-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BWfg1tS5SmMwPOCzrR3OS4Pu8P2Cb6K++jxqz8fiZm0K4CLfPnQiCv18YtimK3uP 2opsEJC7EZ69lt4R/RXU9A== 0000898822-98-000005.txt : 19980106 0000898822-98-000005.hdr.sgml : 19980106 ACCESSION NUMBER: 0000898822-98-000005 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19980105 SROS: NONE GROUP MEMBERS: BRIDGE STREET FUND 1997, L.P. GROUP MEMBERS: CONFETTI ACQUISITION, INC. GROUP MEMBERS: GOLDMAN SACHS GROUP LP GROUP MEMBERS: GOLDMAN, SACHS & CO. GROUP MEMBERS: GOLDMAN, SACHS & CO. OHG GROUP MEMBERS: GS ADVISORS II (CAYMAN), L.P. GROUP MEMBERS: GS ADVISORS, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS II (GERMANY) CIVIL LAW PARTNERSHIP GROUP MEMBERS: GS CAPITAL PARTNERS II OFFSHORE, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS II, L.P. GROUP MEMBERS: STONE STREET ASSET CORP. GROUP MEMBERS: STONE STREET FUND 1997, L.P. GROUP MEMBERS: THE GOLDMAN SACHS GROUP, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMSCAN HOLDINGS INC CENTRAL INDEX KEY: 0001024729 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 133911462 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-49237 FILM NUMBER: 98501055 BUSINESS ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 9143452020 MAIL ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS GROUP LP CENTRAL INDEX KEY: 0000904571 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133501777 STATE OF INCORPORATION: NY FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 85 BROAD ST CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2129021000 MAIL ADDRESS: STREET 1: 85 BROAD STREET CITY: NEW YORK STATE: NY ZIP: 10004 SC 13D/A 1 SCHEDULE 13-D AMENDMENT NO. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13D-101) UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 1) AMSCAN HOLDINGS, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.10 PER SHARE (Title of Class of Securities) 03216N 10 3 (CUSIP Number) DAVID J. GREENWALD, ESQ. GOLDMAN, SACHS & CO. 85 BROAD STREET NEW YORK, NEW YORK 10004 (212) 902-1000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) DECEMBER 19, 1997 (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ] SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CONFETTI ACQUISITION, INC. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY -0- OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER -0- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON -0- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) -0- 14. TYPE OF REPORTING PERSON CO PAGE 2 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS CAPITAL PARTNERS II, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 517.6286775 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 517.6286775 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 517.6286775 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 51.3% 14. TYPE OF REPORTING PERSON PN PAGE 3 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS CAPITAL PARTNERS II OFFSHORE, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 205.7786775 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 205.7786775 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 205.7786775 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% 14. TYPE OF REPORTING PERSON PN PAGE 4 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS CAPITAL PARTNERS II (GERMANY) C.L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION GERMANY 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 19.0926450 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 19.0926450 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 19.0926450 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.9% 14. TYPE OF REPORTING PERSON PN PAGE 5 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON STONE STREET FUND 1997, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 55.5348750 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 55.5348750 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 55.5348750 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.5% 14. TYPE OF REPORTING PERSON PN PAGE 6 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON BRIDGE STREET FUND 1997, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 26.9651250 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 26.9651250 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 26.9651250 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.7% 14. TYPE OF REPORTING PERSON PN PAGE 7 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS ADVISORS, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 517.6286775 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 517.6286775 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 517.6286775 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 51.3% 14. TYPE OF REPORTING PERSON PN PAGE 8 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS ADVISORS II (CAYMAN), L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 205.7786775 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 205.7786775 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 205.7786775 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% 14. TYPE OF REPORTING PERSON PN PAGE 9 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GOLDMAN, SACHS & CO. OHG 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION GERMANY 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 19.0926450 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 19.0926450 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 19.0926450 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.9% 14. TYPE OF REPORTING PERSON PN PAGE 10 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON STONE STREET ASSET CORP. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 82.5000000 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 82.5000000 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 82.5000000 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.2% 14. TYPE OF REPORTING PERSON CO PAGE 11 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GOLDMAN, SACHS & CO. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF; OO 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / X / 6. CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 825 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 825 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 825 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 81.7% 14. TYPE OF REPORTING PERSON BD; PN; IA PAGE 12 OF 32 PAGES SCHEDULE 13D CUSIP NO. 03216N 10 3 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON THE GOLDMAN SACHS GROUP, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7. SOLE VOTING POWER NUMBER OF -0- SHARES 8. SHARED VOTING POWER BENEFICIALLY 825 OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING -0- PERSON WITH 10. SHARED DISPOSITIVE POWER 825 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PER- SON 825 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 81.7% 14. TYPE OF REPORTING PERSON HC; PN PAGE 13 OF 32 PAGES ITEM 1. SECURITY AND ISSUER The Statement on Schedule 13D (the "Schedule 13D"), relating to the Common Stock, par value $0.10 per share (the "Common Stock"), of Amscan Holdings, Inc., a Delaware corpora- tion (the "Issuer"), as previously filed by Confetti Acquisi- tion, Inc., a Delaware corporation ("Confetti"), GS Capital Partners II, L.P., a Delaware limited partnership ("GSCP II"), GS Capital Partners II Offshore, L.P., a Cayman Islands ex- empted limited partnership ("GSCP II Offshore"), GS Capital Partners II (Germany) Civil Law Partnership (with limitation of liability), a German civil law partnership ("GSCP II Germany" and, together with GSCP II and GSCP II Offshore, "GSCP"), GS Advisors, L.P., a Delaware limited partnership ("GS Advisors"), GS Advisors II (Cayman), L.P., a Cayman Islands exempted limited partnership ("GS Advisors Cayman"), Goldman, Sachs & Co. oHG, a German general partnership ("GS oHG"), Goldman, Sachs & Co., a New York limited partnership ("Goldman Sachs"), and The Goldman Sachs Group, L.P., a Delaware limited partnership ("GS Group" and, together with Confetti, GSCP, GS Advisors, GS Advisors Cayman, GS oHG and Goldman Sachs, the "Original Reporting Persons"). The Original Reporting Persons, together with Bridge Street Fund 1997, L.P., a Delaware limited partnership ("Bridge Street"), Stone Street Fund 1997, L.P., a Delaware limited partnership ("Stone Street"), and Stone Street Asset Corp., a Delaware corporation ("Stone Asset" and, together with Bridge Street, Stone Street and the Original Reporting Persons, the "Reporting Persons") hereby file this Amendment No. 1 (this "Amendment No. 1") to the Schedule 13D. GSCP together with Stone Street and Bridge Street are referred to herein as the "GS Funds." Unless otherwise indicated, all capitalized terms not otherwise defined herein shall have the same meanings as those set forth in the Schedule 13D. ITEM 2. IDENTITY AND BACKGROUND This Amendment No. 1 is filed jointly by the Reporting Persons and the information contained herein amends and supplements the information contained in the Schedule 13D. Goldman Sachs and GS Group may be deemed, for purposes of this Amendment No. 1, to own beneficially 825 shares of Common Stock through the GS Funds of which affiliates of Goldman Sachs and GS Group are the general partner, managing general partner or the managing partner. An amendment adding Stone Street, Bridge Street and Stone Asset to the agreement between the Reporting Persons relating to the joint filing of this Schedule 13D is attached as Exhibit 4 hereto. Goldman Sachs and GS Group each disclaim ownership of shares of Common Stock beneficially owned by the GS Funds to the extent of partnership interests in the GS Funds held by persons other than GS Group or its affiliates. PAGE 14 OF 32 PAGES As a result of the transactions more fully described in Item 4 herein, as amended, Confetti was merged with and into the Issuer and Confetti's separate corporate existence terminated, ceased to be the beneficial owner of more than five percent of Common Stock, and thus ceased to be a Reporting Person. Stone Street and Bridge Street were formed for the purpose of investing in equity and equity-related securities primarily acquired or issued in leveraged acquisitions, reorga- nizations and other private equity transactions and in other financial instruments. Stone Asset is the sole general partner of Stone Street and the managing general partner of Bridge Street. The principal business address of each of Stone Street, Bridge Street and Stone Asset is 85 Broad Street, New York, New York 10004. The name, business address, present principal occupa- tion or employment and citizenship of each director of GS Corp. and GS L.L.C. and of each member of the executive committees of GS Corp., GS L.L.C., GS Group and Goldman Sachs are set forth on Schedule I hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each director and executive of- ficer of GS Advisors, Inc. and GS Advisors II, Inc., each a Delaware corporation and the sole general partner of GS Advi- sors and GS Advisors Cayman, respectively, are set forth in Schedule II-A hereto and are incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each Managing Director of Gold- man, Sachs & Co. Finanz GmbH which is the managing partner of GS oHG are set forth in Schedule II-B hereto and are incorpo- rated herein by reference. The name, business address, present principal occupation or employment and citizenship of each di- rector and each executive officer of Stone Asset are set forth on Schedule II-C hereto and are incorporated herein by refer- ence. During the last five years, none of the Reporting Persons, or, to the best knowledge of each of the Reporting Persons, any of the persons listed on Schedules I or II-A, II-B or II-C hereto, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (ii) except as set forth on Schedule III hereto, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION PAGE 15 OF 32 PAGES The $61.875 million used by the GSCP Funds to purchase the shares of Confetti Common Stock which were converted in the Merger into shares of Common Stock of the Issuer (as described below under Item 4) were obtained by such entities from capital contributions by their partners and from the available funds of such entities. In connection with the Merger, the Issuer entered into several related financing transactions including (i) bor- rowings of $117.0 million under senior credit facilities with Goldman Sachs Credit Partners L.P., as Arranger and Syndication Agent, and Fleet National Bank, as Administrative Agent, and (ii) the issuance of $110.0 million aggregate principal amount of 9-7/8% Senior Subordinated Notes due 2007, with Goldman, Sachs & Co. as Initial Purchaser. The Issuer also received the contribution of $5.625 million in equity by certain management employees of the Issuer, and the Estate of John A. Svenningsen (the "Estate") retained an equity interest in the Issuer of approximately $7.5 million. None of the persons listed on Schedules I or II-A, II-B or II-C hereto has contributed any funds or other consid- eration towards the purchase of the securities of the Issuer, except insofar as they may have partnership interests in any of the Reporting Persons and have made capital contributions to any of the Reporting Persons, as the case may be. ITEM 4. PURPOSE OF TRANSACTION. As previously reported in the Schedule 13D, on August 10, 1997, the Issuer and Confetti entered into the Merger Agreement, providing for the recapitalization of the Issuer and the Merger of Confetti with and into the Issuer, with the Is- suer as the surviving corporation. On December 19, 1997, the Merger was consummated (the "Effective Time") and pursuant to the Merger Agreement, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares of Common Stock owned, directly or indirectly, by the Issuer or by Confetti and (ii) shares of Common Stock subject to dissenters' rights) were converted, at the election of each of the Issuer's stockholders, into the right to receive from the Issuer either (A) $16.50 in cash (the "Cash Consideration") or (B) $9.33 in cash plus a retained interest in the Issuer equal to one share of Common Stock for every 150,000 shares held by such stock- holder (the "Mixed Consideration"), with fractional shares of Common Stock to be paid in cash. The Estate, which owned approximately 72% of the outstanding shares of Common Stock immediately prior to the Effective Time, elected to retain almost 10% of the outstanding shares of Common Stock. No other stockholder elected to retain shares. Also pursuant to the Merger Agreement, at the Effective Time each outstanding share of Confetti Common Stock, par value $0.10 per share ("Confetti PAGE 16 OF 32 PAGES Common Stock"), was converted into an equal number of shares of Common Stock of the Issuer as surviving corporation in the Merger. Accordingly, in the Merger the 825 shares of Confetti Common Stock owned by the GS Funds immediately prior to the Effective Time were converted into 825 shares of Common Stock, representing approximately 81.7% of the 1,010 issued and outstanding shares of the Issuer following the Effective Time. As of the Effective Time, the members of the Board of Directors of the Issuer became Terence M. O'Toole, Sanjeev K. Mehra and Joseph P. DiSabato. Messrs. O'Toole and Mehra are managing directors of Goldman Sachs. Mr. DiSabato's present principal occupation is as an associate of Goldman Sachs. The composition of the Board of Directors of the Issuer is subject to change from time to time, but representatives or employees of the Reporting Persons are expected to constitute a majority of the Board of Directors. In that capacity, such persons will be consulted, and will vote, on matters that are presented to the Board of Directors, including sales of assets, extraordinary corporate transactions and changes to the Issuer's capitalization, dividend policy, business or corporate structure. As previously reported, in connection the with the Merger Agreement, Confetti entered into the Voting Agreement with the Estate and the Individual (previously filed as Exhibit 2 to the Schedule 13D). The Voting Agreement terminated ac- cording to its terms upon the consummation of the Merger at the Effective Time. Concurrent with the Merger, the certificate of incor- poration of the Issuer, as in effect immediately prior to the Merger, was amended so as to read in its entirety in the form set forth as Exhibit A to the Merger Agreement (previously filed as Exhibit 3 to the Schedule 13D) so that, among other things, the authorized capital stock of the Issuer was set at 50 million shares of Common Stock and no shares of preferred stock were authorized. Pursuant to the Merger Agreement, at the Effective Time the By-laws of Confetti became the By-laws of the Issuer, with certain conforming changes made immediately thereafter. Following the Merger, the Common Stock was delisted from the Nasdaq National Market and the Issuer filed a Form 15 with the Securities and Exchange Commission suspending the Issuer's duty to file reports under Section 15(d) of the Ex- change Act and seeking to deregister the Common Stock under the Exchange Act. The preceding summary of certain provisions of and Exhibits to the Merger Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of such agreements, copies of which have previously been filed PAGE 17 OF 32 PAGES as exhibits to the Schedule 13D, and incorporated therein by reference. The GS Funds acquired the shares of Confetti Common Stock for the purpose of acquiring an equity interest in the Issuer by virtue of the shares of Confetti Common Stock being converted into shares of Common Stock of the Issuer in the Merger. The Reporting Persons intend to review on a continu- ing basis their investment in the Issuer, and each Reporting Person reserves the right to change its plans and intentions at any time, as it deems appropriate. Accordingly, each Reporting Person may decide to increase or decrease its investment in the Issuer depending upon subsequent developments affecting the Is- suer, the Issuer's business and prospects, other investment and business opportunities available to the Reporting Person, gen- eral market and economic conditions, tax considerations and other factors. In addition, the Reporting Persons understand that the Issuer believes that opportunities exist to make acquisitions of complementary businesses, and that the Issuer has received and continues to receive inquiries from time to time with respect to the possible acquisition by the Issuer of other entities. The Reporting Persons understand that Issuer intends to pursue acquisition opportunities aggressively. Other than as described above, none of the Reporting Persons or, to the knowledge of the Reporting Persons, any of the persons listed on Schedules I or II-A, II-B or II-C hereto, has any plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of December 19, 1997, GSCP II may be deemed to own beneficially and directly, and its general partner, GS Ad- visors, may be deemed to own beneficially and indirectly, 517.628775 shares of Common Stock, or approximately 51.3% of the shares of Common Stock issued and outstanding. GS Advisors disclaims beneficial ownership of the securities reported herein except to the extent of its pecuniary interest in such securities. As of December 19, 1997, GSCP II Offshore may be deemed to own beneficially and directly, and its general part- ner, GS Advisors Cayman, may be deemed to own beneficially and indirectly, 205.7786775 shares of Common Stock, or ap- proximately 20.4% of the shares of Common Stock issued and out- standing. GS Advisors Cayman disclaims beneficial ownership of the securities reported herein except to the extent of its pe- cuniary interest in such securities. PAGE 18 OF 32 PAGES As of December 19, 1997, GSCP II Germany may be deemed to own beneficially and directly, and its general part- ner, GS oHG, may be deemed to own beneficially and indirectly, 19.0926450 shares of Common Stock, or approximately 1.9% of the shares of Common Stock issued and outstanding. GS oHG dis- claims beneficial ownership of the securities reported herein except to the extent of its pecuniary interest in such securi- ties. As of December 19, 1997, Stone Street may be deemed to own beneficially and directly 55.5348750 shares of Common Stock, or approximately 5.5% of the shares of Common Stock is- sued and outstanding. As of December 19, 1997, Bridge Street may be deemed to own beneficially and directly 26.9651260 shares of Common Stock, or approximately 2.7% of the shares of Common Stock issued and outstanding. Stone Asset, general partner of Stone Street and managing general partner of Bridge Street, may be deemed to own beneficially and indirectly 82.5000000 shares of Common Stock, or approximately 8.2% of the shares of Common Stock issued and outstanding. Stone Asset disclaims beneficial ownership of the securities reported herein except to the extent of its pecuniary interest in such securities. As of December 19, 1997, Goldman Sachs and GS Group may, for purposes of this Schedule 13D, be deemed to benefi- cially own the 825 shares of Common Stock through the GS Funds. Based on such holdings, Goldman Sachs and GS Group could be deemed to beneficially own as of December 19, 1997, 825 shares of Common Stock, or approximately 81.7% of the outstanding shares of Common Stock. Goldman Sachs and GS Group disclaim beneficial ownership of the shares of Common Stock beneficially owned by the GSCP Funds to the extent of partnership interests in the GSCP Funds held by persons other than Goldman Sachs, GS Group or their affiliates. None of the Reporting Persons, and, to the knowledge of each of the Reporting Persons, none of the other persons listed on Schedules I or II-A, II-B or II-C, beneficially owns any shares of Common Stock other than as set forth herein. (b) Each Reporting Person shares the power to vote or direct the vote and dispose or direct the disposition of shares of Common Stock beneficially owned by such Reporting Person as indicated in pages 2 through 13 above. (c) Except as described in Item 4 hereof, no trans- actions in the Common Stock were effected by the Reporting Per- sons, or, to the best knowledge of any of the Reporting Per- sons, any of the directors and officers of Confetti or the per- sons listed on Schedules I or II-A, II-B or II-C hereto, during the 60-day period preceding December 19, 1997. PAGE 19 OF 32 PAGES (d) No person other than the Reporting Persons have the right to receive dividends from, or the proceeds from the sale of, the shares of Common Stock beneficially owned by such Reporting Persons. (e) Pursuant to the Merger, Confetti was merged with and into the Issuer and Confetti's separate corporate existence terminated, ceased to be the beneficial owned or more than five percent of the Common Stock, and thus ceased to be a Reporting Person. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATION- SHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. On December 19, 1997, the Issuer and the GS Funds, the Estate and certain employees of the Issuer entered into the Stockholders' Agreement (the "Stockholders' Agreement"). The Stockholders' Agreement provides, among other things, for (i) the right of the Estate and such employees (together, the "Non- GSCP Investors") to participate in, and the right of the GSCP Funds to require the Non-GSCP Investors to participate in, certain sales of Common Stock by the GSCP Funds, (ii) prior to an initial public offering of the stock of the Issuer (as defined in the Stockholders' Agreement), certain rights of the Issuer to purchase, and certain rights of the Non-GSCP Investors (other than the Estate) to require the Issuer to purchase (except in the case of termination of employment by such Non-GSCP Investors) all, but not less than all, of the shares of Common Stock owned by a Non-GSCP Investor (other than the Estate) upon the termination of employment or death of such Non-GSCP Investor, at prices determined in accordance with the Stockholders' Agreement and (iii) certain additional restrictions on the rights of the Non-GSCP Investors to transfer shares of Common Stock. Also under the Stockholders' Agreement, the GSCP Funds will be entitled, subject to certain limitations, to require the Issuer to register the Common Stock, including, at the election of the GSCP Funds, in an underwritten offering. In addition, subject to certain limitations, if the Issuer proposes to register for sale by the Issuer under the Securities Act any of its equity securities or equity securities held by the GSCP Funds (except for certain registrations relating to shares issued in business combinations or pursuant to employee benefit plans), including pursuant to a demand by the GSCP Funds, in a manner that would permit registration of shares of Common Stock for sale by the GSCP Funds or the Non-GSCP Investors to the public under the Securities Act in an underwritten offering, then the Issuer will provide the GSCP Funds and the Non-GSCP Investors an opportunity to register their shares of Common Stock on the same terms and conditions (a "Piggyback Registration"). In connection with each demand registration or Piggyback Registration, the Issuer will pay all expenses incident to PAGE 20 OF 32 PAGES performance of or compliance with such registration under the Stockholders' Agreement, provided that the GSCP Funds and each Non-GSCP Investor will pay any underwriting discounts and commissions and transfer taxes, if any, relating to the sale of its registrable securities pursuant to such registration. In addition, the Stockholders' Agreement provides that, in the event of a registration pursuant to the terms of the Stockholders' Agreement, the Issuer will indemnify the seller (and its directors, officers, fiduciaries, employees and stockholders, among others) of any shares of Common Stock covered by such registration statement against certain claims and expenses, including under the Securities Act and Exchange Act. The Stockholders' Agreement also provides for similar indemnification by the sellers of such shares of the Issuer (and its directors, officers, fiduciaries, employees and stockholders, among others). In addition, the Stockholders' Agreement provides for, on request of the Issuer (or the underwriter of the offering, if any), certain limitations on sales of shares of Common Stock (or certain other securities of the Issuer, including options) by the GSCP Funds and/or the Non-GSCP Investors within 14 days before and 180 days after the effective date of a registration statement filed in connection with a registration affording the GSCP Funds and the Non-GSCP Investors registration rights pursuant to the Stockholders' Agreement. Similar limitations apply to the Issuer on request of the underwriter of any offering in connection with a registration demanded by the GSCP Funds, with certain exceptions. The Stockholders' Agreement became effective at the Effective Time and will terminate (i) with respect to the rights and obligations of and restrictions on the GSCP Funds and the Non-GSCP Investors in connection with certain restrictions on the transfer of shares of Common Stock when the GSCP Funds and their affiliates no longer hold at least 40% of the outstanding shares of Common Stock, on a fully diluted basis; provided that the Stockholders' Agreement will terminate in such respect in any event if the Issuer enters into certain transactions resulting in the GSCP Funds, their affiliates, the Non-GSCP Investors, and each of their respective permitted transferees, owning less than a majority of the outstanding voting power of the entity surviving such transaction; and (ii) with respect to the registration matters described above, with certain exceptions, on the earlier of (1) the date on which there are no longer any registrable securities outstanding (as determined under the Stockholders' Agreement) and (2) the twentieth anniversary of the Stockholders' Agreement. The foregoing description of the Stockholders' Agree- ment is qualified in its entirety by reference to the Stock- holders' Agreement, a copy of which is filed as Exhibit 5 hereto and is incorporated herein by reference. In addition, in connection with the Merger, the Issuer entered into certain financing transactions with a Reporting Person and entities related to certain of the PAGE 21 OF 32 PAGES Reporting Persons, as described in Item 3 of this Amendment No. 1 to the Schedule 13D. Copies of the Purchase Agreement and the Exchange and Registration Rights Agreement relating to the issuance of the Senior Subordinated Notes are filed as Exhibits 6 and 7 hereto, respectively, and are incorporated herein by reference. The foregoing description of such agreements is qualified in its entirety by reference to such agreements. Except as set forth in the Schedule 13D and amended by this Amendment No. 1, to the best knowledge of the Reporting Persons, there are no other contracts, arrangements, under- standings or relationships (legal or otherwise) among the per- sons named in Item 2 or listed on Schedules I or II-A, II-B or II-C hereto, and between such persons and any person with re- spect to any securities of the Issuer, including but not lim- ited to, transfer or voting of any of the securities of the Issuer, joint ventures, loan or option arrangements, puts or calls, guarantees or profits, division of profits or loss, or the giving or withholding of proxies, or a pledge or contin- gency the occurrence of which would give another person voting power over the securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 4. Amendment to Joint Filing Agreement, dated as of December 19, 1997, by the Reporting Persons, relating to the filing of a joint statement on Schedule 13D. 5. Stockholders' Agreement, dated as of December 19, 1997, by and between the Issuer, the GSCP Funds, the Estate and certain management employ- ees of the Issuer. 6. Purchase Agreement, dated as of December 15, 1997, by and between the Issuer, the Guarantors party thereto and Goldman Sachs. 7. Exchange and Registration Rights Agreement, dated as of December 19, 1997, by and among the Issuer, the Guarantors party thereto and Goldman Sachs. PAGE 22 OF 32 PAGES SIGNATURE After reasonable inquiry and to the best of each of the undersigned's knowledge and belief, the undersigned certi- fies that the information set forth in this statement is true, complete and correct. Dated: December 19, 1997 CONFETTI ACQUISITION, INC. By: /s/ Joseph P. DiSabato Name: Joseph P. DiSabato Title: Vice President GS CAPITAL PARTNERS II, L.P. By: GS Advisors, L.P., its general partner By: GS Advisors, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS ADVISORS, L.P. By: GS Advisors, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President PAGE 23 OF 32 PAGES GS CAPITAL PARTNERS II OFFSHORE, L.P. By: GS Advisors II (Cayman), L.P., its general partner By: GS Advisors II, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS ADVISORS II (CAYMAN), L.P. By: GS Advisors II, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II (GERMANY) CIVIL LAW PARTNERSHIP (with limitation of liability) By: GOLDMAN, SACHS & CO. OHG, its managing partner By: GOLDMAN, SACHS & CO. Finanz GmbH, its managing partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Attorney-in-Fact GOLDMAN, SACHS & CO. OHG By: GOLDMAN, SACHS & CO. Finanz GmbH, its managing partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Attorney-in-Fact PAGE 24 OF 32 PAGES STONE STREET FUND 1997, L.P. By: Stone Street Asset Corp., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President BRIDGE STREET FUND 1997, L.P. By: Stone Street Asset Corp., its managing general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President STONE STREET ASSET CORP. By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President GOLDMAN, SACHS & CO. By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Managing Director THE GOLDMAN SACHS GROUP, L.P. By: The Goldman Sachs Corporation, its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Executive Vice President PAGE 25 OF 32 PAGES EXHIBIT INDEX Exhibit Description 1.* Joint Filing Agreement, dated August 20, 1997, among Goldman, Sachs & Co., The Goldman Sachs Group, L.P., GS Advisors, L.P., GS Advisors II (Cayman), L.P., Goldman, Sachs & Co. oHG, GS Capital Partners II, L.P., GS Capital Partners II Offshore, L.P., GS Capital Partners II (Ger- many) C.L.P. and Confetti Acquisition, Inc., relating to the filing of a joint statement on Schedule 13D. 2.* Agreement and Plan of Merger, dated as of August 10, 1997, between Amscan Holdings, Inc. and Con- fetti Acquisition, Inc. 3.* Voting Agreement, dated as of August 10, 1997, among Confetti Acquisition, Inc., the Estate of John A. Svenningsen and Christine Svenningsen. 4. Amendment to Joint Filing Agreement, dated as of December 19, 1997, by the Reporting Persons, relating to the filing of a joint statement on Schedule 13D. 5. Stockholders' Agreement, dated as of December 19, 1997, by and between the Issuer, the GSCP Funds, the Estate and certain management employ- ees of the Issuer. 6. Purchase Agreement, dated as of December 15, 1997, by and between the Issuer, the Guarantors party thereto and Goldman Sachs. 7. Exchange and Registration Rights Agreement, dated as of December 19, 1997, by and among the Issuer, the Guarantors party thereto and Goldman Sachs. ___________________ * Previously filed. PAGE 26 OF 32 PAGES SCHEDULE I The name of each director of The Goldman Sachs Corpo- ration and The Goldman, Sachs & Co. L.L.C. and of each member of the executive committees of The Goldman Sachs Corporation, The Goldman, Sachs & Co. L.L.C., The Goldman Sachs Group, L.P. and Goldman, Sachs & Co. is set forth below. The business address of each natural person listed below except John A. Thain and John L. Thornton is 85 Broad Street, New York, NY 10004. The business address of John A. Thain and John L. Thornton is 133 Fleet Street, London EC4A 2BB, England. Each person is a citizen of the United States of America. The present principal occupation or employment of each of the listed persons is as a managing director of Gold- man, Sachs & Co. or another Goldman Sachs operating entity and a member of the executive committee. Jon Z. Corzine Henry M. Paulson, Jr. Roy J. Zuckerberg Robert J. Hurst John A. Thain John L. Thornton PAGE 27 OF 32 PAGES SCHEDULE II-A The name, position and present principal occupation of each director and executive officer of GS Advisors, Inc., the sole general partner of GS Advisors, L.P., which is the sole general partner of GS Capital Partners II, L.P., and GS Advisors II, Inc., the sole general partner of GS Advisors II (Cayman), L.P., which is the sole general partner of GS Capital Partners II Offshore, L.P., are set forth below. The business address for all the executive officers and directors listed below except Henry Cornell is 85 Broad Street, New York, NY 10004. The business address of Henry Cor- nell is 3 Garden Road, Hong Kong. All executive officers and directors listed below are citizens of the United States of America. Name Position Present Principal Occupation Richard A. Friedman Director/President Managing Director of Gold- man, Sachs & Co. Terence M. O'Toole Director/Vice President Managing Director of Gold- man, Sachs & Co. Elizabeth S. Cogan Treasurer Managing Director of Gold- man, Sachs & Co. Joseph H. Gleberman Director/Vice President Managing Director of Gold- man, Sachs & Co. Henry Cornell Vice President Managing Director of Goldman Sachs (Asia) L.L.C. Barry S. Volpert Director/Vice President Managing Director of Gold- man, Sachs & Co. Eve M. Gerriets Vice President/ Vice President of Goldman, Secretary Sachs & Co. David J. Greenwald Assistant Secretary Vice President of Goldman, Sachs & Co. C. Douglas Fuge Assistant Treasurer Managing Director of Gold- man, Sachs & Co. Katherine B. Enquist Vice President Vice President of Goldman, Sachs & Co. PAGE 28 OF 32 PAGES SCHEDULE II-B The name, position and present principal occupation of each executive officer and director of Goldman, Sachs & Co. Finanz GmbH which is the sole managing general partner of Goldman, Sachs & Co. oHG are set forth below. The business address for Paul M. Achleitner and Ernst Tschoeke is MesseTurm, 60308 Frankfurt am Main, Germany. The business address for Philip D. Murphy is 3 Garden Road, Hong Kong. Of the directors and executive officers listed below, Philip D. Murphy is a United States citizen, Paul M. Achleitner is a citizen of Austria, and Ernst Tschoeke is a citizen of Germany. Present Principal Name Position Occupation Paul M. Achleitner Managing Director Managing Director of Gold- man, Sachs & Co. oHG Philip D. Murphy Managing Director Managing Director of Gold- man, Sachs & Co. oHG Ernst Tschoeke Managing Director Director of Goldman, Sachs & Co. oHG PAGE 29 OF 32 PAGES SCHEDULE II-C The name, position and present principal occupation of each director and executive officer of Stone Street Asset Corp., the sole general partner of Stone Street Fund 1997, L.P. and the managing general partner of Bridge Street Fund 1997, L.P., are set forth below. The business address for all the executive officers and directors listed below is 85 Broad Street, New York, New York 10004. All executive officers and directors listed below are United States citizens. Present Principal Name Position Occupation Richard A. Friedman Director/Vice President Managing Director of Gold- man, Sachs & Co. Avi M. Nash Director/Vice President Managing Director of Gold- man, Sachs & Co. Jeffrey B. Goldenberg Director/Vice President Managing Director of Gold- man, Sachs & Co. William J. McMahon Director/Vice President Vice President of Goldman, Sachs & Co. Dinakar Singh Director/Vice President Vice President of Goldman, Sachs & Co. Jonathan L. Kolatch Director/Vice President Managing Director of Gold- man, Sachs & Co. Sanjeev K. Mehra Director/Vice President Managing Director of Gold- man, Sachs & Co. Eric M. Mindich Director/Vice President/ Managing Director of Treasurer Goldman, Sachs & Co. Peter G. Sachs Director/Vice President Limited Partner of The Gold- man Sachs Group, L.P. Glenn R. Fuhrman Director/Vice President Managing Director of Gold- man, Sachs & Co. PAGE 30 OF 32 PAGES Present Principal Name Position Occupation Peter M. Sacerdote Director/Chairman/ Limited Partner of The C.E.O./President Goldman Sachs Group, L.P. David J. Greenwald Vice President Vice President of Goldman, Sachs & Co. Esta E. Stecher Vice President Managing Director of Gold- man, Sachs & Co. Richard A. Yacenda Vice President Vice President of Goldman, Sachs & Co. C. Douglas Fuge Assistant Treasurer Managing Director of Gold- man, Sachs & Co. Eve M. Gerriets Vice President/Secretary Vice President of Goldman, Sachs & Co. Katherine B. Enquist Vice President Vice President of Goldman, Sachs & Co. PAGE 31 OF 32 PAGES SCHEDULE III In settlement of Securities and Exchange Commission Administrative Proceeding File NO. 3-7646 In the Matter of the Distribution of Securities Issued by Certain Government Spon- sored Enterprises, Goldman, Sachs & Co. (the "Firm"), along with numerous other securities firms, without admitting or de- nying any of the findings of the Securities and Exchange Com- mission (the "SEC") consented to the entry of an Order, dated January 16, 1992. The SEC found that the Firm, in connection with its participation in the primary distributions of certain unsecured debt securities issued by Government Sponsored Enter- prises ("GSEs"), made and kept certain records that did not accurately reflect the Firm's customers' orders for GSEs' secu- rities and/or offers, purchases or sales by the Firm of the GSEs' securities effected by the Firm in violation of Section 17(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and 17 C.F.R. Sections 240.17a-3 and 240.17a- 4. The Firm was ordered to cease and desist from commit- ting or causing future violations of the aforementioned sec- tions of the Exchange Act in connection with any primary dis- tributions or unsecured debt securities issued by the GSEs, pay a civil money penalty to the United States Treasury in the amount of $100,000 and maintain policies and procedures reason- ably designed to ensure the Firm's future compliance with the aforementioned sections of the Exchange Act in connection with any primary distributions of unsecured debt securities issued by the GSEs. In Securities and Exchange Commission Administrative Proceeding File No. 3-8282 In the Matter of Goldman, Sachs & Co., the Firm, without admitting or denying any of the SEC's allegations, settled administrative proceedings involving al- leged books and records and supervisory violations relating to eleven trades of U.S. Treasury securities in the secondary mar- kets in 1985 and 1986. The SEC alleged that the Firm had failed to maintain certain records required pursuant to Section 17(a) of the Exchange Act and had also failed to supervise ac- tivities relating to the aforementioned trades in violation of Section 15(b)(4)(E) of the Exchange Act. The Firm was ordered to cease and desist from commit- ting or causing any violation of the aforementioned sections of the Exchange Act, pay a civil money penalty to the SEC in the amount of $250,000 and establish policies and procedures rea- sonably designed to assure compliance with Section 17(a) of the Exchange Act and Rules 17a-3 and 17a-4 thereunder. PAGE 32 OF 32 PAGES EX-99 2 EXHIBIT 4 Exhibit 4 AMENDMENT TO JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing of a Statement on Schedule 13D (including any and all amendments thereto) with respect to the shares of Amscan Holdings, Inc. and further agree to the filing of this Amendment to the Joint Filing Agreement, dated August 20, 1997, as an Exhibit thereto. In addition, each party to this Amendment expressly authorizes each other party to such Joint Filing Agreement, as amended, to file on its behalf any and all amendments to such Statement on Schedule 13D. Dated: December 19, 1997 CONFETTI ACQUISITION, INC. By: /s/ Joseph P. DiSabato Name: Joseph P. DiSabato Title: Vice President GS CAPITAL PARTNERS II, L.P. By: GS Advisors, L.P., its general partner By: GS Advisors, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS ADVISORS, L.P. By: GS Advisors, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II OFFSHORE, L.P. By: GS Advisors II (Cayman), L.P., its general partner By: GS Advisors II, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS ADVISORS II (CAYMAN), L.P. By: GS Advisors, II, Inc., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II (Germany) CIVIL LAW PARTNERSHIP (with limitation of liability) By: GOLDMAN, SACHS & CO. oHG, its managing partner By: GOLDMAN, SACHS & CO. Finanz GmbH, its managing partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Attorney-in-Fact GOLDMAN, SACHS & CO. oHG By: Goldman, Sachs & Co. Finanz GmbH, its managing partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Attorney-in-Fact STONE STREET FUND 1997, L.P. By: Stone Street Asset Corp., its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President BRIDGE STREET FUND 1997, L.P. By: Stone Street Asset Corp., its managing general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President STONE STREET ASSET CORP. By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President GOLDMAN, SACHS & CO. By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Managing Director THE GOLDMAN SACHS GROUP, L.P. By: The Goldman Sachs Corporation, its general partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Executive Vice President EX-99 3 EXHIBIT 5 Exhibit 5 STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT, dated as of December 19, 1997 (the "Agreement"), by and among AMSCAN HOLDINGS, INC., a Delaware corporation (the "Company"), GS CAPITAL PARTNERS II, L.P., a Delaware limited partnership ("GSCP II"), GS CAPITAL PARTNERS II OFFSHORE, L.P., a Cayman Islands exempt limited partnership ("GSCP II Offshore"), GOLDMAN, SACHS & CO. VERWAL- TUNGS GMBH, a corporation recorded in the Commercial Register Frankfurt, as nominee for GS Capital Partners II Germany C.L.P. ("GSCP II Germany"), STONE STREET FUND 1997, L.P., a Delaware limited partnership ("Stone Street"), BRIDGE STREET FUND 1997, L.P., a Delaware limited partnership ("Bridge Street" and, to- gether with GSCP II, GSCP II Offshore, GSCP II Germany and Stone Street, "GSCP") and each of the individuals and the Es- tate of John A. Svenningsen (the "Estate") listed on Schedule I hereto (collectively, including the Estate, the "Management In- vestors"). References herein to the Company shall mean the Company as the surviving corporation in the Merger (as defined below). Employees, directors, consultants and certain other Persons (as defined below) having significant business rela- tionships with the Company and its Affiliates (as defined be- low) may be issued shares of Common Stock (as defined below) (or other equity securities of the Company) or securities con- vertible into or exchangeable for Common Stock (or other equity securities of the Company) subject to the terms of this Agree- ment and, if so issued, the Company, without the consent of any other party hereto, may amend this Agreement to allow any such Person the Company so chooses to become an additional Manage- ment Investor hereunder, subject to such Person becoming a sig- natory to this Agreement. The parties hereto (other than the Company) and any other Person who shall hereafter acquire shares of Common Stock of the Company (or other equity securi- ties of the Company) or securities convertible into or ex- changeable for Common Stock (or other equity securities of the Company) pursuant to the provisions of, and/or subject to the restrictions and rights set forth in, this Agreement (including through participation in certain Company stock or option plans) are sometimes hereinafter referred to individually as a "Stock- holder" or collectively as the "Stockholders." RECITALS A. The Company, as of the Effective Date (as defined herein), will have an authorized capital stock consisting of 50,000,000 shares of Common Stock, par value $0.10 per share (the "Common Stock"), each share of which is entitled to one vote on all stockholder matters as more specifically provided in the amended certificate of incorporation of the Company (the "Amended Certificate"), and of which 1,010 shares will be is- sued and outstanding immediately after the Effective Date. As used in this Agreement, Common Stock shall include any shares of Restricted Stock (as defined below) of the Company granted to Management Investors; provided, however, that to the extent the Transfer (as defined herein) thereof is otherwise prohib- ited or restricted, no rights to Transfer, including pursuant to Section 2.4 or Article III, shall be granted hereunder. In addition, the Company will have reserved, as of the Effective Date, 120 shares of Common Stock for issuance pursuant to the Company 1997 Stock Incentive Plan (the "Stock Incentive Plan"). B. An Agreement and Plan of Merger, dated August 10, 1997 (the "Merger Agreement"), has been executed by and among Confetti Acquisition, Inc., a Delaware corporation ("Con- fetti"), and the Company, pursuant to which Confetti was merged with and into the Company (the "Merger") with the Company as the surviving corporation in the Merger. C. In connection with the Merger, Confetti entered into employment and/or equity agreements with certain Manage- ment Investors (the "Employment Agreements") that provide for, among other things, the investment by such Management Investors in the Common Stock and the grant and/or rollover of Options to such Management Investors. As of or immediately following the Effective Date, the Company has executed or shall execute and become a party to the Employment Agreements. D. In connection with the Merger, Confetti entered into a Voting Agreement, dated August 10, 1997 (the "Voting Agreement"), by and among Confetti, the Estate and a certain individual. -2- E. The individual holdings of Common Stock of each Stockholder, immediately after the closing of the transactions contemplated in the Merger Agreement and the Employment Agree- ments (not assuming the exercise of any Options) are as fol- lows: Number of Shares of Common Stock Name Held After Closing GSCP II 517.6286775 GSCP II Offshore 205.7786775 GSCP II Germany 19.0926450 Stone Street 55.5348750 Bridge Street 26.9651250 Estate of John A. Svenningsen 100.0000000 Gerald C. Rittenberg 60.0000000 James M. Harrison 15.0000000 William Wilkey 6.6666667 Diane D. Spaar 1.3333333 Katherine A. Kusnierz 2.0000000 __________________________ ___________ Total 1,010.0000000 F. The individual holdings of Options to purchase shares of Common Stock of each Stockholder, immediately after the closing of the transactions contemplated in the Merger Agreement and the Employment Agreements are as set forth as follows: Number of Shares of Common Stock Subject to Options Name Held After Closing Gerald C. Rittenberg 16.648 James M. Harrison 16.268 William S. Wilkey 16.441 Diane D. Spaar 11.827 Katherine A. Kusnierz 11.577 Morton Fisher 2.383 William Mark 1.280 Angelo Giummarra 2.477 Karen McKenzie 1.477 Keith Johnson 1.280 Howard Harding 1.280 Walter Thompson 1.144 Charles Phillips 0.478 Susan Scott 1.144 -3- Rose Giagrande 1.238 Randy Harris 0.718 Eric Stollman 1.238 Kathleen Rooney 1.238 James Dotti 1.238 Vincent Anastasi 0.794 Michael A. Correale 2.570 Mark Irvine 0.555 Scott Lametto 0.999 Joseph Walter 0.555 Cheryl Considine 0.999 Patrick Venuti 0.555 Dallas Hartman 0.555 Robert Yedowitz 0.555 Nigel Keane 0.555 Connie Weckman 0.555 Ken Danforth 0.555 __________________________ ___________ Total 101.179 G. The parties hereto desire to restrict the sale, assignment, transfer, encumbrance or other disposition of the Common Stock which the parties hereto own or may hereafter ac- quire, and to provide for certain rights and obligations in respect thereof as hereinafter provided. -4- NOW, THEREFORE, in consideration of the premises and of the terms and conditions contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the meanings ascribed to them below: "Affected Holder" shall have the meaning ascribed to it in Section 5.10 hereof. "Affiliate" of a Person shall mean a Person directly or indirectly controlled by, controlling or under common control with such Person. "Agreement" shall have the meaning ascribed to it in the Introduction hereof. "Amended Certificate" shall have the meaning ascribed to it in the Recitals hereof. "Bridge Street" shall have the meaning ascribed to it in the Introduction hereof. "Buy-Out Note" shall mean an unsecured promissory note of the Company, or a direct or indirect subsidiary thereof, which shall have a stated maturity of five (5) years, shall accrue interest at seven (7) percent per annum, shall be prepayable at the option of the Company or such subsidiary at any time, in whole or in part, at its principal amount plus any accrued and unpaid interest, shall provide for the reimbursement of reason- able expenses incurred by the holder to enforce the note and shall accelerate upon the earlier of a Change of Control or the consummation of an IPO. "Change of Control" shall mean (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than GSCP and their Affiliates of a majority of the outstanding voting stock of the Company or (2) the sale of or other disposition (other than by way of merger or consolidation) of all or substantially all of the assets of the Company and its subsidiaries taken as a whole to any Person or group of Persons, other than to a Per- son (or group of Persons) a majority of the outstanding voting stock (or other interests) of which are beneficially owned by GSCP and their Affiliates. "Claims" shall mean losses, claims, damages or liabili- ties, joint or several, actions or proceedings (whether com- menced or threatened). "Common Stock" shall have the meaning ascribed to it in the Recitals hereof. "Company" shall have the meaning ascribed to it in the Introduction hereof. "Confetti" shall have the meaning ascribed to it in the Recitals hereof. "Demand Registration" shall have the meaning ascribed to it in Section 3.1(b) hereof. "Drag-Along Right" shall have the meaning ascribed to it in Section 2.5.1 hereof. "Drag-Along Seller" shall have the meaning ascribed to it in Section 2.5.2 hereof. "Effective Date" shall have the meaning ascribed to it in Section 5.1(a) hereof. "Employment Agreements" shall have the meaning ascribed to it in the Recitals hereof. "Estate" shall have the meaning ascribed to it in the In- troduction hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean fair value as reasonably determined by Goldman Sachs in light of all circumstances in- cluding comparable recent bona fide third party sales. "Goldman Sachs" shall mean Goldman, Sachs & Co. "GSCP", "GSCP II", "GSCP II Germany" and "GSCP II Off- shore" shall have the meanings ascribed to them in the Intro- duction hereof. "IPO" shall mean an underwritten initial public offering or public offerings (on a cumulative basis) of shares of Common Stock pursuant to a registration statement or registration statements under the Securities Act with aggregate gross pro- ceeds to the Company of at least $50 million. -2- "Management Investors" shall have the meaning ascribed to it in the Introduction hereof. "Merger" shall have the meaning ascribed to it in the Re- citals hereof. "Merger Agreement" shall have the meaning ascribed to it in the Recitals hereof. "NASD" shall mean the National Association of Securities Dealers, Inc. "Nasdaq" shall mean The Nasdaq Stock Market, Inc. "New Cost Per Share" shall have the meaning ascribed to it in the Employment Agreement, by and between James M. Harrison and Confetti, dated as of August 10, 1997, as in effect on the date hereof. "Offer Shares" shall have the meaning ascribed to it in Section 2.4.1. "Offeree Stockholders" shall have the meaning ascribed to it in Section 2.4.1. "Options" shall mean options to purchase shares of Common Stock from the Company, whether granted pursuant to the Stock Incentive Plan or otherwise. "Permitted Transferee" shall have the meaning ascribed to it in Sections 2.3.3 and 2.3.4 hereof. "Person" shall mean an individual, corporation, partner- ship, joint venture, trust, unincorporated organization, gov- ernment (or any department or agency thereof) or other entity. "Piggyback Notice" shall have the meaning ascribed to it in Section 3.1(a) hereof. "Piggyback Registration" shall have the meaning ascribed to it in Section 3.1(a) hereof. "Proposed Transferee" means a Person or group as defined in Section 13(d)(3) of the Exchange Act, other than any Stock- holders or their Affiliates (whether any such Affiliate is such prior to or upon consummation of the proposed Transfer, but not solely by virtue of becoming a party to this Agreement), to whom Common Stock is proposed to be Transferred pursuant to the terms of Section 2.4.3(a) or 2.5 of this Agreement. -3- "Registrable Securities" shall mean the shares of Common Stock; provided, however, as to any particular Registrable Se- curities, once issued such securities shall cease to be Reg- istrable Securities when (i) a registration statement with re- spect to the sale of such securities shall have become effec- tive under the Securities Act and such securities shall have been disposed of in accordance with such registration state- ment, (ii) such securities shall have been sold pursuant to Rule 144 (or any successor provision) under the Securities Act, (iii) such securities shall have been otherwise transferred and new certificates for such securities not bearing a legend re- stricting further transfer shall have been delivered by the Company, (iv) such securities shall have ceased to be outstand- ing (and, in the case of shares of Common Stock underlying op- tions granted under the Stock Incentive Plan or underlying op- tions or warrants granted otherwise, such shares of Common Stock shall have ceased to be outstanding after issuance pursu- ant to the exercise of such options or warrants), or (v) in the case of shares of Common Stock held by a Management Investor, such securities shall have been transferred to any Person other than a Management Investor or a Permitted Transferee. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance with Article III of this Agreement, including without limitation, (i) all SEC and stock exchange or the NASD registration and filing fees, (ii) all fees and expenses of complying with securities or "blue sky" laws (including reasonable fees and disbursements of coun- sel for the underwriters in connection with "blue sky" qualifi- cations of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) the fees and disburse- ments of counsel for the Company and of the Company's indepen- dent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, (v) the reasonable fees and disbursements of one counsel retained by the Stockholders (if GSCP is one of the selling Stockholders, such counsel to be selected by GSCP) as a group in connection with each such reg- istration, (vi) any fees and disbursements of underwriters cus- tomarily paid by issuers or sellers of securities and the rea- sonable fees and expenses of any special experts retained in connection with the requested registration, including any fee payable to a qualified independent underwriter within the mean- ing of the rules of the NASD, but excluding underwriting dis- counts and commissions and transfer taxes, if any, (vii) inter- nal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and (viii) securities acts li- ability insurance (if the Company elects to obtain such insur- ance). -4- "Restricted Stock" shall have the meaning ascribed to it in the Employment Agreements. "Rule 144" shall mean Rule 144 under the Securities Act. "Sale Notice" shall have the meaning ascribed to it is Section 2.4.1. "SEC" shall mean the Securities and Exchange Commission. "Section 3.1 Sale Number" shall have the meaning ascribed to it in Section 3.1(d) hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Stock Incentive Plan" shall have the meaning ascribed to it in the Recitals hereof. "Stone Street" shall have the meaning ascribed to it in the Introduction hereof. "Subsidiary Dividend" shall have the meaning ascribed to it in Section 4.1 hereof. "Tag-Along Right" shall have the meaning ascribed to it in Section 2.4.3(a) hereof. "Tag-Along Seller" shall have the meaning ascribed to it in Section 2.4.3(b) hereof. "Tag-Along Shares" shall have the meaning ascribed to it in Section 2.4.2 hereof. "Transfer" shall mean to sell, assign, pledge or encumber or otherwise transfer, directly or indirectly, whether or not for consideration. "Transferee" shall mean any Person to whom a Transfer is made, regardless of the method of Transfer. "Transferor" shall mean any Person by whom a Transfer is made, regardless of the method of Transfer. "Violation" shall have the meaning ascribed to it in Sec- tion 3.3(a) hereof. "Voting Agreement" shall have the meaning ascribed to it in the Recitals hereof. -5- ARTICLE II RESTRICTIONS ON TRANSFERS OF STOCK 2.1 General Prohibition on Transfers. (a) Prohibition on Transfers Generally. No Manage- ment Investor shall, at any time prior to an IPO, Transfer any shares of Common Stock, unless such Transfer is made in accord- ance with Section 2.3, 2.4 or 2.5 or pursuant to a Piggyback Registration, and any Transfer by any Management Investor of any shares of Common Stock owned as of the date hereof or here- after acquired not in accordance with such provisions shall be null and void. (b) Recordation. The Company shall not record upon its books any Transfer of shares of Common Stock held or owned by any of the Management Investors to any other Person except Transfers in accordance with this Agreement. (c) Obligations of Transferees. No Transfer of shares of Common Stock by a Management Investor otherwise per- mitted pursuant to this Agreement (other than pursuant to a Piggyback Registration or pursuant to a Tag-Along Right or Drag-Along Right) shall be effective unless (x) the Transferee (including a Permitted Transferee pursuant to Section 2.3) shall have executed an appropriate document in form and sub- stance reasonably satisfactory to the Company confirming that (i) the Transferee takes such shares subject to all the terms and conditions of this Agreement to the same extent as its Transferor was bound by and entitled to the benefits of such provisions and (ii) the shares shall bear legends, substan- tially in the forms required by Section 2.6, and (y) such docu- ment shall have been delivered to and approved (as described above) by the Company prior to such Transferee's acquisition of shares of Common Stock. (d) Transfers to Competitors. Notwithstanding any- thing to the contrary in this Agreement, no Management Investor shall, at any time, directly or indirectly, Transfer any shares of Common Stock to any Person who is a competitor of the Com- pany or to any Affiliate of such a competitor (other than Transfers to the Company and its Affiliates), unless such Transfer (i) is made in connection with the exercise of a Tag- Along Right pursuant to Section 2.4 or in connection with the exercise of a Drag-Along Right pursuant to Section 2.5, in which event such sale may be effected only in accordance with such Section 2.4 or Section 2.5, as applicable, or (ii) is made -6- in accordance with the terms of this Agreement and is made pur- suant to a widely distributed, underwritten public offering registered under the Securities Act (or an underwritten offer- ing pursuant to the exercise of such Management Investor's pig- gyback registration rights pursuant to Section 3.1(a) hereof) or pursuant to a sale effected through an open market, nondi- rected broker's transaction pursuant to Rule 144 in which the seller does not know that the buyer is a competitor. For pur- poses of this provision, the good faith determination of a ma- jority of the entire Board that a proposed Transferee is a "competitor," made within thirty (30) days of written notice to the Board of the proposed Transfer, shall in all respects be conclusive. 2.2 Compliance with Securities Laws. No Management In- vestor shall Transfer any shares of Common Stock unless the Transfer is made in accordance with the terms of this Agreement and (i) the Transfer is pursuant to an effective registration statement under the Securities Act and in compliance with any other applicable federal securities laws and state securities or "blue sky" laws or (ii) such Management Investor shall have furnished the Company with an opinion of counsel, if reasonably requested by the Company, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that no such registration is required because of the availability of an exemption from registration under the Securities Act and under any applicable state securities or "blue sky" laws and that the Transfer otherwise complies with this Agreement and any other applicable federal securities laws and state securities or "blue sky" laws. 2.3 Permitted Transfers. 2.3.1 GSCP Transfers. (a) GSCP and any Affiliate of GSCP shall be free to Transfer shares of Common Stock to any Person, in whole at any time, or in part from time to time; provided, however, that if such Person is not Affiliate of GSCP, such Transfer shall be subject to Section 2.4 and Section 2.5 hereof. In any Transfer made pursuant to the foregoing to an Affiliate of GSCP, the Transferee shall agree, in connection with such Transfer, for the benefit of the Company, that such Transferee will Transfer back to the Transferor or another con- tinuing Affiliate of GSCP (that will be similarly bound by this sentence) any shares of Common Stock so Transferred, if the Transferee at any time is no longer an Affiliate of GSCP. (b) No Transfer of shares of Common Stock by GSCP or an Affiliate of GSCP otherwise permitted pursuant to this Sec- tion 2.3.1 shall be effective unless the Transferee (whether or not an Affiliate of GSCP) shall have executed an appropriate -7- document in form and substance reasonably satisfactory to the Company confirming that the Transferee takes such shares sub- ject to all the terms and conditions of this Agreement to the same extent as its Transferor was bound by and entitled to the benefits of such provisions. 2.3.2 Management Investors. (a) The restrictions contained in Sections 2.1(a) of this Agreement with respect to Transfers by Management Investors (other than the Estate) of shares of Common Stock shall not apply to any Transfer by a Management Investor (other than the Estate): (i) to or among such Management Investor's spouse, children, grandchildren or other living descendants, or to a trust or family partnership of which there are no principal (i.e., corpus) beneficiaries or partners other than the grantor or one or more of such Manage- ment Investor, spouse or described relatives, and provided, in the case of a trust, that the existing beneficiaries and/or trustee(s) and/or grantor(s) of such trust have the power to act with respect to the trust's assets without court approval and, in the case of a family partnership, that the partners thereof have the power to act with respect to the partnership's assets without court approval and the partnership is not per- mitted to (x) distribute assets to Persons who are not among the relatives listed above or (y) have partners who are not among the relatives listed above, and, in any case, all the partners agree, for the benefit of the Company and GSCP, not to amend such provisions; (ii) to a legal representative of such Management Investor in the event such Management Investor be- comes mentally incompetent or to such Management Investor's personal representative following the death of such Management Investor; (iii) with the prior written approval of the Company, which approval may be granted or withheld by the Board of Di- rectors of the Company in its sole and absolute discretion; and (iv) pursuant to any pledge by a Management Investor to the Company or an Affiliate thereof for money borrowed to purchase shares of Common Stock pursuant to the Employment Agreements, if applicable. (b) The restrictions contained in Section 2.1(a) of this Agreement with respect to Transfers by the Estate shall not apply to any of the following Transfers by the Estate: (i) to a qualified terminable interest property trust in accordance with the terms of the will of the decedent of the Estate or (ii) with the prior written approval of the Company which ap- proval may be granted or withheld by the Board of Directors of the Company in its sole and absolute discretion. 2.3.3 Permitted Transferees. Transferees to whom Transfers are permitted pursuant to clauses (i), (ii) and (iii) of Section 2.3.2(a) and clauses (i) and (ii) of Section -8- 2.3.2(b) are referred to herein as "Permitted Transferees." Any such permitted Transfer shall be subject to the terms of this Agreement, including compliance with Section 2.1(c). 2.3.4 Transfer by Permitted Transferees. The re- strictions contained in Section 2.1(a) of this Agreement with respect to Transfers by Management Investors of shares of Com- mon Stock shall not apply to any Transfer by a Permitted Trans- feree of a Management Investor to such Management Investor or to another Permitted Transferee of such Stockholder, and any such Transferee shall also be a "Permitted Transferee," subject to the provisions of Section 2.3.3. 2.3.5 Other Transfer Restrictions. The restrictions contained in Sections 2.1(a), 2.4 and 2.5 hereof and the provi- sions regarding Permitted Transferees contained in this Section 2.3 shall be in addition to and not in lieu or limitation of any restrictions on the ownership or Transfer of shares of Com- mon Stock (including with respect to any Restricted Stock) con- tained in any Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or ar- rangement or other agreement between Confetti or the Company and any Stockholder; provided, however, that upon the termina- tion of any such Employment Agreement or other such agreement or arrangement or lapsing of such restrictions, the restric- tions and provisions contained herein shall continue in full force and effect pursuant to this Agreement. 2.4 Tag-Along Rights. 2.4.1 Sale Notice. If GSCP proposes to sell any of the Common Stock owned by it, other than (a) to an Affiliate of GSCP, (b) pursuant to the exercise of a Drag-Along Right pursu- ant to Section 2.5 of this Agreement, (c) pursuant to a Demand Registration (which affords piggyback registration rights pur- suant to Section 3.1) or Piggyback Registration, or (d) follow- ing an IPO, sales effected through open market, nondirected broker's transactions pursuant to Rule 144, then GSCP shall first give written notice (the "Sale Notice") to the Company and to each of the Management Investors (such Management Inves- tors, being referred to herein as the "Offeree Stockholders"), stating that GSCP desires to make such sale, referring to Sec- tion 2.4 of this Agreement, specifying the number of shares of Common Stock proposed to be sold by GSCP pursuant to the offer (the "Offer Shares"), and specifying the price, the form of consideration and the material terms pursuant to which such sale is proposed to be made. -9- 2.4.2 Tag-Along Election. Within seven (7) days of the date of receipt of the Sale Notice, each Offeree Stock- holder, other than GSCP, shall deliver to GSCP and to the Com- pany a written notice stating whether the Offeree Stockholder elects to sell a pro rata portion of its Common Stock (equal to (A) the total number of shares of Common Stock owned by such Offeree Stockholder, plus the total number of shares of Common Stock then issuable upon exercise of vested Options then exer- cisable by such Offeree Stockholder, multiplied by (B) a frac- tion, (i) the numerator of which is the number of Offer Shares and (ii) the denominator of which is the total number of shares of Common Stock held by GSCP plus the total number of shares of Common Stock then issuable upon exercise or conversion of any convertible securities, if applicable, then exercisable or con- vertible by GSCP) to such Proposed Transferee on the same terms and conditions as GSCP (with respect to each Offeree Stock- holder, its "Tag-Along Shares"). An election pursuant to the first sentence of this Section 2.4.2 shall constitute an ir- revocable commitment by the Offeree Stockholder making such election to sell such Common Stock to the Proposed Transferee if the sale of Offer Shares to the Proposed Transferee occurs on the terms contemplated hereby. 2.4.3 Seller's Rights to Transfer. (a) Third Party Sale; Tag-Along Buyer. A sale to a Proposed Transferee pursuant to Section 2.4 shall only be con- summated if the Proposed Transferee shall purchase, within 120 days of the date of the Sale Notice, concurrently with and on the same terms and conditions and at the same price as the Of- fer Shares, all of each Offeree Stockholder's Tag-Along Shares with respect to such sale, in accordance with their elections pursuant to Section 2.4.2 (the "Tag-Along Right"). (b) Sale Agreement. Each Offeree Stockholder elect- ing to sell Tag-Along Shares (a "Tag-Along Seller") agrees to cooperate in consummating such a sale, including, without limi- tation, by becoming a party to the sales agreement and all other appropriate related agreements (other than any amendment to such Tag-Along Seller's Employment Agreement, if any), de- livering at the consummation of such sale, stock certificates and other instruments for such Common Stock duly endorsed for transfer, free and clear of all liens and encumbrances, and voting or consenting in favor of such transaction (to the ex- tent a vote or consent is required) and taking any other neces- sary or appropriate action in furtherance thereof, including the execution and delivery of any other appropriate agreements, certificates, instruments and other documents. The foregoing notwithstanding, in connection with such sale, a Tag-Along -10- Seller, as such, shall not be required to make any representa- tions and warranties with respect to the Company or the Company's business or with respect to any other seller. In addition, each Tag-Along Seller shall be severally responsible for its proportionate share of the expenses of sale incurred by the sellers in connection with such sale and the obligations and liabilities incurred by the sellers in connection with such sale. Such obligations and liabilities shall include (to the extent such obligations are incurred) obligations and li- abilities for indemnification (including for (x) breaches of representations and warranties made in connection with such sale by the Company or any other seller with respect to the Company or the Company's business, (y) breaches of covenants and (z) other matters), and shall also include amounts paid into escrow or subject to holdbacks, and amounts subject to post-closing purchase price adjustments. The foregoing not- withstanding, (1) without the written consent of a Tag-Along Seller, the amount of such obligations and liabilities for which such Tag-Along Seller shall be responsible shall not ex- ceed the gross proceeds received by such Tag-Along Seller in such sale and (2) a Tag-Along Seller shall not be responsible for the fraud of any other seller or for any indemnification obligations and liabilities for breaches of representations and warranties made by any other seller with respect to such other seller's (i) ownership of and title to shares of capital stock of the Company, (ii) organization, (iii) authority and (iv) conflicts and consents. (c) No Liability. Notwithstanding any other provi- sion contained in this Section 2.4.3, there shall be no li- ability on the part of the Company or GSCP in the event that the sale pursuant to this Section 2.4.3 is not consummated for any reason whatsoever. The decision whether to effect a Trans- fer pursuant to this Section 2.4.3 shall be in the sole and absolute discretion of GSCP. 2.5 Drag-Along Right. 2.5.1 Exercise. If GSCP proposes to make a bona fide sale of all of its shares of Common Stock to a Proposed Transferee, pursuant to a stock sale, merger, business combina- tion, recapitalization, consolidation, reorganization, restruc- turing or similar transaction, GSCP shall have the right (a "Drag-Along Right"), exercisable upon fifteen (15) days' prior written notice to the other Stockholders, to require the other Stockholders to sell all of their shares of Common Stock and, at the election of GSCP, Options (whether vested or unvested) to the Proposed Transferee on the same terms and conditions and at the same price (in the case of Options the purchase price of each Option shall be equal to the purchase price attributable -11- to the number of shares of Common Stock issuable upon exercise of such Option less the exercise price thereof) as GSCP. 2.5.2 Sale Agreement. Each Stockholder selling shares of Common Stock pursuant to a transaction contemplated by this Section 2.5 (a "Drag-Along Seller") agrees to cooperate in consummating such a sale, including, without limitation, by becoming a party to the sales agreement and all other appro- priate related agreements (other than any amendment to such Drag-Along Seller's Employment Agreement, if any), delivering at the consummation of such sale, stock certificates and other instruments for such shares of Common Stock duly endorsed for transfer, free and clear of all liens and encumbrances, and voting or consenting in favor of such transaction (to the ex- tent a vote or consent is required) and taking any other neces- sary or appropriate action in furtherance thereof, including the execution and delivery of any other appropriate agreements, certificates, instruments and other documents. The foregoing notwithstanding, in connection with such sale, a Drag-Along Seller, as such, shall not be required to make any representa- tions and warranties with respect to the Company or the Company's business or with respect to any other seller. In addition, each Drag-Along Seller shall be severally responsible for its proportionate share of the expenses of sale incurred by GSCP in connection with such sale and the obligations and li- abilities incurred by the seller in connection with such sale. Such obligations and liabilities shall include (to the extent such obligations are incurred) obligations and liabilities for indemnification (including for (x) breaches of representations and warranties made in connection with such sale by the Company or any other seller with respect to the Company or the Company's business, (y) breaches of covenants and (z) other matters), and shall also include amounts paid into escrow or subject to holdbacks, and amounts subject to post-closing pur- chase price adjustments. The foregoing notwithstanding, (1) without the written consent of a Drag-Along Seller, the amount of such obligations and liabilities for which such Drag-Along Seller shall be responsible shall not exceed the gross proceeds received by such Drag-Along Seller in such sale and (2) a Drag- Along Seller shall not be responsible for the fraud of any other seller or any indemnification obligations and liabilities for breaches of representations and warranties made by any other seller with respect to such other seller's (i) ownership of and title to shares of capital stock of the Company, (ii) organization, (iii) authority and (iv) conflicts and consents. 2.5.3 No Liability. Notwithstanding any other pro- vision contained in this Section 2.5, there shall be no liabil- ity on the part of the Company or GSCP in the event that the sale pursuant to this Section 2.5 is not consummated for any -12- reason whatsoever. The decision whether to effect a Transfer pursuant to this Section 2.5 shall be in the sole and absolute discretion of GSCP. 2.6 Additional Provisions Relating to Restrictions on Transfers. 2.6.1 Legends. Each of the Stockholders hereby agrees that each outstanding certificate representing shares of Common Stock held or owned by such Stockholder or its Trans- feree, including any certificate representing shares of Common Stock acquired in accordance with the provisions of this Agree- ment or the Employment Agreements and any certificates repre- senting shares of Common Stock issued upon exercise of the Op- tions, in any case, subject to the provisions of this Agreement and issued prior to the date when the applicable restrictions are terminated pursuant to Section 2.6.3, shall bear endorse- ments reading substantially as follows: (a) The securities represented by this cer- tificate have not been registered under the Securities Act of 1933, as amended, or under the securities laws of any state and may not be transferred, sold or otherwise dis- posed of except while such a registration is in effect or pursuant to an exemption from registration under said Act and applicable state securities laws. (b) The securities represented by this certifi- cate are subject to the terms and conditions set forth in a Stockholders' Agreement, dated as of December 19, 1997, copies of which may be obtained from the issuer or from the holder of this security. No transfer of such securi- ties will be made on the books of the issuer unless ac- companied by evidence of compliance with the terms of such agreement. Each outstanding certificate representing shares of Common Stock shall also bear any legend required by the terms of the Employment Agreements or the Stock Incentive Plan or as the Company may otherwise deem appropriate. 2.6.2 Copy of Agreement. A copy of this Agreement shall be filed with the corporate secretary of the Company and kept with the records of the Company and shall be made avail- able for inspection by any stockholder of the Company at the principal executive offices of the Company. 2.6.3 Termination of Restrictions. The restriction referred to in the endorsement required pursuant to Section 2.6.1(a) shall cease and terminate as to any particular shares -13- of Common Stock when, in the reasonable opinion of counsel for the Company, such restriction is no longer required in order to assure compliance with the Securities Act. The Company or the Company's counsel, at their election, may request from any Stockholder a certificate or an opinion of such Stockholder's counsel with respect to any relevant matters in connection with the removal of the endorsement set forth in Section 2.6.1(a) from such Stockholder's stock certificates, any such certifi- cate or opinion of counsel to be reasonably satisfactory to the Company and its counsel. The restrictions referred to in Sec- tion 2.6.1(b) shall cease and terminate as to any particular shares of Common Stock when, in the reasonable opinion of coun- sel for the Company, the provisions of this Agreement are no longer applicable to such shares or this Agreement shall have terminated in accordance with its terms. Any other restric- tions referred to in any other legends required pursuant to Section 2.6.1 shall cease and terminate when, in the reasonable opinion of counsel for the Company, such restrictions are no longer applicable. Whenever such restrictions shall cease and terminate as to any shares of Common Stock, the Stockholder holding such shares shall be entitled to receive from the Com- pany, without expense (other than applicable transfer taxes, if any, if such unlegended shares are being delivered and trans- ferred to any Person other than the registered holder thereof), new certificates for a like number of shares of Common Stock not bearing the relevant legend(s) set forth or referred to in Section 2.6.1. ARTICLE III REGISTRATION RIGHTS 3.1 Piggyback and Demand Registrations. (a) Piggyback Registrations. If at any time the Company proposes to register for sale by the Company under the Securities Act any of its equity securities (other than a reg- istration on Form S-4 or Form S-8, or any successor or similar forms), or any shares of Common Stock held by GSCP pursuant to Section 3.1(b), in a manner that would permit registration of Registrable Securities for sale to the public under the Securi- ties Act and in an underwritten offering, the Company will each such time promptly give written notice to all Stockholders who beneficially own any Registrable Securities of its intention to do so, of the registration form of the SEC that has been se- lected by the Company and of such holders' rights under this Section 3.1 (the "Piggyback Notice"). The Company will use its reasonable best efforts to include, and to cause the under- writer or underwriters to include, in the proposed offering, on -14- the same terms and conditions as the securities of the Company included in such offering, all Registrable Securities that the Company has been requested in writing, within fifteen (15) cal- endar days after the Piggyback Notice is given, to register by the Stockholders thereof (each such registration pursuant to this Section 3.1(a), a "Piggyback Registration"); provided, however, that (i) if, at any time after giving a Piggyback No- tice and prior to the effective date of the registration state- ment filed in connection with such registration, the Company shall determine for any reason not to register such equity se- curities (or, in the case of a Demand Registration (as defined below), GSCP so determines), the Company may, at its election (or, in the case of a Demand Registration where GSCP so deter- mines, the Company shall), give written notice of such determi- nation to all Stockholders who beneficially own any Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, and (ii) in case of a determination by the Company to delay registration of its equity securities (or, in the case of a Demand Registration, GSCP so determines), the Company shall be permitted to (or, in the case of a Demand Reg- istration where GSCP so determines, the Company shall) delay the registration of such Registrable Securities for the same period as the delay in registering such other equity securities (provided that clauses (i) and (ii) shall not relieve the Com- pany of its obligations under Section 3.1(b)). In the case of any registration of Registrable Securities in an underwritten offering pursuant to this Section 3.1(a), all Stockholders pro- posing to distribute their securities pursuant to this Section 3.1(a) shall, at the request of the Company (or, in the case of a Demand Registration, GSCP), enter into an agreement in cus- tomary form with the underwriter or underwriters selected by the Company (or, in the case of a Demand Registration, selected by GSCP). Notwithstanding the foregoing, following an IPO, the Company shall not be obligated to effect registration of Regis- trable Securities for which Piggyback Registration is requested by a Management Investor if, at the time of such request, all such Registrable Securities are eligible for sale to the public by the requesting Management Investor without registration un- der Rule 144 under the Securities Act, with such sale not being limited by the volume restrictions thereunder. (b) Demand Registrations. The Company, upon the reasonable request of GSCP, shall, from time to time, use its reasonable best efforts to register under the Securities Act any reasonable portion of Registrable Securities held by GSCP (including, at the election of GSCP, in an underwritten offer- ing) and bear all expenses in connection with such offering in a manner consistent with paragraph (c) below and shall enter into such other agreements in furtherance thereof (including -15- with underwriters selected by GSCP, including, in any case, Affiliates of GSCP as lead underwriters, if requested by GSCP) (each such registration pursuant to this Section 3.1(b), a "De- mand Registration"), and the Company shall provide customary indemnifications in such instances (in a manner consistent with the indemnification provisions of this Article III) to GSCP and any such underwriters; provided, however, that the Company shall not be obligated to effect more than four Demand Regis- trations. A registration shall not count as a Demand Registra- tion unless and until the registration statement relating thereto has been declared effective by the SEC and not with- drawn. (c) Expenses. The Company shall pay all Registra- tion Expenses in connection with each registration of Regis- trable Securities requested pursuant to this Section 3.1; pro- vided, however, that each Stockholder shall pay all underwrit- ing discounts and commissions and transfer taxes, if any, re- lating to the sale or disposition of such Stockholder's Regis- trable Securities pursuant to a registration statement effected pursuant to this Section 3.1. (d) Priority in Piggyback and Demand Registrations. If the managing underwriter for a registration pursuant to this Section 3.1 shall advise the Company in writing that, in its opinion, the number of securities requested to be included in such registration exceeds the number (the "Section 3.1 Sale Number") that can be sold in an orderly manner in such offering within a price range acceptable to the Company (or, in the case of a Demand Registration, to GSCP), the Company shall include in such offering (i) first, all the securities the Company pro- poses to register for its own sale, and (ii) second, to the extent that the securities the Company proposes to register are less than the Section 3.1 Sale Number, all Registrable Securi- ties requested to be included by all Stockholders; provided, however, that if the number of such Registrable Securities ex- ceeds (x) the Section 3.1 Sale Number less (y) the number of securities included pursuant to clause (i) hereof, then the number of such Registrable Securities included in such regis- tration shall be allocated pro rata among all requesting Stock- holders, on the basis of the relative number of shares of such Registrable Securities each such Stockholder then holds. If there is any reduction or exclusion of Registrable Securities pursuant to this Section 3.1(d) in connection with a Demand Registration, such registration shall not be deemed to be a Demand Registration for purposes of determining the maximum number of Demand Registrations the Company is obligated to ef- fect pursuant to Section 3.1(b) hereof. -16- (e) Underwriting Requirements. In connection with any offering involving any underwriting of securities in a Pig- gyback Registration, the Company shall not be required to in- clude any Stockholder's Registrable Securities in such under- writing unless such Stockholder accepts the terms of the under- writing as agreed upon between the Company and the underwriters in such quantities and on such terms as set forth in Section 3.1(a) hereof, and such Management Investor agrees to sell such Management Investor's securities on the basis provided therein and completes and/or executes all questionnaires, indemnities, lock-ups, underwriting agreements and other documents (includ- ing powers of attorney and custody arrangements) required gen- erally of all selling Stockholders, in each case in customary form and substance, which are requested to be executed in con- nection therewith. 3.2 Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Article III, the Company will, as soon as practicable: (a) prepare and file with the SEC the requisite reg- istration statement with respect to such Registrable Secu- rities and use its reasonable best efforts to cause such registration statement to become and remain effective; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be neces- sary to keep such registration statement effective for such period as the Company shall deem appropriate and to comply with the provisions of the Securities Act with re- spect to the sale or other disposition of all securities covered by such registration statement during such period; (c) furnish to each seller of such Registrable Secu- rities and each underwriter such number of copies of such registration statement and of each amendment and supple- ment thereto (in each case including all exhibits), such number of copies of the prospectus included in such regis- tration statement (including each preliminary prospectus and summary prospectus), in conformity with the require- ments of the Securities Act, and such other documents as such seller may reasonably request; -17- (d) promptly notify each Stockholder that holds Reg- istrable Securities covered by such registration state- ment, (i) when such registration statement or any post- effective amendment or supplement thereto becomes effec- tive, (ii) of the issuance by the SEC or any state securi- ties authority of any stop order, injunction or other or- der or requirement suspending the effectiveness of such registration statement (and take all reasonable action to prevent the entry of such stop order or to remove it if entered, or the initiation of any proceedings for that purpose), or (iii) of the happening of any event as a re- sult of which the registration statement, as then in ef- fect, the prospectus related thereto or any document in- cluded therein by reference includes an untrue statement of a material fact or omits to state a material fact re- quired to be stated therein or necessary to make the statements therein not misleading in the light of the cir- cumstances under which they were made and promptly file such amendments and supplements which may be required on account of such event and use its reasonable best efforts to cause each such amendment and supplement to become ef- fective; (e) promptly furnish counsel for each underwriter, if any, and for the selling Stockholders of Registrable Securities copies of any written request by the SEC or any state securities authority for amendments or supplements to a registration statement and prospectus or for ad- ditional information; (f) use reasonable best efforts to obtain the with- drawal of any order suspending the effectiveness of a reg- istration statement at the earliest possible time; (g) use its best efforts to cause all such Regis- trable Securities covered by such registration statement to be listed on the principal securities exchange or au- thorized for quotation on Nasdaq on which similar equity securities issued by the Company are then listed or autho- rized for quotation, or eligible for listing or quotation, if the listing or authorization for quotation of such se- curities is then permitted under the rules of such ex- change or the NASD; (h) enter into an underwriting agreement with the underwriter of such offering in the form customary for such underwriter for similar offerings, including such representations and warranties by the Company, provisions -18- regarding the delivery of opinions of counsel for the Com- pany and accountants' letters, provisions regarding indem- nification and contribution, and such other terms and con- ditions as are at the time customarily contained in such underwriter's underwriting agreements for similar offer- ings (the sellers of Registrable Securities which are to be distributed by such underwriter(s) may, at their op- tion, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriter(s) shall also be made to and for the benefit of such sellers of Registrable Securities); (i) make available for inspection by representatives of the selling Stockholders who hold Registrable Securi- ties and any underwriters participating in any disposition pursuant hereto and any counsel or accountant retained by such Stockholders or underwriters, all relevant financial and other records, pertinent corporate documents and prop- erties of the Company and cause the respective officers, directors and employees of the Company to supply all in- formation reasonably requested by any such representative, underwriter, counsel or accountant in connection with a registration pursuant hereto; provided, however, that, with respect to records, documents or information which the Company determines, in good faith, to be confidential and as to which the Company notifies such representatives, underwriters, counsel or accountants in writing of such confidentiality, such representatives, underwriters, coun- sel or accountants shall not disclose such records, docu- ments or information unless (i) the release of such rec- ords, documents or information is ordered pursuant to a subpoena or other order from a court of competent juris- diction, (ii) such records, documents or information have previously been generally made available to the public, or (iii) the disclosure of such records, documents or infor- mation is necessary, in the written opinion of outside legal counsel, to avoid or correct a material misstatement or omission in the registration statement and then only after reasonable request has been made to the Company to make such disclosure and the Company has denied such re- quest. Each selling Stockholder of such Registrable Secu- rities agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates (or for such Stockholder's business purposes or for any reason other than in connection with a registration hereunder) -19- unless and until such information is made generally avail- able (other than by such Stockholder or where such Stock- holder knows that such information became publicly avail- able as a result of a breach of any confidentiality ar- rangement) to the public. Each selling Stockholder of such Registrable Securities further agrees that it will, upon learning that disclosure of such records is sought, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent dis- closure of the records deemed confidential; (j) permit any beneficial owner of Registrable Se- curities who, in the sole judgment, exercised in good faith, of such holder, might be deemed to be a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to re- quire the insertion therein of material, furnished to the Company in writing, that in the judgment of such holder, as aforesaid, should be included; and (k) make reasonably available its employees and per- sonnel and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company's businesses and the requirements of the marketing process) in the marketing of Registrable Securities in any underwritten offering. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing. The Company shall not be required to register or qualify any Registrable Securi- ties covered by such registration statement under any state securities, or "blue sky," laws of such jurisdictions other than as it deems necessary in connection with the chosen method of distribution or to take any other actions or do any other things other than those it deems necessary or advisable to con- summate such distribution, and the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not otherwise be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general ser- vice of process in any such jurisdiction. Each beneficial owner of Registrable Securities agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in subclauses (i) and (ii) of clause (d) of this Section 3.2, such beneficial owner will forthwith discontinue disposition of Registrable -20- Securities pursuant to the registration statement covering such Registrable Securities until such beneficial owner's receipt of the copies of the supplemented or amended prospectus contem- plated by clause (d) of this Section 3.2, and, if so directed by the Company, such beneficial owner will deliver to the Com- pany (at the Company's expense) all copies, other than perma- nent file copies then in such beneficial owner's possession, of the prospectus covering such Registrable Securities that was in effect prior to such amendment or supplement. 3.3 Indemnification. (a) In the event of any registration of any Reg- istrable Securities pursuant to this Article III, the Company will, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, the seller of any Registrable Securities covered by such registration statement, its direc- tors, officers, fiduciaries, employees and stockholders or gen- eral and limited partners (and the directors, officers, fidu- ciaries, employees and stockholders or general and limited partners thereof), each other Person who participates as an underwriter or a qualified independent underwriter, if any, in the offering or sale of such securities, each director, of- ficer, fiduciary, employee and stockholder or general and lim- ited partner of such underwriter or qualified independent un- derwriter, and each other Person (including any such Person's directors, officers, fiduciaries, employees and stockholders or general and limited partners), if any, who controls such seller or any such underwriter or qualified independent underwriter, within the meaning of the Securities Act, against any and all Claims in respect thereof and expenses (including reasonable fees and expenses of counsel and any amounts paid in any set- tlement effected with the Company's consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims or expenses arise out of or are based upon any of the following actual or alleged statements, omissions or violations (each, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities were registered pursuant to this Agreement under the Securities Act or the 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 under which they were made, not misleading, (ii) any untrue statement or alleged untrue state- ment of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, to- gether with the documents incorporated by reference therein, or the omission or alleged omission to state therein a material -21- fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances un- der which they were made, not misleading, or (iii) any viola- tion by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action re- quired of or inaction by the Company in connection with any such registration, and the Company will reimburse any such in- demnified party for any legal or other expenses reasonably in- curred by such indemnified party in connection with investigat- ing or defending any such Claim as such expenses are incurred; provided, that the Company shall not be liable to any such in- demnified party in any such case to the extent such Claim or expense arises out of or is based upon any Violation which oc- curs in reliance upon and in conformity with written informa- tion furnished to the Company or its representatives by or on behalf of such indemnified party expressly stating that such information is for use therein. (b) Each holder of Registrable Securities that are included in the securities as to which any Demand Registration or Piggyback Registration is being effected (and, if the Com- pany requires as a condition to including any Registrable Secu- rities in any registration statement filed in connection with any Demand Registration or Piggyback Registration, any under- writer and qualified independent underwriter, if any) shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 3.3), to the extent permitted by law, the Company, its directors, officers, fiduciaries, employees and stockholders (and the directors, officers, fiduciaries, employ- ees and stockholders or general and limited partners thereof) and each Person (including any such Person's directors, offic- ers, fiduciaries, employees and stockholders or general and limited partners), if any, controlling the Company within the meaning of the Securities Act and all other prospective sellers and their directors, officers, fiduciaries, employees and stockholders or general and limited partners and respective controlling Persons (including any such Person's directors, officers, fiduciaries, employees and stockholders or general and limited partners) against any and all Claims and expenses (including reasonable fees and expenses of counsel and any amounts paid in any settlement effected with the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims or expenses arise out of or are based upon any Violation which occurs in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such holder or under- writer or qualified independent underwriter, if any, expressly -22- stating that such information is for use in connection with any registration statement, preliminary, final or summary prospec- tus or amendment or supplement or document incorporated by ref- erence into any of the foregoing; provided, however, that the aggregate amount which any such holder, underwriter or quali- fied independent underwriter shall be required to pay pursuant to this Section 3.3(b) and Sections 3.3(c) and (e) shall be limited to (x) in the case of any such holder, the amount of the gross proceeds received by such holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such claim and (y) in the case of any such un- derwriter or qualified independent underwriter, the amount of the total sales price of the Registrable Securities sold through or by it pursuant to the registration statement giving rise to such claim. (c) Indemnification similar to that specified in the preceding paragraphs (a) and (b) of this Section 3.3 (with ap- propriate modifications) shall be given by the Company and each seller of Registrable Securities (and, if the Company requires as a condition to including any Registrable Securities in any registration statement filed in connection with any Demand Reg- istration or Piggyback Registration, any underwriter and quali- fied independent underwriter, if any) with respect to any re- quired registration or other qualification of securities under any state securities and "blue sky" laws. (d) Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursu- ant to this Section 3.3, but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 3.3, except to the extent the indemnifying party is prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Section 3.3. In case any action or proceeding is brought against an indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemni- fied and indemnifying parties may exist in respect of such claim, to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indem- nified party, and after notice from the indemnifying party to such indemnified party that it so chooses, the indemnifying party shall not be liable to such indemnified party for any -23- legal or other expenses subsequently incurred by such indemni- fied party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps neces- sary to defend diligently the action or proceeding within twenty (20) days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemni- fying party reasonably shall have concluded that there may be one or more legal defenses available to such indemnified party which are not available to the indemnifying party; or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional con- duct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indem- nified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have concluded that there may be legal defenses available to such party or parties which are not available to the other indemnified par- ties or to the extent representation of all indemnified parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct) and the indemnifying party shall be liable for any expenses therefor. No indemnifying party shall, without the written consent of the indemnified party, which consent shall not be unreasonably withheld, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an uncondi- tional release of the indemnified party from all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. (e) If for any reason the foregoing indemnity is unavailable or is insufficient to hold harmless an indemnified party under Section 3.3(a), (b) or (c), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any Claim in such proportion as is appropriate to reflect the relative fault of the indemni- fying party on the one hand and the indemnified party on the other from the relevant offering of securities. If, however, the allocation provided in the immediately preceding sentence is not permitted by applicable law, or if the indemnified party failed to give the notice required by Section 3.3(d) above and -24- the indemnifying party is prejudiced thereby, then each indem- nifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault of but also the relative benefits received by the indemnifying party, on the one hand, and the indemnified party, on the other hand, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the Violation relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and op- portunity to correct or prevent such Violation. The parties hereto agree that it would not be just and equitable if contri- butions pursuant to this Section 3.3(e) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 3.3(e). The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably in- curred by such indemnified party in connection with investigat- ing or defending any such Claim. No person guilty of fraudu- lent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 3.3(e) to the con- trary, no indemnifying party (other than the Company) shall be required pursuant to this Section 3.3(e) to contribute any amount in excess of (x) in the case of an indemnifying party that is a holder of Registrable Securities, the gross proceeds received by such indemnifying party from the sale of Regis- trable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate, or (y) in the case of an indemnifying party that is an underwriter or a qualified independent underwriter, the amount of the total sales price of the Registrable Securities sold through or by it in the offering to which the losses, claims, damages or li- abilities of the indemnified parties relate, less, in any such case referred to in (x) and (y), the amount of all indemni- fication and contribution payments made pursuant to Sections 3.3(b) and (c) and this Section 3.3(e), as the case may be, in connection with such offering. (f) The indemnity agreements contained herein shall be in addition to any other rights to indemnification or con- tribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party. -25- (g) The indemnification and contribution required by this Section 3.3 shall be made by periodic payments of the amount thereof during the course of the investigation or de- fense, as and when bills are received or expense, loss, damage or liability is incurred. (h) In connection with underwritten offerings, the Company will use reasonable best efforts to negotiate terms of indemnification that are reasonably favorable to the various sellers pursuant thereto, as appropriate under the circum- stances. 3.4 Holdback Agreement. (a) If requested in writing by the Company or the underwriter, if any, of any offering affording Stockholders registration rights pursuant to Section 3.1 (whether or not some or all of such Stockholder's Registrable Securities are subject to a cutback pursuant to Section 3.1 of this Agree- ment), including without limitation an IPO, each Stockholder agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, of any Registrable Securities or any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering) within fourteen (14) days before or 180 days after the effective date of a registration statement affording Stockholders registration rights pursuant to Section 3.1 (including where subject to a cutback pursuant to Section 3.1(d)). (b) If requested in writing by the underwriter of any offering in connection with a Demand Registration, the Com- pany agrees not to effect any public sale or distribution (other than public sales or distributions solely by and for the account of the Company of securities issued (x) pursuant to any employee or director benefit or similar plan or any dividend reinvestment plan or (y) in any acquisition by the Company) of any Registrable Securities or any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), within fourteen (14) days before or 180 days after the effec- tive date of a registration statement filed in connection with a Demand Registration, or for such shorter period as the sole or lead managing underwriter shall request, in any such case, unless consented to by such underwriter. -26- ARTICLE IV MANAGEMENT INVESTORS' PUTS AND CALLS 4.1 Call Rights. If, prior to the consummation of an IPO, a Management Investor (other than the Estate or the Estate's Permitted Transferees) dies or the Management Investor's (other than the Estate or the Estate's Permitted Transferees) employment by the Company terminates for any rea- son (including due to a Disability, as defined in such Manage- ment Investor's Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or ar- rangement, if any, and if not so defined, upon the good faith determination of the Board of Directors of the Company of such Disability), the Company shall have the right, at its election, to purchase all (but not less than all) of the Management Investor's shares of Common Stock (including any shares held by its Permitted Transferees) within six (6) months after such termination, or fifteen (15) months after such termination in the case of death of the Management Investor (with respect to any shares of Common Stock acquired after such termination or death upon the exercise of Options held by the Management In- vestor, such period to run from the date of exercise) at a price equal to the Fair Market Value of such Common Stock de- termined as of, in all cases other than the death of the Man- agement Investor, the date such termination is effective and, in the case of the Management Investor's death, as of the date of death. The Company shall pay the purchase price in cash to the extent that (x) subsidiaries of the Company are permitted to dividend the funds for such purchase to the Company (a "Sub- sidiary Dividend") (under both applicable law and the indebted- ness of the Company and its Affiliates) and (y) the Company is permitted to purchase such shares for cash (under both ap- plicable law and such indebtedness). The Company shall fund any amount not permitted to be funded through a Subsidiary Dividend or to be used to purchase such shares with a Buy-Out Note. The Board of Directors of the Company may, in its dis- cretion, assign the rights and obligations of the Company under this Section 4.1 to any other Person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 4.2 Put Rights. If, prior to the consummation of an IPO, a Management Investor (other than the Estate or the Estate's Permitted Transferee) dies or the Management Investor's (other than the Estate or the Estate's Permitted Transferee's) employment by the Company is terminated by the Company for any reason (including due to a Disability, as de- fined in such Management Investor's Employment Agreement or any analogous provision of any employment, compensation or benefit -27- agreement or arrangement, if any, and if not so defined, upon the good faith determination of the Board of Directors of the Company of such Disability), the Management Investor or the Management Investor's legal representative or trustee, as the case may be, shall have the right, within three (3) months af- ter such termination is effective (or one year after the date of death in the case of the Management Investor's death), to require the Company to purchase all (but not less than all) of the Management Investor's Common Stock (including any shares held by its Permitted Transferees) at a price equal to (A) in the case of termination by reason of death or Disability, the Fair Market Value thereof determined as of the date of death (in the case of termination due to death) or the date such other termination is effective and (B) in the case of termina- tion by the Company for any other reason, the lower of (1) Fair Market Value and (2) the product of (x) the number of shares of Common Stock and (y) the New Cost Per Share (subject to adjust- ment to reflect any adjustments to the Common Stock made to re- flect any merger, reorganization, consolidation, recapitali- zation, spinoff, stock dividend, stock split, extraordinary distribution with respect to the Common Stock or other change in corporate structure affecting the Common Stock, as the Com- pany reasonably shall deem fair and appropriate). To the ex- tent the funds for such purchase are permitted under the in- debtedness of the Company and its Affiliates and applicable law to be funded through a Subsidiary Dividend and to be used to purchase such shares, the Company shall pay the purchase price in cash. The Company shall pay any amount not permitted to be funded through a Subsidiary Dividend or to be used to purchase such shares with a Buy-Out Note. The Board of Directors of the Company may, in its discretion, assign the rights and obliga- tions of the Company under this Section 4.2 to any other Per- son, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such as- signee. ARTICLE V MISCELLANEOUS 5.1 Effectiveness; Term. (a) This Agreement shall be- come effective (the "Effective Date") simultaneously with the closing of the transactions under the Merger Agreement and shall terminate without liability or penalty on the part of any party or its directors, officers, fiduciaries, employees and stockholders or general and limited partners (and the direc- tors, officers, fiduciaries, employees and stockholders or gen- eral and limited partners thereof) to any other party or such -28- other party's Affiliates upon the termination of the Merger Agreement pursuant to its terms. (b) Unless theretofore terminated pursuant to the preceding paragraph, the rights and obligations of, and re- strictions on, the Stockholders under Article II of this Agree- ment shall terminate when GSCP and its Affiliates no longer hold in the aggregate at least 40% of the fully diluted shares of Common Stock then outstanding. Notwithstanding the forego- ing, in the event the Company enters into any agreement to merge with or into any other Person or adopts any other plan of recapitalization, consolidation, reorganization or other re- structuring transaction as a result of which the Stockholders and their respective Permitted Transferees (including GSCP and any Affiliates thereof) shall own less than a majority of the outstanding voting power of the entity surviving such transac- tion, this Agreement shall terminate. (c) Unless theretofore terminated pursuant to Sec- tion 5.1(a), and notwithstanding anything in Section 5.1(b) to the contrary, the provisions contained in Article III hereof shall continue to remain in full force and effect until the earlier to occur of the twentieth anniversary of the date hereof and the date on which there are no longer any Regis- trable Securities outstanding or issuable or thereafter avail- able for or subject to issuance to any Stockholder upon exer- cise or conversion of any options, warrants, rights or other convertible securities; provided, however, that the provisions of Section 3.3 hereof shall survive termination pursuant to Section 5.1(b) or (c) of this Agreement. 5.2 No Voting or Conflicting Agreements. Prior to an IPO, no Management Investor shall grant any proxy or enter into or agree to be bound by any voting trust with respect to the Common Stock nor, at any time, shall any Management Investor enter into any stockholder agreements or arrangements of any kind with any Person with respect to the Common Stock inconsis- tent with the provisions of this Agreement (whether or not such agreements and arrangements are with other Management Investors or holders of Common Stock that are not parties to this Agree- ment). The foregoing prohibition includes, but is not limited to, agreements or arrangements with respect to the acquisition, disposition or voting of shares of Common Stock inconsistent with the provisions of this Agreement. No Management Investor shall act, at any time, for any reason, as a member of a group or in concert with any other Persons in connection with the acquisition, disposition or voting of shares of Common Stock in any manner which is inconsistent with the provisions of this Agreement. -29- 5.3 Approval of Stock Incentive Plan by Stockholders. The Stockholders by their execution of this Agree- ment, hereby approve the Stock Incentive Plan, a copy of which is attached hereto as Exhibit A. 5.4 Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and accord- ingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of any other party under this Agreement in accordance with the terms and conditions of this Agreement. Any remedy under this Section 5.4 is subject to certain equitable defenses and to the discre- tion of the court before which any proceedings therefor may be brought. 5.5 Notices. All notices, statements, instructions or other documents required to be given hereunder shall be in writing and shall be given either personally or by mailing the same in a sealed envelope, by overnight courier or by first- class mail, postage prepaid and either certified or registered, in either case, return receipt requested, or by telecopy, ad- dressed to the Company at its principal offices and to the other parties at their addresses reflected on the signature pages hereto. Each party hereto, by written notice given to the other parties hereto in accordance with this Section 5.5, may change the address to which notices, statements, instruc- tions or other documents are to be sent to such party. All notices, statements, instructions and other documents hereunder that are mailed or telecopied shall be deemed to have been giv- en on the date of mailing or, in the case of telecopying, upon confirmation of receipt. 5.6 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties, and their respective successors and assigns. If any Stockholder or any Affiliate thereof or any Transferee of any Stockholder shall acquire any shares of Common Stock in any manner, whether by operation of law or otherwise, such shares shall be held subject to all of the terms of this Agreement, and by taking and holding such shares such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. 5.7 Recapitalizations and Exchanges Affecting Common Stock. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to Common Stock, to any and all shares of capital stock or equity securities of the -30- Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of, the Common Stock, or which may be issued by reason of any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification or otherwise. Upon the oc- currence of any of such events, numbers of shares and amounts hereunder shall be appropriately adjusted, as determined in good faith by the Board of Directors of the Company. 5.8 Governing Law. This Agreement shall be governed and construed and enforced in accordance with the laws of the State of New York, without regard to the principles of conflicts of law thereof. 5.9 Descriptive Headings, Etc. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Agreement otherwise re- quires, references to "hereof," "herein," "hereby," "hereunder" and similar terms shall refer to this entire Agreement. 5.10 Amendment; Waiver; Bylaws. This Agreement may not be amended or supplemented except by an instrument in writing signed by the Company and by Stockholders holding a majority of the then outstanding shares of Common Stock held by all Stock- holders; provided that any amendment, supplement or modifica- tion of this Agreement which adversely affects the rights and obligations of any Stockholder (an "Affected Holder") differ- ently than those of any other Stockholder shall also require the approval of such Affected Holder; provided further, the foregoing proviso notwithstanding, any amendment, supplement or modification of this Agreement that adversely affects the Man- agement Investors (or a group thereof) as a class may be ap- proved by Management Investors (or members of such group, as the case may be) holding Common Stock or Options to purchase Common Stock, which together represent a majority of the sum of the total number of (x) the shares of such Common Stock and (y) the shares of Common Stock issuable upon exercise of such Op- tions held by all the Management Investors (or such group, as the case may be). The foregoing notwithstanding, (i) the Com- pany, without the consent of any other party hereto, may amend Schedule I and the signature pages hereto, in order to add any Management Investor or any other party that becomes a holder of Common Stock or securities convertible into or exercisable for Common Stock and (ii) GSCP and the Company may amend Article III of this Agreement (other than in a manner that would mate- rially reduce the Management Investor's rights or materially increase the Management Investor's obligations with respect to -31- Piggyback Registrations) without the agreement or consent of any Management Investor. 5.11 Severability. If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Upon the determination that any term or other provision is invalid, il- legal or incapable of being enforced, the parties shall nego- tiate in good faith to modify this Agreement so as to effect their original intent as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. 5.12 Further Assurances. The parties hereto shall from time to time execute and deliver all such further documents and do all acts and things as the other party may reasonably re- quire to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement, including, to the extent necessary or appropriate, using all reasonable ef- forts to cause the amendment of the Amended Certificate or the By-Laws in order to provide for the enforcement of this Agree- ment in accordance with its terms. In furtherance and not in limitation of the foregoing, in the event of any amendment, modification or termination of this Agreement in accordance with its terms, the Stockholders shall cause the Board to meet within thirty (30) days following such amendment, modification or termination or as soon thereafter as is practicable for the purpose of amending the Amended Certificate and By-Laws, as may be required as a result of such amendment, modification or ter- mination, and, to the extent required by law, proposing such amendments to the stockholders of the Company entitled to vote thereon, and such action shall be the first action to be taken at such meeting. 5.13 Complete Agreement; Counterparts. This Agreement (together with the Merger Agreement, the Voting Agreement, the Stock Incentive Plan, the Employment Agreements and the other agreements referred to herein and therein) constitutes the en- tire agreement and supersedes all other agreements and under- standings, both written and oral, among the parties or any of them, with respect to the subject matter hereof. This Agree- ment may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together con- stitute one and the same instrument. 5.14 Certain Transactions. The parties hereto agree that Goldman Sachs shall have the exclusive right to perform all -32- consulting, financing, investment banking and similar services for the Company and its subsidiaries (including as lead under- writer or in any analogous role in connection with any public or private offering of securities or debt, and including in connection with the Merger), for customary compensation and on other terms that are customary for similar engagements with unaffiliated third parties, and neither the Company nor its subsidiaries shall engage any other Person to perform such ser- vices during the term of this Agreement except to the extent Goldman Sachs shall consent thereto or shall decline, at its sole election, to perform such services. 5.15 No Third Party Beneficiaries. The provisions of this Agreement shall be only for the benefit of the parties to this Agreement, and no other Person (other than Goldman Sachs with respect to Section 5.14) shall have any third party ben- eficiary or other right hereunder. -33- IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. AMSCAN HOLDINGS, INC. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: Chief Executive Officer Address: 80 Grasslands Road Elmsford, New York 10523 Attn: Secretary Telecopier No.: (914) 345-2056 GS CAPITAL PARTNERS II, L.P. By: GS Advisors, L.P. General Partner By: GS Advisors Inc., its General Partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President Address: c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Attn: David J. Greenwald Telecopier No.: (212) 357-5505 GS CAPITAL PARTNERS II OFFSHORE, L.P. By: GS Advisors II (Cayman), L.P. General Partner By: GS Advisors II, Inc., its General Partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President Address: c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Attn: David J. Greenwald Telecopier No.: (212) 357-5505 GOLDMAN, SACHS & CO. VERWALTUNGS GMBH By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: President By: /s/ Eve Gerriets Name: Eve Gerriets Title: Registered Agent Address: c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Attn: David J. Greenwald Telecopier No.: (212) 357-5505 STONE STREET FUND 1997, L.P. By: Stone Street Asset Corp. General Partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President Address: c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Attn: David J. Greenwald Telecopier No.: (212) 357-5505 BRIDGE STREET FUND 1997, L.P. By: Stone Street Asset Corp. Managing General Partner By: /s/ Richard A. Friedman Name: Richard A. Friedman Title: Vice President Address: c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Attn: David J. Greenwald Telecopier No.: (212) 357-5505 THE ESTATE OF JOHN A. SVENNINGSEN By: /s/ Christine Svenningsen Name: Christine Svenningsen Title: Executrix Address: c/o Lee Harrison Corbin 1 North Broadway White Plains, NY 10801 The following individuals, in their capacities as trustees or other fidu- ciaries (whether on the date hereof or at any point in the future) of any trust or similar instrument created by or at the instruction of, or under the last will and testament of, John A. Svenningsen or the Estate, ac- knowledge this Agreement and agree to be bound by the terms hereof in each such capacity, such agreement being for the benefit of each of the par- ties hereto, and such individuals further agree to cause any such trust or similar instrument upon its forma- tion to become a party to this Agree- ment as a Permitted Transferee pursu- ant to Section 2.3.3 hereof (and as if a Management Investor hereunder) and in accordance herewith have agreed to and acknowledged this Agreement: By: /s/ Lee Harrison Corbin Dated: December 18, 1997 Name: Lee Harrison Corbin Title: Attorney-In-Fact for Trustee Address: 1 North Broadway White Plains, NY 10801 By: /s/ Fanny S. Warren Dated: December 18, 1997 Name: Fanny S. Warren Title: Trustee Address: 1 North Broadway White Plains, NY 10801 EXHIBIT A [STOCK INCENTIVE PLAN] Schedule I Management Investors Options Gerald C. Rittenberg 16.648 James M. Harrison 16.268 William S. Wilkey 16.441 Diane D. Spaar 11.827 Katherine A. Kusnierz 11.577 Morton Fisher 2.383 William Mark 1.280 Angelo Giummarra 2.477 Karen McKenzie 1.477 Keith Johnson 1.280 Howard Harding 1.280 Walter Thompson 1.144 Charles Phillips 0.478 Susan Scott 1.144 Rose Giagrande 1.238 Randy Harris 0.718 Eric Stollman 1.238 Kathleen Rooney 1.238 James Dotti 1.238 Vincent Anastasi 0.794 Michael A. Correale 2.570 Mark Irvine 0.555 Scott Lametto 0.999 Joseph Walter 0.555 Cheryl Considine 0.999 Patrick Venuti 0.555 Dallas Hartman 0.555 Robert Yedowitz 0.555 Nigel Keane 0.555 Connie Weckman 0.555 Ken Danforth 0.555 EX-99 4 EXHIBIT 6 Exhibit 6 AMSCAN HOLDINGS, INC. 9 7/8% SENIOR SUBORDINATED NOTES DUE DECEMBER 2007 _____________________________________ jointly and severally guaranteed as to the payment of principal, premium, if any, and interest on a senior subordinated basis by the Guarantors _____________________________________ PURCHASE AGREEMENT December 15, 1997 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: Amscan Holdings, Inc., a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to Goldman, Sachs & Co. (the "Purchaser") an aggregate of $110,000,000 principal amount of the Notes specified above. The Company's payment obligations under the Notes will be jointly and severally guaranteed on a senior subordinated basis (the "Senior Subordinated Guarantees") by the Guarantors (as defined in the Indenture referred to in Section 1(f) below). The Notes and the Guarantees are hereinafter called the "Securities". 1. The Company and each Guarantor represent and warrant to, and agree with, the Purchaser that: (a) A preliminary offering circular, dated November 21, 1997 (the "Preliminary Offering Circular") and an offering circular, dated December 15, 1997 (the "Offering Circular"), in each case including the international supplement thereto, have been prepared in connection with the offering of the Securities. Any reference to the Preliminary Offering Circular or the Offering Circular shall be deemed to refer to and include any Additional Issuer Information (as defined in Section 5(f)) furnished by the Company prior to the completion of the distribution of the Securities. The Preliminary Offering Circular or the Offering Circular and any amendments or supplements thereto did not and will not, as of their respective dates, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Purchaser expressly for use therein; (b) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular; and, since the respective dates as of which information is given in the Offering Circular, there has not been any change in the capital stock of the Company or any of its subsidiaries or change in the long-term debt (other than scheduled maturities) of the Company and its subsidiaries on a consolidated basis or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Offering Circular; (c) The Company does not own any real property in fee simple; the Company's subsidiaries have good and marketable title in fee simple to all real property and the Company and its subsidiaries have good title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Circular or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries; (d) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation (or, with respect to foreign subsidiaries, such subsidiaries have been duly constituted, are validly -2- existing and, if applicable, are in good standing in the respective jurisdictions where each such foreign subsidiary has been so constituted) and each has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction (e) The Company has an authorized capitalization as set forth in the Offering Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non- assessable; with respect to each of the subsidiaries of the Company that are 100% owned by the Company as set forth in the Offering Circular, all of the issued and outstanding shares of capital stock of each such subsidiary are fully paid and non-assessable and (except as otherwise described in the Offering Circular) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims; with respect to each of the subsidiaries of the Company that is less than 100% owned by the Company as set forth in the Offering Circular, all of the issued shares of capital stock owned by the Company of each such subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and (except as otherwise described in the Offering Circular) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, and the percentage owned by the Company of all of the outstanding shares of capital stock of each such subsidiary is at least equal to the percentage set forth in the Offering Circular; (f) The Notes have been duly authorized by the Company and, when issued and delivered pursuant to this Agreement and duly authenticated by the trustee under the Indenture (as defined below), will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the indenture to be dated as of December 19, 1997 (the "Indenture") among the Company, the Guarantors and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"), under which they are to be issued, which will be substantially in the form previously delivered to you, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); the Senior Subordinated Guarantees have been duly authorized and, when the Notes have been duly authenticated in accordance with the Indenture and have been issued and delivered pursuant to this Agreement with the Senior Subordinated Guarantees endorsed thereon, will have been duly executed, issued and delivered and will constitute valid and legally binding obligations of the Guarantors entitled to the benefits provided by the Indenture, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); the Indenture has been duly authorized and, when executed and delivered by the Company, the Guarantors and the Trustee, the -3- Indenture will constitute a valid and legally binding instrument, enforceable against the Company and the Guarantors in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); and the Notes, the Senior Subordinate Guarantees and the Indenture will conform to the descriptions thereof in the Offering Circular and will be in substantially the form previously delivered to you; (g) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any regulation promulgated thereunder, including, without limitation, Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System; (h) Prior to the date hereof, neither the Company nor any of its affiliates (other than the Purchaser and Goldman Sachs International, as to which no representation or warranty is made or given) has taken any action which is designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the offering of the Securities; (i) The issue and sale of the Securities and the compliance by the Company and the Guarantors with all of the provisions of the Securities, the Indenture, this Agreement, the Registration Rights Agreement (as defined in the Offering Circular), the Bank Credit Agreement (as defined in the Offering Circular) and the Transaction Agreement (as defined in the Offering Circular) (together the Registration Rights Agreement, the Transaction Agreement and the Bank Credit Agreement, the "Related Agreements" and each, a "Related Agreement") to which they are a party, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, which conflict, breach, violation or default may reasonably be expected to have, individually or in the aggregate, a material adverse affect on the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole (a "Material Adverse Affect"), or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement, the Indenture or any of the Related Agreements or the offering of the Securities in the manner contemplated by the Offering Circular, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By- laws or other constituent documents of the Company or any of its subsidiaries or any statute or any order, rule or regulation of any court or governmental agency or body having -4- jurisdiction over the Company or any of its subsidiaries or any of their properties which violation may reasonably be expected to have, individually or in the aggregate, a Material Adverse Affect, or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement, the Indenture or any of the Related Agreements or the offering of the Securities in the manner contemplated by the Offering Circular; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body (other than filings to perfect security interests in property) is required for the issue and sale of the Securities or the consummation by the Company or the Guarantors of the transactions contemplated by this Agreement, any Related Agreement or the Indenture, except (A) for the filing of registration statements by the Company in connection with the Transaction and the Exchange Offer (as defined in the Registration Rights Agreement) or resale registration contemplated by the Offering Circular with the United States Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Act"), (B) for the qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), (C) such consents, approvals, authorizations, registrations or qualifications as may be required in connection with the transactions contemplated by the Transaction Agreement and the Disclosure Schedule a part thereof, the Exchange Offer and the resale registration contemplated by the Offering Circular and (D) as have been made or obtained, and, in connection with the purchase and distribution of the Securities by the Purchaser, under state securities or Blue Sky laws; (j) Neither the Company nor any of its subsidiaries is in violation of its Certificate of Incorporation or By- laws or other constituent documents; neither the Company nor any of its subsidiaries is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, which default may reasonably be expected to have, individually or in the aggregate, a Material Adverse Affect or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement, any Related Agreement or the Indenture or the offering of the Securities in the manner contemplated by the Offering Circular; (k) The statements set forth in the Offering Circular under the caption "Description of Notes," insofar as they purport to constitute a summary of the terms of the Securities and under the captions "Description of Certain Federal Income Tax Consequences of an Investment in the Notes" and "Underwriting", insofar as they purport to describe the provisions of the laws and the provisions of documents referred to therein, are accurate, and fairly summarize such provisions in all material respects; (l) Other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the -5- subject which may reasonably be expected to have, individually or in the aggregate, a Material Adverse Affect or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement, any Related Agreement or the Indenture or the offering of the Securities in the manner contemplated by the Offering Circular; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (m) When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system; (n) Neither the Company nor any of the Guarantors is, or after giving effect to the offering and sale of the Securities, will be an "investment company," as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (o) Neither the Company, any of the Guarantors nor any person acting on its behalf (other than the Purchaser and Goldman Sachs International, as to which no representation or warranty is made or given) has offered or sold the Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act or, with respect to Securities sold outside the United States to non-U.S. persons (as defined in Rule 902 under the Act), by means of any directed selling efforts within the meaning of Rule 902 under the Act and each of the Company, each of the Guarantors, any affiliate of the Company or any of the Guarantors and any person acting on its behalf (other than the Purchaser and Goldman Sachs International, as to which no representation or warranty is made or given) has com- plied with and will implement the "offering restriction" within the meaning of such Rule 902; (p) Within the preceding six months, neither the Company, any of its subsidiaries nor any other person acting on behalf of the Company or any of its subsidiaries (other than the Purchaser and Goldman Sachs International, as to which no representation or warranty is made or given) has offered or sold to any person any Securities, or any securities of the same or a similar class as the Securities, other than Securities offered or sold to the Purchaser hereunder. The Company and each of its subsidiaries will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Securities or any substantially similar security issued by the Company or any of its subsidiaries, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Company by the Purchaser), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons -6- contemplated by this Agreement as transactions exempt from the registration provisions of the Act; (q) Neither the Company nor any of its affiliates (other than the Purchaser and Goldman Sachs International, as to which no representation or warranty is made or given) does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes; (r) KPMG Peat Marwick LLP, who have certified certain financial statements of the Company and its subsidiaries, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (s) Each of the Company and its subsidiaries owns or is licensed to use all patents, trademarks, service marks, trade names and copyrights ("Intellectual Property") currently used in the conduct of their business, except for such Intellectual Property with respect to which the failure to own or license same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Affect. To the best knowledge of the Company and its subsidiaries, none of the activities engaged in by the Company or its subsidiaries infringe upon or otherwise conflict with Intellectual Property rights of others, except for any such conflicts as would not reasonably be expected to have a Material Adverse Affect; and (t) Each of the Related Agreements (other than the Registration Rights Agreement) has been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the other parties thereto, constitutes a valid and legally binding agreement of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); the Registration Rights Agreement, which shall be substantially in the form previously delivered to you, has been duly authorized, and, when executed and delivered by the Company and the Guarantors (assuming due authorization, execution and delivery by the Purchaser), will constitute a valid and legally binding agreement of the Company and each Guarantor enforceable against the Company and each Guarantor in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law). 2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, at a purchase price of 100% of the principal amount thereof, plus accrued interest, if any, from December 19, 1997 to the Time of Delivery hereunder, the Notes, each of which will have duly endorsed thereon the Senior Subordinated Guarantee of each -7- Guarantor, and the Guarantors agree to issue their Senior Subordinated Guarantees accordingly. The Company agrees to pay to the Purchaser an underwriting discount of 3% of the principal amount of the Notes. 3. Upon the authorization by you of the release of the Securities, the Purchaser proposes to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and the Purchaser hereby represents and warrants to, and agrees with the Company that: (a) It will offer and sell the Securities only to: (i) persons who it reasonably believes are "qualified institutional buyers" ("QIBs") within the meaning of Rule 144A under the Act in transactions meeting the requirements of Rule 144A or (ii) upon the terms and conditions set forth in Annex I to this Agreement; (b) It is an Institutional Accredited Investor; and (c) It will not offer or sell the Securities by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Act. 4. (a) The Securities to be purchased by the Purchaser hereunder will be represented by one or more global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depositary Trust Company (the "DTC") or its designated custodian. The Company will deliver the Securities to the Purchaser, against payment by or on behalf of the Purchaser of the purchase price therefor (net of the underwriting discount specified in Section 2 hereof) in Federal (same day) funds, by causing DTC to credit the Securities to the account of the Purchaser at DTC. The Company will cause the certificates representing the Securities to be made available to the Purchaser for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of DTC or its designated custodian (the "Designated Office"). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on December 19, 1997 or such other time and date as the Purchaser and the Company may agree upon in writing. Such time and date are herein called the "Time of Delivery". (b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross-receipt for the Securities and any additional documents requested by the Purchaser pursuant to Section 7(i) hereof, will be delivered at such time and date at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 (the "Closing Location") (or such other location as the Company and the Purchaser mutually agree), and the Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 2:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery (or at such other time as the Company and the Purchaser mutually agree), at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, -8- Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 5. Each of the Company and the Guarantors, jointly and severally, agrees with the Purchaser: (a) To prepare the Offering Circular in a form approved by you; to make no amendment or any supplement to the Offering Circular which shall be disapproved by you promptly after reasonable notice thereof; and to furnish you with copies thereof; (b) Promptly from time to time to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions until the Exchange Offer is Consummated (as defined in the Registration Rights Agreement), provided that in connection therewith neither the Company nor the Guarantors shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time until such time as the Exchange Offer is Consummated, to furnish the Purchaser with a copy of the Offering Circular in New York City and each amendment or supplement thereto signed by an authorized officer of the Company with the independent accountants' report(s) in the Offering Circular, and any amendment or supplement containing amendments to the financial statements covered by such report(s), signed by the accountants, and additional copies thereof in such quantities as you may from time to time reasonably request, and if, at any time prior to the time the Exchange Offer is Consummated, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without charge to you and to any dealer in securities as many copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such amendment or supplement; (d) During the period beginning from the date hereof and continuing until the date 90 days after the date of the Offering Circular, not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder and in the Registration Rights Agreement, any securities of the Company that are substantially similar to the Securities or any securities of the Company convertible into or exchangeable -9- for securities of the Company substantially similar to the Securities, without your prior written consent; (e) Not to be or become, at any time prior to the expiration of two years after the Time of Delivery, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act; (f) At any time when the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Securities, to furnish at its expense, upon request, to holders of Securities and prospective purchasers of securities information (the "Additional Issuer Information") satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act; (g) To furnish to the holders of the Securities (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K under the Exchange Act if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports under the Exchange Act; (h) If requested by you, to use its best efforts to cause the Securities to be eligible for the PORTAL trading system of the National Association of Securities Dealers, Inc.; (i) During a period of five years from the date of the Offering Circular, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders of the Company, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any securities exchange on which the Securities or any class of securities of the Company or any Guarantor is listed; and (ii) such additional information concerning the business and financial condition of the Company and the Guarantors as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission); (j) To execute and deliver the Registration Rights Agreement prior to the Time of Delivery; and (k) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Offering Circular under the caption "Use of Proceeds". -10- 6. Each of the Company and the Guarantors, jointly and severally, covenants and agrees with the Purchaser that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the issue of the Securities and all other expenses in connection with the preparation, printing and filing of the Preliminary Offering Circular and the Offering Circular and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Purchaser and dealers; (ii) the cost of printing or producing this Agreement, the Registration Rights Agreement, the Indenture, the Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the reasonable fees and disbursements of counsel for the Purchaser in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; (vii) any cost incurred in connection with the designation of the Securities for trading in PORTAL; and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 10 hereof, the Purchaser will pay all of its own costs and expenses, including the fees of its counsel, transfer taxes on resale of any of the Securities by it, and any advertising expenses connected with any offers it may make. 7. The obligations of the Purchaser hereunder shall be subject, in its discretion, to the condition that all representations and warranties and other statements of the Company and the Guarantors herein are, at and as of the Time of Delivery, true and correct, the condition that the Company and the Guarantors shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions: (a) Sullivan & Cromwell, counsel for the Purchaser, shall have furnished to you such opinion or opinions, dated such Time of Delivery, with respect to the incorporation of the Company, the Purchase Agreement, the validity of the Indenture and the Securities being delivered at such Time of Delivery, the Offering Circular and such other related matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (b) Wachtell, Lipton, Rosen & Katz, special counsel for the Company, shall have furnished to you their written opinion (a draft of such opinion is attached as Annex II(b) hereto), dated the Time of Delivery, in form and substance satisfactory to you, to the effect that: (i) The Company is validly existing as a corporation in good standing under the laws of Delaware; -11- (ii) The Company has an authorized equity capitalization as set forth in the Offering Circular; (iii) Each of this Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Company and the Guarantors; (iv) The Indenture has been duly authorized, executed and delivered by the Company and the Guarantors and constitutes a valid and legally binding instrument of the Company and the Guarantors, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); (v) The Notes have been duly authorized, executed, issued and delivered and, assuming the due authentication by the Trustee under the Indenture, constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); the Senior Subordinated Guarantees have been duly authorized, executed, issued and endorsed onto the global Notes and, assuming the due authentication of the Notes by the Trustee under the Indenture, constitute valid and legally binding obligations of each of the Guarantors entitled to the benefits provided by the Indenture, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); and the Notes, the Senior Subordinated Guarantees and the Indenture conform to the descriptions thereof in the Offering Circular; (vi) The issue and sale of the Securities and the compliance by the Company and the Guarantors, as the case may be, with all of the provisions of the Securities, the Indenture, this Agreement, and each Related Agreement and the consummation of the transactions herein and therein contemplated will not result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company; (vii) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body (other than filings to perfect security interests in property) having jurisdiction over the Company or any of its subsidiaries or any of their properties is required for the issue and sale of the Securities or the consummation by the Company or the Guarantors, as the case may be, of the transactions contemplated by this Agreement, the Indenture, or any Related Agreement, except (A) for the filing and effectiveness of registration statements by the -12- Company in connection with the Transaction and the Exchange Offer or resale registration contemplated by the Offering Circular with the Commission pursuant to the Act, (B) for the qualification of the Indenture under the Trust Indenture Act, (C) such consents, approvals, authorizations, orders, registrations or qualifications as may be required in connection with the transactions contemplated by the Transaction Agreement and the Disclosure Schedule a part thereof, the Exchange Offer and the resale registration contemplated by the Offering Circular, (D) as have been obtained or made and (E) in connection with the purchase and distribution of the Securities by the Purchaser, as may be required under state securities or Blue Sky laws as to which counsel need not express an opinion; (viii) The statements set forth in the Offering Circular under the caption "Description of Notes," insofar as they purport to constitute a summary of the terms of the Securities and under the captions "Description of Certain Federal Income Tax Consequences of an Investment in the Notes" and "Underwriting," insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and fairly summarize such provisions in all material respects; (ix) No registration of the Securities under the Act, and no qualification of an indenture under the Trust Indenture Act with respect thereto, is required for the offer, sale and initial resale of the Securities by the Purchaser in the manner contemplated by this Agreement and the Offering Cir- cular, other than any registration or qualification that may be required in connection with the Exchange Offer contemplated by the Offering Circular or in connection with the Registration Rights Agreement; (x) Neither the Company nor any of the Guarantors is an "investment company" as such term is defined in the Investment Company Act; (xi) The Exchange Notes (as defined in the Registration Rights Agreement) have been duly and validly authorized for issuance by the Company, and when issued and authenticated in accordance with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer, will be the valid and legally binding obligations of the Company entitled to the benefits of the Indenture, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law); and (xii) The Senior Subordinated Guarantees of the Exchange Notes have been duly authorized by each of the Guarantors, and when duly and validly executed and delivered in accordance with the terms of the Indenture and when the Exchange Notes are duly and validly issued and authenticated -13- in accordance with the terms of the Indenture and the Registration Rights Agreement, will be a valid and legally binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicabil- ity relating to or affecting creditors' rights and to general principles of equity (whether considered in a proceeding in equity or at law). In addition, such counsel shall state that they have participated in conferences with officers and representatives of the Company and the Guarantors, representatives of the independent accountants of the Company and representatives of the Purchaser at which the contents of the Offering Circular and related matters were discussed and, subject to the fact that such counsel shall not assume any responsibility for the accuracy, completeness or fairness of the factual statements contained in the Offering Circular and have made no independent verification thereof, on the basis of the foregoing such counsel shall state that nothing has come to such counsel's attention that causes them to believe that the Offering Circular and any further amendments or supplements thereto made by the Company prior to the Time of Delivery (other than the financial statements, schedules and other financial data contained in the Offering Circular, as to which such counsel need express no opinion) contained as of its date or contains as of the Time of Delivery an untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may state that such opinion is limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the federal law of the United States of America. In rendering such opinion, such counsel shall be entitled to rely, as to certain matters of fact, on information contained in certificates of officers of the Company and the Guarantors and on certificates and reports of public officials. (c) Kurzman & Eisenberg, counsel for the Company, shall have furnished to you their written opinion (a draft of such opinion is attached as Annex II(c) hereto), dated the Time of Delivery, in form and substance satisfactory to you, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Offering Circular; (ii) Each of Amscan Inc., Am-Source, Inc., Trisar, Inc., JCS Realty Corp. and SSY Realty Corp. (collectively, the "Domestic Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; and all of the issued shares of capital stock of each such subsidiary have been duly and validly authorized and issued, are fully paid -14- and non-assessable, and (except for directors' qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of public officials, officers of the Company and officers of the Domestic Subsidiaries, provided that such counsel shall state that they have no reason to believe that both you and they are not justified in relying upon such opinions and certificates); (iii) Each of the Company and the Domestic Subsidiaries has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of public officials and officers of the Company and of the Domestic Subsidiaries, provided that such counsel shall state that they have no reason to believe that both you and they are not justified in relying upon such opinions and certificates); (iv) The Company does not own any real property in fee simple; the Domestic Subsidiaries have good and marketable title in fee simple to all real properties owned by them; and, to the best of their knowledge, all real property and buildings held under lease by the Company and the Domestic Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made of such property and buildings by the Company and such subsidiaries (in giving the opinion in this clause, such counsel may state that they are relying upon opinions of local counsel, upon opinions of counsel to the lessors of such property and, in respect of matters of fact, upon certificates of public officials and officers of the Company or such subsidiaries, provided that such counsel shall state that they have no reason to believe that both you and they are not justified in relying upon such opinions and certificates); (v) To the best of such counsel's knowledge and other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending to which the Company or any of the Domestic Subsidiaries is a party or of which any of their property is the subject which, if determined adversely to any of the Company or the Domestic Subsidiaries can reasonably be expected to have, individually or in the aggregate, a material adverse effect on the consolidated financial position, stockholders equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; -15- (vi) The issue and sale of the Securities and the compliance by the Company and the Guarantors, as the case may be, with all of the provisions of the Securities, the Indenture, this Agreement, and each Related Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its Domestic Subsidiaries is a party or by which the Company or any of its Domestic Subsidiaries is bound or to which any of the property or assets of the Company or any of its Domestic Subsidiaries is subject, which conflict, breach, violation or default may reasonably be expected to have individually or in the aggregate, a material adverse effect on or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company or the Domestic Subsidiaries, taken as a whole, or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement or the Registration Rights Agreement or the offering of the Securities in the manner contemplated by the Offering Circular nor will such actions result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any Guarantor or any statute or any order (which order is known to such counsel), rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Domestic Subsidiaries or any of their properties which violation may reasonably be expected to have, individually or in the aggregate, a material adverse effect on or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company or the Domestic Subsidiaries, taken as a whole, or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement or the Registration Rights Agreement or the offering of the Securities in the manner contemplated by the Offering Circular; and (vii) Neither the Company nor any Guarantor is in violation of its Certificate of Incorporation or By- laws or, to the best of such counsel's knowledge after reasonable investigation, in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, which default may reasonably be expected to have, individually or in the aggregate, a material adverse affect on or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company or the Guarantors or in any way, individually or in the aggregate, impair or delay the consummation of the transactions contemplated by this Agreement or the Registration Rights Agreement or the offering of the Securities in the manner contemplated by the Offering Circular. -16- In addition, such counsel shall state that they have participated in conferences with officers and representatives of the Company and the Guarantors, representatives of the independent accountants of the Company and representatives of the Purchaser at which the contents of the Offering Circular and related matters were discussed and, subject to the fact that such counsel shall not assume any responsibility for the accuracy, completeness or fairness of the factual statements contained in the Offering Circular and have made no independent verification thereof, on the basis of the foregoing such counsel shall state that nothing has come to such counsel's attention that causes them to believe that the Offering Circular and any further amendments or supplements thereto made by the Company prior to the Time of Delivery (other than the financial statements, schedules and other financial data contained in the Offering Circular, as to which such counsel need express no opinion) contained as of its date or contains as of the Time of Delivery ati untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may state that such opinion is limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the federal law of the United States of America. In rendering such opinion, such counsel shall be entitled to rely, as to certain matters of fact, on information contained in certificates of officers of the Company and the Domestic Subsidiaries and on certificates and reports of public officials. (d) On the date of the Offering Circular prior to the execution of this Agreement and also at the Time of Delivery, KPMG Peat Marwick LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex II(a) hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex II(d) hereto and a draft of the from of the letter to be delivered as of the Time of Delivery is attached as Annex II(a) hereto); (e) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Offering Circular any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular, and (ii) since the respective dates as of which information is given in the Offering Circular there shall not have been any change in the capital stock of the Company or any of its subsidiaries or change in the long-term debt (other than scheduled maturities) of the Company and its subsidiaries on a consolidated basis or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries on a consolidated basis, otherwise than as set forth or contemplated in the Offering Circular, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Purchaser so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the -17- Securities on the terms and in the manner contemplated in this Agreement and in the Offering Circular; (f) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded the Company's or any Guarantor's debt securities by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization (which had not heretofore made such announcement) shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities; (g) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on The Nasdaq Stock Market, Inc. (other than as a direct result of the consummation of the Transaction (as defined in the Offering Circular)); (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this Clause (v) in the judgment of the Purchaser makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in the Offering Circular; or (vi) the occurrence of any material adverse change in the existing financial, political or economic conditions in the United States or elsewhere which, in the judgment of the Purchaser, would materially and adversely affect the financial markets or the markets for the Securities and other debt securities; (h) The Securities have been designated for trading on PORTAL; (i) The Company shall have entered into the Registration Rights Agreement and the Bank Credit Agreement and shall have consummated the Transaction (as defined in the Offering Circular); and (j) The Company shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Company and the Guarantors satisfactory to you as to the accuracy of the representations and warranties of the Company and the Guarantors herein at and as of such Time of Delivery, as to the performance by the Company and the Guarantors of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsection (e) of this Section and as to such other matters as you may reasonably request. 8. (a) The Company and the Guarantors, jointly and severally, will indemnify and hold harmless the Purchaser against any losses, claims, damages or liabilities to which the Purchaser may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or -18- actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, and will reimburse the Purchaser for any reasonable legal or other expenses reasonably incurred by the Purchaser in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor the Guarantors shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Purchaser expressly for use therein. (b) The Purchaser will indemnify and hold harmless the Company and the Guarantors against any losses, claims, damages or liabilities to which the Company and the Guarantors may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Purchaser expressly for use therein; and will reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or -19- threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Purchaser on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantors on the one hand and the Purchaser on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Purchaser on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Purchaser, in each case as set forth in the Offering Circular. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantors on the one hand or the Purchaser on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and the Pur- chaser agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) 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. Notwithstanding the provisions of this subsection (d), the Purchaser shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities were offered to the public exceeds the amount of any damages which the Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (e) The obligations of the Company and the Guarantors under this Section 8 shall be in addition to any liability which the Company and the Guarantors may otherwise -20- have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Purchaser within the meaning of the Act; and the obligations of the Purchaser under this Section 8 shall be in addition to any liability which the Purchaser may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or the Guarantors and to each person, if any, who controls the Company or the Guarantors within the meaning of the Act. 9. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantors and the Purchaser, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by the Purchaser or any controlling person of the Purchaser, or the Company, the Guarantors, or any officer or director or controlling person of the Company or the Guarantors, and shall survive delivery of and payment for the Securities. 10. If, for any reason, the Securities are not delivered by or on behalf of the Company and the Guarantors as provided herein, the Company and the Guarantors will reimburse the Purchaser for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Purchaser in making preparations for the purchase, sale and delivery of the Securities, but neither the Company nor the Guarantors shall then be under further liability to the Purchaser except as provided in Sections 6 and 8 hereof. 11. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchaser shall be delivered or sent by mail, telex or facsimile transmission to it at 85 Broad Street, New York, New York 10004, Attention: Registration Department; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Secretary. 12. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchaser, the Company, the Guarantors and, to the extent provided in Sections 8 and 9 hereof, the officers and directors of the Company or any Guarantor and each person who controls the Company, any Guarantor or the Purchaser, and their respective heirs, execu- tors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from the Purchaser shall be deemed a successor or assign by reason merely of such purchase. 13. Time shall be of the essence of this Agreement. 14. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 15. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. -21- If the foregoing is in accordance with your understanding, please sign and return to us 6 counterparts hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof shall constitute a binding agreement between the Purchaser, the Company and the Guarantors. Very truly yours, Amscan Holdings, Inc. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: Acting Chairman of the Board and President Amscan Inc. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: Acting Chairman of the Board and President Am-Source, Inc. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President Trisar, Inc. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President SSY Realty Corp. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President JCS Realty Corp. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President Accepted as of the date hereof: By: /s/ Goldman, Sachs & Co. (Goldman, Sachs & Co.) -22- ANNEX I (1) The Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act. The Purchaser represents that it has offered and sold the Securities, and will offer and sell the Securities (i) as part of its distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Time of Delivery, only in accordance with Rule 903 of Regulation S or Rule 144A under the Act. Accordingly, the Purchaser agrees that neither it, its affiliates (other than the Company) nor any persons acting on its behalf has engaged or will engage in any directed selling efforts (within the meaning of Rule 902 under Regulation S) with respect to the Securities and the Purchaser, its affiliates (other than the Company) and each person acting on its behalf have complied and will comply with the offering restrictions requirement of Regulation S. The Purchaser agrees that, at or prior to confirmation of sale of Securities (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S Securities Act of 1933 (the "Securities Act") and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S." Terms used in this paragraph have the meanings given to them by Regulation S. The Purchaser further agrees that it has not entered and will not enter into any contractual arrangement with respect to the distribution or delivery of the Securities, except with its affiliates or with the prior written consent of the Company. (2) Notwithstanding the foregoing, Securities in registered form may be offered, sold and delivered by the Purchaser in the United States and to U.S. persons pursuant to Section 3 of this Agreement without delivery of the written statement required by paragraph (1) above. (3) The Purchaser further represents and agrees that (i) it has not offered or sold and prior to the date six months after the date of issue of the Securities will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (b) it has complied, and will comply, with all applicable provisions of the Financial Services Act of 1986 of Great Britain with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Securities to a person who is of a kind described in Article 11(3) of the Financial Ser- vices Act 1986 (Investment Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom the document may otherwise lawfully be issued or passed on. (4) The Purchaser agrees that it will not offer, sell or deliver any of the Securities in any jurisdiction outside the United States except under circumstances that will result in compliance with the applicable laws thereof, and that it will take at its own expense whatever action is required to permit its purchase and resale of the Securities in such juris- dictions. The Purchaser understands that no action has been taken to permit a public offering in any jurisdiction outside the United States where action would be required for such purpose. (5) The Purchaser represents and agrees that the Securities offered and sold in reliance on Regulation S have been and will be offered and sold only in offshore transac- tions. (6) The Purchaser agrees not to cause any advertisement of the Securities to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Securities, except such advertisements that include the statements required by Regulation S. ANNEX II(a) Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall furnish letters to the Purchaser to the effect that: (i) They are independent certified public accountants with respect to the Company and its subsidiaries under rule 101 of the American Institute of Certified Public Accountants' Code of Professional Conduct, and its interpretations and rulings; (ii) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Company for the most recent fiscal years included in the Offering Circular agrees with the corresponding amounts (after restatements where applicable) in the audited consolidated financial statements for such periods; (iii) On the basis of limited procedures not constituting an audit in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included in the Offering Circular, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Offering Circular are not in conformity with generally accepted accounting principles applied on the basis substantially consistent with the basis for the audited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Offering Circular; (B) other unaudited income statement data and balance sheet items included in the Offering Circular do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included in the Offering Circular; (C) the unaudited financial statements which were not included in the Offering Circular but from which were derived any unaudited condensed financial statements referred to in Clause (A) and any unaudited income statement data and balance sheet items included in the Offering Circular and referred to in Clause (B) were not determined on a basis substantially consistent with the basis for the audited consolidated financial statements included in the Offering Circular; (D) the pro forma adjustments have not been properly applied to the historical amounts in the compilation of the pro forma consolidated condensed financial statements included in the Offering Circular; (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock or any increase in the consolidated long-term debt of the Company and its subsidiaries, or any decreases in consolidated net current assets or stockholders' equity or other items specified by the Purchaser, or any increases in any items specified by the Purchaser, in each case as compared with amounts shown in the latest balance sheet included in the Offering Circular except in each case for changes, increases or decreases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and (F) for the period from the date of the latest financial statements included in the Offering Circular to the specified date referred to in Clause (E) there were any decreases in consolidated sales or operating income or net income or the total or per share amounts of consolidated net income or other items specified by the Purchaser, or any increases or decreases in any items specified by the Purchaser, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Purchaser, except in each case for decreases or increases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and (iv) In addition to the examination referred to in their report(s) included in the Offering Circular and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Purchaser, which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Offering Circular, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries and have found them to be in agreement. II(a)-2 EX-99 5 EXHIBIT 7 Exhibit 7 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT Dated as of December 19, 1997 by and among Amscan Holdings, Inc., the Guarantors party hereto and Goldman, Sachs & Co. This Exchange and Registration Rights Agreement (this "Agreement") is made and entered into as of December 19, 1997 by and among Amscan Holdings, Inc., a Delaware corporation (the "Company"), each subsidiary of the Company which is a signatory hereof and by each additional subsidiary of the Company that is created or acquired after the date hereof that executes a counterpart to this Agreement substantially in the form of Exhibit A attached hereto pursuant to Section 6(d)(xxii) (collectively, including such signatories, the "Guarantors"), and Goldman, Sachs & Co. (the "Initial Purchaser"), who has agreed to purchase the Company's 9.875% Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated December 15, 1997 (the "Purchase Agreement"), by and among the Company, the Guarantors and the Initial Purchaser. In order to induce the Initial Purchaser to purchase the Senior Subordinated Notes, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchaser set forth in Section 2 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1 DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Broker-Dealer: Any broker or dealer registered with the Commission under the Exchange Act. Broker-Dealer Transfer Restricted Securities: Exchange Notes that are acquired by a Restricted Broker-Dealer for its own account as a result of market-making activities or other trading activities. Closing Date: The date of the closing of the Transaction. Commission: The Securities and Exchange Commission. Consummate: A Registered Exchange Offer shall be deemed "Consummated" (including correlative terms) for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture (or an indenture substantially identical to the Indenture) of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Senior Subordinated Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Senior Subordinated Notes, each Interest Payment Date. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Notes: Debt securities and guarantees of the Company and the Guarantors, respectively, which debt securities and guarantees shall be substantially identical to the Senior Subordinated Notes and the Senior Subordinated Guarantees (as defined in the Indenture), respectively, except that they have been registered pursuant to an effective Registration Statement under the Act, and are entitled to the benefits of the Indenture or an indenture which is substantially identical to the Indenture and which has been qualified under the Trust Indenture Act. Exchange Offer: The registration by the Company under the Act of the Exchange Notes pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchaser proposes to sell the Senior Subordinated Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act. Guarantors: As defined in the preamble hereto. Holders: As defined in Sections 2(b) and 2(c) hereof. Indenture: The Indenture, dated as of December 19, 1997, among the Company, IBJ Schroder Bank & Trust Company, as trustee (the "Trustee") and the Guarantors, pursuant to which the Senior Subordinated Notes and the Exchange Notes are to be issued, as such Indenture may be amended or supplemented from time to time in accordance with the terms thereof; except that, if the Exchange Notes are issued pursuant to an indenture substantially identical to the Indenture, then Indenture shall also refer to such indenture. Initial Purchaser: As defined in the preamble hereto. Interest Payment Date: As defined in the Indenture and the Notes. Market-Maker Prospectus: As defined in Section 4 hereof. -2- NASD: National Association of Securities Dealers, Inc. Notes: The Senior Subordinated Notes and the Exchange Notes. Person: An individual, partnership, corporation, trust, limited liability company or unincorporated organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration Statement including, without limitation, a Market- Maker Prospectus, in each case, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus. Record Holder: With respect to any Damages Payment Date relating to Notes, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Restricted Broker-Dealer: Any Broker-Dealer that is an affiliate of the Company and that holds Broker-Dealer Transfer Restricted Securities. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Company relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer, (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of Section 4(a) of this Agreement, or (c) the registration for resale of Broker-Dealer Transfer Restricted Securities, which is filed pursuant to the provisions of Section 4(c) of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Senior Subordinated Notes: As defined in the preamble hereto. Shelf Filing Deadline: As defined in Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. Transaction: As defined in the Indenture. Transfer Restricted Securities: Each Note, until the earliest to occur of (a) the date on which such Note is exchanged by a person other than a Broker-Dealer for an Exchange Note in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) following the exchange by a Broker-Dealer in the Exchange Offer of a Senior Subordinated Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date -3- of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (c) the date on which such Note has been effectively registered under the Act and disposed of in accordance with a Shelf Registration Statement and (d) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. Trust Indenture Act: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. SECTION 2 SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities and Broker-Dealer Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities and the Broker-Dealer Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. (c) Holders of Broker-Dealer Transfer Restricted Securities. A Restricted Broker-Dealer is deemed to be a holder of Broker-Dealer Transfer Restricted Securities (each, a "Holder") whenever such Restricted Broker-Dealer owns Broker- Dealer Transfer Restricted Securities. SECTION 3 REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with), the Company and the Guarantors shall (i) cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 45 days after the Closing Date, a Registration Statement under the Act relating to the Exchange Notes and the Exchange Offer, (ii) use their best efforts to cause such Registration Statement to become effective at the earliest possible time, but in no event later than 105 days after the date on which such Registration Statement is filed with the Commission (which 105-day period shall be extended for a number of days equal to the number of Business Days (as defined in the Indenture), if any, that the Commission is officially closed during such period), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) file, if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Registration Statement, commence the Exchange Offer. The Exchange Offer Registration Statement shall be on the -4- appropriate form permitting registration of the Exchange Notes to be offered in exchange for the Transfer Restricted Securities and to permit resales of Notes held by Broker- Dealers as contemplated by Section 3(c) below. (b) The Company and the Guarantors shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 45 days thereafter. (c) The Company and the Guarantors shall indicate in a "Plan of Distribution" section contained in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Senior Subordinated Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Senior Subordinated Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any sales of the Exchange Notes received by such Broker- Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker- Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission. The Company and the Guarantors shall use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(d) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market- making activities or other trading activities, and to ensure that such Registration Statement conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 195 days from the date on which the Exchange Offer Registration Statement is declared effective. The Company and the Guarantors shall promptly provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request, at any time during such 195-day period in order to facilitate such sales. -5- SECTION 4 SHELF REGISTRATION; MARKET-MAKER PROSPECTUS (a) Shelf Registration. If (i) the Company and the Guarantors are not required to file an Exchange Offer Registration Statement or permitted to Consummate the Exchange Offer, in either case, because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) any Holder of Transfer Restricted Securities shall notify the Company on or prior to the 20th Business Day following Consummation of the Exchange Offer that such Holder alone or together with Holders who hold in the aggregate at least $1.0 million in principal amount of Senior Subordinated Notes (A) is prohibited by law or Commission policy from participating in the Exchange Offer, or (B) may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) is a Broker-Dealer and holds Notes acquired directly from the Company or one of the Company's affiliates, then the Company and the Guarantors shall use their best efforts to (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement") on or prior to the earlier to occur of (1) the 45th day after the date on which the Company is notified by the Commission or otherwise determines that it is not required to file the Exchange Offer Registration Statement or permitted to Consummate the Exchange Offer, and (2) the 45th day after the date on which the Company receives notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above (such earlier date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) cause such Shelf Registration Statement to be declared effective by the Commission on or before the 105th day after the Shelf Filing Deadline. The Company and the Guarantors shall use their best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (d) hereof to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, until the second anniversary of the Closing Date or such shorter period that will terminate when all the Notes covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or become eligible for resale pursuant to Rule 144 without volume or other restrictions. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request -6- therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. (c) Market-Maker Prospectus. The Company and the Guarantors acknowledge that any Restricted Broker-Dealer holding Broker-Dealer Transfer Restricted Securities may not resell such Broker-Dealer Transfer Restricted Securities without delivering a Prospectus. Consequently, on the date that the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is filed with the Commission, the Company and the Guarantors shall file a Registration Statement for use with respect to such resales (which may be the Exchange Offer Registration Statement or, if the filing of the Exchange Offer Registration Statement is not required hereunder, the Shelf Registration Statement if permitted by the rules and regulations of the Commission) and shall use their best efforts to cause such Registration Statement to be declared effective by the Commission on or prior to the Consummation of the Exchange Offer. The Company and the Guarantors shall use their best efforts to keep such Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(c) and (d) hereof to the extent necessary to ensure that it is available for resales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, until such time as all Restricted Broker-Dealers determine in their judgment that they are no longer required to deliver a Prospectus in connection with sales of Broker-Dealer Transfer Restricted Securities. The Prospectus included in such Registration Statement is referred to in this Agreement as a "Market-Maker Prospectus." SECTION 5 LIQUIDATED DAMAGES If (i) either of the Registration Statements required by Section 3 or 4(a) of this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) either of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated within 45 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) either Registration Statement required by Section 3 or 4(a) of this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable (except as permitted by Section 6(d)(i) of this Agreement) for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company and the Guarantors hereby jointly and severally agree to pay liquidated damages to each Holder of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of such Registration Default, in an amount equal to $0.05 per week per $1,000 -7- principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the liquidated damages shall increase by an additional $0.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $0.50 per week per $1,000 principal amount of Transfer Restricted Securities. All accrued liquidated damages shall be paid to Record Holders by the Company by wire transfer of immediately available funds on each Damages Payment Date, as provided in the Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of liquidated damages with respect to such Transfer Restricted Securities will cease. All obligations of the Company and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. SECTION 6 REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Guarantors shall comply with all of the provisions of Section 6(d) below, shall use their best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If in the reasonable opinion of counsel to the Company there is a question as to whether the Exchange Offer is permitted by applicable law, the Company and the Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Senior Subordinated Notes. The Company and the Guarantors each hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Company and the Guarantors each hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pur- sue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to -8- participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company's preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including any no- action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Notes obtained by such Holder in exchange for Senior Subordinated Notes acquired by such Holder directly from the Company. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall, if required by the Commission, provide a supplemental letter to the Commission (A) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above and (B) including a representation that neither the Company nor the Guarantors have entered into any arrangement or understanding with any Person to distribute the Exchange Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes received in the Exchange Offer. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company and the Guarantors shall comply with all the provisions of Section 6(d) below and shall use their best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto, to the extent required by Section 4(a), the Company will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) Market-Maker Prospectus. In connection with any Registration Statement filed pursuant to Section 4(c) of this Agreement, during the period it is required to be effective hereunder, the Company and the Guarantors will comply with all of the provisions of Section 6(d) (other than sub-sections (xii), (xiii), (xvi), (xix) and (xx)) below until such time as all Restricted Broker-Dealers determine in their judgment that they are no longer required to deliver Market-Maker Prospectuses -9- in connection with sales of Broker-Dealer Transfer Restricted Securities. The Company and Guarantors shall use their best efforts to deliver Market-Maker Prospectuses to all Restricted Broker-Dealers immediately upon the effectiveness of the Registration Statement and from time to time thereafter, during the period the Registration Statement is required to be effective hereunder, upon request, in such quantities as such Restricted Broker-Dealer shall require. (d) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Notes by Broker-Dealers) and Broker-Dealer Transfer Restricted Securities, the Company and the Guarantors shall: (i) use their best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, during the period required by this Agreement, the Company and the Guarantors shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use their best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter. Notwithstanding the foregoing and the provisions of Section 4, at any time after Consummation of the Exchange Offer, the Company and the Guarantors may allow the Shelf Registration Statement or Market-Maker Prospectus and the related Registration Statement to cease to be effective and usable if (x) the Board of Directors of the Company determines in good faith that such action is in the best interests of the Company, and the Company notifies the Holders within two Business Days after the Board of Directors makes such determination, or (y) the Prospectus contained in the Shelf Registration Statement or the Market-Maker Prospectus or the Registration Statement relating to either, as the case may be, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; PROVIDED that the two-year period referred to in Section 4(a) hereof during which the Shelf Registration Statement is required to be effective and usable shall be extended by the number of days during which such registration statement was not effective or usable pursuant to the foregoing provisions; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act with -10- respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders of Transfer Restricted Securities and, following the Consummation of the Exchange Offer, Holders of Broker- Dealer Transfer Restricted Securities, promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the hap- pening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, under state securities or Blue Sky laws, the Company and the Guarantors shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to each of the selling Holders of Transfer Restricted Securities or Holders of Broker-Dealer Transfer Restricted Securities and each of the under- writer(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein (except that the Exchange Offer Regis- tration Statement need only be provided to such underwriters) or any amendments or supplements to any such Registration Statement or Prospectus (including all docu- ments incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review of such Holders and underwriter(s), if any, for a period of at least five Business Days, and the Company and the Guarantors will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) if a selling Holder of Transfer Restricted Securities or a Holder of Broker-Dealer Transfer Restricted Securities, as applicable, covered by such Registration Statement or the underwriter(s), if any, shall not have had such an opportunity to participate in the preparation thereof; (v) promptly prior to the filing of any document that is to be incorporated by reference into -11- a Registration Statement or Prospectus, provide copies of such document to the selling Holders of Transfer Restricted Securities or the Holders of Broker-Dealer Transfer Restricted Securities, as applicable, and to the underwriter(s), if any, make the Company's representatives available (and representatives of the Guarantors) for discussion of such document and other customary due dili- gence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) make available at reasonable times at the Company's principal place of business for inspection by the selling Holders of Transfer Restricted Securities, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriter(s) who shall certify to the Company and the Guarantors that they have a current intention to sell Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities pursuant to a Shelf Registration Statement or Market-Maker Prospectus, and, following the Consummation of the Exchange Offer, the Holders of Broker- Dealer Transfer Restricted Securities, such financial and other information of the Company and the Guarantors as reasonably requested and cause the Company's and the Guarantors' officers, directors and employees to respond to such inquiries as shall be reasonably necessary, in the reasonable judgment of counsel to such Holders, to conduct a reasonable investigation; PROVIDED, HOWEVER, that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company in writing as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such Registration Statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to the subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement), or (C) such information is required to be set forth in such Registration Statement or the Prospectus included therein or in an amendment to such Registration Statement or an amendment or supplement to such Prospectus in order that such Registration Statement, Prospectus, amendment or supplement, as the case may be, does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (vii) if requested by any selling Holders of Transfer Restricted Securities or Holders of Broker-Dealer Transfer Restricted Securities, as applicable, or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information that is required by the Act as such Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities or Broker- Dealer Transfer Restricted Securities, as applicable, to be sold in such offering; and make all required filings of such Prospectus supplement or -12- post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (viii) furnish to each Holder of Transfer Restricted Securities or Holders of Broker-Dealer Transfer Restricted Securities, as applicable, and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (ix) deliver to each selling Holder of Transfer Restricted Securities and each of the underwriter(s), if any, and each Holder of Broker-Dealer Transfer Restricted Securities, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Guarantors hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, and each Holder of Broker- Dealer Transfer Restricted Securities, in connection with the offering and the sale of the Transfer Restricted Securities and Broker-Dealer Transfer Restricted Securities, as applicable, covered by the Prospectus or any amendment or supplement thereto; (x) enter into, and cause the Guarantors to enter into, such agreements (including an underwriting agreement), and make, and cause the Guarantors to make, such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities and Broker-Dealer Transfer Restricted Securities, as applicable, pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be requested by the Initial Purchaser or, in the case of registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, by any Holder or Holders of Transfer Restricted Securities who hold Transfer Restricted Securities in an amount equal to at least 25% in aggregate principal amount of outstanding Notes or, in the case of Broker-Dealer Transfer Restricted Securities, by any Holder of Broker- Dealer Transfer Restricted Securities; PROVIDED, that, the Company and the Guarantors shall not be required to enter into any such agreement more than once with respect to all of the Transfer Restricted Securities and, in the case of a Shelf Registration Statement, may delay entering into such agreement if the Board of Directors of the Company determines in good faith that it is in the best interests of the Company; and whether or not an underwriting agree- ment is entered into and whether or not the registration is an Underwritten Registration, the Company and the Guarantors shall: (A) furnish to the Initial Purchaser, the Holders of Transfer Restricted Securities who hold Transfer Restricted Securities in an amount equal to at least 25% in aggregate principal amount of outstanding Notes (in the case of a Shelf Registration Statement), each Holder of Broker-Dealer Transfer Restricted Securities and each underwriter, if any, in such substance and scope as they may request and as are customarily made in connection with an offering of debt securities pursuant to a Registration Statement (i) upon the effective date of any Registration Statement (and if such Registration Statement contemplates an -13- Underwritten Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, upon the date of the closing under the underwriting agreement related thereto) and (ii) upon the filing of any amendment or supplement to any Registration Statement or any other document that is incorporated in any Registration Statement by reference and includes financial data with respect to a fiscal quarter or year: (1) a certificate, dated the date of effectiveness of any Registration Statement (and if such Registration Statement contemplates an Underwritten Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, the date of the closing under the underwriting agreement related thereto) or the date of the filing of any other document pursuant to clause (A)(ii) above, as the case may be, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company and the Guarantors, confirming, as of the date thereof, the matters set forth in paragraphs (e), (f) and (j) of Section 7 of the Purchase Agreement and such other matters as such parties may reasonably request; (2) an opinion, dated the date of effectiveness of any Registration Statement (and if such Registration Statement contemplates an Underwritten Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, the date of the closing under the underwriting agreement related thereto) or the date of the filing of any other document pursuant to clause (A)(ii) above, as the case may be, of counsel for the Company and the Guarantors, covering the matters set forth in paragraphs (b) and (c) of Section 7 of the Purchase Agreement and such other matter as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors (if applicable), the Initial Purchaser's representatives and the Initial Purchaser's counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the factual statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a certain extent upon facts provided to such counsel by officers and other representatives of the Company and the Guarantors and without independent check or verification), nothing came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order -14- to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, has not inde- pendently verified and expresses no opinion with respect to, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of effectiveness of any Registration Statement (and if such Registration Statement contemplates an Underwritten Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, the date of the closing under the underwriting agreement related thereto) or the date of the filing of any other document pursuant to clause (A) (ii) above, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters by underwriters in connection with an offering of debt securities pursuant to a Registration Statement, and affirming, or updating, as applicable, the matters set forth in the comfort letters delivered pursuant to Section 7(d) of the Purchase Agreement, without exception; (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company pursuant to this clause (x), if any. (xi) prior to any public offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, cooperate with, and cause the Guarantors to cooperate with, the selling Holders of Transfer Restricted Securities, the Holders of Broker- Dealer Transfer Restricted Securities, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, under the securities or Blue Sky laws of such jurisdictions as the selling Holders of Transfer Restricted Securities or Holders of Broker-Dealer Transfer Restricted Securities or underwriter(s) may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, covered by any Registration Statement filed pursuant to Section 4 hereof; PROVIDED, HOWEVER, that neither the Company nor the Guarantors shall be required to register or qualify as a foreign corporation where they are not now so qualified or to take any action that would subject them to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where they are not now so subject; (xii) shall issue, upon the request of any Holder of Senior Subordinated Notes covered -15- by the Shelf Registration Statement, Exchange Notes, having an aggregate principal amount equal to the aggregate principal amount of Senior Subordinated Notes surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Senior Subordinated Notes held by such Holder shall be surrendered to the Company for cancellation; (xiii) cooperate with, and cause the Guarantors to cooperate with, the selling Holders of Transfer Restricted Securities and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as such Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xiv) use its reasonable best efforts to cause the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, subject to the proviso contained in clause (xi) above; (xv) if any fact or event contemplated by clause (d)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities or Broker- Dealer Transfer Restricted Securities, as applicable, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (xvi) provide CUSIP numbers for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustees under the Indentures with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD; (xviii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which -16- Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; (xix) cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate, and cause the Guarantors to cooperate, with the Trustees and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and cause the Guarantors to execute, and use their best efforts to cause the Trustees to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (xx) cause all Transfer Restricted Securities covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Notes or the managing underwriter(s), if any; (xxi) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act; and (xxii) cause each direct or indirect domestic subsidiary of the Company that is created or acquired and that is required to become a guarantor of the Notes under the Indenture, upon the creation or acquisition of such subsidiary (if then required to become a guarantor), to execute a counterpart to this Agreement in the form at- tached hereto as Exhibit A and to deliver such counterpart, together with an opinion of counsel as to the enforceability thereof against such entity, to the Initial Purchaser no later than seven days following the execution thereof. Each Holder agrees by acquisition of a Transfer Restricted Security or Broker-Dealer Transfer Restricted Securities, as applicable, that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(d)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(d)(xv) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4(a) hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(d)(iii)(D) hereof to and including -17- the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(d)(xv) hereof or shall have received the Advice. The Company may require each Holder of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder and such Holder's intended method of distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order to comply with the Act. Each such Holder agrees to notify the Company as promptly as practicable of (i) any inaccuracy or change in information previously furnished by such Holder to the Company or (ii) the occurrence of any event, in either case, as a result of which any Prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Holder or such Holder's intended method of distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities or omits to state any material fact regarding such Holder or such Holder's intended method of distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities required to be stated therein or necessary to make the statements therein not misleading and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such Prospectus shall not contain, with respect to such Holder or the distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. SECTION 7 REGISTRATION EXPENSES (a) All expenses associated with and incident to the Company's or the Guarantors' performance of or compliance with this Agreement will be borne by the Company or the Guarantors, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by the Initial Purchaser or any Holder with the NASD and reasonable counsel fees and disbursements in connection therewith (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all reasonable fees and disbursements of compliance with federal securities and state Blue Sky or securities laws (including all reasonable fees and expenses of counsel to the underwriter(s) in connection with compliance with state Blue Sky or securities laws); (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and the Guarantors and, subject to Section 7(b)) below, the reasonable fees and disbursements of counsel for the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; (vi) all fees and expenses of the Trustees under the Indenture to the extent provided in the Indenture and of any custodian or exchange agent; and (vii) all fees and disbursements of independent certified public -18- accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company shall, in any event, bear its and the Guarantors' internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company shall reimburse the Initial Purchaser and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be such counsel as the Initial Purchaser shall appoint or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8 INDEMNIFICATION (a) Indemnification by the Company and the Guarantors. Upon any registration of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, pursuant to Sections 3 and 4 hereof, and in consideration of the agreements of the Initial Purchaser contained herein, and as an inducement to the Initial Purchaser to purchase the Notes, the Company and the Guarantors, jointly and severally, shall and hereby agree to, (i) indemnify and hold harmless each Holder of Transfer Restricted Securities and Broker-Dealer Transfer Restricted Securities, as applicable, to be included in such registration and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, against any losses, claims, damages or liabilities, joint or several, to which such Holder, agent or underwriter may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, were registered under the Act, or any preliminary, final or summary Prospectus contained therein or furnished by the Company to any such Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the 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 (ii) reimburse such Holder, such agent and such underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company and the Guarantors shall not be liable under (i) above to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration -19- Statement, or preliminary, final or summary Prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein. (b) Indemnification by the Holders and any Agents and Underwriters. The Company and the Guarantors may require, as a condition to including any Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, in any Registration Statement filed pursuant to Sections 3 and 4 hereof and to entering into any underwriting or placement or sales agent agreement, if any, with respect thereto, that the Company and the Guarantors shall have received an undertaking reasonably satisfactory to them from the Holders of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, and from each underwriter or agent named in any such underwriting or placement or sales agent agreement, if any, severally and not jointly, to (i) indemnify and hold harmless the Company and the Guarantors, and, in the case of a Shelf Registration Statement, all other Holders of Transfer Restricted Securities, against any losses, claims, damages or liabilities to which the Company, the Guarantors or such other Holders of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, or any preliminary, final or summary Prospectus contained therein or furnished by the Company to any such Holder, agent or underwriter, if any, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Holder, agent or underwriter expressly for use therein, and (ii) reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that no such Holder shall be required to undertake liability to any person under this Section 8(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Holder from the sale of such Holder's Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, pursuant to such registration. (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 8, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under the indemnification provisions of or contemplated by Section 8(a) or 8(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying -20- party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the foregoing, any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless the indemnified party shall have been advised by counsel that representation of the indemnified party by counsel provided by the indemnifying party would be inappropriate due to actual or potential conflicting interests between the indemnifying party and the indemnified party, including situations in which there are one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party; PROVIDED, HOWEVER, that the indemnifying party shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all indemnified parties, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding. The indemnifying party shall not be required to indemnify any indemnified party for any amount paid or payable by such indemnified party in the settlement of any action, proceeding or investigation without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Contribution. Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 8(a) or Section 8(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d). The amount paid or payable -21- by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such Holder from the sale of any Transfer Restricted Securities (after deducting any fees, discounts and commissions applicable thereto) or Broker-Dealer Transfer Restricted Securities, as applicable, exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Transfer Restricted Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' and any underwriters' obligations in this Section 8(d) to contribute shall be several in proportion to the principal amount of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, registered or underwritten, as the case may be, by them and not joint. (e) The obligations of the Company and the Guarantors under this Section 8 shall be in addition to any liability which the Company and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each Holder, agent and underwriter and each person, if any, who controls any Holder, agent or underwriter within the meaning of the Act; and the obligations of the Holders and any underwriters contemplated by this Section 8 shall be in addition to any liability which the respective Holder or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and the Guarantors (including any person who, with his consent, is named in any Registration Statement as about to become a director of the Company and the Guarantors) and to each person, if any, who controls the Company and the Guarantors within the meaning of the Act. SECTION 9 RULE 144A The Company and the Guarantors hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS -22- No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11 SELECTION OF UNDERWRITERS The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Company; PROVIDED, that such investment bankers and managers must be Goldman, Sachs & Co. or another firm reasonably satisfactory to the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering. SECTION 12 MISCELLANEOUS (a) Remedies. The Company and the Guarantors agree that monetary damages (including the liquidated damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not, and will cause the Guarantors not to, on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor the Guarantors have previously entered into any agreement granting any registration rights with respect to its debt securities or convertible debt securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Notes. The Company and the Guarantors shall not take any action, or permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate the Exchange Offer or the ability of the Holders to include such Notes in the Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a -23- waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. The provisions of Sections 4(c), 6(d), 7, 8 and this Section 12(d) may not be amended, modified or supplemented without the written consent of the Initial Purchaser. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrars under the Indentures, with a copy to the Registrars under the Indentures; and (ii) if to the Company and the Guarantors: Amscan Holdings, Inc. 80 Grasslands Road Elmsford, New York 10523 Telecopier No.: (914) 345-2056 Attention: Secretary With a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Telecopier No.: (212) 403-2000 Attention: Mitchell S. Presser All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustees at the address specified in the Indentures. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the -24- parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement together with the Indenture, the Notes and Purchase Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company and the Guarantors with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. -25- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. AMSCAN HOLDINGS, INC. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: Chief Executive Officer AMSCAN INC. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President AM-SOURCE, INC. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President -26- TRISAR, INC. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President SSY REALTY CORP. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President JCS REALTY CORP. By: /s/ Gerald C. Rittenberg Name: Gerald C. Rittenberg Title: President GOLDMAN, SACHS & CO. /s/ Goldman, Sachs & Co. (Goldman, Sachs & Co.) EXHIBIT A COUNTERPART TO EXCHANGE AND REGISTRATION RIGHTS AGREEMENT The undersigned hereby absolutely, unconditionally and irrevocably agrees to be bound by the terms and provisions of the Exchange and Registration Rights Agreement, dated as of December 19, 1997, by and among Amscan Holdings, Inc., a Delaware corporation, each of the Guarantors (as defined therein) and the Initial Purchaser (as defined therein). IN WITNESS WHEREOF, the undersigned has executed this Counterpart as of _______________, 199_. [NAME] By: Name: Title: -27- -----END PRIVACY-ENHANCED MESSAGE-----