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: [ ]
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
(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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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
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<PAGE>
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<PAGE>
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
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<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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.<PAGE>
"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-<PAGE>
"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-<PAGE>
"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-<PAGE>
"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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
(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-<PAGE>
(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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
(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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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 <PAGE>
EXHIBIT A
[STOCK INCENTIVE PLAN]<PAGE>
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
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 <PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
(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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
(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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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 <PAGE>
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.<PAGE>
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 <PAGE>
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
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.<PAGE>
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.<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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-<PAGE>
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
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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-<PAGE>
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
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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
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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
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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
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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
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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.
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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-<PAGE>
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.)<PAGE>
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:
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