Exhibit 7
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of December 19, 1997
by and among
Amscan Holdings, Inc.,
the Guarantors party hereto
and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
This Exchange and Registration Rights Agreement (this
"Agreement") is made and entered into as of December 19, 1997
by and among Amscan Holdings, Inc., a Delaware corporation (the
"Company"), each subsidiary of the Company which is a signatory
hereof and by each additional subsidiary of the Company that is
created or acquired after the date hereof that executes a
counterpart to this Agreement substantially in the form of
Exhibit A attached hereto pursuant to Section 6(d)(xxii)
(collectively, including such signatories, the "Guarantors"),
and ▇▇▇▇▇▇▇, Sachs & Co. (the "Initial Purchaser"), who has
agreed to purchase the Company's 9.875% Senior Subordinated
Notes due 2007 (the "Senior Subordinated Notes") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase
Agreement, dated December 15, 1997 (the "Purchase Agreement"),
by and among the Company, the Guarantors and the Initial
Purchaser. In order to induce the Initial Purchaser to
purchase the Senior Subordinated Notes, the Company and the
Guarantors have agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial
Purchaser set forth in Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1 DEFINITIONS
As used in this Agreement, the following capitalized
terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered with
the Commission under the Exchange Act.
Broker-Dealer Transfer Restricted Securities:
Exchange Notes that are acquired by a Restricted Broker-Dealer
for its own account as a result of market-making activities or
other trading activities.
Closing Date: The date of the closing of the
Transaction.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be
deemed "Consummated" (including correlative terms) for purposes
of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the
Exchange Offer, (ii) the maintenance of such Registration
Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Company to the Registrar under the Indenture
(or an indenture substantially identical to the Indenture) of
Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Senior Subordinated Notes that
were tendered by Holders thereof pursuant to the Exchange
Offer.
Damages Payment Date: With respect to the Senior
Subordinated Notes, each Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934,
as amended.
Exchange Notes: Debt securities and guarantees of
the Company and the Guarantors, respectively, which debt
securities and guarantees shall be substantially identical to
the Senior Subordinated Notes and the Senior Subordinated
Guarantees (as defined in the Indenture), respectively, except
that they have been registered pursuant to an effective
Registration Statement under the Act, and are entitled to the
benefits of the Indenture or an indenture which is
substantially identical to the Indenture and which has been
qualified under the Trust Indenture Act.
Exchange Offer: The registration by the Company
under the Act of the Exchange Notes pursuant to a Registration
Statement pursuant to which the Company offers the Holders of
all outstanding Transfer Restricted Securities the opportunity
to exchange all such outstanding Transfer Restricted Securities
held by such Holders for Exchange Notes in an aggregate
principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer
by such Holders.
Exchange Offer Registration Statement: The
Registration Statement relating to the Exchange Offer,
including the related Prospectus.
Exempt Resales: The transactions in which the
Initial Purchaser proposes to sell the Senior Subordinated
Notes to certain "qualified institutional buyers," as such term
is defined in Rule 144A under the Act.
Guarantors: As defined in the preamble hereto.
Holders: As defined in Sections 2(b) and 2(c)
hereof.
Indenture: The Indenture, dated as of December 19,
1997, among the Company, IBJ ▇▇▇▇▇▇▇▇ 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.
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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
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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
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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.
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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
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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
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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-
▇▇▇ 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
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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
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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
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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
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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
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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
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Underwritten Offering of Transfer Restricted
Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, upon the date of the
closing under the underwriting agreement related
thereto) and (ii) upon the filing of any amendment or
supplement to any Registration Statement or any other
document that is incorporated in any Registration
Statement by reference and includes financial data
with respect to a fiscal quarter or year:
(1) a certificate, dated the date of
effectiveness of any Registration Statement (and
if such Registration Statement contemplates an
Underwritten Offering of Transfer Restricted
Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, the date of the
closing under the underwriting agreement related
thereto) or the date of the filing of any other
document pursuant to clause (A)(ii) above, as
the case may be, signed by (y) the President or
any Vice President and (z) a principal financial
or accounting officer of each of the Company and
the Guarantors, confirming, as of the date
thereof, the matters set forth in paragraphs
(e), (f) and (j) of Section 7 of the Purchase
Agreement and such other matters as such parties
may reasonably request;
(2) an opinion, dated the date of
effectiveness of any Registration Statement (and
if such Registration Statement contemplates an
Underwritten Offering of Transfer Restricted
Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, the date of the
closing under the underwriting agreement related
thereto) or the date of the filing of any other
document pursuant to clause (A)(ii) above, as
the case may be, of counsel for the Company and
the Guarantors, covering the matters set forth
in paragraphs (b) and (c) of Section 7 of the
Purchase Agreement and such other matter as such
parties may reasonably request, and in any event
including a statement to the effect that such
counsel has participated in conferences with
officers and other representatives of the
Company and the Guarantors, representatives of
the independent public accountants for the
Company and the Guarantors (if applicable), the
Initial Purchaser's representatives and the
Initial Purchaser's counsel in connection with
the preparation of such Registration Statement
and the related Prospectus and have considered
the matters required to be stated therein and
the factual statements contained therein,
although such counsel has not independently
verified the accuracy, completeness or fairness
of such statements; and that such counsel
advises that, on the basis of the foregoing
(relying as to materiality to a certain extent
upon facts provided to such counsel by officers
and other representatives of the Company and the
Guarantors and without independent check or
verification), nothing came to such counsel's
attention that caused such counsel to believe
that the applicable Registration Statement, at
the time such Registration Statement or any
post-effective amendment thereto became
effective, and, in the case of the Exchange
Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a
material fact or omitted to state a material
fact required to be stated therein or necessary
to make the statements therein not misleading,
or that the Prospectus contained in such
Registration Statement as of its date and, in
the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the
date of Consummation, contained an untrue
statement of a material fact or omitted to state
a material fact necessary in order
-14-
to make the statements therein, in light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing,
such counsel may state further that such counsel
assumes no responsibility for, has not inde-
pendently verified and expresses no opinion with
respect to, the accuracy, completeness or
fairness of the financial statements, notes and
schedules and other financial data included in
any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the
date of effectiveness of any Registration
Statement (and if such Registration Statement
contemplates an Underwritten Offering of
Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities, as applicable,
the date of the closing under the underwriting
agreement related thereto) or the date of the
filing of any other document pursuant to clause
(A) (ii) above, as the case may be, from the
Company's independent accountants, in the
customary form and covering matters of the type
customarily covered in comfort letters by
underwriters in connection with an offering of
debt securities pursuant to a Registration
Statement, and affirming, or updating, as
applicable, the matters set forth in the comfort
letters delivered pursuant to Section 7(d) of
the Purchase Agreement, without exception;
(B) set forth in full or incorporate by
reference in the underwriting agreement, if any, the
indemnification provisions and procedures of Section
8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and
certificates as may be reasonably requested by such
parties to evidence compliance with clause (A) above
and with any customary conditions contained in the
underwriting agreement or other agreement entered
into by the Company pursuant to this clause (x), if
any.
(xi) prior to any public offering of Transfer
Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, cooperate with, and cause the
Guarantors to cooperate with, the selling Holders of
Transfer Restricted Securities, the Holders of Broker-
Dealer Transfer Restricted Securities, the underwriter(s),
if any, and their respective counsel in connection with
the registration and qualification of the Transfer
Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, under the securities or Blue
Sky laws of such jurisdictions as the selling Holders of
Transfer Restricted Securities or Holders of Broker-Dealer
Transfer Restricted Securities or underwriter(s) may
reasonably request and do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities, as
applicable, covered by any Registration Statement filed
pursuant to Section 4 hereof; PROVIDED, HOWEVER, that
neither the Company nor the Guarantors shall be required
to register or qualify as a foreign corporation where they
are not now so qualified or to take any action that would
subject them to the service of process in suits or to
taxation, other than as to matters and transactions
relating to the Registration Statement, in any
jurisdiction where they are not now so subject;
(xii) shall issue, upon the request of any Holder of
Senior Subordinated Notes covered
-15-
by the Shelf Registration Statement, Exchange Notes,
having an aggregate principal amount equal to the
aggregate principal amount of Senior Subordinated Notes
surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Exchange Notes
to be registered in the name of such Holder or in the name
of the purchaser(s) of such Notes, as the case may be; in
return, the Senior Subordinated Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiii) cooperate with, and cause the Guarantors to
cooperate with, the selling Holders of Transfer Restricted
Securities and the underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations
and registered in such names as such Holders or the
underwriter(s), if any, may request at least two Business
Days prior to any sale of Transfer Restricted Securities
made by such underwriter(s);
(xiv) use its reasonable best efforts to cause the
Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, covered by the
Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition
of such Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities, as applicable, subject to
the proviso contained in clause (xi) above;
(xv) if any fact or event contemplated by clause
(d)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document
incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities or Broker-
Dealer Transfer Restricted Securities, as applicable, the
Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary
to make the statements therein not misleading;
(xvi) provide CUSIP numbers for all Transfer
Restricted Securities not later than the effective date of
the Registration Statement and provide the Trustees under
the Indentures with printed certificates for the Transfer
Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due
diligence investigation by any underwriter (including any
"qualified independent underwriter") that is required to
be retained in accordance with the rules and regulations
of the NASD;
(xviii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission,
and make generally available to its security holders, as
soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the
end of any fiscal quarter in which
-16-
Transfer Restricted Securities are sold to underwriters in
a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with
the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration
Statement;
(xix) cause the Indenture to be qualified under the
Trust Indenture Act not later than the effective date of
the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate, and
cause the Guarantors to cooperate, with the Trustees and
the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the Trust
Indenture Act; and execute, and cause the Guarantors to
execute, and use their best efforts to cause the Trustees
to execute, all documents that may be required to effect
such changes and all other forms and documents required to
be filed with the Commission to enable such Indenture to
be so qualified in a timely manner;
(xx) cause all Transfer Restricted Securities covered
by the Registration Statement to be listed on each
securities exchange on which similar securities issued by
the Company are then listed if requested by the Holders of
a majority in aggregate principal amount of Notes or the
managing underwriter(s), if any;
(xxi) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange
Act; and
(xxii) cause each direct or indirect domestic
subsidiary of the Company that is created or acquired and
that is required to become a guarantor of the Notes under
the Indenture, upon the creation or acquisition of such
subsidiary (if then required to become a guarantor), to
execute a counterpart to this Agreement in the form at-
tached hereto as Exhibit A and to deliver such
counterpart, together with an opinion of counsel as to the
enforceability thereof against such entity, to the Initial
Purchaser no later than seven days following the execution
thereof.
Each Holder agrees by acquisition of a Transfer
Restricted Security or Broker-Dealer Transfer Restricted
Securities, as applicable, that, upon receipt of any notice
from the Company of the existence of any fact of the kind
described in Section 6(d)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented
or amended Prospectus contemplated by Section 6(d)(xv) hereof,
or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by
the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering
such Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, that was current at the
time of receipt of such notice. In the event the Company shall
give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in
Section 3 or 4(a) hereof, as applicable, shall be extended by
the number of days during the period from and including the
date of the giving of such notice pursuant to Section
6(d)(iii)(D) hereof to and including
-17-
the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(d)(xv) hereof or
shall have received the Advice.
The Company may require each Holder of Transfer
Restricted Securities or Broker-Dealer Transfer Restricted
Securities as to which any registration is being effected to
furnish to the Company such information regarding such Holder
and such Holder's intended method of distribution of the
applicable Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities as the Company may from time to
time reasonably request in writing, but only to the extent that
such information is required in order to comply with the Act.
Each such Holder agrees to notify the Company as promptly as
practicable of (i) any inaccuracy or change in information
previously furnished by such Holder to the Company or (ii) the
occurrence of any event, in either case, as a result of which
any Prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding such
Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities or omits to state any material
fact regarding such Holder or such Holder's intended method of
distribution of the applicable Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities required to be
stated therein or necessary to make the statements therein not
misleading and promptly to furnish to the Company any
additional information required to correct and update any
previously furnished information or required so that such
Prospectus shall not contain, with respect to such Holder or
the distribution of the applicable Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
SECTION 7 REGISTRATION EXPENSES
(a) All expenses associated with and incident to the
Company's or the Guarantors' performance of or compliance with
this Agreement will be borne by the Company or the Guarantors,
regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration
and filing fees and expenses (including filings made by the
Initial Purchaser or any Holder with the NASD and reasonable
counsel fees and disbursements in connection therewith (and, if
applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules
and regulations of the NASD)); (ii) all reasonable fees and
disbursements of compliance with federal securities and state
Blue Sky or securities laws (including all reasonable fees and
expenses of counsel to the underwriter(s) in connection with
compliance with state Blue Sky or securities laws); (iii) all
expenses of printing (including printing certificates for the
Exchange Notes to be issued in the Exchange Offer and printing
of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the
Company and the Guarantors and, subject to Section 7(b)) below,
the reasonable fees and disbursements of counsel for the
Holders of Transfer Restricted Securities; (v) all application
and filing fees in connection with listing Notes on a national
securities exchange or automated quotation system pursuant to
the requirements hereof; (vi) all fees and expenses of the
Trustees under the Indenture to the extent provided in the
Indenture and of any custodian or exchange agent; and (vii) all
fees and disbursements of independent certified public
-18-
accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by
or incident to such performance).
The Company shall, in any event, bear its and the
Guarantors' internal expenses (including, without limitation,
all salaries and expenses of their officers and employees
performing legal or accounting duties), the expenses of any
annual audit and the fees and expenses of any Person, including
special experts, retained by the Company.
(b) In connection with any Registration Statement
required by this Agreement (including, without limitation, the
Exchange Offer Registration Statement and the Shelf
Registration Statement), the Company shall reimburse the
Initial Purchaser and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold
pursuant to the "Plan of Distribution" contained in the
Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel,
who shall be such counsel as the Initial Purchaser shall
appoint or such other counsel as may be chosen by the Holders
of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is
being prepared.
SECTION 8 INDEMNIFICATION
(a) Indemnification by the Company and the
Guarantors. Upon any registration of Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, pursuant to Sections 3 and 4 hereof, and in
consideration of the agreements of the Initial Purchaser
contained herein, and as an inducement to the Initial Purchaser
to purchase the Notes, the Company and the Guarantors, jointly
and severally, shall and hereby agree to, (i) indemnify and
hold harmless each Holder of Transfer Restricted Securities and
Broker-Dealer Transfer Restricted Securities, as applicable, to
be included in such registration and each person who
participates as a placement or sales agent or as an underwriter
in any offering or sale of such Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities, as applicable,
against any losses, claims, damages or liabilities, joint or
several, to which such Holder, agent or underwriter may become
subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement under which such Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, were registered under the Act, or any preliminary,
final or summary Prospectus contained therein or furnished by
the Company to any such Holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) reimburse
such Holder, such agent and such underwriter for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company and
the Guarantors shall not be liable under (i) above to any such
person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration
-19-
Statement, or preliminary, final or summary Prospectus, or
amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by
such person expressly for use therein.
(b) Indemnification by the Holders and any Agents
and Underwriters. The Company and the Guarantors may require,
as a condition to including any Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities, as applicable,
in any Registration Statement filed pursuant to Sections 3 and
4 hereof and to entering into any underwriting or placement or
sales agent agreement, if any, with respect thereto, that the
Company and the Guarantors shall have received an undertaking
reasonably satisfactory to them from the Holders of such
Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, and from each underwriter
or agent named in any such underwriting or placement or sales
agent agreement, if any, severally and not jointly, to (i)
indemnify and hold harmless the Company and the Guarantors,
and, in the case of a Shelf Registration Statement, all other
Holders of Transfer Restricted Securities, against any losses,
claims, damages or liabilities to which the Company, the
Guarantors or such other Holders of Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement, or any preliminary,
final or summary Prospectus contained therein or furnished by
the Company to any such Holder, agent or underwriter, if any,
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written
information furnished to the Company by such Holder, agent or
underwriter expressly for use therein, and (ii) reimburse the
Company and the Guarantors for any legal or other expenses
reasonably incurred by the Company and the Guarantors in
connection with investigating or defending any such action or
claim as such expenses are incurred; PROVIDED, HOWEVER, that no
such Holder shall be required to undertake liability to any
person under this Section 8(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder
from the sale of such Holder's Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities, as applicable,
pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt
by an indemnified party under subsection (a) or (b) above of
written notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section
8, notify such indemnifying party in writing of the
commencement of such action; but the omission so to notify the
indemnifying party shall not relieve it from any liability
which it may have to any indemnified party other than under the
indemnification provisions of or contemplated by Section 8(a)
or 8(b) hereof. In case any such action shall be brought
against any indemnified party and it shall notify an
indemnifying party of the commencement thereof, such
indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying
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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
▇▇▇▇▇▇▇, ▇▇▇▇▇ & 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.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
AMSCAN INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
AM-SOURCE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
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TRISAR, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
SSY REALTY CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
JCS REALTY CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
/s/ ▇▇▇▇▇▇▇, Sachs & Co.
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
EXHIBIT A
COUNTERPART TO EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
The undersigned hereby absolutely, unconditionally
and irrevocably agrees to be bound by the terms and provisions
of the Exchange and Registration Rights Agreement, dated as of
December 19, 1997, by and among Amscan Holdings, Inc., a
Delaware corporation, each of the Guarantors (as defined
therein) and the Initial Purchaser (as defined therein).
IN WITNESS WHEREOF, the undersigned has executed this
Counterpart as of _______________, 199_.
[NAME]
By:
Name:
Title:
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