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AMSCAN HOLDINGS, INC.
WARRANT AGREEMENT
Dated as of August 6, 1998
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WARRANT AGREEMENT (the "Agreement") dated as of August 6, 1998,
between AMSCAN HOLDINGS, INC., a Delaware corporation (the "Company"), and the
Xxxxx Xxxxxx Retained Annuity Trust (the "Warrantholder").
WHEREAS, the Company proposes to issue an aggregate of 10 Warrants
(the "Warrants"), each Warrant entitling the holder thereof to purchase one
share of common stock, par value $.10 per share, of the Company (collectively
the "Securities") (as used hereinafter, the term "Shares" refers to the
Company's Securities and to equity shares or equity interests in the Company or
any other equity security of or equity interests in any other class into which
such Securities may hereafter be changed);
WHEREAS, the Company proposes to issue the Warrants to the
Warrantholder as a portion of the aggregate consideration for the sale by the
Warrantholder of a portion of all of the capital stock of Anagram International,
Inc. and certain related companies to the Company pursuant to the Stock Purchase
Agreement, dated as of the date hereof, by and among the Company, the
Warrantholder and certain other parties listed on the signature pages thereto
(the "Stock Purchase Agreement"); and
WHEREAS, on the date hereof, the Warrantholder is entering into the
Stockholders' Agreement, dated as of December 19, 1997, as amended as of the
date hereof, with the Company and certain stockholders of the Company (the
"Stockholders' Agreement"), and the Warrants and the Shares issuable upon
exercise of the Warrants shall be subject to the terms of, and the Warrantholder
shall be entitled to certain rights and subject to certain obligations under,
the Stockholders' Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Warrant Certificates (and the
Form of Exercise attached thereto) shall be substantially in the form
set forth in Exhibit A attached hereto (the "Warrant Certificates"). The Warrant
Certificates may have such letters, numbers or other marks of identification and
such legends printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, or to conform to usage.
SECTION 2. Execution and Countersignature of Warrant Certificates.
The Warrant Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, its President or a Vice President and attested under the
corporate seal by its Secretary or an Assistant Secretary. The signature of any
such officer on any Warrant Certificate may be manual or facsimile. Warrant
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company
notwithstanding that such individuals, or any of them, ceased to be such
officers subsequent to the execution thereof or were not such officers at
the date of this Agreement.
SECTION 3. Initial Issuance of Warrant Certificates. The
Company shall, concurrently with the "Closing" under the Stock Purchase
Agreement, and conditioned upon
such Closing, issue and deliver to the Warrantholder a Warrant Certificate
representing the number of Warrants and registered in the name of the
Warrantholder.
SECTION 4. Registration; Transfers. Warrant Certificates
shall be registered in the name of the Warrantholder. This Warrant Certificate
and the Warrants evidenced hereby are personal to the Warrantholder and, without
prior written consent of the Company, shall not be assignable or otherwise
transferable by the Warrantholder otherwise than (i) by will or the laws of
descent and distribution or by a distribution of the Warrants from the
Warrantholder to the trust beneficiary of the Warrantholder or (ii) pursuant to
a qualified domestic relations order (as defined in the Internal Revenue Code of
1986, as amended), and subject in any such case to the assignee, transferee or
distributee agreeing in writing to be bound by and become a party to this
Agreement and the Stockholders' Agreement as if such assignee, transferee or
distributee was the Warrantholder thereunder.
SECTION 5. Duration and Exercise of Warrants; Company to
Reaffirm Obligations. The Warrants shall expire at 5:00 p.m., New York City
time, on the tenth anniversary of the date of this Agreement (the "Expiration
Date"). Each Warrant may be exercised, in whole and not in part, on any business
day on or prior to 5:00 p.m., New York City time, on the Expiration Date, at
which time unexercised Warrants will become wholly void and of no value.
Subject to the provisions of this Agreement, the holder of each
Warrant shall have the right to purchase from the Company (and the Company shall
issue and sell to such holder) one fully paid and nonassessable Share at the
exercise price (the "Exercise Price") at the time in effect hereunder, upon
surrender to the Company, at its principal executive offices, of the Warrant
Certificate evidencing such Warrant, with the Form of Exercise attached thereto
duly completed and signed, and upon payment of the Exercise Price in lawful
money of the United States of America by certified check payable to the order
of, or by wire transfer to, the Company provided, however, that payment of the
Exercise Price upon such exercise in connection with or following a Public
Offering (as defined in Section 6) may also be made by delivery by the
Warrantholder of Shares having a "current market price" (determined as provided
in subsection (e) of Section 12) equal to such Exercise Price, and, if requested
by the Company, the amount of any required federal, state, local or foreign
withholding taxes. The Exercise Price, as of the initial issuance of the
Warrants, shall be $125,000 per Share. The Exercise Price and the number of
Shares purchasable upon exercise of a Warrant shall be subject to adjustment as
provided in Section 12. No adjustments shall be made for any cash dividends on
Shares issuable on the exercise of a Warrant, except as provided in Section 12.
Subject to Section 8, upon such surrender of a Warrant Certificate
(with the Form of Exercise being duly completed and executed) and payment of the
Exercise Price at the time in effect hereunder, the Company shall issue and
deliver, or if there is a transfer agent for the Shares, request the transfer
agent to issue and deliver, to or upon the written order of the registered
holder of such Warrant Certificate and in the name of the registered holder of
the Warrant Certificate, a certificate for the Share or Shares issuable upon the
exercise of the Warrant or Warrants evidenced by such Warrant Certificate.
Following such surrender, the
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surrendered Warrant Certificate shall be cancelled. Such certificate for the
Share or Shares shall be deemed to have been issued and the registered holder of
the Warrant or Warrants being exercised shall be deemed to have become the
holder of record of such Share or Shares as of the date of the surrender of such
Warrant Certificate and payment of the Exercise Price.
The Warrants evidenced by a Warrant Certificate shall be
exercisable, at the election of the registered holder thereof, either as an
entirety or from time to time for part only (but only in whole numbers of
Warrants) of the number of Warrants evidenced by the Warrant Certificate. In the
event that less than all of the Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Warrants are exercised, a new Warrant
Certificate or Certificates shall be issued for the remaining number of Warrants
evidenced by the Warrant Certificate so surrendered.
SECTION 6. Exercise upon Public Offering. The Company shall
have the right to repurchase for cash the Warrants in whole and not in part at
or prior to (but in connection with) the consummation of a public offering or
offerings of Shares with gross proceeds to the Company in the aggregate of at
least $50 million (a "Public Offering") if the Public Offering is the Company's
initial public offering and the underwriter in the Public Offering deems it
required that the Company exercise such right to promote the success of the
Public Offering. The price at which the Company will repurchase the Warrants
under this Section 6 shall be the excess of the public offering price in the
Public Offering over the then Exercise Price of the Warrants. The Company may
exercise such right by delivering to Warrantholder a written notice no more than
60 and no less than 10 days prior to the consummation of the Public Offering.
Such notice shall set forth the expected date of consummation of the Public
Offering. Following delivery of such notice, the Warrantholder shall take all
reasonable actions requested by the Company consistent therewith, including
execution of appropriate repurchase documentation.
SECTION 7. Warrantholder's Covenants. The Warrantholder
hereby agrees that such Warrantholder shall not offer to sell, transfer or
distribute the Warrants except in compliance with all applicable state and
federal securities laws and in accordance with the terms of the Stockholders'
Agreement and this Agreement, including Section 4 hereof.
SECTION 8. Payment of Taxes. The Company shall pay all
documentary stamp taxes, if any, attributable to the issuance of Shares or other
securities upon the exercise of any Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes or governmental charges which may
be payable in respect of any transfer involved in the issuance of any
certificates for Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, which is only
permitted in accordance with Section 4 hereof, and the Company shall not be
required to issue or deliver such certificates unless or until the persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax, taxes or charges or shall have established to the satisfaction of the
Company that such tax, taxes or charges have been paid or are not payable.
SECTION 9. Mutilated or Missing Warrant Certificates. If any
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue, in exchange and
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substitution for and upon cancellation of such Warrant Certificate, if
mutilated, a new Warrant Certificate representing an equivalent number of
Warrants, and, in the case of any lost, stolen or destroyed Warrant Certificate,
a new Warrant Certificate representing the same number of Warrants evidenced by
the Warrant Certificate lost, stolen or destroyed upon receipt of evidence of
such loss, theft or destruction reasonably satisfactory to the Company and, if
requested by the Company, upon receipt of a duly executed indemnification
agreement or bond of indemnity reasonably satisfactory to the Company.
SECTION 10. Reservation of Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Shares or its authorized and issued
Shares held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Shares upon exercise of Warrants, the full number of Shares
deliverable upon the exercise of all outstanding Warrants.
The Company covenants that all Shares that may be issued upon the
exercise of Warrants will, upon issuance, be (to the extent the following terms
are applicable to the forms of such Shares at such time) validly issued, fully
paid and nonassessable and free from all taxes, liens, charges and security
interests with respect to the issue thereof. In furtherance of the provisions of
this Section 10, in the case of any adjustment to the Exercise Price or the
number or type of Shares for which the Warrants are exercisable, the Company and
each holder of Warrants agree to cooperate to provide for reasonable alternative
arrangements.
SECTION 11. Obtaining of Governmental Qualifications. The
Company will in good faith and as expeditiously as possible take all action
which may be necessary to obtain and keep effective any and all registrations,
qualifications, permits, consents and approvals of governmental agencies and
authorities, and will make any and all filings under federal and state
securities laws, necessary in connection with the issuance, distribution and
transfer of Warrant Certificates, the exercise of the Warrants, and the
issuance, sale, transfer and delivery of Shares upon exercise of Warrants, in
each case to the extent such actions are in compliance with all applicable state
and federal securities laws, the Stockholders' Agreement and this Agreement,
including Section 4 hereof.
SECTION 12. Adjustment of Exercise Price; Number of Shares
Purchasable and Number of Warrants. The Exercise Price and either the number or
kinds of Shares purchasable upon the exercise of each Warrant or the number of
Warrants outstanding are subject to adjustment from time to time as provided in
this Section 12.
(a) In case the Company shall at any time after the date of this
Agreement declare a Share dividend or other distribution on the Shares in
Shares, the Exercise Price in effect at the opening of business on the day
following the date fixed for determination of shareholders entitled to receive
such dividend or other distribution shall be reduced to a price determined by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the number of Shares outstanding at the close of business on the date fixed for
such determination and the denominator of which shall be the sum of such number
of Shares outstanding at the close of business on the date fixed for such
determination and the total number of Shares constituting
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such dividend or distribution, such reduction to become effective immediately as
of the opening of business on the day following the date fixed for such
determination. For purposes of this subsection (a) of this Section 12, the
number of Shares at any time outstanding shall not include Shares held in the
treasury of the Company (unless the Company pays such dividend or makes such
distribution on Shares held in the treasury of the Company) but shall include
Shares issuable in respect of scrip certificates issued in lieu of fractional
Shares, if any.
(b) In case the outstanding Shares shall be subdivided, split or
otherwise converted into a greater number of Shares, the Exercise Price in
effect at the opening of business on the day following the day upon which such
subdivision, split or conversion becomes effective shall be proportionately
reduced, and, conversely, in case the outstanding Shares shall each be combined
into a smaller number of Shares, the Exercise Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately as of the opening of business on
the day following the day upon which such subdivision, split or conversion or
combination becomes effective.
(c) In case the Company shall, by dividend or otherwise, distribute
to all holders of Shares evidences of its indebtedness or assets (including
securities, but excluding any regular periodic dividend paid in cash and any
dividend or distribution referred to in subsection (a) of this Section 12; and
further excluding distributions of its assets referred to in subsection (j) of
this Section 12), the Exercise Price shall be adjusted so that the same shall
equal the price determined by multiplying the Exercise Price in effect
immediately prior to the close of business on the date fixed for the
determination of holders of Shares entitled to receive such dividend or
distribution by a fraction, the numerator of which shall be the current market
price per Share (determined as provided in subsection (e) of this Section 12) on
the date fixed for such determination, less the then fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive) of the portion of assets or evidences of
indebtedness so distributed applicable to one Share, and the denominator of
which shall be such current market price per Share, such adjustment to become
effective immediately as of the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
distribution.
(d) The reclassification of Shares into a different number of
Shares or into other property or assets including securities other than Shares
shall be deemed to involve (i) a subdivision or combination, as the case may be,
of the number of Shares outstanding immediately prior to such reclassification
into the number of Shares outstanding immediately thereafter and, to the extent
applicable, shall be governed by subsection (b) of this Section 12 and/or,
without duplication, (ii) a distribution of such other property or assets which,
to the extent applicable, shall be governed by subsection (c) of this Section
12.
(e) For the purpose of any computation under subsection (c) of this
Section 12, the current market price per Share on any date shall be deemed to be
the average of the closing prices per Share for the 20 consecutive trading days
before the day in question. The closing price for each day shall be the last
reported sale price regular way or, in case no such
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reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way for such day, in either case on the New York Stock
Exchange (the "NYSE"), or, if the Shares are not listed or admitted to trading
on the NYSE, the last reported sales price regular way, or in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, on the Nasdaq National Market (the "NNM") or on
the principal national securities exchange on which the Shares are listed or
admitted to trading, or if the Shares are not listed or admitted to trading on
the NNM or on any national securities exchange, the average of the closing bid
and asked prices in the over-the-counter market as reported by Nasdaq or any
comparable system, or if not listed on Nasdaq or a comparable system, the
average of the closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from time to time by
the board of directors of the Company for that purpose. If the Shares are not
publicly traded at such time, or such prices are not available, the market price
per share shall be determined in the same manner as the determination of "Fair
Market Value" under the Stockholders' Agreement with respect to the Kieves
Parties (as defined therein).
(f) No adjustment in the Exercise Price shall be required pursuant
to subsections (a) through (d) of this Section 12 unless such adjustment would
require an increase or decrease of at least 1% in such price; provided, however,
that any adjustments which by reason of this subsection (f) of this Section 12
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 12 shall be made
to the nearest cent or the nearest one-ten-thousandth of a Share, as the case
may be.
(g) In the event that at any time, as a result of an adjustment
made pursuant to this Section 12, the Warrantholder shall become entitled to
receive any shares of the Company other than Shares, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Shares contained in this
Section 12 and Sections 6, 8, 10, 11 and 13 with respect to the Shares shall
apply on the like terms to any such other shares.
(h) Upon each adjustment of the Exercise Price pursuant to this
Section 12, each Warrant outstanding immediately prior to such adjustment shall
thereafter constitute the right to purchase, at the adjusted Exercise Price per
Share, an adjusted number of Shares determined (to the nearest
one-ten-thousandth) by multiplying the number of Shares purchasable upon
exercise of a Warrant immediately prior to such adjustment by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
such adjustment and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment; provided, however, that the Company
may elect, in substitution for the adjustment in the number of Shares pursuant
to this subsection (h) of this Section 12 to adjust the number of Warrants
pursuant to subsection (i) of this Section 12.
(i) In substitution for any adjustment in the number of Shares
purchasable upon the exercise of a Warrant as provided in subsection (h) of this
Section 12, the Company
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may elect to adjust the number of Warrants so that each Warrant outstanding
after such adjustment in number of Warrants shall be exercisable for one Share.
If the Company so elects, each Warrant held of record immediately prior to such
adjustment of the number of Warrants shall become that number of Warrants
determined (to the nearest one-ten-thousandth) by multiplying the number of
Shares purchasable upon exercise of a Warrant immediately prior to such
adjustment by a fraction, the numerator of which shall be the Exercise Price in
effect immediately prior to such adjustment and the denominator of which shall
be the Exercise Price in effect immediately after such adjustment. The Company
shall give notice to the Warrantholder of its election to adjust the number of
Warrants, indicating the record date for the adjustment and, if known at the
time, the amount of the adjustment to be made in the number of Warrants. This
record date may be the date on which the Exercise Price is adjusted or any day
thereafter, but shall be at least 10 days later than the date of the earlier of
the public announcement or notice to the holders of Warrants. Upon each
adjustment of the number of Warrants pursuant to this subsection (i) the Company
shall, as promptly as practicable, cause to be distributed to the Warrantholder
on such record date Warrant Certificates evidencing, subject to Section 13, the
additional Warrants to which the Warrantholder shall be entitled as a result of
such adjustment or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Warrant
Certificates held by the Warrantholder prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Warrant Certificates
evidencing all the Warrants to which the Warrantholder shall be entitled after
such adjustment. Warrant Certificates to be so distributed may, at the option of
the Company, bear the adjusted Exercise Price and shall be registered in the
names of the Warrantholder on the record date specified in the public
announcement.
(j) If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its properties or assets (including
pursuant to a liquidation) to, any person or group of persons (other than a
merger or consolidation which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Shares), then, upon
consummation of such transaction, the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the Warrantholder would have owned immediately after the consolidation, merger,
transfer or lease if the Warrantholder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consummation
of a merger or consolidation transaction referred to in the immediately
preceding sentence, the Company shall require that the corporation formed by or
surviving any such transaction, if other than the Company, shall enter into a
supplemental Warrant Agreement so providing and further providing for (1)
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 12 and (2) the assumption of all of the
Company's obligations and responsibilities under this Agreement pursuant to
subsection (n) of this Section 12. Concurrently with the consummation of a
transfer or lease of all or substantially all of the properties or assets of the
Company (including pursuant to a liquidation) referred to in the first sentence
of this subsection (j) of this Section 12, the Company shall make adequate
provision for the ability of the Warrantholder to receive the consideration to
which the Warrantholder is entitled under this subsection (j) of this Section
12.
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(k) Except as provided in this Section 12, no adjustment in respect
of any dividends or distribution on the Shares shall be made during the term of
a Warrant or upon the exercise of a Warrant.
(l) Irrespective of any adjustments in the Exercise Price, the
number or kind of shares purchasable upon the exercise of the Warrants or the
number of Warrants outstanding, Warrant Certificates theretofore or thereafter
issued may continue to express the same Exercise Price per Share, number and
kind of Shares and number of Warrants as are stated on the Warrant Certificates
initially issuable pursuant to this Agreement.
(m) Anything in this Section 12 to the contrary notwithstanding,
the Company, in its sole discretion, may make such reductions in the Exercise
Price, in addition to those adjustments required by this Section 12, as it
considers to be advisable in order that any event occurring in respect of, or
relating to, the Warrants or the Shares shall not be taxable to the holders
thereof.
(n) Notwithstanding anything contained in this Agreement to the
contrary, the Company will not effect any merger or consolidation transaction
described in subsection (j) of this Section 12 unless, prior to the consummation
thereof, each person (other than the Company) which may be required to deliver
any stock, securities, cash or property upon the exercise of any Warrant as
provided herein shall assume, by written instrument delivered to the
Warrantholder, (1) the obligations of the Company under this Agreement, and (2)
the obligation to deliver to the Warrantholder such shares of stock, securities,
cash or property as, in accordance with the provisions of this Agreement, the
Warrantholder may be entitled to receive.
SECTION 13. Fractional Warrants and Fractional Shares. (a)
The Company shall not be required to issue fractions of Warrants on any
distribution of Warrants to the Warrantholder pursuant to subsection (i) of
Section 12 or distribute Warrant Certificates which evidence fractional
Warrants. In lieu of such fractional Warrants or Warrant Certificates, at the
Company's option, there shall be paid to the registered holders of Warrant
Certificates with regard to which such fractional Warrants would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value (as defined below) of a whole Warrant on the day immediately prior to the
date on which such fractional Warrant otherwise would have been issuable. For
purposes of this subsection (a) of Section 13, the "current market value" of a
Warrant on any day shall be the fair market value of the Warrants on such day,
as determined in good faith by the board of directors of the Company. Such
determination shall be conclusive, absent manifest error.
(b) The Company shall not be required to issue fractions of Shares
upon exercise of the Warrants or to distribute Share certificates which evidence
fractional Shares. In lieu of fractional Shares, at the Company's option, there
shall be paid to the registered holders of Warrant Certificates at the time such
Warrants are exercised an amount in cash equal to the same fraction of the
current market price per Share as determined pursuant to subsection (e) of
Section 11 hereof on the day immediately prior to the date of such exercise.
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SECTION 14. Stockholders' Agreement. Notwithstanding anything
in this agreement to the contrary, it shall be a condition to receiving any
Shares upon exercise of this Warrant or upon subsequent transfer of Shares
received upon exercise of this Warrant, that the intended holder of those shares
become a party to the Stockholders' Agreement prior to any such exercise or
transfer.
SECTION 15. Notices to the Warrantholder. In the case of any
adjustment of the Exercise Price, or the number or kind of shares purchasable
upon exercise of a Warrant or the number of Warrants outstanding pursuant to
Section 12, the Company within 5 business days thereafter shall cause notice of
such adjustment to be mailed by first-class mail, postage prepaid (or by
overnight courier), to the Warrantholder. Where appropriate, such notice may be
mailed in advance and included as a part of any notice required to be mailed
under any other provision of this Agreement.
SECTION 16. Certificates. Shares issuable upon the exercise
of this Warrant shall be evidenced in such manner as the Company may deem
appropriate, including book-entry registration or issuance of one or more stock
certificates. Any certificate issued in respect of this Warrant shall be
registered in the name of the Warrantholder and shall bear appropriate legends
referring to the terms, conditions, and restrictions applicable thereto,
substantially in the forms provided for in the Stockholders' Agreement. Such
shares may bear other legends to the extent the Company determines it to be
necessary or appropriate.
SECTION 17. Rights of the Warrantholder. Nothing contained in
this Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the Warrantholder the right to vote or receive dividends or
distributions or to be deemed for any purpose the holder of Shares or of any
other securities of the Company which may at any time be issuable on the
exercise of the Warrant or Warrants evidenced by the Warrant Certificates, nor
shall anything contained herein or in the Warrant Certificates be construed to
confer upon the Warrantholder, as such, any of the rights of a holder of Shares
of the Company or any right to vote upon any matter submitted to holders of
Shares at any meeting thereof, or to give or withhold consent to any action
(whether upon any recapitalization, issue of stock (or other securities),
reclassification of stock (or other securities), change of par value (if such
term applies to such Shares at such time), consolidation, merger, sale, transfer
or disposition or otherwise) or, to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant or Warrants
evidenced by the Warrant Certificates shall have been exercised as provided
herein.
SECTION 18. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the registered holders
of the Warrant Certificates.
SECTION 19. Notices to Company and Registered Holders. Any
notice pursuant to this Agreement to be given by the registered holder of any
Warrant Certificate to the
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Company shall be in writing and be sufficiently given if delivered or sent by
first-class mail, postage prepaid, addressed to the Company as follows:
Amscan Holdings, Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx
(or to such other address as such entities may have furnished in writing to the
registered holders for this purpose).
Any notice pursuant to this Agreement to be given to any registered
holder of any Warrant Certificate shall be in writing and be sufficiently given,
except as otherwise provided in Section 15, if delivered or sent by first-class
mail, postage prepaid, addressed to such holder as his address appears on the
Warrant Register (or to such other address as such holder may have furnished in
writing to the Company for this purpose).
SECTION 20. Supplements and Amendments. This Agreement may be
supplemented or amended only in a writing signed by the Company and all
registered holders of Warrants at the time such writing is signed.
SECTION 21. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrantholder shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate at
5:00 p.m., New York City time, on the Expiration Date. Notwithstanding the
foregoing, this Agreement will terminate on any earlier date when all Warrants
have been exercised.
SECTION 23. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.
SECTION 24. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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SECTION 25. Effectiveness. The effectiveness of this
Agreement is contingent upon the consummation of the "Closing" under the Stock
Purchase Agreement. If such Closing does not occur, this Agreement shall have no
effect and shall be void ab initio without any party hereto having any liability
to any other party hereto (provided that the foregoing shall not limit the
rights of the parties thereto under the Stock Purchase Agreement).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
AMSCAN HOLDINGS, INC.
By:/s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: President
XXXXX XXXXXX RETAINED ANNUITY TRUST
dated December 30, 1992
By:/s/Xxxxxxxx Xxxxx
Name: Xxxxxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Co-Trustee
By:/s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Co-Trustee
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EXHIBIT A
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE ISSUED PURSUANT TO AND
ARE SUBJECT TO A WARRANT AGREEMENT WHICH FIXES THE RIGHTS AND OBLIGATIONS OF THE
COMPANY AND THE HOLDER OF THE WARRANTS. A COPY OF THE WARRANT AGREEMENT IS ON
FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE SHARES PURCHASABLE
UPON EXERCISE OF THE WARRANTS ARE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH
IN A STOCKHOLDERS' AGREEMENT, DATED AS OF DECEMBER 19, 1997, AS AMENDED FROM
TIME TO TIME (THE "STOCKHOLDERS' AGREEMENT"), A COPY OF WHICH MAY BE OBTAINED
FROM THE ISSUER OR FROM THE HOLDER OF THIS WARRANT. NO TRANSFER OF THE WARRANTS
OR THE SHARES PURCHASABLE UPON EXERCISE OF THE WARRANTS WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS
OF THE STOCKHOLDERS' AGREEMENT.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE SHARES PURCHASABLE
UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A
REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY ARE PERSONAL TO THE
HOLDER AND, WITHOUT PRIOR WRITTEN CONSENT OF THE COMPANY, SHALL NOT BE
ASSIGNABLE OR OTHERWISE TRANSFERABLE BY THE HOLDER OTHERWISE THAN (I) BY WILL OR
THE LAWS OF DESCENT AND DISTRIBUTION OR BY A DISTRIBUTION OF THE WARRANTS FROM
THE WARRANTHOLDER TO THE TRUST BENEFICIARY OF THE WARRANTHOLDER OR (II) PURSUANT
TO A QUALIFIED DOMESTIC RELATIONS ORDER (AS DEFINED IN THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED), AND SUBJECT IN ANY SUCH CASE TO THE ASSIGNEE, TRANSFEREE
OR DISTRIBUTEE AGREEING IN WRITING TO BE BOUND BY AND BECOME A PARTY TO THE
STOCKHOLDERS' AGREEMENT AS IF SUCH ASSIGNEE, TRANSFEREE OR DISTRIBUTEE WAS THE
HOLDER THEREUNDER.
[FORM OF WARRANT CERTIFICATE]
[FACE]
EXERCISABLE ONLY
ON OR BEFORE ______________ __, 2008
No. W- _____________Warrants
WARRANT CERTIFICATE
AMSCAN HOLDINGS, INC.
This Warrant Certificate certifies that_______________, or
registered assigns, is the registered holder of __________ Warrants (the
"Warrants") expiring______________ __, 2008 to purchase shares of voting common
stock, par value $.10 per share ("Shares"), of AMSCAN HOLDINGS, INC., a Delaware
corporation (the "Company"). Each Warrant entitles the holder to purchase from
the Company, on or before 5:00 p.m., New York City time on ______________ __,
2008, one fully paid and nonassessable Share of the Company
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at the exercise price (the "Exercise Price") at the time in effect under the
Warrant Agreement dated as of______________ __, 1998 (the "Warrant Agreement")
($125,000 per Share, at the time of the initial issuance of the Warrants),
payable in lawful money of the United States of America or in securities as
permitted under the Warrant Agreement, upon surrender of this Warrant
Certificate and payment of such Exercise Price at the principal executive
offices of the Company, but subject to the conditions set forth herein and in
the Warrant Agreement; provided, however, that the number or kind of Shares (or
in certain events other property) purchasable upon exercise of the Warrants, the
number of Warrants evidenced hereby and the Exercise Price referred to herein
may as of the date of this Warrant Certificate have been, or may after such date
be, adjusted as a result of the occurrence of certain events, as more fully
provided in the Warrant Agreement. Payment of the Exercise Price shall be made
by certified check payable to the order of, or by wire transfer to, the Company,
or, to the extent permitted by the Warrant Agreement, by delivery by the holder
of the Warrants of Shares having a "current market price" (determined as
provided in subsection (e) of Section 12 of the Warrant Agreement) equal to the
Exercise Price, and, if requested by the Company, the amount of any required
federal, state, local or foreign withholding taxes.
No Warrant may be exercised after 5:00 p.m. New York City time on
______________ __, 2008 (the "Expiration Date").
Reference is hereby made to the further provisions of the Warrant
Agreement and of this Warrant Certificate set forth on the reverse hereof and
such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, AMSCAN HOLDINGS, INC. has caused this Warrant
Certificate to be duly executed.
AMSCAN HOLDINGS, INC.
Dated: By______________________________
Attest:
______________________________
Secretary
Void after ______________ __, 2008 or such earlier date as may be
fixed under the circumstances set forth in the Warrant Agreement and described
on the reverse hereof.
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[FORM OF WARRANT CERTIFICATE]
[REVERSE]
AMSCAN HOLDINGS, INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to a Warrant Agreement dated
as of ______________ __, 1998 (the "Warrant Agreement") between the Company and
a certain warrantholder who is a party thereto, which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering the Warrant Certificate, with the Form of Exercise
set forth hereon properly completed and executed, together with payment of the
Exercise Price at the time in effect, at the principal executive offices of the
Company. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his valid
assignee, transferee or distributee, if any, a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price, the number or kinds of shares purchasable upon
exercise of a Warrant or the number of Warrants outstanding may, subject to
certain conditions, be adjusted and under certain circumstances the Warrant may
become exercisable for securities or other assets other than the Shares referred
to on the face hereof. The Warrant Agreement provides that in such events, at
the election of the Company, either (i) the number of Shares purchasable upon
the exercise of each Warrant shall be adjusted or (ii) each outstanding Warrant
shall be adjusted to become a different number of Warrants. In the case of (ii),
the Company will cause to be distributed to registered holders of Warrant
Certificates either Warrant Certificates representing the additional Warrants
issuable pursuant to the adjustment, or substitute Warrant Certificates to
replace all outstanding Warrant Certificates. No fractional Warrant is required
to be issued upon any such adjustment but the persons entitled to such
fractional interest may be paid, as provided in the Warrant Agreement, an amount
in cash equal to the current market value of such fractional Warrant, as
determined in good faith by the board of directors of the Company.
This Warrant Certificate and the Warrants evidenced hereby are
personal to the Holder and, without prior written consent of the Company, shall
not be assignable or otherwise transferable by the Holder otherwise than (i) by
will or the laws of descent and distribution or by a distribution of the
Warrants from the Warrantholder to the trust beneficiary of the Warrantholder,
(ii) pursuant to a qualified domestic relations order (as defined in the
Internal Revenue Code of 1986, as amended), and subject in any such case to the
assignee, transferee or distributee agreeing in writing to be bound by and
become a party to this Warrant Certificate and the Stockholders' Agreement as if
such assignee, transferee or distributee was the Holder thereunder.
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, any distribution to the holder hereof, and for all other
purposes, and the Company shall not be affected by any notice or knowledge to
the contrary.
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[FORM OF EXERCISE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ Shares and
herewith tenders payment for such Shares to the order of Amscan Holdings, Inc.
in the amount of $__________ in accordance with the terms hereof. The
undersigned requests that a certificate for such Shares be registered in its
name. The address of the undersigned is____________________. If said number of
Shares is less than all of the Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
the Shares be registered in its name and that such Warrant Certificate be
returned to the undersigned at the address set forth above:
Dated: Signature:_____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
______________________________
(Insert Social Security or Taxpayer
Identification Number of Holder)
Signature Guaranteed:
______________________________
______________________________
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