/NQ	 	 	20,000	 	 	$	3.7000	 	 	 	0	 	 	 	20,000	 	 	 	0	 	 	 	0	 	 	 	20,000	 	 	 	20,000	 
	 
	 	 	 	 	 	 	00000897	 	 	 	9/26/2001	 	 	1999/NQ	 	 	3,000	 	 	$	6.5500	 	 	 	0	 	 	 	3,000	 	 	 	0	 	 	 	0	 	 	 	3,000	 	 	 	3,000	 
	 
	 	 	 	 	 	 	00000922	 	 	 	3/13/2002	 	 	1999/NQ	 	 	2,000	 	 	$	12.3600	 	 	 	0	 	 	 	2,000	 	 	 	0	 	 	 	0	 	 	 	2,000	 	 	 	2,000	 
	 
	 	 	 	 	 	 	00001113	 	 	 	11/13/2002	 	 	1999/NQ	 	 	10,000	 	 	$	13.6563	 	 	 	0	 	 	 	10,000	 	 	 	0	 	 	 	0	 	 	 	10,000	 	 	 	10,000	 
	 
	 	 	 	 	 	 	00001139	 	 	 	5/12/2003	 	 	1999/NQ	 	 	5,000	 	 	$	10.0000	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001140	 	 	 	6/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	10.8600	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001142	 	 	 	7/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	10.9375	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001143	 	 	 	8/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	10.1100	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001145	 	 	 	9/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	11.5000	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001146	 	 	 	9/18/2003	 	 	1999/NQ	 	 	30,000	 	 	$	11.9100	 	 	 	0	 	 	 	30,000	 	 	 	0	 	 	 	0	 	 	 	30,000	 	 	 	30,000	 
	 
	 	 	 	 	 	 	00001147	 	 	 	10/13/2003	 	 	1999/NQ	 	 	5,000	 	 	$	14.0100	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001149	 	 	 	11/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	14.3281	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001257	 	 	 	12/11/2003	 	 	1999/NQ	 	 	5,000	 	 	$	13.8000	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001258	 	 	 	1/9/2004	 	 	1999/NQ	 	 	5,000	 	 	$	12.4800	 	 	 	0	 	 	 	5,000	 	 	 	0	 	 	 	0	 	 	 	5,000	 	 	 	5,000	 
	 
	 	 	 	 	 	 	00001261	 	 	 	1/12/2004	 	 	1999/NQ	 	 	600,000	 	 	$	12.3400	 	 	 	0	 	 	 	300,000	 	 	 	0	 	 	 	300,000	 	 	 	600,000	 	 	 	300,000	A 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	TOTALS	 	 	 	 	 	 	 	 	 	 	710,000	 	 	 	 	 	 	 	0	 	 	 	410,000	 	 	 	0	 	 	 	300,000	 	 	 	710,000	 	 	 	410,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 
	A

	 	-
	 	Based on contract, below is the calculation for option # 1261 that Nancy receives partial vesting on Tranche #3.
Based on calculation, she has an additional 32,055 shares that are exercisable for option # 1261 that is not included in the schedule above.






	 	 	 
	Tranche # 3

	 	150,000 (A)






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	# of days employed	 	 	 	 
	Tranche begin	 	 	 	since last vesting	 	 	 	 
	date	 	term Date	 	period	 	ratio	 	Shares
	1/12/2005

	 	3/31/2005
	 	78.00 (B)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	32,055	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	365.00 (C)
	 	21.4% (D) = (B)/(C)
	 	 	(A) x 	(D)






 









 







Schedule B



Nancy Pedots Employee Stock Contribution Plan



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	# of shares	 	 	Shares	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributions from January 2004 thru June 2004
	 	 	Original Price	 	 	Contributions	 	 	Carryforward	 	 	Refunds	 	 	Total Contribution	 	 	Stock PP	 	 	of Stock	 	 	Rounded	 	 	Total Price	 	 	New Carry Forward	 	 	Total Value	 	 	Gain	 
	
###-##-####
	 	NANCY J.	 	PEDOT	 	$	25,000.00	 	 	$	12.620	 	 	$	25,000.00	 	 	$	0.00	 	 	$	25,000.00	 	 	$	10.727	 	 	 	2,330.57	 	 	 	2,330	 	 	$	24,993.91	 	 	$	6.09	 	 	$	29,404.60	 	 	$	4,410.69	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributions from July 2004 thru December 2004	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	###-##-####
	 	NANCY J.	 	PEDOT	 	$	25,000.00	 	 	$	12.425	 	 	$	25,000.00	 	 	$	6.09	 	 	$	25,006.09	 	 	$	10.561	 	 	 	2,367.78	 	 	 	2,367	 	 	$	24,997.89	 	 	$	8.20	 	 	$	29,409.98	 	 	$	4,412.09	 





The 2,330 shares from the January 2004 thru June 2004 contributions were mailed to Nancy at the end of December 2004. The 2,367 shares from
the July 2004 thru December 2004 contribution will be mailed at the end of June 2005.