Document:

<PAGE>

                                                                    Exhibit 4(2)

                          FIRST SUPPLEMENTAL INDENTURE

      THIS FIRST SUPPLEMENTAL INDENTURE dated as of June 21, 2004 among Amscan
Holdings, Inc., a Delaware corporation (the "Company"), the Guarantors, as such
term is defined in the Indenture (as defined below), and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee").

      WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture dated as of April 30, 2004 (the
"Indenture"), providing for the issuance of $175 million aggregate principal
amount of the Company's 8.75% Senior Subordinated Notes due 2014 (the "Notes");

      WHEREAS, the Company and Guarantors propose to amend and supplement the
Indenture to join Anagram International, LLC, a Nevada limited liability company
("Anagram") and an indirect subsidiary of the Company, as a party to the
Indenture as a Guarantor thereunder;

      WHEREAS, pursuant to Section 9.01 of the Indenture, the Company, the
Guarantors and the Trustee may amend or supplement the Indenture, the Notes or
the Note Guarantees without the consent of any Holder of Notes to make any
change that would provide additional rights or benefits to the Holders of the
Notes or that does not adversely affect the legal rights under the Indenture of
any Holder;

      WHEREAS, the Company, each Guarantor and Anagram have been authorized by a
resolution of its respective board of directors or managing member to enter into
this First Supplemental Indenture;

      WHEREAS, all other acts and proceedings required by law, by the Indenture
and by the respective certificates of incorporation, by-laws and limited
liability company agreements of the Company, each Guarantor and Anagram to make
this First Supplemental Indenture a valid and binding agreement for the purposes
expressed herein, in accordance with its terms, have been duly performed;

      WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is
authorized to execute and deliver this First Supplemental Indenture;

      NOW, THEREFORE, for in consideration of the premises herein contained and
in order to effect the proposed amendment to join Anagram as a party to the
Indenture pursuant to Section 9.01 of the Indenture, the Company and the
Guarantors agree with the Trustee as follows:

<PAGE>

                                    ARTICLE I

                             Amendment of Indenture

      1.1.  Amendment of Indenture. As of the date hereof, this First
Supplemental Indenture amends the Indenture by joining Anagram as a party to the
Indenture.

      1.2.  Execution and Delivery of Note Guarantee. Upon the effectiveness of
this First Supplemental Indenture, Anagram agrees that a notation of its Note
Guarantee substantially in the form attached as Exhibit E to the Indenture, will
be endorsed by an Officer of Anagram on each Note authenticated and delivered by
the Trustee under the Indenture.

                                   ARTICLE II

                            Miscellaneous Provisions

      2.1.  Instruments to be Read Together. This First Supplemental Indenture
is an indenture supplemental to and in implementation of the Indenture, and said
Indenture and this First Supplemental Indenture shall henceforth be read
together.

      2.2.  Confirmation. The Indenture as amended and supplemented by this
First Supplemental Indenture is in all respects confirmed and preserved.

      2.3.  Terms Defined. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

      2.4.  Counterparts. This First Supplemental Indenture may be signed in any
number of counterparts each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

      2.5.  Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.

      2.6.  Effectiveness. The provisions of this First Supplemental Indenture
will take effect immediately upon execution thereof by the parties hereto.

      2.7.  Trust Indenture Act Controls. If any provision of this First
Supplemental Indenture limits, qualifies or conflicts with another provision
that is required by or deemed to be included in this First Supplemental
Indenture by the Trust Indenture Act, the required or incorporated provision
shall control.

      2.8.  Governing Law. The internal law of the State of New York shall
govern and be used to construe this First Supplemental Indenture without giving
effect to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby. This
First Supplemental Indenture is subject to the provisions of the Trust Indenture
Act that are required to be part of the Indenture and shall, to the extent
applicable, be governed by such provisions.

                                      -2-
<PAGE>

      2.9.  Trustee. The Trustee makes no representations as to the validity or
sufficiency of this First Supplemental Indenture. The recitals and statements
herein are deemed to be those of the Company and the Guarantors and not of the
Trustee.

                                      -3-
<PAGE>

Dated as of June 21, 2004

                                    AMSCAN HOLDINGS, INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Chief Financial  Officer,
                                                  Secretary and Vice President

                                    AMSCAN INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Vice President and Treasurer

                                    SSY REALTY CORP.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Assistant Treasurer

                                    JCS REALTY CORP.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Assistant Treasurer

                                    AM-SOURCE, LLC

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Assistant Treasurer and
                                                  Secretary

                                    TRISAR, INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Assistant Treasurer

<PAGE>

                                    ANAGRAM INTERNATIONAL, INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Vice President, Assistant
                                                  Treasurer and Secretary

                                    ANAGRAM INTERNATIONAL HOLDINGS, INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Vice President, Assistant
                                                  Treasurer and Secretary

                                    ANAGRAM EDEN PRAIRIE PROPERTY HOLDINGS, LLC

                                    By: Amscan Holdings, Inc., its Sole Member

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Chief Financial Officer,
                                                  Secretary and Vice President

                                    M&D INDUSTRIES, INC.

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Vice President, Assistant
                                                  Treasurer and Secretary

                                    ANAGRAM INTERNATIONAL, LLC

                                    By:    /s/ Michael A. Correale
                                           ------------------------------------
                                           Name:  Michael A. Correale
                                           Title: Manager

<PAGE>

                                    THE BANK OF NEW YORK, as Trustee

                                    By:    /s/ Remo J. Reale
                                           -------------------------------------
                                           Name: Remo J. Reale
                                           Title: Vice President<PAGE>

                                                                    EXHIBIT 4(3)

                                                                  EXECUTION COPY

                             AMSCAN HOLDINGS, INC.

                    8.75% SENIOR SUBORDINATED NOTES DUE 2014

                      UNCONDITIONALLY GUARANTEED AS TO THE
                     PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
           AND INTEREST BY THE GUARANTORS NAMED ON SCHEDULE I HERETO

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                                  April 30, 2004
Goldman, Sachs & Co.
Credit Suisse First Boston LLC,
  As representatives of the several Purchasers
  named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

      Amscan Holdings, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the Purchasers (as defined herein) upon the terms set forth in
the Purchase Agreement (as defined herein) an aggregate of $175,000,000
principal amount of its 8.75% Senior Subordinated Notes due 2014, which are
unconditionally guaranteed by the Guarantors named in Schedule I hereto. As an
inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Company and the Guarantors agree with the Purchasers for the benefit of holders
(as defined herein) from time to time of the Registrable Securities (as defined
herein) as follows:

      1. Certain Definitions. For purposes of this Exchange and Registration
Rights Agreement, the following terms shall have the following respective
meanings:

      "Base Interest" shall mean the interest that would otherwise accrue on the
   Securities under the terms thereof and the Indenture, without giving effect
   to the provisions of this Agreement.

      "Blackout Period" shall have the meaning set forth in Section 2(c) hereof.

      The term "broker-dealer" shall mean any broker or dealer registered with
   the Commission under the Exchange Act.

      "Closing Date" shall mean the date on which the Securities are initially
   issued.

      "Commission" shall mean the United States Securities and Exchange
   Commission, or any other federal agency at the time administering the
   Exchange Act or the Securities Act, whichever is the relevant statute for the
   particular purpose.

<PAGE>

      "Effective Time," in the case of (i) an Exchange Registration, shall mean
   the time and date as of which the Commission declares the Exchange
   Registration Statement effective or as of which the Exchange Registration
   Statement otherwise becomes effective and (ii) a Shelf Registration, shall
   mean the time and date as of which the Commission declares the Shelf
   Registration Statement effective or as of which the Shelf Registration
   Statement otherwise becomes effective.

      "Effectiveness Target Date" shall have the meaning assigned thereto in
   Section 2(d) hereof.

      "Electing Holder" shall mean any holder of Registrable Securities that has
   returned a completed and signed Notice and Questionnaire to the Company in
   accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, or any
   successor thereto, and the rules, regulations and forms promulgated
   thereunder, all as the same shall be amended from time to time.

      "Exchange Offer" shall have the meaning assigned thereto in Section 2(a)
   hereof.

      "Exchange Registration" shall have the meaning assigned thereto in Section
   3(c) hereof.

      "Exchange Registration Statement" shall have the meaning assigned thereto
   in Section 2(a) hereof.

      "Exchange Securities" shall have the meaning assigned thereto in Section
   2(a) hereof.

      "Guarantors" shall have the meaning assigned thereto in the Indenture.

      The term "holder" shall mean each of the Purchasers and other persons who
   acquire Registrable Securities from time to time (including any successors or
   assigns), in each case for so long as such person owns any Registrable
   Securities.

      "Indenture" shall mean the Indenture, dated as of April 30, 2004, among
   the Company, the Guarantors and The Bank of New York, as Trustee, as the same
   shall be amended from time to time.

      "Notice and Questionnaire" means a Notice of Registration Statement and
   Selling Securityholder Questionnaire substantially in the form of Exhibit A
   hereto.

      The term "person" shall mean a corporation, association, partnership,
   organization, business, individual, government or political subdivision
   thereof or governmental agency.

      "Purchase Agreement" shall mean the Purchase Agreement, dated as of April
   27, 2004, among the Purchasers, the Guarantors, AAH Holdings Corporation, a
   Delaware corporation, and the Company relating to the Securities.

      "Purchasers" shall mean the Purchasers named in Schedule I to the Purchase
   Agreement.

      "Registrable Securities" shall mean each Security until the earlier to
   occur of: (a) the date on which such Security has been exchanged by a person
   other than a broker-dealer for an Exchange Security in the Exchange Offer;
   (b) following the exchange by a broker-dealer in the Exchange Offer of a
   Security for an Exchange Security, the date on which such

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<PAGE>

   Exchange Security is sold to a purchaser who receives from such broker-dealer
   on or prior to the date of such sale a copy of the prospectus contained in
   the Exchange Registration Statement; (c) the date on which such Security has
   been effectively registered under the Securities Act and disposed of in
   accordance with the Shelf Registration Statement; or (d) the date on which
   such Security is distributed to the public pursuant to Rule 144 under the
   Securities Act, or is saleable pursuant to clause (k) of such Rule 144.

      "Registration Default" shall have the meaning assigned thereto in Section
   2(d) hereof.

      "Registration Expenses" shall have the meaning assigned thereto in Section
   4 hereof.

      "Resale Period" shall have the meaning assigned thereto in Section 2(a)
   hereof.

      "Restricted Holder" shall mean (i) a holder that is an affiliate of the
   Company within the meaning of Rule 405, (ii) a holder who acquires Exchange
   Securities outside the ordinary course of such holder's business, (iii) a
   holder who has arrangements or understandings with any person to participate
   in the Exchange Offer for the purpose of distributing Exchange Securities and
   (iv) a holder that is a broker-dealer, but only with respect to Exchange
   Securities received by such broker-dealer pursuant to an Exchange Offer in
   exchange for Registrable Securities acquired by the broker-dealer directly
   from the Company.

      "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such rule
   promulgated under the Securities Act (or any successor provision), as the
   same shall be amended from time to time.

      "Securities" shall mean, collectively, the 8.75% Senior Subordinated Notes
   due 2014 of the Company to be issued and sold to the Purchasers, and
   securities issued in exchange therefor or in lieu thereof pursuant to the
   Indenture. Each Security is entitled to the benefit of the guarantees
   provided for in the Indenture (the "Guarantees") and, unless the context
   otherwise requires, any reference herein to a "Security," an "Exchange
   Security" or a "Registrable Security" shall include a reference to the
   related Guarantees.

      "Securities Act" shall mean the Securities Act of 1933, or any successor
   thereto, and the rules, regulations and forms promulgated thereunder, all as
   the same shall be amended from time to time.

      "Shelf Registration" shall have the meaning assigned thereto in Section
   2(b) hereof.

      "Shelf Registration Statement" shall have the meaning assigned thereto in
   Section 2(b) hereof.

      "Special Interest" shall have the meaning assigned thereto in Section 2(d)
   hereof.

      "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or any
   successor thereto, and the rules, regulations and forms promulgated
   thereunder, all as the same shall be amended from time to time.

      Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause, as the case may be, of this Exchange
and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.

            2. Registration Under the Securities Act.

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<PAGE>

      (a) Except as set forth in Section 2(b) below, the Company and the
   Guarantors agree to file under the Securities Act, as soon as practicable,
   but no later than 120 days after the Closing Date, a registration statement
   relating to an offer to exchange (such registration statement, the "Exchange
   Registration Statement," and such offer, the "Exchange Offer") any and all of
   the Securities for a like aggregate principal amount of debt securities
   issued by the Company and guaranteed by the Guarantors, which debt securities
   and guarantees are substantially identical to the Securities and the related
   Guarantees, respectively (and are entitled to the benefits of a trust
   indenture which is substantially identical to the Indenture or is the
   Indenture and which has been qualified under the Trust Indenture Act), except
   that they have been registered pursuant to an effective registration
   statement under the Securities Act and do not contain provisions for the
   additional interest contemplated in Section 2(d) below (such new debt
   securities hereinafter called "Exchange Securities"). The Company and the
   Guarantors agree to use commercially reasonable efforts to cause the Exchange
   Registration Statement to become effective under the Securities Act as soon
   as practicable, but no later than 210 days after the Closing Date. The
   Exchange Offer will be registered under the Securities Act on the appropriate
   form and will comply with all applicable tender offer rules and regulations
   under the Exchange Act. The Company and the Guarantors further agree to use
   commercially reasonable efforts to (A) complete the Exchange Offer promptly,
   but no later than 40 business days after such Exchange Registration Statement
   has become effective, and (B) exchange Exchange Securities for all
   Registrable Securities that have been properly tendered and not withdrawn on
   or prior to the expiration of the Exchange Offer. The Exchange Offer will be
   deemed to have been "completed" only if the debt securities and the related
   guarantees received by holders other than Restricted Holders in the Exchange
   Offer for Registrable Securities are, upon receipt, transferable by each such
   holder without restriction under the Securities Act and the Exchange Act and
   without material restrictions under the blue sky or securities laws of a
   substantial majority of the States of the United States of America. The
   Exchange Offer shall be deemed to have been completed upon the earlier to
   occur of (i) the Company having exchanged the Exchange Securities for all
   outstanding Registrable Securities pursuant to the Exchange Offer and (ii)
   the Company having exchanged, pursuant to the Exchange Offer, Exchange
   Securities for all Registrable Securities that have been properly tendered
   and not withdrawn before the expiration of the Exchange Offer. The Company
   agrees (x) to include in the Exchange Registration Statement a prospectus for
   use in any resales by any holder of Exchange Securities that is a
   broker-dealer and (y) to keep such Exchange Registration Statement effective
   for a period (the "Resale Period") beginning when Exchange Securities are
   first issued in the Exchange Offer and ending upon the earlier of the
   expiration of the 180th day after the Exchange Offer has been completed or
   such time as such broker-dealers no longer own any Registrable Securities.
   With respect to such Exchange Registration Statement, such holders shall have
   the benefit of the rights of indemnification and contribution set forth in
   Sections 6(a), (c), (d) and (e) hereof.

      (b) If (i) on or prior to the time the Exchange Offer is completed
   existing laws or Commission interpretations are changed such that the debt
   securities or the related guarantees received by holders other than
   Restricted Holders in the Exchange Offer for Registrable Securities are not
   or would not be, upon receipt, transferable by each such holder without
   restriction under the Securities Act, (ii) the Exchange Offer has not been
   completed within 210 days following the Closing Date or (iii) a holder
   notifies the Company prior to the 20th business day following the
   consummation of the Exchange Offer that the Exchange Offer is not available
   to such holder of the Securities, the Company and the Guarantors shall, in
   lieu of (or, in the case of clause (iii), in addition to) conducting the
   Exchange Offer contemplated by Section 2(a), file under the Securities Act as
   soon as practicable, but no later than the later of 60 days after the time
   such obligation to file arises

                                       4
<PAGE>

   or 150 days following the Closing Date, a "shelf" registration statement
   providing for the registration of, and the sale on a continuous or delayed
   basis by the holders of, all of the Registrable Securities, pursuant to Rule
   415 or any similar rule that may be adopted by the Commission (such filing,
   the "Shelf Registration" and such registration statement, the "Shelf
   Registration Statement"). The Company and the Guarantors agree to use
   commercially reasonable efforts (x) to cause the Shelf Registration Statement
   to become or be declared effective no later than 90 days after such Shelf
   Registration Statement is filed and to keep such Shelf Registration Statement
   continuously effective for a period ending on the earlier of the second
   anniversary of the Effective Time or such time as there are no longer any
   Registrable Securities outstanding, provided, however, that no holder shall
   be entitled to be named as a selling securityholder in the Shelf Registration
   Statement or to use the prospectus forming a part thereof for resales of
   Registrable Securities unless such holder is an Electing Holder who agrees to
   be bound by all of the provisions of this Agreement applicable to such
   holder, and (y) after the Effective Time of the Shelf Registration Statement,
   promptly upon the request of any holder of Registrable Securities that is not
   then an Electing Holder, to take any action reasonably necessary to enable
   such holder to use the prospectus forming a part thereof for resales of
   Registrable Securities, including, without limitation, any action necessary
   to identify such holder as a selling securityholder in the Shelf Registration
   Statement, provided, however, that nothing in this clause (y) shall relieve
   any such holder of the obligation to return a completed and signed Notice and
   Questionnaire to the Company and the Guarantors in accordance with Section
   3(d)(iii) hereof. The Company and the Guarantors further agree to supplement
   or make amendments to the Shelf Registration Statement, as and when required
   by the rules, regulations or instructions applicable to the registration form
   used by the Company and the Guarantors for such Shelf Registration Statement
   or by the Securities Act or rules and regulations thereunder for shelf
   registration, and the Company agrees to furnish to each Electing Holder
   copies of any such supplement or amendment prior to its being used or
   promptly following its filing with the Commission.

      (c) Notwithstanding the foregoing, the Company, upon advising the
   Purchasers in writing, may, pursuant to the advice of outside counsel to the
   Company, delay the filing or effectiveness of any Exchange Registration
   Statement or Shelf Registration Statement (if not filed or effective, as
   applicable) or suspend, or otherwise fail to maintain, the effectiveness
   thereof, for a period (the "Blackout Period") not to exceed an aggregate of
   60 days in any twelve consecutive month period in the event that (1) the
   Board of Directors of the Company reasonably and in good faith determines
   that the premature disclosure of a material event at such time would have a
   material adverse effect on the Company's business, operations or prospects or
   (2) the disclosure otherwise relates to a material business transaction which
   has not been publicly disclosed and the Board of Directors of the Company
   reasonably and in good faith determines that any such disclosure would
   jeopardize the success of such transaction; provided, that upon the
   termination of such Blackout Period, the Company promptly shall advise the
   Purchasers that such Blackout Period has been terminated.

      (d) In the event that (i) the Company has not filed the Exchange
   Registration Statement or Shelf Registration Statement on or before the date
   on which such registration statement is required to be filed pursuant to
   Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration
   Statement or Shelf Registration Statement has not become effective or been
   declared effective by the Commission on or before the date on which such
   registration statement is required to become or be declared effective
   pursuant to Section 2(a) or 2(b), respectively (each, an "Effectiveness
   Target Date"), or (iii) the Exchange Offer has not been consummated within 40
   business days after the Effectiveness Target Date relating to the Exchange
   Offer (if the Exchange Offer is then required to be made) or (iv) any
   Exchange

                                       5
<PAGE>

   Registration Statement or Shelf Registration Statement required by Section
   2(a) or 2(b) hereof is filed and declared effective but shall thereafter, if
   on or after the date on which such registration statement is required to
   become or declared effective pursuant to Section 2(a) or 2(b) hereof, either
   be withdrawn by the Company or shall become subject to an effective stop
   order issued pursuant to Section 8(d) of the Securities Act suspending the
   effectiveness of such registration statement (except as specifically
   permitted herein) without the Company proceeding promptly, with commercially
   reasonable efforts to file, and have declared effective an additional
   registration statement (each such event referred to in clauses (i) through
   (iv), a "Registration Default" and each period during which a Registration
   Default has occurred and is continuing, a "Registration Default Period"),
   then, as liquidated damages for such Registration Default, subject to the
   provisions of Section 9(b), special interest ("Special Interest"), in
   addition to the Base Interest, shall accrue at a rate of $.05 per week per
   $1,000 principal amount of Notes for the first 90 days of the Registration
   Default Period, and the amount of Special Interest shall increase by an
   additional $.05 per week per $1,000 principal amount of Notes with respect to
   each subsequent 90-day period until all Registration Defaults have been
   cured, up to a maximum amount of Special Interest of $.25 per week per $1,000
   principal amount of Notes for the remaining portion of the Registration
   Default Period. Notwithstanding the foregoing, (1) the amount of Special
   Interest payable shall not increase because more than one Registration
   Default has occurred and is pending and (2) a Holder of Registrable
   Securities that is not entitled to the benefits of the Shelf Registration
   Statement (e.g., such Holder has not elected to include information) shall
   not be entitled to Special Interest with respect to a Registration Default
   that pertains to the Shelf Registration Statement.

      (e) The Company shall take, and shall cause the Guarantors to take, all
   actions necessary or advisable to be taken by it to ensure that the
   transactions contemplated herein are effected as so contemplated, including
   all actions necessary or desirable to register the Guarantees under the
   registration statement contemplated in Section 2(a) or 2(b) hereof, as
   applicable.

      (f) Any reference herein to a registration statement as of any time shall
   be deemed to include any document incorporated, or deemed to be incorporated,
   therein by reference as of such time and any reference herein to any
   post-effective amendment to a registration statement as of any time shall be
   deemed to include any document incorporated, or deemed to be incorporated,
   therein by reference as of such time.

      3. Registration Procedures.

            If the Company and the Guarantors file a registration statement
pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:

      (a) At or before the Effective Time of the Exchange Offer or the Shelf
   Registration, as the case may be, the Company shall qualify the Indenture
   under the Trust Indenture Act.

      (b) In the event that such qualification would require the appointment of
   a new trustee under the Indenture, the Company shall appoint a new trustee
   thereunder pursuant to the applicable provisions of the Indenture.

      (c) In connection with the Company's and the Guarantors' obligations with
   respect to the registration of Exchange Securities as contemplated by Section
   2(a) (the "Exchange Registration"), if applicable, the Company and the
   Guarantors shall, as soon as practicable (or as otherwise specified):

                                       6
<PAGE>

         (i) prepare and file with the Commission, no later than 120 days after
      the Closing Date, an Exchange Registration Statement on any form which may
      be utilized by the Company and the Guarantors and which shall permit the
      Exchange Offer and resales of Exchange Securities by broker-dealers during
      the Resale Period to be effected as contemplated by Section 2(a), and use
      commercially reasonable efforts to cause such Exchange Registration
      Statement to become effective as soon as practicable thereafter, but no
      later than 210 days after the Closing Date;

         (ii) as soon as practicable prepare and file with the Commission such
      amendments and supplements to such Exchange Registration Statement and the
      prospectus included therein as may be necessary to effect and maintain the
      effectiveness of such Exchange Registration Statement for the periods and
      purposes contemplated in Section 2(a) hereof and as may be required by the
      applicable rules and regulations of the Commission and the instructions
      applicable to the form of such Exchange Registration Statement, and
      promptly provide each broker-dealer holding Exchange Securities with such
      number of copies of the prospectus included therein (as then amended or
      supplemented), in conformity in all material respects with the
      requirements of the Securities Act and the Trust Indenture Act, as such
      broker-dealer reasonably may request prior to the expiration of the Resale
      Period, for use in connection with resales of Exchange Securities;

         (iii) promptly notify each broker-dealer that has requested or received
      copies of the prospectus included in such registration statement, and
      confirm such advice in writing, (A) when such Exchange Registration
      Statement or the prospectus included therein or any prospectus amendment
      or supplement or post-effective amendment has been filed, and, with
      respect to such Exchange Registration Statement or any post-effective
      amendment, when the same has become effective, (B) once such Exchange
      Registration Statement has become effective, of any comments by the
      Commission and by the blue sky or securities commissioner or regulator of
      any state with respect thereto or any request by the Commission for
      amendments or supplements to such Exchange Registration Statement or
      prospectus or for additional information, (C) of the issuance by the
      Commission of any stop order suspending the effectiveness of such Exchange
      Registration Statement or the initiation or threatening of any proceedings
      for that purpose, (D) if at any time the representations and warranties of
      the Company contemplated by Section 5 cease to be true and correct in all
      material respects, (E) of the receipt by the Company of any notification
      with respect to the suspension of the qualification of the Exchange
      Securities for sale in any jurisdiction or the initiation or threatening
      of any proceeding for such purpose, or (F) at any time during the Resale
      Period when a prospectus is required to be delivered under the Securities
      Act, that such Exchange Registration Statement, prospectus, prospectus
      amendment or supplement or post-effective amendment does not conform in
      all material respects to the applicable requirements of the Securities Act
      and the Trust Indenture Act or contains an untrue statement of a material
      fact or omits to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing;

         (iv) in the event that the Company and the Guarantors would be
      required, pursuant to Section 3(c)(iii)(F) above, to notify any
      broker-dealers holding Exchange Securities, without delay prepare and
      furnish to each such holder a reasonable number of copies of a prospectus
      supplemented or amended so that, as thereafter delivered to purchasers of
      such Exchange Securities during the Resale Period, such prospectus shall
      conform in all material respects to the applicable requirements of

                                       7
<PAGE>

      the Securities Act and the Trust Indenture Act and shall 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
      not misleading in light of the circumstances then existing;

         (v) use commercially reasonable efforts to obtain the withdrawal of any
      order suspending the effectiveness of such Exchange Registration Statement
      or any post-effective amendment thereto at the earliest practicable date;

         (vi) use commercially reasonable efforts to (A) register or qualify the
      Exchange Securities under the securities laws or blue sky laws of such
      jurisdictions as are contemplated by Section 2(a) no later than the
      commencement of the Exchange Offer, (B) keep such registrations or
      qualifications in effect and comply with such laws so as to permit the
      continuance of offers, sales and dealings therein in such jurisdictions
      until the expiration of the Resale Period and (C) take any and all other
      actions as may be reasonably necessary or advisable to enable each
      broker-dealer holding Exchange Securities to consummate the disposition
      thereof in such jurisdictions; provided, however, that neither the Company
      nor any of the Guarantors shall be required for any such purpose to (1)
      qualify as a foreign corporation in any jurisdiction wherein it would not
      otherwise be required to qualify but for the requirements of this Section
      3(c)(vi), (2) consent to general service of process in any such
      jurisdiction or (3) make any changes to its certificate of incorporation
      or by-laws or any agreement between it and its stockholders;

         (vii) use commercially reasonable efforts to obtain the consent or
      approval of each governmental agency or authority, whether federal, state
      or local, which may be required to effect the Exchange Registration, the
      Exchange Offer and the offering and sale of Exchange Securities by
      broker-dealers during the Resale Period;

         (viii)provide a CUSIP number for all Exchange Securities, not later
      than the applicable Effective Time; and

         (ix) comply with all applicable rules and regulations of the
      Commission, and make generally available to its securityholders as soon as
      practicable but no later than eighteen months after the effective date of
      such Exchange Registration Statement, an earnings statement of the Company
      and its subsidiaries complying with Section 11(a) of the Securities Act
      (including, at the option of the Company, Rule 158 thereunder).

   (d) In connection with the Company's and the Guarantors' obligations with
respect to the Shelf Registration, if applicable, the Company and the Guarantors
shall, as soon as practicable (or as otherwise specified):

         (i) prepare and file with the Commission, within the time periods
      specified in Section 2(b), a Shelf Registration Statement on any form
      which may be utilized by the Company and which shall register all of the
      Registrable Securities for resale by the holders thereof in accordance
      with such method or methods of disposition as may be specified by such of
      the holders as, from time to time, may be Electing Holders and use
      commercially reasonable efforts to cause such Shelf Registration Statement
      to become effective as soon as practicable but in any case within the time
      periods specified in Section 2(b);

                                       8
<PAGE>

         (ii) not less than 30 calendar days prior to the Effective Time of the
      Shelf Registration Statement, mail the Notice and Questionnaire to the
      holders of Registrable Securities; no holder shall be entitled to be named
      as a selling securityholder in the Shelf Registration Statement as of the
      Effective Time, and no holder shall be entitled to use the prospectus
      forming a part thereof for resales of Registrable Securities at any time,
      unless such holder has returned a completed and signed Notice and
      Questionnaire to the Company by the deadline for response set forth
      therein; provided, however, holders of Registrable Securities shall have
      at least 28 calendar days from the date on which the Notice and
      Questionnaire is first mailed to such holders to return a completed and
      signed Notice and Questionnaire to the Company;

         (iii) after the Effective Time of the Shelf Registration Statement,
      upon the request of any holder of Registrable Securities that is not then
      an Electing Holder, promptly send a Notice and Questionnaire to such
      holder; provided that the Company shall not be required to take any action
      to name such holder as a selling securityholder in the Shelf Registration
      Statement or to enable such holder to use the prospectus forming a part
      thereof for resales of Registrable Securities until such holder has
      returned a completed and signed Notice and Questionnaire to the Company;

         (iv) as soon as practicable prepare and file with the Commission such
      amendments and supplements to such Shelf Registration Statement and the
      prospectus included therein as may be necessary to effect and maintain the
      effectiveness of such Shelf Registration Statement for the period
      specified in Section 2(b) hereof and as may be required by the applicable
      rules and regulations of the Commission and the instructions applicable to
      the form of such Shelf Registration Statement, and furnish to the Electing
      Holders copies of any such supplement or amendment simultaneously with or
      prior to its being used or filed with the Commission;

         (v) comply with the provisions of the Securities Act with respect to
      the disposition of all of the Registrable Securities covered by such Shelf
      Registration Statement in accordance with the intended methods of
      disposition by the Electing Holders provided for in such Shelf
      Registration Statement;

         (vi) provide (A) the Electing Holders, (B) the underwriters (which
      term, for purposes of this Exchange and Registration Rights Agreement,
      shall include a person deemed to be an underwriter within the meaning of
      Section 2(a)(11) of the Securities Act), if any, thereof, (C) any sales or
      placement agent therefor, (D) counsel for any such underwriter or agent
      and (E) not more than one counsel for all the Electing Holders the
      opportunity to participate in the preparation of such Shelf Registration
      Statement, each prospectus included therein or filed with the Commission
      and each amendment or supplement thereto;

         (vii) for a reasonable period prior to the filing of such Shelf
      Registration Statement, and throughout the period specified in Section
      2(b), make available at reasonable times at the Company's principal place
      of business or such other reasonable place for inspection by the persons
      referred to in Section 3(d)(vi) who shall certify to the Company that they
      have a current intention to sell the Registrable Securities pursuant to
      the Shelf Registration such financial and other information and books and
      records of the Company, and cause the officers, employees, counsel and
      independent certified public accountants of the Company to respond to such

                                       9
<PAGE>

      inquiries, as shall be reasonably necessary (and, in the case of counsel,
      not violate an attorney-client privilege, in such counsel's good faith
      belief), in the judgment of the respective counsel referred to in such
      Section, to conduct a reasonable investigation within the meaning of
      Section 11 of the Securities Act; provided, however, that each such party
      shall be required to maintain in confidence and not to disclose to any
      other person any information or records reasonably designated by the
      Company as being confidential, until such time as (A) such information
      becomes a matter of public record (whether by virtue of its inclusion in
      such registration statement or otherwise), or (B) such person shall be
      required so to disclose such information pursuant to a subpoena or order
      of any court or other governmental agency or body having jurisdiction over
      the matter (subject to the requirements of such order, and only after such
      person shall have given the Company prompt prior written notice of such
      requirement), or (C) such information is required to be set forth in such
      Shelf Registration Statement or the prospectus included therein or in an
      amendment to such Shelf Registration Statement or an amendment or
      supplement to such prospectus in order that such Shelf Registration
      Statement, prospectus, amendment or supplement, as the case may be,
      complies with applicable requirements of the federal securities laws and
      the rules and regulations of the Commission and does not contain an untrue
      statement of a material fact or omit to state therein a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading in light of the circumstances then existing;

         (viii) promptly notify each of the Electing Holders, any sales or
      placement agent therefor and any underwriter thereof (which notification
      may be made through any managing underwriter that is a representative of
      such underwriter for such purpose) and confirm such advice in writing, (A)
      when such Shelf Registration Statement or the prospectus included therein
      or any prospectus amendment or supplement or post-effective amendment has
      been filed, and, with respect to such Shelf Registration Statement or any
      post-effective amendment, when the same has become effective, (B) once
      such Shelf Registration Statement has become effective, of any comments by
      the Commission and by the blue sky or securities commissioner or regulator
      of any state with respect thereto or any request by the Commission for
      amendments or supplements to such Shelf Registration Statement or
      prospectus or for additional information, (C) of the issuance by the
      Commission of any stop order suspending the effectiveness of such Shelf
      Registration Statement or the initiation or threatening of any proceedings
      for that purpose, (D) if at any time the representations and warranties of
      the Company contemplated by Section 3(d)(xvii) or Section 5 cease to be
      true and correct in all material respects, (E) of the receipt by the
      Company of any notification with respect to the suspension of the
      qualification of the Registrable Securities for sale in any jurisdiction
      or the initiation or threatening of any proceeding for such purpose, or
      (F) if at any time when a prospectus is required to be delivered under the
      Securities Act, that such Shelf Registration Statement, prospectus,
      prospectus amendment or supplement or post-effective amendment does not
      conform in all material respects to the applicable requirements of the
      Securities Act and the Trust Indenture Act or contains an untrue statement
      of a material fact or omits to state any material fact required to be
      stated therein or necessary to make the statements therein not misleading
      in light of the circumstances then existing;

         (ix) use commercially reasonable efforts to obtain the withdrawal of
      any order suspending the effectiveness of such registration statement or
      any post-effective amendment thereto at the earliest practicable date;

                                       10
<PAGE>

         (x) if requested by any managing underwriter or underwriters, any
      placement or sales agent or any Electing Holder, promptly incorporate in a
      prospectus supplement or post-effective amendment such information as is
      required by the applicable rules and regulations of the Commission and as
      such managing underwriter or underwriters, such agent or such Electing
      Holder specifies should be included therein relating to the terms of the
      sale of such Registrable Securities, including information with respect to
      the principal amount of Registrable Securities being sold by such Electing
      Holder or agent or to any underwriters, the name and description of such
      Electing Holder, agent or underwriter, the offering price of such
      Registrable Securities and any discount, commission or other compensation
      payable in respect thereof, the purchase price being paid therefor by such
      underwriters and with respect to any other terms of the offering of the
      Registrable Securities to be sold by such Electing Holder or agent or to
      such underwriters; and make all required filings of such prospectus
      supplement or post-effective amendment promptly after notification of the
      matters to be incorporated in such prospectus supplement or post-effective
      amendment;

         (xi) furnish to each Electing Holder, each placement or sales agent, if
      any, therefor, each underwriter, if any, thereof and the respective
      counsel referred to in Section 3(d)(vi) an executed copy (or, in the case
      of an Electing Holder, a conformed copy) of such Shelf Registration
      Statement, each such amendment and supplement thereto (in each case
      including all exhibits thereto (in the case of an Electing Holder of
      Registrable Securities, upon request) and documents incorporated by
      reference therein) and such number of copies of such Shelf Registration
      Statement (excluding exhibits thereto and documents incorporated by
      reference therein unless specifically so requested by such Electing
      Holder, agent or underwriter, as the case may be) and of the prospectus
      included in such Shelf Registration Statement (including each preliminary
      prospectus and any summary prospectus), in conformity in all material
      respects with the applicable requirements of the Securities Act and the
      Trust Indenture Act, and such other documents, as such Electing Holder,
      agent, if any, and underwriter, if any, may reasonably request in order to
      facilitate the offering and disposition of the Registrable Securities
      owned by such Electing Holder, offered or sold by such agent or
      underwritten by such underwriter and to permit such Electing Holder, agent
      and underwriter to satisfy the prospectus delivery requirements of the
      Securities Act; and the Company hereby consents to the use of such
      prospectus (including such preliminary and summary prospectus) and any
      amendment or supplement thereto by each such Electing Holder and by any
      such agent and underwriter, in each case in the form most recently
      provided to such person by the Company, in connection with the offering
      and sale of the Registrable Securities covered by the prospectus
      (including such preliminary and summary prospectus) or any supplement or
      amendment thereto;

         (xii) use commercially reasonable efforts to (A) register or qualify
      the Registrable Securities to be included in such Shelf Registration
      Statement under such securities laws or blue sky laws of such
      jurisdictions as any Electing Holder and each placement or sales agent, if
      any, therefor and underwriter, if any, thereof shall reasonably request,
      (B) keep such registrations or qualifications in effect and comply with
      such laws so as to permit the continuance of offers, sales and dealings
      therein in such jurisdictions during the period the Shelf Registration is
      required to remain effective under Section 2(b) above and for so long as
      may be necessary to enable any such Electing Holder, agent or underwriter
      to complete its distribution of Securities pursuant to such Shelf
      Registration Statement and (C) take any and all

                                       11
<PAGE>

      other actions as may be reasonably necessary or advisable to enable each
      such Electing Holder, agent, if any, and underwriter, if any, to
      consummate the disposition in such jurisdictions of such Registrable
      Securities; provided, however, that neither the Company nor any of the
      Guarantors shall be required for any such purpose to (1) qualify as a
      foreign corporation in any jurisdiction wherein it would not otherwise be
      required to qualify but for the requirements of this Section 3(d)(xii),
      (2) consent to general service of process in any such jurisdiction or (3)
      make any changes to its certificate of incorporation or by-laws or any
      agreement between it and its stockholders;

         (xiii)use commercially reasonable efforts to obtain the consent or
      approval of each governmental agency or authority, whether federal, state
      or local, which may be required to effect the Shelf Registration or the
      offering or sale in connection therewith or to enable the selling holder
      or holders to offer, or to consummate the disposition of, their
      Registrable Securities;

         (xiv) unless any Registrable Securities shall be in book-entry only
      form, cooperate with the Electing Holders and the managing underwriters,
      if any, to facilitate the timely preparation and delivery of certificates
      representing Registrable Securities to be sold, which certificates, if so
      required by any securities exchange upon which any Registrable Securities
      are listed, shall be penned, lithographed or engraved, or produced by any
      combination of such methods, on steel engraved borders, and which
      certificates shall not bear any restrictive legends; and, in the case of
      an underwritten offering, enable such Registrable Securities to be in such
      denominations and registered in such names as the managing underwriters
      may request at least two business days prior to any sale of the
      Registrable Securities;

         (xv) provide a CUSIP number for all Registrable Securities, not later
      than the applicable Effective Time;

         (xvi) enter into one or more underwriting agreements, engagement
      letters, agency agreements, "best efforts" underwriting agreements or
      similar agreements, as appropriate, including customary provisions
      relating to indemnification and contribution, and take such other actions
      in connection therewith as any Electing Holders aggregating at least 20%
      in aggregate principal amount of the Registrable Securities at the time
      outstanding shall request in order to expedite or facilitate the
      disposition of such Registrable Securities; provided that the Company and
      the Guarantors shall not be required to enter into any such agreement more
      than two times with respect to all Registrable Securities;

         (xvii) whether or not an agreement of the type referred to in Section
      3(d)(xvi) hereof is entered into and whether or not any portion of the
      offering contemplated by the Shelf Registration is an underwritten
      offering or is made through a placement or sales agent or any other
      entity, (A) make such representations and warranties to the Electing
      Holders and the placement or sales agent, if any, therefor and the
      underwriters, if any, thereof in form, substance and scope as are
      customarily made in connection with an offering of debt securities
      pursuant to any appropriate agreement or to a registration statement filed
      on the form applicable to the Shelf Registration; (B) obtain an opinion of
      counsel to the Company in customary form and covering such matters, of the
      type customarily covered by such an opinion, as the managing underwriters,
      if any, or as any Electing Holders of at least 20% in aggregate principal
      amount of the Registrable Securities at the time outstanding may
      reasonably request, addressed to such Electing Holder or Electing Holders
      and the placement or

                                       12
<PAGE>

      sales agent, if any, therefor and the underwriters, if any, thereof and
      dated the effective date of such Shelf Registration Statement (and if such
      Shelf Registration Statement contemplates an underwritten offering of a
      part or all of the Registrable Securities, dated the date of the closing
      under the underwriting agreement relating thereto); (C) obtain a "cold
      comfort" letter or letters from the independent certified public
      accountants of the Company addressed to the selling Electing Holders, the
      placement or sales agent, if any, therefor or the underwriters, if any,
      thereof, dated (i) the effective date of such Shelf Registration Statement
      and (ii) the effective date of any prospectus supplement to the prospectus
      included in such Shelf Registration Statement or post-effective amendment
      to such Shelf Registration Statement which includes unaudited or audited
      financial statements as of a date or for a period subsequent to that of
      the latest such statements included in such prospectus (and, if such Shelf
      Registration Statement contemplates an underwritten offering pursuant to
      any prospectus supplement to the prospectus included in such Shelf
      Registration Statement or post-effective amendment to such Shelf
      Registration Statement which includes unaudited or audited financial
      statements as of a date or for a period subsequent to that of the latest
      such statements included in such prospectus, dated the date of the closing
      under the underwriting agreement relating thereto), such letter or letters
      to be in customary form and covering such matters of the type customarily
      covered by letters of such type; (D) deliver such documents and
      certificates, including officers' certificates, as may be reasonably
      requested by any Electing Holders of at least 20% in aggregate principal
      amount of the Registrable Securities at the time outstanding or the
      placement or sales agent, if any, therefor and the managing underwriters,
      if any, thereof to evidence the accuracy of the representations and
      warranties made pursuant to clause (A) above or those contained in Section
      5(a) hereof and the compliance with or satisfaction of any agreements or
      conditions contained in the underwriting agreement or other agreement
      entered into by the Company or the Guarantors; and (E) undertake such
      obligations relating to expense reimbursement, indemnification and
      contribution as are provided in Section 6 hereof;

         (xviii) notify in writing each holder of Registrable Securities of any
      proposal by the Company to amend or waive any provision of this Exchange
      and Registration Rights Agreement pursuant to Section 9(h) hereof and of
      any amendment or waiver effected pursuant thereto, each of which notices
      shall contain the text of the amendment or waiver proposed or effected, as
      the case may be;

         (xix) in the event that any broker-dealer registered under the Exchange
      Act shall underwrite any Registrable Securities or participate as a member
      of an underwriting syndicate or selling group or "assist in the
      distribution" (within the meaning of the Conduct Rules (the "Conduct
      Rules) of the National Association of Securities Dealers, Inc. ("NASD") or
      any successor thereto, as amended from time to time) thereof, whether as a
      holder of such Registrable Securities or as an underwriter, a placement or
      sales agent or a broker or dealer in respect thereof, or otherwise, assist
      such broker-dealer in complying with the requirements of such Conduct
      Rules, including by (A) if such Conduct Rules shall so require, engaging a
      "qualified independent underwriter" (as defined in such Conduct Rules) to
      participate in the preparation of the Shelf Registration Statement
      relating to such Registrable Securities, to exercise usual standards of
      due diligence in respect thereto and, if any portion of the offering
      contemplated by such Shelf Registration Statement is an underwritten
      offering or is made through a placement or sales agent, to recommend the
      yield of such Registrable Securities, (B) indemnifying any such qualified

                                       13
<PAGE>

      independent underwriter to the extent of the indemnification of
      underwriters provided in Section 6 hereof (or to such other customary
      extent as may be requested by such underwriter), and (C) providing such
      information to such broker-dealer as may be required in order for such
      broker-dealer to comply with the requirements of the Conduct Rules; and

         (xx) comply with all applicable rules and regulations of the
      Commission, and make generally available to its securityholders as soon as
      practicable but in any event not later than eighteen months after the
      effective date of such Shelf Registration Statement, an earning statement
      of the Company and its subsidiaries complying with Section 11(a) of the
      Securities Act (including, at the option of the Company, Rule 158
      thereunder).

      (e) In the event that the Company would be required, pursuant to Section
   3(d)(viii)(F) above, to notify the Electing Holders, the placement or sales
   agent, if any, therefor and the managing underwriters, if any, thereof, the
   Company shall promptly prepare and furnish to each of the Electing Holders,
   to each placement or sales agent, if any, and to each such underwriter, if
   any, a reasonable number of copies of a prospectus supplemented or amended so
   that, as thereafter delivered to purchasers of Registrable Securities, such
   prospectus shall conform in all material respects to the applicable
   requirements of the Securities Act and the Trust Indenture Act and shall 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 not misleading in light of the circumstances then existing. Each
   Electing Holder agrees that upon receipt of any notice from the Company
   pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder shall
   forthwith discontinue the disposition of Registrable Securities pursuant to
   the Shelf Registration Statement applicable to such Registrable Securities
   until such Electing Holder shall have received copies of such amended or
   supplemented prospectus, and if so directed by the Company, such Electing
   Holder shall deliver to the Company (at the Company's expense) all copies,
   other than permanent file copies, then in such Electing Holder's possession
   of the prospectus covering such Registrable Securities at the time of receipt
   of such notice.

      (f) In the event of a Shelf Registration, in addition to the information
   required to be provided by each Electing Holder in its Notice Questionnaire,
   the Company may require such Electing Holder to furnish to the Company such
   additional information regarding such Electing Holder and such Electing
   Holder's intended method of distribution of Registrable Securities as may be
   required in order to comply with the Securities Act. Each such Electing
   Holder agrees to notify the Company as promptly as practicable of any
   inaccuracy or change in information previously furnished by such Electing
   Holder to the Company or of the occurrence of any event in either case as a
   result of which any prospectus relating to such Shelf Registration contains
   or would contain an untrue statement of a material fact regarding such
   Electing Holder or such Electing Holder's intended method of disposition of
   such Registrable Securities or omits to state any material fact regarding
   such Electing Holder or such Electing Holder's intended method of disposition
   of such Registrable Securities required to be stated therein or necessary to
   make the statements therein not misleading in light of the circumstances then
   existing, and promptly to furnish to the Company any additional information
   required to correct and update any previously furnished information or
   required so that such prospectus shall not contain, with respect to such
   Electing Holder or the disposition of such Registrable Securities, an untrue
   statement of a material fact or omit to state a material fact required to be
   stated therein or necessary to make the statements therein not misleading in
   light of the circumstances then existing.

                                       14
<PAGE>

      (g) Until the expiration of two years after the Closing Date, the Company
   will not, and will not permit any of its "affiliates" (as defined in Rule
   144) to, resell any of the Securities that have been reacquired by any of
   them except pursuant to an effective registration statement under the
   Securities Act.

      (h) As a condition to its participation in the Exchange Offer, each holder
   of Registrable Securities shall furnish, upon the request of the Company, a
   written representation to the Company (which may be contained in the letter
   of transmittal contemplated by the Exchange Registration Statement) to the
   effect that (A) it is not an affiliate of the Company, as defined in Rule 405
   of the Securities Act, or if it is an affiliate, it will comply with the
   registration and prospectus delivery requirements of the Securities Act to
   the extent applicable; (B) it is not engaged in, and does not intend to
   engage in, and has no arrangement or understanding with any person to
   participate in, a distribution of the Exchange Securities to be issued in the
   Exchange Offer; (C) it is acquiring the Exchange Securities in its ordinary
   course of business; (D) if it is a broker-dealer that holds Securities that
   were acquired for its own account as a result of market-making activities or
   other trading activities (other than Securities acquired directly from the
   Company or any of its affiliates), it will deliver a prospectus meeting the
   requirements of the Securities Act in connection with any resales of the
   Exchange Securities received by it in the Exchange Offer; (E) if it is a
   broker-dealer, that it did not purchase the Securities to be exchanged in the
   Exchange Offer from the Company or any of its affiliates; and (F) it is not
   acting on behalf of any Person who could not truthfully and completely make
   the representations contained in the foregoing clauses (A) through (E).

      4. Registration Expenses.

         The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) reasonable fees, disbursements and
expenses of any "qualified independent underwriter" engaged pursuant to Section
3(d)(xix) hereof, (i) reasonable fees, disbursements and expenses of one counsel
for the Electing Holders retained in connection with a Shelf Registration, as
selected by the Electing Holders of

                                       15
<PAGE>

at least a majority in aggregate principal amount of the Registrable Securities
held by Electing Holders (which counsel shall be reasonably satisfactory to the
Company), (j) any fees charged by securities rating services for rating the
Securities, and (k) fees, expenses and disbursements of any other persons,
including special experts, retained by the Company in connection with such
registration (collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of Registrable
Securities or any placement or sales agent therefor or underwriter thereof, the
Company shall reimburse such person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a request
therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered shall pay all agency fees and commissions and
underwriting discounts and commissions attributable to the sale of such
Registrable Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above.

      5. Representations and Warranties.

         Each of the Company and the Guarantors represent and warrant to, and
agree with, each Purchaser and each of the holders from time to time of
Registrable Securities that:

      (a) Each registration statement covering Registrable Securities and each
   prospectus (including any preliminary or summary prospectus) contained
   therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and any
   further amendments or supplements to any such registration statement or
   prospectus, when it becomes effective or is filed with the Commission, as the
   case may be, and, in the case of an underwritten offering of Registrable
   Securities, at the time of the closing under the underwriting agreement
   relating thereto, will conform in all material respects to the requirements
   of the Securities Act and the Trust Indenture Act and will 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 not
   misleading; and at all times subsequent to the Effective Time when a
   prospectus would be required to be delivered under the Securities Act, other
   than from (i) such time as a notice has been given to holders of Registrable
   Securities pursuant to Section 3(d)(viii)(F) or Section 3(c)(iii)(F) hereof
   until (ii) such time as the Company furnishes an amended or supplemented
   prospectus pursuant to Section 3(e) or Section 3(c)(iv) hereof, each such
   registration statement, and each prospectus (including any summary
   prospectus) contained therein or furnished pursuant to Section 3(d) or
   Section 3(c) hereof, as then amended or supplemented, will conform in all
   material respects to the requirements of the Securities Act and the Trust
   Indenture Act and will 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 not misleading in the light of the circumstances
   then existing; 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 a holder
   of Registrable Securities expressly for use therein.

      (b) Any documents incorporated by reference in any prospectus referred to
   in Section 5(a) hereof, when they become or became effective or are or were
   filed with the Commission, as the case may be, will conform or conformed in
   all material respects to the requirements of the Securities Act or the
   Exchange Act, as applicable, and none of such documents will contain or
   contained an untrue statement of a material fact or will omit or omitted 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 a holder of Registrable Securities expressly for use
   therein.

                                       16
<PAGE>

      (c) The compliance by the Company with all of the provisions of this
   Exchange and Registration Rights Agreement and the consummation of the
   transactions herein contemplated will not conflict with or result in a breach
   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 subsidiary of the Company is a party
   or by which the Company or any subsidiary of the Company is bound or to which
   any of the property or assets of the Company or any subsidiary of the Company
   is subject, nor will such action result in any violation of the provisions of
   the certificate of incorporation or certificate of formation, as amended, or
   the by-laws or the respective governing documents of the Company or any
   Guarantor or any statute or any order, rule or regulation of any court or
   governmental agency or body having jurisdiction over the Company or any
   subsidiary of the Company or any of their properties; and no consent,
   approval, authorization, order, registration or qualification of or with any
   such court or governmental agency or body is required for the consummation by
   the Company and the Guarantors of the transactions contemplated by this
   Exchange and Registration Rights Agreement, except the registration under the
   Securities Act of the Securities, qualification of the Indenture under the
   Trust Indenture Act and such consents, approvals, authorizations,
   registrations or qualifications as may be required under State securities or
   blue sky laws in connection with the offering and distribution of the
   Securities.

      (d) This Exchange and Registration Rights Agreement has been duly
   authorized, executed and delivered by the Company.

      6. Indemnification.

      (a) Indemnification by the Company and the Guarantors. The Company and the
   Guarantors, jointly and severally, will indemnify and hold harmless each of
   the holders of Registrable Securities included in an Exchange Registration
   Statement, each of the Electing Holders of Registrable Securities included in
   a Shelf Registration Statement and each person who participates as a
   placement or sales agent or as an underwriter in any offering or sale of such
   Registrable Securities against any losses, claims, damages or liabilities,
   joint or several, to which such holder, agent or underwriter may become
   subject under the Securities 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 Exchange Registration Statement or Shelf
   Registration Statement, as the case may be, under which such Registrable
   Securities were registered under the Securities Act, or any preliminary,
   final or summary prospectus contained therein or furnished by the Company to
   any such holder, Electing Holder, agent or underwriter, or any amendment or
   supplement thereto, or arise out of or are based upon the omission or alleged
   omission to state therein a material fact required to be stated therein or
   necessary to make the statements therein not misleading, and will reimburse
   such holder, such Electing Holder, such agent and such underwriter for any
   legal or other expenses reasonably incurred by them in connection with
   investigating or defending any such action or claim as such expenses are
   incurred; provided, however, that neither the Company nor any of the
   Guarantors shall be liable to any such person in any such case to the extent
   that any such loss, claim, damage or liability arises out of or is based upon
   an untrue statement or alleged untrue statement or omission or alleged
   omission made in such registration statement, or preliminary, final or
   summary prospectus, or amendment or supplement thereto, in reliance upon and
   in conformity with written information furnished to the Company by such
   person expressly for use therein.

      (b) Indemnification by the Holders and any Agents and Underwriters. The
   Company may require, as a condition to including any Registrable Securities
   in any registration

                                       17
<PAGE>

   statement filed pursuant to Section 2(b) hereof and to entering into any
   underwriting agreement with respect thereto, that the Company shall have
   received an undertaking reasonably satisfactory to it from the Electing
   Holder of such Registrable Securities and from each underwriter named in any
   such underwriting agreement, severally and not jointly, to (i) indemnify and
   hold harmless the Company, the Guarantors and all other holders of
   Registrable Securities, against any losses, claims, damages or liabilities to
   which the Company, the Guarantors or such other holders of Registrable
   Securities may become subject, under the Securities Act or otherwise, insofar
   as such losses, claims, damages or liabilities (or actions in respect
   thereof) arise out of or are based upon an untrue statement or alleged untrue
   statement of a material fact contained in such registration statement, or any
   preliminary, final or summary prospectus contained therein or furnished by
   the Company to any such Electing Holder, agent or underwriter, or any
   amendment or supplement thereto, or arise out of or are based upon the
   omission or alleged omission to state therein a material fact required to be
   stated therein or necessary to make the statements therein not misleading, in
   each case to the extent, but only to the extent, that such untrue statement
   or alleged untrue statement or omission or alleged omission was made in
   reliance upon and in conformity with written information furnished to the
   Company by such Electing Holder or underwriter expressly for use therein, and
   (ii) reimburse the Company and the Guarantors for any legal or other expenses
   reasonably incurred by the Company and the Guarantors in connection with
   investigating or defending any such action or claim as such expenses are
   incurred; provided, however, that no such Electing Holder shall be required
   to undertake liability to any person under this Section 6(b) for any amounts
   in excess of the dollar amount of the proceeds to be received by such
   Electing Holder from the sale of such Electing Holder's Registrable
   Securities pursuant to such registration. The holders' and the underwriters'
   obligations in this Section 6(b) to indemnify the Company, the Guarantors and
   all other holders of Registrable Securities shall be several and not joint.

      (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
   under subsection (a) or (b) above of written notice of the commencement of
   any action, such indemnified party shall, if a claim in respect thereof is to
   be made against an indemnifying party pursuant to the indemnification
   provisions of or contemplated by this Section 6, notify such indemnifying
   party in writing of the commencement of such action; but the omission so to
   notify the indemnifying party shall not relieve it from any liability which
   it may have to any indemnified party otherwise than under the indemnification
   provisions of or contemplated by Section 6(a) or 6(b) hereof. In case any
   such action shall be brought against any indemnified party and it shall
   notify an indemnifying party of the commencement thereof, such indemnifying
   party shall be entitled to participate therein and, to the extent that it
   shall wish, jointly with any other indemnifying party similarly notified, to
   assume the defense thereof, with counsel reasonably satisfactory to such
   indemnified party (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, such indemnifying party shall not be liable to such
   indemnified party for any legal expenses of other counsel or any other
   expenses, in each case subsequently incurred by such indemnified party, in
   connection with the defense thereof other than reasonable costs of
   investigation. 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.

                                       18
<PAGE>

      (d) Contribution. If for any reason the indemnification provisions
   contemplated by Section 6(a) or Section 6(b) are unavailable to or
   insufficient to hold harmless an indemnified party in respect of any losses,
   claims, damages or liabilities (or actions in respect thereof) referred to
   therein, then each indemnifying party shall contribute to the amount paid or
   payable by such indemnified party as a result of such losses, claims, damages
   or liabilities (or actions in respect thereof) in such proportion as is
   appropriate to reflect the relative fault of the indemnifying party and the
   indemnified party in connection with the statements or omissions which
   resulted in such losses, claims, damages or liabilities (or actions in
   respect thereof), as well as any other relevant equitable considerations. The
   relative fault of such indemnifying party and indemnified party shall be
   determined by reference to, among other things, whether the untrue or alleged
   untrue statement of a material fact or omission or alleged omission to state
   a material fact relates to information supplied by such indemnifying party or
   by such indemnified party, and the parties' relative intent, knowledge,
   access to information and opportunity to correct or prevent such statement or
   omission. The parties hereto agree that it would not be just and equitable if
   contributions pursuant to this Section 6(d) were determined by pro rata
   allocation (even if the holders or any agents or underwriters or all of them
   were treated as one entity for such purpose) or by any other method of
   allocation which does not take account of the equitable considerations
   referred to in this Section 6(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 shall be deemed to include
   any legal or other fees or expenses reasonably incurred by such indemnified
   party in connection with investigating or defending any such action or claim.
   Notwithstanding the provisions of this Section 6(d), no holder shall be
   required to contribute any amount in excess of the amount by which the dollar
   amount of the proceeds received by such holder from the sale of any
   Registrable Securities (after deducting any fees, discounts and commissions
   applicable thereto) exceeds the amount of any damages which such holder has
   otherwise been required to pay by reason of such untrue or alleged untrue
   statement or omission or alleged omission, and no underwriter shall be
   required to contribute any amount in excess of the amount by which the total
   discounts and commissions received by such underwriter with respect to the
   offering of Registrable Securities underwritten by it 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 Securities Act) shall be entitled to
   contribution from any person who was not guilty of such fraudulent
   misrepresentation. The holders' and any underwriters' obligations in this
   Section 6(d) to contribute shall be several in proportion to the principal
   amount of Registrable Securities registered or underwritten, as the case may
   be, by them and not joint.

      (e) The obligations of the Company and the Guarantors under this Section 6
   shall be in addition to any liability which the Company or the Guarantors may
   otherwise have and shall extend, upon the same terms and conditions, to each
   officer, director and partner of each holder, agent and underwriter and each
   person, if any, who controls any holder, agent or underwriter within the
   meaning of the Securities Act; and the obligations of the holders and any
   agents or underwriters contemplated by this Section 6 shall be in addition to
   any liability which the respective holder, agent or underwriter may otherwise
   have and shall extend, upon the same terms and conditions, to each officer
   and director of the Company or the Guarantors (including any person who, with
   his consent, is named in any registration statement as about to become a
   director of the Company or the Guarantors) and to each person, if any, who
   controls the Company within the meaning of the Securities Act.

      7. Underwritten Offerings.

                                       19
<PAGE>

      (a) Selection of Underwriters. If any of the Registrable Securities
   covered by the Shelf Registration are to be sold pursuant to an underwritten
   offering, the managing underwriter or underwriters thereof shall be
   designated by Electing Holders holding at least a majority in aggregate
   principal amount of the Registrable Securities to be included in such
   offering, provided that such designated managing underwriter or underwriters
   is or are reasonably acceptable to the Company.

      (b) Participation by Holders. Each holder of Registrable Securities hereby
   agrees with each other such holder that no such holder may participate in any
   underwritten offering hereunder unless such holder (i) agrees to sell such
   holder's Registrable Securities on the basis provided in any underwriting
   arrangements approved by the persons entitled hereunder to approve such
   arrangements and (ii) completes and executes all questionnaires, powers of
   attorney, indemnities, underwriting agreements and other documents reasonably
   required under the terms of such underwriting arrangements.

      8. Rule 144.

         The Company covenants to the holders of Registrable Securities that to
the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.

      9. Miscellaneous.

      (a) No Inconsistent Agreements. The Company represents, warrants,
   covenants and agrees that it has not granted, and shall not grant,
   registration rights with respect to Registrable Securities or any other
   securities which would be inconsistent with the terms contained in this
   Exchange and Registration Rights Agreement.

      (b) Specific Performance. The parties hereto acknowledge that there would
   be no adequate remedy at law if the Company fails to perform any of its
   obligations hereunder and that the Purchasers and the holders from time to
   time of the Registrable Securities may be irreparably harmed by any such
   failure, and accordingly agree that the Purchasers and such holders, in
   addition to any other remedy to which they may be entitled at law or in
   equity, shall be entitled to compel specific performance of the obligations
   of the Company under this Exchange and Registration Rights Agreement in
   accordance with the terms and conditions of this Exchange and Registration
   Rights Agreement, in any court of the United States or any State thereof
   having jurisdiction.

      (c) Notices. All notices, requests, claims, demands, waivers and other
   communications hereunder shall be in writing and shall be deemed to have been
   duly given when delivered by hand, if delivered personally or by courier, or
   three days after being deposited in the mail (registered or certified mail,
   postage prepaid, return receipt requested) as follows: If to the Company, to
   it at Amscan Holdings, Inc., 80 Grasslands Road, Elmsford, New York 10523,

                                       20
<PAGE>

   with a copy to Ropes & Gray LLP, One International Place, Boston,
   Massachusetts 02110-2624, Attention: David Chapin, Esq., and if to a holder,
   to the address of such holder set forth in the security register or other
   records of the Company, or to such other address as the Company or any such
   holder may have furnished to the other in writing in accordance herewith,
   except that notices of change of address shall be effective only upon
   receipt.

      (d) Parties in Interest. All the terms and provisions of this Exchange and
   Registration Rights Agreement shall be binding upon, shall inure to the
   benefit of and shall be enforceable by the parties hereto and the holders
   from time to time of the Registrable Securities and the respective successors
   and assigns of the parties hereto and such holders. In the event that any
   transferee of any holder of Registrable Securities shall acquire Registrable
   Securities, in any manner, whether by gift, bequest, purchase, operation of
   law or otherwise, such transferee shall, without any further writing or
   action of any kind, be deemed a beneficiary hereof for all purposes and such
   Registrable Securities shall be held subject to all of the terms of this
   Exchange and Registration Rights Agreement, and by taking and holding such
   Registrable Securities such transferee shall be entitled to receive the
   benefits of, and be conclusively deemed to have agreed to be bound by all of
   the applicable terms and provisions of this Exchange and Registration Rights
   Agreement. If the Company shall so request, any such successor, assign or
   transferee shall agree in writing to acquire and hold the Registrable
   Securities subject to all of the applicable terms hereof.

      (e) Survival. The respective indemnities, agreements, representations,
   warranties and each other provision set forth in this Exchange and
   Registration Rights Agreement or made pursuant hereto shall remain in full
   force and effect regardless of any investigation (or statement as to the
   results thereof) made by or on behalf of any holder of Registrable
   Securities, any director, officer or partner of such holder, any agent or
   underwriter or any director, officer or partner thereof, or any controlling
   person of any of the foregoing, and shall survive delivery of and payment for
   the Registrable Securities pursuant to the Purchase Agreement and the
   transfer and registration of Registrable Securities by such holder and the
   consummation of an Exchange Offer.

      (f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL
   BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
   YORK.

      (g) Headings. The descriptive headings of the several Sections and
   paragraphs of this Exchange and Registration Rights Agreement are inserted
   for convenience only, do not constitute a part of this Exchange and
   Registration Rights Agreement and shall not affect in any way the meaning or
   interpretation of this Exchange and Registration Rights Agreement.

      (h) Entire Agreement; Amendments. This Exchange and Registration Rights
   Agreement and the other writings referred to herein (including the Indenture
   and the form of Securities) or delivered pursuant hereto which form a part
   hereof contain the entire understanding of the parties with respect to its
   subject matter. This Exchange and Registration Rights Agreement supersedes
   all prior agreements and understandings between the parties with respect to
   its subject matter. This Exchange and Registration Rights Agreement may be
   amended and the observance of any term of this Exchange and Registration
   Rights Agreement may be waived (either generally or in a particular instance
   and either retroactively or prospectively) only by a written instrument duly
   executed by the Company and the holders of at least a majority in aggregate
   principal amount of the Registrable Securities at the time outstanding. Each
   holder of any Registrable Securities at the time or thereafter outstanding
   shall be bound by any amendment or waiver effected pursuant to this Section
   9(h), whether or not any notice, writing or marking indicating such amendment
   or waiver appears on such Registrable Securities or is delivered to such
   holder.

                                       21
<PAGE>

      (i) Inspection. For so long as this Exchange and Registration Rights
   Agreement shall be in effect, this Exchange and Registration Rights Agreement
   and a complete list of the names and addresses of all the holders of
   Registrable Securities shall be made available for inspection and copying on
   any business day by any holder of Registrable Securities for proper purposes
   only (which shall include any purpose related to the rights of the holders of
   Registrable Securities under the Securities, the Indenture and this
   Agreement) at the offices of the Company at the address thereof set forth in
   Section 9(c) above and at the office of the Trustee under the Indenture.

      (j) Counterparts. This agreement may be executed by the parties in
   counterparts, each of which shall be deemed to be an original, but all such
   respective counterparts shall together constitute one and the same
   instrument.

                                       22
<PAGE>

      If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement among the Purchasers, the Guarantors and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, 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: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Chief Financial Officer,
                                                    Secretary and Vice President

                                          Amscan Inc.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Vice President and Treasurer

                                          SSY Realty Corp.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Assistant Treasurer

                                          JCS Realty Corp.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Assistant Treasurer

                                          Am-Source, LLC

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Assistant Treasurer

                                       23
<PAGE>

                                          Trisar, Inc.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Assistant Treasurer

                                          Anagram International, Inc.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Vice President, Assistant
                                                    Treasurer and Secretary

                                          Anagram International Holdings, Inc.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Vice President, Assistant
                                                    Treasurer and Secretary

                                          Anagram Eden Prairie Property Holdings
                                          LLC

                                          By: Amscan Holdings, Inc., its Sole
                                              Member

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Chief Financial Officer,
                                                    Secretary and Vice President

                                          M&D Industries, Inc.

                                          By: /s/ Michael A. Correale
                                             -----------------------------------
                                             Name:  Michael A. Correale
                                             Title: Vice President, Assistant
                                                    Treasurer and Secretary

                                       24
<PAGE>

Accepted as of the date hereof:
Goldman, Sachs & Co.
Credit Suisse First Boston LLC

By: /s/ Goldman, Sachs & Co.
   ---------------------------------------
      (Goldman, Sachs & Co.)

      On behalf of each of the Purchasers

                                       25
<PAGE>

                                                                      SCHEDULE I

Amscan Inc.

SSY Realty Corp.

JCS Realty Corp.

Am-Source, LLC

Trisar, Inc.

Anagram International, Inc.

Anagram International Holdings, Inc.

Anagram Eden Prairie Property Holdings, LLC

M&D Industries, Inc.

<PAGE>

                                                                       EXHIBIT A

                             AMSCAN HOLDINGS, INC.

                        INSTRUCTION TO DTC PARTICIPANTS

                               (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                        DEADLINE FOR RESPONSE: [DATE] *

The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Amscan Holdings, Inc. (the "Company")
8.75% Senior Subordinated Notes due 2014 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.

It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [Deadline For Response]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Amscan Holdings,
Inc., 80 Grasslands Road, Elmsford, New York 10523, Tel: (914) 345-2020.

----------------------
*Not less than 28 calendar days from date of mailing.

                                      A-1
<PAGE>

                             AMSCAN HOLDINGS, INC.

                        Notice of Registration Statement
                                      and
                      Selling Securityholder Questionnaire

                                     (Date)

Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") among Amscan Holdings, Inc. (the
"Company"), the Guarantors and the Purchasers named therein. Pursuant to the
Exchange and Registration Rights Agreement, the Company has filed with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form __ (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Company's 8.75% Senior Subordinated Notes due
2014 (the "Securities"). A copy of the Exchange and Registration Rights
Agreement is attached hereto. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Exchange and Registration Rights
Agreement.

Each beneficial owner of Registrable Securities (as defined below) is entitled
to have the Registrable Securities beneficially owned by it included in the
Shelf Registration Statement. In order to have Registrable Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire by such date (i) will not be named as selling securityholders
in the Shelf Registration Statement and (ii) may not use the Prospectus forming
a part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.

The term "Registrable Securities" is defined in the Exchange and Registration
Rights Agreement.

                                      A-2
<PAGE>

                                    ELECTION

The undersigned holder (the "Selling Securityholder") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.

Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:

                                      A-3
<PAGE>

                                 QUESTIONNAIRE

(1)   (a)Full Legal Name of Selling Securityholder:

      (b)Full Legal Name of Registered Holder (if not the same as in (a) above)
            of Registrable Securities Listed in Item (3) below:

      (c)   Full Legal Name of DTC Participant (if applicable and if not the
            same as (b) above) Through Which Registrable Securities Listed in
            Item (3) below are Held:

(2)         Address for Notices to Selling Securityholder:
            __________________

            __________________

            __________________

            Telephone:      __________________________________

            Fax:            __________________________________

            Contact Person: __________________________________

(3)         Beneficial Ownership of Securities:

            Except as set forth below in this Item (3), the undersigned does not
            beneficially own any Securities.

      (a)   Principal amount of Registrable Securities beneficially owned:______
            ________________________CUSIP No(s). of such Registrable Securities:
            ______________________________

      (b)Principal amount of Securities other than Registrable Securities
            beneficially owned:_________________________________________________
            CUSIP No(s). of such other Securities:______________________________

      (c)   Principal amount of Registrable Securities which the undersigned
            wishes to be included in the Shelf Registration Statement:__________
            ______________________  CUSIP No(s). of such Registrable Securities
            to be included in the Shelf Registration Statement:_________________
            ______________________________

(4)         Beneficial Ownership of Other Securities of the Company:

            Except as set forth below in this Item (4), the undersigned Selling
            Securityholder is not the beneficial or registered owner of any
            other securities of the Company, other than the Securities listed
            above in Item (3).

            State any exceptions here:

(5)         Relationships with the Company:

                                      A-4
<PAGE>

            Except as set forth below, neither the Selling Securityholder nor
            any of its affiliates, officers, directors or principal equity
            holders (5% or more) has held any position or office or has had any
            other material relationship with the Company (or its predecessors or
            affiliates) during the past three years.

            State any exceptions here:

(6)         Plan of Distribution:

            Except as set forth below, the undersigned Selling Securityholder
            intends to distribute the Registrable Securities listed above in
            Item (3) only as follows (if at all): Such Registrable Securities
            may be sold from time to time directly by the undersigned Selling
            Securityholder or, alternatively, through underwriters,
            broker-dealers or agents. Such Registrable Securities may be sold in
            one or more transactions at fixed prices, at prevailing market
            prices at the time of sale, at varying prices determined at the time
            of sale, or at negotiated prices. Such sales may be effected in
            transactions (which may involve crosses or block transactions) (i)
            on any national securities exchange or quotation service on which
            the Registered Securities may be listed or quoted at the time of
            sale, (ii) in the over-the-counter market, (iii) in transactions
            otherwise than on such exchanges or services or in the
            over-the-counter market, or (iv) through the writing of options. In
            connection with sales of the Registrable Securities or otherwise,
            the Selling Securityholder may enter into hedging transactions with
            broker-dealers, which may in turn engage in short sales of the
            Registrable Securities in the course of hedging the positions they
            assume. The Selling Securityholder may also sell Registrable
            Securities short and deliver Registrable Securities to close out
            such short positions, or loan or pledge Registrable Securities to
            broker-dealers that in turn may sell such securities.

            State any exceptions here:

By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which

                                      A-5
<PAGE>

may occur subsequent to the date hereof at any time while the Shelf Registration
Statement remains in effect. All notices hereunder and pursuant to the Exchange
and Registration Rights Agreement shall be made in writing, by hand-delivery,
first-class mail, or air courier guaranteeing overnight delivery as follows:

            (i) To the Company:

                                          Amscan Holdings, Inc.
                                          80 Grasslands Road
                                          Elmsford, New York
                                          Attn: Chief Financial Officer

            (ii) With a copy to:

                                          Ropes & Gray LLP
                                          One International Place
                                          Boston, Massachusetts 02110-2624
                                          Attn: David Chapin, Esq.

Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above. This
Agreement shall be governed in all respects by the laws of the State of New
York.

                                      A-6
<PAGE>

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated:_______________________

            ____________________________________________________________________
            Selling Securityholder
            (Print/type full legal name of beneficial owner of Registrable
            Securities)

            By: ________________________________________________________________
            Name:
            Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:

                                          Amscan Holdings, Inc.
                                          80 Grasslands Road
                                          Elmsford, New York
                                          Attn: Chief Financial Officer

                                          With a copy to:

                                          Ropes & Gray LLP
                                          One International Place
                                          Boston, Massachusetts 02110-2624
                                          Attn: David Chapin, Esq.

                                      A-7
<PAGE>

                                                                       EXHIBIT B

             NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

The Bank of New York
Amscan Holdings, Inc.
c/o The Bank of New York
101 Barclay Street
New York, New York 10286

Attention: Trust Officer

            Re: Amscan Holdings, Inc. (the "Company")
                8.75% Senior Subordinated Notes due 2014

Dear Sirs:

Please be advised that _________________________has transferred
$_______________aggregate principal amount of the above-referenced Notes
pursuant to an effective Registration Statement on Form______(File No.
333-________) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [date] or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.

Dated:

                                          Very truly yours,

                                                ______________________
                                                (Name)

                                          By:   ______________________
                                                (Authorized Signature)

                                      B-1

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