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Exhibit 1
AMSCAN HOLDINGS, INC.
COMMON STOCK
(PAR VALUE $0.10 PER SHARE)
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UNDERWRITING AGREEMENT
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December __, 1996
Xxxxxxx, Xxxxx & Co.,
Alex. Xxxxx & Sons Incorporated,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
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 the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
5,350,000 shares and, at the election of the Underwriters, up to 802,500
additional shares of Common Stock, par value $0.10 per share ("Stock") of the
Company. The 5,350,000 shares to be sold by the Company are herein called the
"Firm Shares" and the 802,500 additional shares to be sold by the Company are
herein called the "Optional Shares". The Firm Shares and the Optional Shares
that the Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares".
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-14107) (the
"Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission");
the Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and
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regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 6(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of
the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the registration
statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and did not contain 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, 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 an
Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain 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; 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 an Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein;
(iv) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Prospectus 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
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries 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
Prospectus;
(v) 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
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the Prospectus or such as do not materially affect the value of such
property, taken as a whole, and do not interfere with the use made and
proposed to be made of such property, taken as a whole, 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;
(vi) 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 Prospectus, 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 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;
(vii) The Company has an authorized capitalization as set forth in
the Prospectus, 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 and conform to the description of the Stock
contained in the Prospectus; with respect to each of the subsidiaries
of the Company that are 100% owned by the Company as set forth in
Schedule II hereto, 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 Prospectus) 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 are less than 100% owned by the Company as set forth in
Schedule II hereto, 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 Prospectus) 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 shown opposite such subsidiary's name on
Schedule II hereto; the Organization (as defined in the Prospectus) has
been duly and validly consummated in compliance with applicable law;
and there are no holders of the securities of the Company or any of its
subsidiaries having rights to registration thereof (except as otherwise
described in the Prospectus) or pre-emptive rights to purchase capital
stock of the Company;
(viii) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable and
will conform to the description of the Stock contained in the
Prospectus;
(ix) The issue and sale of the Shares and the compliance by the
Company with all of the provisions of: (a) this Agreement, (b) the
Stock Agreement, dated October 9, 1996 (the "Stock Agreement"), among
Xxxxxx X. Xxxxxxxxxx, Xxxx X. Xxxxxxxxxxx and Amscan Inc.,
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(c) the Tax Indemnity Agreement, dated __________, 1996 (the "Tax
Indemnity Agreement"), between the Company and Xxxx X. Xxxxxxxxxxx, (d)
the Share Exchange Agreement, dated December __, 1996 (the "Share
Exchange Agreement"), among the Company, Xxxx X. Xxxxxxxxxxx, certain
trusts as specified therein and Xxxxxx X. Xxxxxxxxxx and (e) the
Capital Contribution Agreement, dated as of October 9, 1996 (the
"Capital Contribution Agreement"), between the Company and Xxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx, including the side
letter with respect thereto dated of even date therewith (collectively,
agreements (b) through (e) (including such side letter) in this
subsection 1(ix), the "Organization Agreements") 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, or in any way, individually or in the
aggregate, impair or delay the consummation of the transactions
contemplated by this Agreement or the offering of the Shares in the
manner contemplated by the Prospectus, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation
of any court or governmental agency or body having 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 on the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its 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
offering of the Shares in the manner contemplated by the Prospectus;
and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement and the
Organization Agreements, except for the registration under the Act of
the Shares and the registration of the Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each of which
has been made or obtained, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws; 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 on
the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its 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 offering of the Shares in the manner contemplated
by the Prospectus;
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(xi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the captions "Shares
Eligible For Future Sale", "Organization of the Company", "Certain
Related Transactions" and "Underwriting" (except, with respect to the
statements under the caption "Underwriting", for information furnished
in writing to the Company by the Underwriters through the
representatives expressly for use therein) 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 materials respects;
(xii) Other than as set forth in the Prospectus, 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 subject which, if determined adversely to
the Company or any of its subsidiaries, could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on
the current or future financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(xiii) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xiv) Neither the Company nor any of its affiliates 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;
(xv) 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 those patents, trademarks, service marks, trade
names or copyrights with respect to which the failure to own or license
same would not have a material adverse affect on the financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole. 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
that would not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries; and
(xvi) 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.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
share of $____________, the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto and (b) in the event and to the extent
that the Underwriters shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this Section
2, that portion of the number of Optional Shares as to which
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such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 802,500 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 5
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. The Company hereby confirms its engagement of Xxxxxxx, Sachs & Co. as,
and Xxxxxxx, Xxxxx & Co. hereby confirms its agreement with the Company to
render services as, a "qualified independent underwriter" within the meaning of
Rule 2720(b)(15) of the Rules of Conduct of the National Association of
Securities Dealers, Inc. with respect to the offering and sale of the Shares.
Xxxxxxx, Sachs & Co. in its capacity as qualified independent underwriter and
not otherwise, is referred to herein as the "QIU". As compensation for the
services of the QIU hereunder, the Company agrees to pay the QIU $10,000 on the
Closing Date.
4. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to
Xxxxxxx, Sachs & Co., for the account of such Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor in Federal (same
day) funds. The Company will cause the certificates representing the Shares to
be made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
Xxxxxxx, Xxxxx & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York time, on December 23, 1996 or such other
time and date as Xxxxxxx, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Xxxxxxx, Xxxxx & Co. in the written notice given by Xxxxxxx, Sachs
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Xxxxxxx, Xxxxx & Co. and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 8(k) hereof, will be delivered at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Closing Location"),
and the Shares will be delivered at the Designated Office, all at such Time of
Delivery.
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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 Time of Delivery, 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 5, "New York Business Day" shall mean each Monday, Tuesday,
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.
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act and,
if the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay
to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act; to make no further amendment or
any supplement to the Registration Statement or Prospectus prior to the
last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof unless, in the reasonable judgment of the
Company, such amendment or supplement is required by law and the
Company receives an opinion from counsel reasonably satisfactory to the
representatives to such effect; to advise you, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares 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 for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not 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, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
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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 Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except
for the issuance of an aggregate of $3,000,000 worth of shares of Stock
(based on the initial public offering price set forth on the cover of
the Prospectus) to the Company's Employee Stock Ownership Plan (and
issuances of Stock to employees therefrom) or in the form of stock
bonuses to certain domestic employees and except as otherwise provided
hereunder, any securities of the Company that are substantially similar
to the Shares, including but not limited to any securities that are
exercisable or exchangeable for, that represent the right to receive or
that are convertible into or whose exercise or settlement price is
derivable from the price of Stock or any such substantially similar
securities (other than pursuant to employee stock option plans existing
on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), without your
prior written consent;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
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 national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated
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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);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
Nasdaq Stock Market, Inc. ("NASDAQ"); and
(j) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act.
7. The Company covenants and agrees with the several Underwriters that (a)
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 registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares not
exceeding $10,000; (iii) all expenses in connection with the qualification of
the Shares for offering and sale under state securities laws as provided in
Section 6(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey not exceeding $20,000; (iv) all fees and expenses in connection
with listing the Shares on the NASDAQ; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar; 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 9 and 13 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 6(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
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(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the incorporation of the Company, the Underwriting
Agreement, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus 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;
(c) Xxxxxxx & Xxxxxxxxx, LLP, counsel for the Company, shall have
furnished to you their written opinion (a copy of such opinion in final
draft form being attached as Annex II(a) hereto), dated the date of
such Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) 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 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 he has no reason to believe that both you and he are not
justified in relying upon such opinions and certificates);
(ii) Each of 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 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, officers of the Company and
officers of the Domestic Subsidiaries, provided that such counsel
shall state that he has no reason to believe that both you and he
are not justified in relying upon such opinions and
certificates);
(iii) 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 he
is 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 he has no reason to believe that both
you and he are not justified in relying upon such opinions and
certificates);
(iv) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which any of the Domestic
Subsidiaries is a party or of which any of their property is
subject which, if determined adversely to any such Domestic
Subsidiaries, can reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the current or
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future 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;
(v) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the Organization Agreements 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 any of the
Domestic Subsidiaries is a party or by which any of the Domestic
Subsidiaries is bound or to which any of the property or assets
of any of the Domestic 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 or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company or
the Domestic Subsidiaries or in any way, individually or in the
aggregate, impair or delay the consummation of the transactions
contemplated by this Agreement or the offering of the Shares in
the manner contemplated by the Prospectus, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of any of the Domestic Subsidiaries or
any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over 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 affect
on or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company or the Domestic Subsidiaries or in any way, individually
or in the aggregate, impair or delay the consummation of the
transactions contemplated by this Agreement or the offering of
the Shares in the manner contemplated by the Prospectus;
(vi) None of the Domestic Subsidiaries 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 obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, or lease or agreement or other
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 Domestic Subsidiaries or in any way, individually
or in the aggregate, impair or delay the consummation of the
transactions contemplated by this Agreement or the offering of
the Shares in the manner contemplated by the Prospectus;
(vii) The statements set forth in the Prospectus under the
caption "Certain Related Transactions" 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;
(viii) This Agreement has been duly authorized, executed and
delivered by the Operating Subsidiaries (as defined below) and
duly executed and delivered by Xxxx Xxxxxxxxxxx;
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(ix) The Stock Agreement has been duly authorized, executed
and delivered by Amscan Inc. and has been duly executed and
delivered by Xxxx X. Xxxxxxxxxxx, and such agreement constitutes
a valid and legally binding agreement of each of Amscan Inc. and
Xxxx X. Xxxxxxxxxxx enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(x) Although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (vii) of this Section
8(c), they have no reason to believe that, as of its effective
date, the Registration Statement or any further amendment thereto
made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein, as to
which such counsel need express no opinion) 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, as of its date, the Prospectus or
any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or that, as of such
Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which
such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(d) Xxxxxxxx & Xxxxxxxx, counsel for the Company, shall have
furnished to you their written opinion (a copy of such opinion in final
draft form (which final draft form shall be in form and substance
satisfactory to you) being attached as Annex II(b) hereto), dated the
date of such Time of Delivery 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 the
state of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the Shares being delivered at
such Time of Delivery) have been duly and validly authorized and
issued and are fully paid and non-assessable; and the Shares
conform to the description of the Stock contained in the
Prospectus;
(iii) The Company 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 cannot reasonably be expected to
be subject to any material liability or disability by reason of
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, certificates and official written
statements of public officials and in respect of matters of fact
upon
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certificates of officers of the Company, 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,
certificates and official written statements);
(iv) This Agreement has been duly authorized, executed and
delivered by the Company;
(v) The Organization Agreements (other than the Stock
Agreement, as to which such counsel expresses no opinion)) have
been duly authorized, executed and delivered by the Company, and
such agreements constitute valid and legally binding agreements
of the Company enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(vi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport
to constitute a summary of the terms of the Stock, and under the
captions "Shares Eligible for Future Sale", "Organization of the
Company", and "Underwriting" (except, with respect to the
statements under the caption "Underwriting", for information
furnished in writing to the Company by the Underwriters through
the representatives expressly for use therein) insofar as they
purport to describe the provisions of the laws and provisions of
documents referred to therein, are accurate and fairly summarize
such provisions in all material respects;
(vii) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party
or of which any property of the Company is the subject which, if
determined adversely to the Company, can reasonably be expected
to have, individually or in the aggregate, a material adverse
effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries, taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(viii) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the Organization Agreements (other than the Stock
Agreement, as to which such counsel expresses no opinion) 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 is a party or by which it is bound or to which any of the
property or assets of the Company 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 financial position, stockholders' equity or results of
operations of the Company and its 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 offering of the Shares in the manner
contemplated by the Prospectus, nor will such action result in
any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute (other
than State securities or Blue Sky laws, as to which such counsel
expresses no
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opinion) or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction
over the Company or any of its properties, which violation may
reasonably be expected to have, individually or in the aggregate,
a material adverse affect on the financial position,
stockholders' equity or results of operations of the Company and
its 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 offering of
the Shares in the manner contemplated by the Prospectus;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement and the Organization Agreements
(other than the Stock Agreement, as to which such counsel
expresses no opinion), except for the filing of the Certificate
of Incorporation of the Company with the State of Delaware, the
registration of the offer and sale of the Shares under the Act
and the registration of the Stock under the Exchange Act, each of
which has been made or obtained, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters;
(x) The Company is not in violation of its Certificate of
Incorporation or By-laws;
(xi) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act;
(xii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the rules
and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus, except as and to the extent expressly set forth in
the opinion in subsection (vi) of this Section 8(d), they have no
reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by
the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which
such counsel need express no opinion) 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, as of its date, the Prospectus or
any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or that, as of such
Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which
such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
they do not know of any amendment
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to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which
are not filed or described as required;
(e) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each 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 I
hereto (the executed copy of the letter delivered by KPMG Peat Marwick
LLP prior to the execution of this Agreement is attached hereto as
Annex I(a) and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery are attached hereto as Annex
I(b));
(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus 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 Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries 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, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities, if any,
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 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, if
any;
(h) 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 or on NASDAQ; (ii)
a suspension or material limitation in trading in the Company's
securities on NASDAQ; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities; or
(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 (iv)
in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(i) The Shares at such Time of Delivery shall have been duly listed
for quotation on NASDAQ;
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(j) The Company has obtained and delivered to the Underwriters an
executed copy of an agreement from each of Xxxx X. Xxxxxxxxxxx, the
Xxxxxxxxx Xxxxxxxxxxx Trust, the Xxx Xxxxxxxxxxx Trust, the Xxxxxxxxx
Xxxxxxxxxxx Trust, the Xxxxxxx Xxxxxxxxxxx Trust, the Xxxxx Xxxxxxxxxxx
Trust and the Xxxx Xxxxxxxxxxx Trust, substantially to the effect that
during the period beginning from the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, he shall
not offer, sell, contract to sell, or otherwise dispose of any
securities of the Company including but not limited to any securities
that are exercisable or exchangeable for, that represent the right to
receive or that are convertible into or whose exercise or settlement
price is derivable from the price of Stock or any substantially similar
securities without your prior written consent;
(k) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company,
reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of its
respective obligations hereunder to be performed at or prior to such
Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of
this Section ;
(l) The Company shall have obtained (i) all appropriate waivers of
the covenants under the Credit Agreement, dated as of September 20,
1995, among Amscan Inc., Kookaburra USA Ltd., Deco Paper Products, Inc.
and Trisar, Inc., on the one hand, and the Banks signatory thereto and
The Chase Manhattan Bank, as Agent, on the other hand, (ii) all
appropriate releases of pledged shares pursuant to the Pledge
Agreement, dated September 20, 1995, between Xxxx X. Xxxxxxxxxxx, as
Pledgor, and The Chase Manhattan Bank, as Agent, and (iii) all
appropriate releases of pledged shares pursuant to the Stock Pledge
Agreement, dated November 13, 1993, among Xxxx X. Xxxxxxxxxxx, E. Xxxxx
Xxxxx, L. Xxxxxxx Xxxxxx and Xxxxxx, XxXxxxxxx & Xxxxxxx;
(m) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement; and
(n) The Organization (as defined in the Prospectus) shall have been
duly and validly consummated in accordance with applicable law; the
Company shall have entered into (i) the Tax Indemnity Agreement, (ii)
an employment agreement between the Company and Xxxx X. Xxxxxxxxxxx,
(iii) an employment agreement between the Company and Xxxxxx X.
Xxxxxxxxxx and (iv) an employment agreement between the Company and
Xxxxxxx Xxxxxx; and Amscan Inc. shall have entered into an employment
agreement between it and Xxxxx X. Xxxxxxxx, each such agreement with
terms substantially as described in the Prospectus.
9. (a) The Company, each of the subsidiaries of the Company listed on the
signature pages hereof (the "Operating Subsidiaries"), and Xxxx X. Xxxxxxxxxxx
(the "Principal Stockholder"), jointly and severally, will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such 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 Preliminary Prospectus, the
Registration Statement or the Prospectus, 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 will reimburse each Underwriter for
any legal or other
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expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company, the Operating Subsidiaries and
the Principal Stockholder shall not 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 Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Xxxxxxx,
Xxxxx & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company, the
Operating Subsidiaries and the Principal Stockholder against any losses, claims,
damages or liabilities to which the Company, the Operating Subsidiaries or the
Principal Stockholder 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 Prospectus, the Registration
Statement or the Prospectus, 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 any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein; and will reimburse the
Company, the Operating Subsidiaries and the Principal Stockholder for any legal
or other expenses reasonably incurred by the Company, the Operating Subsidiaries
and the Principal Stockholder 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
out-of-pocket 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
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.
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(d) If the indemnification provided for in this Section 9 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, the Operating Subsidiaries and the Principal Stockholder on the
one hand and the Underwriters on the other from the offering of the Shares. 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, the Operating Subsidiaries and the Principal
Stockholder on the one hand and the Underwriters 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, the
Operating Subsidiaries and the Principal Stockholder on the one hand and the
Underwriters 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
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. 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, the Operating Subsidiaries or the Principal Stockholder
on the one hand or the Underwriters 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 Operating Subsidiaries, the
Principal Stockholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters 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 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
out-of-pocket 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), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares 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 Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company, the Operating Subsidiaries and the
Principal Stockholder under this Section 9 shall be in addition to any liability
which the Company, the respective Operating Subsidiaries and the Principal
Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 9
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the
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same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company or any of the Operating
Subsidiaries within the meaning of the Act.
(f) Notwithstanding the foregoing, and without limiting in any way the
ability of any Underwriter to commence an action or proceeding against the
Principal Stockholder on a joint and several basis, the Principal Stockholder
shall not be required to make payment of any amount pursuant to subsection (a),
(c) or (d) above to any Underwriter with respect to any loss, claim, damage,
liability or expense (each such circumstance or event a "Loss") which falls
within the scope of subsection (a), (c) or (d) above unless and until the
Company and the Operating Subsidiaries have failed to pay any amount owed to
such Underwriter under subsection (a), (c) or (d) above with respect to a Loss
within 20 business days after the earlier to occur of (i) a demand by the
Underwriters for payment by the Company and the Operating Subsidiaries of such
amount, which amount the Company and the Operating Subsidiaries agree, whether
by settlement or otherwise, is owed to such Underwriter, or (ii) entry of a
final judgment by a court of competent jurisdiction, from which the time period
for filing an appeal has expired, against the Company or any of the Operating
Subsidiaries providing for payment to the Underwriters of such amount; provided,
however, that after any Insolvency Event (as hereinafter defined) the Principal
Stockholder shall be liable in accordance with subsections (a), (c) and (d)
above without regard to the requirements of clauses (i) and (ii) of this
paragraph; and in no event shall the aggregate liability of the Principal
Stockholder under Sections 9 and 10 exceed $___________. For purposes of this
subsection (f), an "Insolvency Event" shall have occurred when the Company or
any of the Operating Subsidiaries has commenced a voluntary proceeding, under
any applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, or other proceeding to be adjudicated a bankrupt or insolvent, or
otherwise consented to the entry of a decree or order for relief in respect of
the Company or any of the Operating Subsidiaries in any involuntary proceeding
or to the commencement of any similar proceeding against it, or had entered
against it any decree or order for relief in any such involuntary proceeding or
adjudging the Company or any of the Operating Subsidiaries a bankrupt or
insolvent or appointing a custodian, receiver or similar official of the Company
or any of the Operating Subsidiaries, or of any substantial part of its property
and, with respect to any involuntary order or decree, such order or decree
remains unstayed and in effect for a period of 20 business days, or had any such
party appointed or take possession thereof, or made any assignment for the
benefit of creditors, or taken any corporate action to authorize any of the
foregoing actions.
10. (a) The Company, the Operating Subsidiaries and the Principal
Stockholder, jointly and severally, will indemnify and hold harmless Xxxxxxx,
Xxxxx & Co., in its capacity as QIU, against any losses, claims, damages or
liabilities, joint or several, to which the QIU 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
Prospectus, the Registration Statement or the Prospectus, 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 will reimburse the
QIU for any legal or other expenses reasonably incurred by the QIU in connection
with investigating or defending any such action or claim as such expressed are
incurred.
(b) Promptly after receipt by the QIU under subsection (a) above of notice
of the commencement of any action, the QIU shall, if a claim in respect thereof
is to be made against an indemnifying party under such subsection, notify such
indemnifying party in writing of the commencement thereof; but the omission so
to notify such indemnifying party shall not relieve it from any liability which
it may have to the QIU otherwise than under such subsection. In case any
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such action shall be brought against the QIU and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to the QIU (who shall not, except with the consent of
the QIU, be counsel to the indemnifying party), and, after notice from the
indemnifying party to the QIU of its election so to assume the defense thereof,
the indemnifying party shall not be liable to the QIU under such subsection for
any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by the QIU, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the QIU, 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 QIU is an actual or potential party to such action
or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the QIU 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 QIU.
(c) If the indemnification provided for in this Section 10 is unavailable
to or insufficient to hold harmless Xxxxxxx, Sachs & Co., in its capacity as
QIU, under subsection (a) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then the
Company, the Operating Subsidiaries and the Principal Stockholder shall
contribute to the amount paid or payable by the QIU 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, the Operating Subsidiaries and the Principal Stockholder on the one
hand and the QIU on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the QIU failed to give the notice required under subsection
(b) above, then the Company, the Operating Subsidiaries and the Principal
Stockholder shall contribute to such amount paid or payable by the QIU in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company, the Operating Subsidiaries and the Principal
Stockholder on the one hand and the QIU 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, the
Operating Subsidiaries and the Principal Stockholder on the one hand and the QIU
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,
as set forth in the table on the cover page of the Prospectus, bear to the fee
payable to the QIU pursuant to Section 3 hereof. 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 related to information supplied by the Company, the Operating
Subsidiaries or the Principal Stockholder on the one hand or the QIU 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
Operating Subsidiaries, the Principal Stockholder and the QIU agree that it
would not be just and equitable if contributions pursuant to this subsection (c)
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 (c). The amount paid or payable by the QIU as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (c) 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. No person guilty of
fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(d) The obligations of the Company, the Operating Subsidiaries and the
Principal Stockholder under this Section 10 shall be in addition to any
liability which the Company, the Operating Subsidiaries or the Principal
Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the QIU within the meaning of
the Act.
(e) Notwithstanding the foregoing, and without limiting in any way the
ability of the QIU to commence an action or proceeding against the Principal
Stockholder on a joint and several basis, the Principal Stockholder shall not be
required to make payment of any amount pursuant to subsection (a), (b) or (c)
above to the QIU with respect to any loss, claim, damage, liability or expense
(each such circumstance or event a "Loss") which falls within the scope of
subsection (a), (b) or (c) above unless and until the Company and the Operating
Subsidiaries have failed to pay any amount owed to the QIU under subsection (a),
(b) or (c) above with respect to a Loss within 20 business days after the
earlier to occur of (i) a demand by the QIU for payment by the Company and the
Operating Subsidiaries of such amount, which amount the Company and the
Operating Subsidiaries agree, whether by settlement or otherwise, is owed to the
QIU, or (ii) entry of a final judgment by a court of competent jurisdiction,
from which the time period for filing an appeal has expired, against the Company
or any of the Operating Subsidiaries providing for payment to the QIU of such
amount; provided, however, that after any Insolvency Event the Principal
Stockholder shall be liable in accordance with subsections (a), (b) or (c) above
without regard to the requirements of clauses (i) and (ii) of this paragraph;
and in no event shall the aggregate liability of the Principal Stockholder under
Sections 9 and 10 exceed $___________.
11. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
a Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
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Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for (i) the expenses to be
borne by the Company and the Underwriters as provided in Section 7 hereof and
(ii) the indemnity and contribution agreements of the Company, the Operating
Subsidiaries, the Principal Stockholder and the Underwriters in Sections 9 and
10 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
12. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Operating Subsidiaries, the Principal
Stockholder and the several Underwriters, 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 or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company, the Operating
Subsidiaries, the Principal Stockholder or any officer or director or
controlling person of the Company, the Operating Subsidiaries or the Principal
Stockholder, and shall survive delivery of and payment for the Shares.
13. If this Agreement shall be terminated pursuant to Section 11 hereof,
neither the Company, the Operating Subsidiaries nor the Principal Stockholder
shall then be under any liability to any Underwriter except as provided in
Sections 7, 9 and 10 hereof; but, if for any other reason Shares are not
delivered by or on behalf of the Company as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company, the Operating
Subsidiaries and the Principal Stockholder shall then be under no further
liability to any Underwriter in respect of the Shares not so delivered except as
provided in Sections 7, 9 and 10 hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company, the Operating Subsidiaries or Principal
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company by you on
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request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, the Operating Subsidiaries and the Principal
Stockholder and, to the extent provided in Sections 9, 10 and 12 hereof, the
officers and directors of the Company and the Operating Subsidiaries and each
person who controls the Company, the Operating Subsidiaries or any Underwriter,
and their respective heirs, executors, 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 Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
18. 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 counterparts shall together constitute one and the same instrument.
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If the foregoing is in accordance with your understanding, please sign and
return to us 8 counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters, the Company, the
Operating Subsidiaries and the Principal Stockholder. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
Amscan Holdings, Inc.
By:_______________________________
Name:
Title:
Amscan Inc.
By:_______________________________
Name:
Title:
Am-Source, Inc.
By:_______________________________
Name:
Title:
Trisar, Inc.
By:_______________________________
Name:
Title:
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00
Xxxxxx Xxxxxxxxxxxx (Xxxxxx) Ltd.
By:_______________________________
Name:
Title:
JCS Realty Corp.
By:_______________________________
Name:
Title:
SSY Realty Corp.
By:_______________________________
Name:
Title:
__________________________________
Xxxx X. Xxxxxxxxxxx
Accepted as of the date hereof
Xxxxxxx, Sachs & Co.
Alex. Xxxxx & Sons Incorporated
By:__________________________________
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
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SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ------------------
Xxxxxxx, Xxxxx & Co...............................
Alex. Xxxxx & Sons Incorporated...................
[Names of other Underwriters].....................
Total....................................
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SCHEDULE II
Subsidiary Percentage Owned by Company
---------- ---------------------------
Amscan Inc. 100
Am-Source, Inc. 100
Trisar, Inc. 000
Xxxxxx Xxxxxxxxxxxx (Xxxxxx) Ltd. 100
Amscan Holdings Limited 75
Amscan (Asia Pacific) Pty. Ltd. 85
Amscan Partyartikel GmbH 95
Amscan Svenska AB 000
Xxxxxx xx Xxxxxx, S.A. de C.V. 48
JCS Realty Corp. 100
SSY Realty Corp. 100
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ANNEX I
Pursuant to Section 8(e) of the Underwriting Agreement, KPMG Peat Marwick
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Companies and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and
included in the Prospectus or the Registration Statement comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the unaudited combined interim financial
statements of the Companies for the periods specified in such letter;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed combined statements of income and combined
statements of cash flows included in the Prospectus and on the basis of
specified procedures including inquiries of officials of the Companies
who have responsibility for financial and accounting matters regarding
whether the unaudited condensed combined financial statements referred
to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
combined financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the combined results of operations and financial position of the
Company for the three years ended December 31, 1995 included in the
Prospectus agrees with the corresponding amounts in the audited
combined financial statements for such years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302
and 402, respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination 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 Companies, inspection of the minute
books of the Companies since the date of the latest audited financial
statements included in the Prospectus, inquiries of officials of the
Companies responsible for financial and accounting matters and such
other
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inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited combined statements of income and
combined statements of cash flows included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited combined statements
of income and combined statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus (other than such data and
items for the two years ended December 31, 1992) do not agree
with the corresponding items in the unaudited combined 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 combined financial statements included in
the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited combined financial statements referred to in Clause (A)
and any unaudited income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for
the audited combined financial statements included in the
Prospectus;
(D) any unaudited pro forma combined condensed financial
statements included in the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements
of the Act and the published rules and regulations thereunder or
the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(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
capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs
of performance shares and upon conversions of convertible
securities, in each case which were outstanding on the date of
the latest financial statements included in the Prospectus) or
any increase in the long-term debt of the Companies, or any
decreases in net current assets or stockholders' equity or other
items specified by the Representatives of the Companies, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus 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 Prospectus to the specified date
referred to in Clause (E) there were any decreases in sales or
operating income or net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other
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period of corresponding length specified by the Representatives,
except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are
described in such letter;
(vii) In addition to the audits referred to in their report(s)
included in the Prospectus, they have performed certain specified
procedures not constituting an audit in accordance with generally
accepted auditing standards, consisting of a reading of the combining
schedules of the Companies, a comparison of the unaudited financial
data presented in the unaudited financial statements with the general
accounting records of the individual companies to which such unaudited
financial statements relate and inquiries of officials of the Companies
responsible for financial and accounting matters, with respect to the
combined selected financial statements for the Companies for the years
ended December 31, 1991 and 1992 which appear in the Prospectus and
which are derived from the audited financial statements and the
unaudited financial statements, as the case may be, of the individual
Companies for such years. Based on the foregoing procedures, nothing
came to their attention that caused them to believe that:
(A) the combined financial statements of the Company for the
years ended December 31, 1991 and 1992 were not determined on a
basis substantially consistent with the basis for the
determination of the combined financial statements included in
the Prospectus for the three years ended December 31, 1995; and
(viii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(vi) and (vii) above, they have carried out certain specified
procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company
and its subsidiaries, which appear in the Prospectus, or in Part II of,
or in exhibits and schedules to, the Registration Statement specified
by the Representatives, 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.
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