PARTY CITY CORP
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
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<TYPE>EX-10.4
<SEQUENCE>4
<FILENAME>y89983exv10w4.htm
<DESCRIPTION>AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
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<P align="right"><FONT size="2"><B>EXHIBIT&nbsp;10.4</B></FONT>

<P align="right"><FONT size="2"><B><I>EXECUTION COPY</I></B></FONT>

<P align="center"><FONT size="2"><B>PARTY CITY CORPORATION</B>
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<P align="center"><FONT size="2"><B>AMENDED AND RESTATED<BR><BR>
INVESTOR RIGHTS AGREEMENT</B>
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<P align="center"><FONT size="2"><B>Dated as of August&nbsp;18, 2003</B>
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<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
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    <TD valign="top"><FONT size="2"><B>1.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Certain Definitions</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
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    <TD valign="top"><FONT size="2"><B>2.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Registration Rights</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
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2.1
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Requested Registration
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2.2
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Company Registration
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">5</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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2.3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Registration on Form&nbsp;S-3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">6</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2.4
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Limitations on Subsequent Registration Rights
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
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2.5
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Expenses of Registration
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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2.6
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Registration Procedures
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
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2.7
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Indemnification
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2.8
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Information by Holder
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
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2.9
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Rule&nbsp;144 Reporting
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
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2.10
</FONT></TD>
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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
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2.11
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Termination of Rights
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
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    <TD valign="top"><FONT size="2"><B>3.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Miscellaneous</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
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3.1
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Liability Insurance
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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3.2
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Assignment
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Third Parties
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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3.4
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Future Investors
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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3.5
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Governing Law
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.6
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Counterparts
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
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3.7
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Notices
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.8
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Severability
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.9
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Amendment and Waiver
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.10
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Effect of Amendment or Waiver
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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3.11
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Rights of Holders
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
3.12
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Delays or Omissions
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
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<P align="center"><FONT size="2">i</FONT>
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<P align="center"><FONT size="2"><B>AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the <B>&#147;Agreement&#148;</B>) is
made as of August&nbsp;18, 2003 by and among Party City Corporation, a Delaware
corporation (the <B>&#147;Company&#148;</B>), and the persons set forth on the Schedule of
Investors attached hereto as Annex I, as such Annex I shall be amended pursuant
to the terms of this Agreement (the <B>&#147;Investors&#148;</B>).
</FONT>
<P align="center"><FONT size="2"><B>RECITALS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company issued (i)&nbsp;certain warrants (the <B>&#147;Warrants&#148;</B>) to
purchase shares of its common stock, par value $.01 per share (<B>&#147;Common Stock&#148;</B>),
to Tennenbaum &#038; Co., LLC (<B>&#147;TC LLC&#148;</B>), Goldman, Sachs &#038; Co. (<B>&#147;GS&#148;</B>), Enhanced
Retail Funding, LLC (<B>&#147;ERF&#148;</B>) and Richmond Associates, L.P. (<B>&#147;Richmond&#148;</B>) and (ii)
certain notes (<B>&#147;Notes&#148;</B>) of the Company to TC LLC, ERF, Richmond, TCO/Party
City, LLC (<B>&#147;TCO/PC&#148;</B>) and Goldman Sachs Credit Partners, L.P. (<B>&#147;GSCP&#148;</B>; together
with TC LLC, GS, ERF, Richmond and TCO/PC, the <B>&#147;Original Investors&#148;</B>) pursuant
to one or more Securities Purchase Agreements dated as of August&nbsp;16, 1999 by
and among the Company and the Original Investors (each such agreement being of
the same form and referred to herein as the <B>&#147;Purchase Agreement&#148;</B>);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in conjunction with the Purchase Agreement, on August&nbsp;16, 1999,
the Company entered into an Investor Rights Agreement (the <B>&#147;Original
Agreement&#148;</B>) with the Original Investors and Jack Futterman (<B>&#147;Futterman&#148;</B>);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on September&nbsp;1, 1999, TC LLC sold all of its Warrants and Notes
to Special Value Bond Fund, LLC (<B>&#147;SVBF&#148;</B>);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on October&nbsp;25, 1999, ERF sold a Warrant for 229,333 shares of
Common Stock to Clyde Street Investment, LLC (<B>&#147;Clyde Street&#148;</B>) and ERF kept a
Warrant for 458,667 shares of Common Stock;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on January&nbsp;14, 2000, the Company issued (i)&nbsp;additional notes of
the Company to SVBF, GSCP and ERF and (ii)&nbsp;restated Warrants to ERF, GS,
Richmond, SVBF and Clyde Street, pursuant to First Amendment to Securities
Purchase Agreement dated as of January&nbsp;14, 2000 by and among the Company, GS,
ERF, Richmond, TCO/PC, GSCP, SVBF and Clyde Street;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company, Futterman, SVBF, Special Value Bond Fund II, LLC,
Special Value Investment Management, LLC (now known as Tennenbaum Capital
Partners, LLC), GSCP, GS, ERF, Clyde Street and Richmond amended the Original
Agreement pursuant to the First Amendment to Investor Rights Agreement, dated
as of October&nbsp;11, 2000, and pursuant to the Second Amendment to Investor Rights
Agreement, dated as of November&nbsp;20, 2000 (as amended, the <B>&#147;IR Agreement&#148;</B>);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in September 2001, upon the partial exercise by SVBF of its
Warrant to purchase 600,000 shares of Common Stock, SVBF received 499,687
shares of Common Stock and SVBF immediately distributed (i)&nbsp;114,061 shares of
Common Stock to TC LLC and (ii)&nbsp;385,626 shares of Common Stock to third party
direct and indirect investors in SVBF;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in May 2002, upon the exercise by Richmond of its Warrant to
purchase 229,000 shares of Common Stock, Richmond received 229,000 shares of
Common Stock;
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in June 2002, upon the exercise by GS of its Warrant to purchase
2,867,000 shares of Common Stock, GS received 2,669,720 shares of Common Stock
and GS immediately sold the 2,669,720 shares of Common Stock to Special Value
Absolute Return Fund, LLC;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in July 2002, upon the exercise by ERF of its Warrant to purchase
458,667 shares of Common Stock, ERF received 458,667 shares of Common Stock;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, in August 2002, upon the exercise by Clyde Street of its Warrant
to purchase 229,333 shares of Common Stock, Clyde Street received 213,792
shares of Common Stock and then sold 18,792 shares of Common Stock in the
public market;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, prior to the date hereof the Company has repaid all of the Notes
and no Notes remain outstanding;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, pursuant to Section&nbsp;7.8 of the IR Agreement, the IR Agreement may
be amended with the written consent of the Company, a Supermajority in Interest
of the Investors (as defined in the IR Agreement) and a Supermajority in
Interest of the Warrantholders (as defined in the IR Agreement); and
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company, a Supermajority in Interest of the Investors and a
Supermajority in Interest of the Warrantholders, now desire to amend and
restate the IR Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Company and the Investors agree as follows:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Certain Definitions.</B> As used in this Agreement, the following terms
shall have the following respective meanings:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Commission&#148; shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Exchange Act&#148; shall mean the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Fully-Diluted Common Stock&#148; shall mean all of the issued and outstanding
Common Stock of the Company, assuming conversion, exercise or exchange of all
outstanding convertible, exercisable or exchangeable securities, options,
warrants and similar instruments into or for Common Stock (regardless of
whether such convertibles securities are at such time convertible, exercisable
or exchangeable). All such calculations shall be appropriately adjusted for
stock splits, stock dividends and other similar events.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Holder&#148; shall mean (a)&nbsp;any Investor holding Registrable Securities and
(b)&nbsp;any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section&nbsp;2.10 hereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Initiating Holders&#148; shall mean any Investors or transferees of Investors
under Section&nbsp;2.10 hereof who in the aggregate are Holders of not less than
twenty percent (20%) of the Registrable Securities and who propose to register
securities, the aggregate offering price of which, net of underwriting
discounts and commissions, exceeds $2,500,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Majority in Interest&#148; shall mean, in the case of Investors,
Warrantholders or Initiating Holders, at least fifty-one percent (51.0%) in
aggregate amount of Registrable Securities (as listed on Annex I hereto).
</FONT>
<P align="center"><FONT size="2">2</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Person&#148; shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Public Event&#148; shall mean the earlier to occur of (a)&nbsp;the first public
offering of the Common Stock of the Company after the date hereof to the
general public which is effected pursuant to a registration statement filed
with, and declared effective by, the Commission under the Securities Act or (b)
the first listing (or relisting) of the Common Stock with the Nasdaq National
Market or any national securities exchange after the date hereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms &#147;register,&#148; &#147;registered&#148; and &#147;registration&#148; refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Registration Expenses&#148; shall mean all expenses incurred by the Company in
complying with Sections&nbsp;2.1, 2.2 and 2.3 hereof, including, without limitation,
all registration, qualification, listing and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the and the Holders, blue
sky fees and expenses, and the expense of any special audits incident to or
required by any such registration.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Registrable Securities&#148; shall mean (a)&nbsp;the shares of Common Stock
issuable to any Investor upon exercise of the Warrants, (b)&nbsp;any other shares of
Common Stock held by any Investor from time to time after the date hereof, and
(c)&nbsp;any Common Stock of the Company issued or issuable in respect of the shares
of Common Stock described in clauses (a)&nbsp;and (b)&nbsp;above, or other securities
issued or issuable with respect to such shares of Common Stock upon any stock
split, stock dividend, recapitalization or similar event, provided, however,
that shares of Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (i)&nbsp;sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, (ii)&nbsp;sold in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act under Section&nbsp;4(1)
thereof so that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale, or (iii)&nbsp;transferred in
a transaction pursuant to which the registration rights are not also assigned
in accordance with Section&nbsp;2.10 hereof. As used herein, the term &#147;Registrable
Securities&#148; shall also include the Warrants; provided that only the shares of
Common Stock issuable upon exercise of the Warrants need be registered by the
Company pursuant to Section&nbsp;2 hereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Securities Act&#148; shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder or any similar federal statute
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Selling Expenses&#148; shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;TCO Director&#148; shall mean any director on the Company&#146;s Board of Directors
who has been designated by TC LLC or its affiliates (or their transferees) for
election to the Board of Directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Warrantholder&#148; shall mean the holder of any Warrant.</FONT>
<P align="left"><FONT size="2"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registration Rights.</B></FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;Requested Registration.</FONT>
<P align="center"><FONT size="2">3</FONT>


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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Request for Registration. If the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance, the Company will:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;promptly use its best efforts to effect such
registration, qualification or compliance (including, without
limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act and any
other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the
Company within fifteen (15)&nbsp;days after receipt of such written
notice from the Company; provided, however, that the Company shall
not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section
2.1:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In any particular jurisdiction in which the Company
would be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the date which is six (6)&nbsp;months following
the effective date of the Public Event;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After (A)&nbsp;the Company has effected one (or more)
registrations pursuant to this Section&nbsp;2.1(a) which have
included the Registrable Securities of each and every
Investor who holds or has held at any time at least
twenty-five percent (25%) of the aggregate number of
Registrable Securities subject to this Agreement as set forth
on Annex I hereto, (B)&nbsp;such registrations have been declared
or ordered effective and (C)&nbsp;the securities offered pursuant
to such registrations have been sold; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company shall furnish to such Holders a
certificate, signed by the President or Chief Executive
Officer of the Company, stating that in the good faith
judgment of the Board of Directors the filing of a
registration statement in the near future with respect to the
proposed registration would have a material adverse effect on
the Company, then the Company&#146;s obligation to use its best
efforts to register, qualify or comply under this Section&nbsp;2.1
shall be deferred for a period not to exceed sixty (60)&nbsp;days
from the date of receipt of written request from the
Initiating Holders; provided, however, that the Company may
not utilize this right more than once in any twelve (12)
month period.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the foregoing clauses (1)&nbsp;through (4), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
</FONT>
<P align="center"><FONT size="2">4</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriting. The Initiating Holders shall have the right to
determine whether any registration under Section&nbsp;2.1 shall be underwritten or
not, and shall so specify in their initial notice to the Company. In the event
that a registration pursuant to Section&nbsp;2.1 is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as part of
the notice given pursuant to Section&nbsp;2.1(a)(i). The right of any Holder to
registration pursuant to Section&nbsp;2.1 shall be conditioned upon such Holder&#146;s
participation in the underwriting arrangements required by this Section&nbsp;2.1 and
the inclusion of such Holder&#146;s Registrable Securities in the underwriting, to
the extent requested, to the extent provided herein.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into and perform its obligations
under an underwriting agreement in customary form with the managing underwriter
selected for such underwriting selected by a Majority in Interest of the
Initiating Holders (which managing underwriter shall be reasonably acceptable
to the Company). Notwithstanding any other provision of this Section&nbsp;2.1, if
the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing
the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter&#146;s marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest one hundred (100)
shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Company Registration.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its equity securities, either for
its own account or the account of a security holder or holders other than (i)&nbsp;a
registration relating solely to employee benefit plans, (ii)&nbsp;a registration
relating solely to a Commission Rule&nbsp;145 transaction, or (iii)&nbsp;a registration
on any registration form that does not permit secondary sales, the Company
will:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;promptly give to each Holder written notice thereof; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all of the Registrable Securities
specified in a written request or requests made within fifteen (15)
days after receipt of such written notice from the Company by any
Holder, but only to the extent that such inclusion will not
diminish the number of securities included by the Company or by
holders of the Company&#146;s securities who have demanded such
registration.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company
shall so advise the Holders as a part of the written notice given pursuant to
Section&nbsp;2.2(a)(i). In such event, the right of any Holder to registration
pursuant to Section&nbsp;2.2 shall be conditioned upon such Holder&#146;s participation
in such underwriting and the inclusion of Registrable Securities in the
underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into and perform
their obligations under an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this
<P align="center"><FONT size="2">5</FONT>
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</FONT>

<P align="left"><FONT size="2">Section&nbsp;2.2, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter may exclude all
Registrable Securities from, or limit the number of Registrable Securities to
be included in the registration and underwriting, on a pro rata basis based on
the total number of securities (including, without limitation, Registrable
Securities) entitled to registration pursuant to registration rights granted to
the participating Holders by the Company. To facilitate the allocation of
shares in accordance with the above provisions, the Company or the underwriters
may round the number of shares allocated to any Holder or other holder to the
nearest one hundred (100)&nbsp;shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section&nbsp;2.2
prior to the effectiveness of such registration, whether or not any Holder has
elected to include securities in such registration.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registration on Form&nbsp;S-3.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall use its best efforts to qualify for registration on
Form&nbsp;S-3 or any comparable or successor form. To that end the Company shall
register (whether or not required by law to do so) its Common Stock under the
Exchange Act in accordance with the provisions of the Exchange Act.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any Holder or Holders of not less than twenty percent (20%) of the
Registrable Securities then outstanding requests that the Company file a
registration statement on Form&nbsp;S-3 (or any successor form to Form&nbsp;S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $2,500,000, and the Company is a
registrant entitled to use Form&nbsp;S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form. The
Company will (i)&nbsp;promptly give written notice of the proposed registration to
all other Holders, and (ii)&nbsp;promptly use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within fifteen
(15)&nbsp;days after receipt of the written notice from the Company referred to in
the preceding clause (i). The substantive provisions of Section&nbsp;2.1(b) shall be
applicable to each registration initiated under this Section&nbsp;2.3.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this Section&nbsp;2.3: (i)&nbsp;in any particular
jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act; or (ii)&nbsp;if
the Company shall furnish to such Holder a certificate signed by the President
or Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors the filing of a registration statement in
the near future with respect to the proposed registration would have a material
adverse effect on the Company, then the Company&#146;s obligation to use its best
efforts to register, qualify or comply under this Section&nbsp;2.3 shall be deferred
for a period not to
exceed sixty (60)&nbsp;days from the receipt of the request to file such
registration by such Holder or Holders; provided, however, that the Company may
not utilize this right more than once in any twelve (12)&nbsp;month period.
</FONT>

<P align="center"><FONT size="2">6</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitations on Subsequent Registration Rights. From and after the
date hereof, the Company shall not enter into any agreement granting any holder
or prospective holder of any securities of the Company registration rights with
respect to such securities unless such new registration rights, including
standoff obligations, are subordinate to the registration rights granted to the
Holders hereunder.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections&nbsp;2.1, 2.2 or 2.3 shall be
borne by the Company. Unless otherwise stated, all other Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by
the Holders of the registered securities included in such registration pro rata
on the basis of the number of shares so registered.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section&nbsp;2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof and, at its expense, the Company will:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for at least ninety (90)&nbsp;days or until
the distribution described in the registration statement has been completed;
provided, however, that in the case of any registration of Registrable
Securities on Form&nbsp;S-3 which are intended to be offered on a continuous or
delayed basis, such period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are
sold, provided that if Rule&nbsp;415, or any successor rule under the Securities
Act, permits an offering on a continuous or delayed basis, and provided further
that if applicable rules under the Securities Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective
amendment which (i)&nbsp;includes any prospectus required by Section&nbsp;10(a)(3) of the
Securities Act or (ii)&nbsp;reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (i)
and (ii)&nbsp;above shall be contained in periodic reports filed pursuant to Section
13 or 15(d) of the Exchange Act in the registration statement;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furnish to the Holders participating in such registration and to the
underwriters of the securities being registered such number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as such Holders and underwriters may reasonably request in order to
facilitate the public offering of such securities;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein
<P align="center"><FONT size="2">7</FONT>
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</FONT>

<P align="left"><FONT size="2">or necessary to make the statements therein not misleading
or incomplete in the light of the circumstances then existing;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provide a transfer agent and registrar for all Registrable Securities
and a CUSIP number for all such Registrable Securities, in each case not later
than the effective date of such registration; and
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Make available for inspection by any Holder participating in such
registration, any underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by any such Holder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company&#146;s officers and directors to
supply all information requested by any such Holder, underwriter, attorney or
accountant in connection with such registration statement; provided, however,
that such Holder, underwriter, attorney or accountant shall agree to hold in
confidence and trust all information so provided.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indemnification.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will indemnify each Holder, each of its officers,
principals, members, directors and partners, and each person controlling such
Holder within the meaning of Section&nbsp;15 of the Securities Act, with respect to
which registration, qualification or compliance has been effected pursuant to
this Section&nbsp;2, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section&nbsp;15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its officers and directors, and each person controlling
such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use
therein.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company&#146;s
<P align="center"><FONT size="2">8</FONT>
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</FONT>

<P align="left"><FONT size="2">securities covered by such
registration statement, each person who controls the Company or such
underwriter within the meaning of Section&nbsp;15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section&nbsp;15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as such expenses are incurred, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an
instrument duly executed by such Holder and stated to be specifically for use
therein; provided that in no event shall any indemnity under this Section
2.7(b) exceed the net proceeds received by such Holder in such registration.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each party entitled to indemnification under this Section&nbsp;2.7 (the
&#147;Indemnified Party&#148;) shall give notice to the party required to provide
indemnification (the &#147;Indemnifying Party&#148;) promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party&#146;s expense; provided, however, that an Indemnified Party
(together with all other Indemnified Parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by
such counsel in such proceeding. The failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section&nbsp;2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party&#146;s ability to defend such
action. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the indemnification provided for in this Section&nbsp;2.7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any claim, loss, damage, liability or action referred to therein,
then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such claim, loss, damage,
liability or action in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other in connection with the actions that resulted in such claim,
loss, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties&#146; relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Holders agree that it would not
be just and equitable if contribution pursuant to this Section&nbsp;2.7(d) were
based solely upon the number of entities from whom contribution was requested
or by any other method
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<P align="left"><FONT size="2">of allocation which does not take account of the
equitable considerations referred to above in this Section&nbsp;2.7(d).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to above in this Section&nbsp;2.7
shall be deemed to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim, subject to the provisions of Section&nbsp;2.7 hereof.
Notwithstanding the provisions of this Section&nbsp;2.7, no Holder shall be required
to contribute any amount or make any other payments under this Agreement which
in the aggregate exceed the net proceeds (after selling expenses) received by
such Holder. No person guilty of fraudulent misrepresentation (within the
meaning of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the Company
may reasonably request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Section&nbsp;2.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rule&nbsp;144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration,
after such time as a public market exists for the Common Stock of the Company,
the Company agrees, promptly following the completion of the Company&#146;s audit
for the 18-month period ended July&nbsp;3, 1999, to use its best efforts to:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Make and keep public information available, as those terms are
understood and defined in Rule&nbsp;144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act; and
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transfer of Registration Rights. The rights to cause the Company to register securities granted to any
party hereto under Sections&nbsp;2.1, 2.2 and 2.3 may be assigned to a transferee or
assignee in connection with any transfer or assignment of Registrable
Securities by such party (together with any affiliate); provided that (a)&nbsp;such
transfer may otherwise be effected in accordance with applicable securities
laws and (b)&nbsp;notice of such assignment is given to the Company.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of Rights. The rights of any particular Holder to cause
the Company to register securities under Sections&nbsp;2.1, 2.2 and 2.3 shall
terminate with respect to such Holder on the date that is seven (7)&nbsp;years after
the date hereof or on the date on which all Registrable Securities held by such
Holder can be sold in any 90-day period under Rule&nbsp;144 (without regard to Rule
144(k)).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Miscellaneous.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liability Insurance. Unless the TCO Directors have otherwise
consented, for so long as the TCO Directors serve as directors of the Company,
the Company shall maintain in effect the current policies of directors&#146; and
officers&#146; liability insurance maintained by the Company and to the extent any
claims are made against such insurance, shall increase the coverage amounts
thereunder so as to maintain the same amount of insurance protection for the
TCO Directors as existed immediately prior </FONT>
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</FONT>

<P align="left"><FONT size="2">to any such claims assuming such
claims are paid in full; provided that the Company may substitute therefor
policies of the same or higher standard of coverage and amounts containing
terms and conditions which are no less advantageous. In addition, from and
after the Closing (as such term is defined in the Purchase Agreement), the
Company shall keep in effect provisions in its charter and bylaws providing for
exculpation of director liability and indemnification of directors, officers,
employees and agents at the Company to the extent that such persons are
entitled thereto thereunder on the date hereof, which provisions shall not be
amended, repealed or otherwise modified for so long as the TCO Directors serve
as directors of the Company in any manner that would adversely affect the
rights thereunder of any such individuals unless such modification is required
by law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assignment. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future Investors. Subject to Section&nbsp;2.10, any person who acquires
the Securities (as such term is defined in the Purchase Agreement) may become a
party to this Agreement by execution and delivery to the Company of a
counterpart of this Agreement. Upon delivery of such counterpart, (a)&nbsp;the
signature pages and Annex I hereto shall be deemed automatically amended
(without any action on the part of the Investors) to reflect
the addition of such new party, (b)&nbsp;the Company shall revise the signature
pages and Annex I hereto to include such new party (together with all other
information regarding such new party as required for Annex I) and shall deliver
such revised signature pages and Annex I to all Investors as soon as reasonably
practicable thereafter and (c)&nbsp;such new party shall thereafter be deemed an
&#147;Investor&#148; for purposes of this Agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York without regard to choice of laws or
conflict of laws provisions thereof.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Counterparts. This Agreement may be executed in two or more
counterparts and signature pages may be delivered by facsimile, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
or if mailed by certified mail, return receipt requested, postage prepaid, or
if sent by overnight courier, or if sent by written telecommunication,
addressed to the other party at (a)&nbsp;if to an Investor, at the address set forth
in Annex I hereto, or (b)&nbsp;if to the Company, at 400 Commons Way, Rockaway, New
Jersey 07866, to the attention of Corporate Secretary. Any notice so addressed
and delivered by facsimile transmission, hand or courier shall be deemed to be
given when received, and any notice so addressed and mailed by registered or
certified mail shall be deemed to be given three business days after being so
mailed.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
</FONT>

<P align="center"><FONT size="2">11</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Waiver. Any provision of this Agreement may be amended
with the written consent of the Company and a Majority in Interest of the
Investors; provided that (a)&nbsp;no such amendment shall impose or increase any
liability or obligation on a Holder without the consent of such Holder and (b)
no such amendment having a disproportionately adverse effect on any Holder in
relation to the other Holders may be made without consent of such Holder. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder of Registrable Securities and the Company. In addition, the
Company may waive performance of any obligation owing to it, as to some or all
of the Holders of Registrable Securities, or agree to accept alternatives to
such performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder the terms of such
underwriting agreement shall govern.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of Amendment or Waiver. The Investors and their successors and assigns acknowledge that by the
operation of Section&nbsp;3.9 hereof a Majority in Interest of the Investors, acting
in conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights pursuant to this Agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rights of Holders. Each party to this Agreement shall have the
absolute right to exercise or refrain from exercising any right or rights that
such party may have by reason of this Agreement, including, without limitation,
the right to consent to the waiver or modification of any obligation under this
Agreement, and such party shall not incur any liability to any other party or
other Holder of any securities of the Company as a result of exercising or
refraining from exercising any such right or rights.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of
such non-breaching party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any Holder, shall be
cumulative and not alternative.
</FONT>

<P align="center"><FONT size="2">&#091;SIGNATURES APPEAR ON THE FOLLOWING PAGES&#093;
</FONT>

<P align="center"><FONT size="2">12</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the undersigned, who represent a Supermajority in
Interest of the Investors and a Supermajority in Interest of the
Warrantholders, have executed and delivered this Agreement as of the date first
above written.
</FONT>
<CENTER>
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    <TD colspan="5" valign="top" align="left"><FONT size="2">PARTY CITY CORPORATION</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Linda M. Siluk</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Linda M. Siluk</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Title:
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    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
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    <TD colspan="5" valign="top" align="left"><FONT size="2">SPECIAL VALUE BOND FUND, LLC</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
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    <TD colspan="3" valign="top" align="left"><FONT size="2">SVIM/MSM, LLC</FONT></TD>
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    <TD colspan="3" valign="top" align="left"><FONT size="2">its Managing Member</FONT></TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">TENNENBAUM &#038; CO., LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">its Managing Member</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Michael E. Tennenbaum</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Michael E. Tennenbaum</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Managing Member</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5" valign="top" align="left"><FONT size="2">SPECIAL ABSOLUTE RETURN FUND, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">SVAR/MM, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">its Managing Member</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">TENNENBAUM &#038; CO., LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">its Managing Member</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Michael E. Tennenbaum</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Michael E. Tennenbaum</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Managing Member</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5" valign="top" align="left"><FONT size="2">TENNENBAUM &#038; CO., LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Michael E. Tennenbaum</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Michael E. Tennenbaum</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Managing Member</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="2"><B>ANNEX I</B>
</FONT>

<P align="center"><FONT size="2"><B>SCHEDULE OF INVESTORS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="80%">
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Investor</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Shares of Common Stock</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Promissory Notes</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Special Value Bond Fund,
LLC<BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">2,496,000</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD align="center" valign="top"><FONT size="2">none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">11100 Santa Monica Blvd.<BR>
Suite&nbsp;210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(subject to Warrants)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Los Angeles, CA 90025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Special Absolute Return Fund, LLC <BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
<TD align="center" valign="top"><FONT size="2">

2,594,720
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">11100 Santa Monica Blvd.
Suite&nbsp;210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Los Angeles, CA 90025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Tennenbaum &#038; Co., LLC<BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

114, 061
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">11100 Santa Monica Blvd.
Suite&nbsp;210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Los Angeles, CA 90025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Enhanced Retail Funding,
LLC<BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

458,667
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">c/o Gordon Brothers Equity<BR>
Partners, LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">40 Broad Street</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Boston, MA 02109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Richmond Associates, L.P.<BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

229,000
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">c/o Rubie&#146;s Costume Company,
Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">One Rubie&#146;s Plaza</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Richmond Hill, NY 11418</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Clyde Street Investment,
LLC<BR><BR></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

195,000
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
none</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">5015 Wenlock Rose Court</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Middleton, WI 53562-2374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">

&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">Annex I &#150; Page 1</FONT>




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