Document:

exv10w5

Exhibit 10.5

Execution Copy

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 1st day of January 2008 by and
between Amscan Holdings, Inc., a Delaware corporation (the “Company”), and James M. Harrison (the
“Executive”).

     WHEREAS, the Executive serves the Company as its President pursuant to an Employment Agreement
dated as of June 15, 2003, as amended from time to time, (the “Prior Employment Agreement”); and

     WHEREAS, the Company and the Executive desire to set forth in this new Employment Agreement
the terms and conditions under which the Executive will continue to be employed by the Company;

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. The Company shall employ the Executive, and the Executive
agrees to, and shall, serve the Company, on the terms and conditions set forth in this Agreement,
for the period commencing on January 1, 2008 and ending on December 31, 2012, unless sooner
terminated as set forth hereinafter (the “Employment Period”).

     2. Position and Duties.

          (a) During the Employment Period, the Executive shall be President of the Company with such
duties and responsibilities as are assigned to him by the Board of Directors of the Company (the
“Board”) consistent with his position as President of the Company, including, as the Board may
request, without additional compensation, to serve as an officer or director of certain
subsidiaries and other affiliated entities of the Company.

          (b) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive shall devote his full attention and time during
normal business hours to the business and affairs of the Company and shall perform his services
primarily at the Company’s headquarters, wherever the Board may from time to time designate them to
be, and shall use his reasonable best efforts to carry out the responsibilities assigned to the
Executive faithfully and efficiently. It shall not be considered a violation of the foregoing for
the Executive to (i) serve on civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, (iii) serve on the board of
directors of other companies, so long as the Company approves such appointments, or (iv) manage
personal investments, so long as such activities do not compete with and are not provided to or for
any entity that competes with or intends to compete with the Company or any of its subsidiaries and
affiliates and do not interfere with the performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement.

     3. Compensation.

          (a) Base Salary. During the Employment Period, the Executive shall receive from the
Company an annual base salary (“Annual Base Salary”) of $850,000, payable in regular intervals in
accordance with the Company’s customary payroll practices in effect during

 

 

the Employment Period;
provided that such Annual Base Salary shall be increased by 5% (from the Annual Base Salary
theretofore in effect) on each January 1 during the Employment Period commencing January 1, 2009
and shall be payable in accordance with the preceding sentence.

          (b) Other Compensation. In addition to the Annual Base Salary, the Executive shall be
entitled to receive annual bonus compensation (the “Annual Bonus”) consistent with the Company’s
bonus plan for key executives in effect from time to time. The Annual Bonus, if any, shall be paid
no later than the 75th day following the end of the calendar year to which such Annual Bonus
corresponds. For any year during which the Executive is employed by the Company for less than the
entire calendar year (including a year in which Executive’s employment is terminated), the Annual
Bonus, if any, shall be determined on a pro rata basis for the period during which the Executive
was employed during such calendar year (based on the number of days in such calendar year the
Executive was so employed divided by 365), as determined in good faith by the Board and payable no
later than the 75th day following the end of the year to which such Annual Bonus
corresponds.

          (c) Deferred Compensation. Executive shall be entitled to receive a Deferred Bonus
(any full or partial payment hereunder, the “Deferred Bonus”), which shall accrue at the rate of
$250,000.00 per year, accruing monthly for each calendar month of employment hereunder at the rate
of $20,833.33 per month. The Deferred Bonus shall be payable on the earlier to occur of thirty
(30) days following the expiration of the Employment Period hereunder, or thirty (30) days
following the earlier termination of Executive’s employment as set forth in Section 5 hereinafter,
except as otherwise set forth in Section 5.

          (d) Other Benefits. During the Employment Period: (i) the Executive shall be
entitled to participate in all incentive, savings and retirement plans, practices, policies and
programs of the Company, and shall be entitled to paid vacation, to the same extent and on the same
terms and conditions as peer executives; (ii) the Company shall pay, on Executive’s behalf,
disability insurance premiums up to $2,000.00 per month pursuant to which policy Executive shall be
entitled to designate the beneficiary; and (iii) the Executive and/or the Executive’s family, as
the case may be, shall be eligible for participation in, and shall receive all benefits under, all
other welfare benefit plans, practices, policies and programs provided by the Company (including,
to the extent provided, without limitation, medical, prescription, dental, disability, employee
life insurance, group life insurance, accidental death and travel accident insurance plans and
programs) to the same extent and on the same terms and conditions as peer executives;
provided, however, that nothing in this Agreement shall impose on the Company any
obligation to offer to the Executive participation in any stock, stock option, restricted stock,
bonus or other incentive award, plan, practice, policy or program. The term “peer executives”
means the Chief Executive Officer and Senior Vice Presidents of the Company, if such positions
exist, and if such positions do not exist, the definition of the term “peer executives” shall be
determined by the Board in good faith.

          (e) Expenses. During the Employment Period, the Executive shall be entitled to
receive reimbursement for all reasonable travel and other expenses incurred by the Executive in
carrying out the Executive’s duties under this Agreement, provided that the Executive
complies with the policies, practices and procedures of the Company for submission of expense
reports, receipts, or similar documentation of such expenses.

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     4. Termination of Employment.

          (a) Death or Permanent Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. The Company shall be
entitled to terminate the Executive’s employment because of the Executive’s Permanent Disability
during the Employment Period. “Permanent Disability” means that the Executive (i) is unable to
perform his duties under this Agreement by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months; (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months receiving income replacement benefits for a period of
not less than three months under an accident and health plan covering employees of the Company, or
(iii) has been determined to be totally disabled by the Social Security Administration. A
termination of the Executive’s employment by the Company for Permanent Disability shall be
communicated to the Executive by written notice, and shall be effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”), unless the Executive
returns to full-time performance of the Executive’s duties in accordance with the provisions of
Section 2 before such 30th day. In the event of a dispute as to whether Executive has
suffered a Permanent Disability, the final determination shall be made by a licensed physician
selected by the Board of Directors of the Company and acceptable to Executive in Executive’s
reasonable judgment.

          (b) Other than Death or Disability. The Company may terminate the Executive’s
employment at any time during the Employment Period at any time with or without Cause upon notice
to the Executive.

          (c) Good Reason. The Executive may terminate his employment at any time during the
Employment Period for Good Reason, upon written notice to the Company setting forth in reasonable
detail the nature of such Good Reason, as set forth below. For purposes of this Agreement, “Good
Reason” is defined as any one or more of the following: any attempt to relocate Executive to a
work location that is more than 100 miles from the Company’s offices in Elmsford, New York; any
material diminution in the nature or scope of the Executive’s responsibilities or duties as defined
under this Agreement; any material breach by the Company or any affiliate of the Company of any
provision of this Agreement or any other written agreement with the Executive, which breach is not
cured within twenty (20) days following written notice by Executive to the Company; or any material
failure of the Company to provide the Executive with at least the Annual Base Salary and/or any
other compensation or benefits in accordance with the terms of Section 3 hereof; other than an
inadvertent failure which is cured within ten (10) business days following written notice from the
Executive specifying in reasonable detail the nature of such failure. Notwithstanding the
foregoing, the appointment of an interim President during any period of Executive’s disability
(which may potentially result in
a Permanent Disability) will not be considered “Good Reason” (so long as Executive continues
to be compensated pursuant to the terms of this Agreement), until the occurrence of a Permanent
Disability as defined in Section 4(a).

          (d) Change in Control. If there occurs a “Change in Control” (as hereinafter defined)
during the Employment Period, and the Executive is not offered employment on

3

 

substantially similar
terms by the Company or one of its continuing affiliates immediately thereafter, then, for all
purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by
the Company other than for Cause effective as of the date of such Change in Control;
provided, however, that the Company shall have no obligations to the Executive
under this Section 4 if the Executive is hired or offered employment on substantially similar terms
by the purchaser of the stock or assets of the Company or if the Executive’s employment hereunder
is continued by the Company. As used herein, a “Change in Control” shall be deemed to have occurred
upon the occurrence of any of the following events:

     (i) a change in the ownership of the Company within the meaning of Treasury Regulation
Section 1.409A-3(i)(5)(v) as in effect on the date hereof;

     (ii) a change in the effective control of the Company within the meaning of Treasury
Regulation Section 1.409A-3(i)(5)(vi)(2) as in effect on the date hereof; or

     (iii) a change in the ownership of all or substantially all of the Company’s assets
within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vii) as in effect on the
date hereof.

     Notwithstanding anything to the contrary set forth in d(i)(ii) or (iii) hereinabove, no Change
of Control shall be deemed to have occurred so long as Berkshire Partners and Weston Presidio
continue to own at least 50% of the stock of the Company in the aggregate.

          (f) Date of Termination. The “Date of Termination” means the date of the Executive’s
death, the Disability Effective Date or the date on which the termination of the Executive’s
employment by the Company, or by the Executive, is effective, as the case may be, including by
reason of the expiration of the Employment Period.

     5. Obligations of the Company Upon Termination.

          (a) By the Company Upon Executive’s Death or Permanent Disability If Executive dies
during the Employment Period or the Company terminates the Executive’s employment due to the
Executive’s Permanent Disability, the Company shall pay Executive or his legal representative:

     (i) The following amounts in a lump sum in cash within 30 days after the Date of
Termination:

(A) The Executive’s accrued but unpaid cash compensation (the “Accrued
Obligations”), which shall equal the sum of (1) any portion of the
Executive’s Annual Base Salary through the Date of Termination that has not
yet been paid; (2) any Bonus that the Executive has earned for a
prior full calendar year that has ended prior to the Date of Termination but
which has not yet been calculated and paid; and (3) any accrued but unpaid
vacation pay; and

(B) The Deferred Bonus equal to the sum of (x) the number of calendar years
during the Employment Period prior to the Date of

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Termination multiplied by
$250,000, and (y) if the Date of Termination is not December 31st, a pro
rated portion of Deferred Bonus for the year in which such termination
occurs based on the number of months in such calendar year the Executive was
so employed; and

          (ii) Executive shall also be entitled to receive a pro rata Annual Bonus for the year of
termination, calculated and paid in accordance with Section 3(b).

          (b) By the Company for Cause. If Executive’s employment is terminated by the Company
for “Cause” (as hereinafter defined), then the Executive shall be entitled to only the payment of
the Accrued Obligations which shall be paid to Executive in cash in a lump sum within thirty (30)
days of the Date of Termination and the Company shall have no further obligations under this
Agreement. For purposes of this Agreement, “Cause” shall mean (1) conviction of the Executive by a
court of competent jurisdiction of a felony (excluding felonies under the Motor Vehicle Code); (2)
any act of intentional fraud in connection with his duties under this Agreement; (3) any act of
gross negligence or willful misconduct with respect to the Executive’s duties under this Agreement;
and (4) any act of willful disobedience in violation of specific reasonable directions of the Board
consistent with the Executive’s duties.

          (c) By the Company for any reason other than Cause or by Executive for Good Reason.
If the Executive’s employment is terminated during the Employment Period (i) by the Company other
than for Cause, death or Permanent Disability (including by reason of a Change in Control) or (ii)
by the Executive for Good Reason, the Company shall pay to the Executive (i) the Accrued
Obligations, (ii) the Deferred Bonus (as calculated in accordance with Section 5(a)(i)(B)), (iii)
Executive will also be entitled to receive a pro rata Annual Bonus for the year of termination,
calculated and paid in accordance with Section 3(b), and (iv) a Severance Payment (the “Severance
Payment”), in an amount equal to Executive’s then current Annual Base Salary multiplied by the
number of years in the post employment Restriction Period, calculated in accordance with Section
9(d) hereinafter. Notwithstanding anything to the contrary set forth herein, in the event that
termination of Executive’s employment pursuant to this Paragraph occurs within 6 months following a
Change of Control, the Severance Payment shall equal three (3) years of Base Salary. All amounts
payable hereunder (except the Annual Bonus which is payable in accordance with Section 3(b)) shall
be payable in cash in a lump sum within thirty (30) days following the Date of Termination.

          (d) By the Executive other than for Good Reason. If during the Employment Period the
Executive terminates his employment with the Company other than for Good Reason, the Company shall
pay the Accrued Obligations to the Executive in a lump sum in cash within 30 days of the Date of
Termination and the Company shall have no further obligations under this Agreement.

          (e) Expiration of the Term. Unless otherwise terminated pursuant to any of the
foregoing clauses of this Section 5, the Executive’s employment hereunder will automatically
terminate at the expiration of the Employment Period and the Company shall pay to the Executive (i)
the Accrued Obligations, (ii) the Annual Bonus and (iii) the Deferred Bonus. All amounts payable
hereunder (except the Annual Bonus which is payable in accordance with Section 3(b)) shall be
payable in cash in a lump sum within thirty (30) days following the Date of

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Termination. Upon
expiration of the Employment Period, no Severance Payment will be due and no further Restriction
Period shall apply.

          (f) Continuing Rights under Benefits Programs. Notwithstanding anything to the
contrary set forth herein, upon termination of employment for any reason other than death,
termination by the Company for Cause, or termination by Executive without Good Reason, Executive
shall be entitled to receive at the Executive’s expense, continued coverage under the Company’s
health insurance policy comparable to the family coverage received by Executive at the Date of
Termination, so long as the Company’s Plan at the Date of Termination and thereafter permits
coverage of former employees.

     6. Deferral Election. By his execution of this Agreement, the Executive hereby elects
to defer the receipt of the Deferred Bonus, if any, to be paid to him pursuant to the provisions of
Section 5 above until the Date of Termination. The parties intend for the Deferred Bonus to comply
with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended.

     7. Full Settlement. The Company’s obligations to make the payments provided for in,
and otherwise to perform its obligations under, this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may
have against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of
whether the Executive obtains other employment.

     8. Confidential Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data relating to the
Company or any company affiliated with the Company and its respective businesses that the Executive
obtains during the Executive’s employment by the Company (whether before, during or after the
Employment Period) and that is not public knowledge (other than as a result of the Executive’s
violation of this Section 8) (“Confidential Information”). The Executive shall not communicate,
divulge or disseminate Confidential Information at any time during or after the Executive’s
employment with the Company, except with the prior written consent of the Company or as otherwise
required by law.

     9. Noncompetition; Nonsolicitation.

          (a) Non-Competition. During the Employment Period, and following termination of the
Executive’s employment with the Company and any of its affiliates, during the “Restriction Period”
(as hereinafter defined), the Executive shall not directly or indirectly participate in or permit
his name directly or indirectly to be used by or become associated with
(including as an advisor, representative, agent, promoter, independent contractor, provider of
personal services or otherwise) any person, corporation, partnership, firm, association or other
enterprise or entity (a “person”) that is, or intends to be, engaged in any business which is in
competition with any business of the Company, or any of its subsidiaries or controlled affiliates
in any country in which the Company or any of its subsidiaries or controlled affiliates operate,
compete or are engaged in such business or at such time intend so to operate, compete or become

6

 

engaged in such business (a “Competitor”). For purposes of this Agreement, the term “participate”
includes any direct or indirect interest, whether as an officer, director, employee, partner, sole
proprietor, trustee, beneficiary, agent, representative, independent contractor, consultant,
advisor, provider of personal services, creditor, or owner (other than by ownership of less than
five percent of the stock of a publicly-held corporation whose stock is traded on a national
securities exchange or in an over-the-counter market).

          (b) Non-Solicitation. During the Employment Period, and during the Restriction Period
following termination of employment, the Executive shall not, directly or indirectly, encourage or
solicit, or assist any other person or firm in encouraging or soliciting, any person that during
the three-year period preceding such termination of the Executive’s employment with the Company is
or was engaged in a business relationship with the Company, any of its subsidiaries or controlled
affiliates to terminate its relationship with the Company or any of its subsidiaries or controlled
affiliates or to engage in a business relationship with a Competitor.

          (c) No Hire. During the Employment Period, and during the Restriction Period
following termination of employment, the Executive will not, except with the prior written consent
of the Company, directly or indirectly, induce any employee of the Company, or any of its
subsidiaries or controlled affiliates to terminate employment with such entity, and will not,
directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise,
employ, offer employment or cause employment to be offered to any person (including employment as
an independent contractor) who is or was employed by the Company or any of its respective
subsidiaries or controlled affiliates unless such person shall have ceased to be employed by such
entity for a period of at least twelve months. For purposes of this Section 9(c), “employment”
shall be deemed to include rendering services as an independent contractor and “employees” shall be
deemed to include independent contractors.

          (d) Restriction Period. The term “Restriction Period” as used herein, shall mean the
following periods:

     (i) In the event the Employment Period is terminated by the Company prior to the
expiration of the Term (except as provided in Section 9(d)(iii) hereinafter) other than (1)
for Cause or (2) due to Executive’s death or Permanent Disability, the Company shall elect,
in its sole and absolute discretion, to limit the Restriction Period following termination
to a one, two or three-year period (but no event less than one year), and the Company shall
pay Executive severance pay for each year of the elected Restriction Period. If no
Restriction Period election is made, the Company shall be deemed to have elected a
three-year Restriction Period. The Severance Payment shall be payable in a lump sum thirty
(30) days following the Date of Termination.

     (ii) In the event Executive is terminated by the Company for Cause, or if Executive
resigns without Good Reason, then the Restriction Period shall be three years following
termination of employment and no Severance Payment shall be payable to Executive.

7

 

     (iii) Notwithstanding anything to the contrary set forth herein, in the event
Executive’s employment is terminated by the Company following a Change of Control, or by
Executive for Good Reason following a Change of Control, the Restriction Period shall be
three years following the Change of Control and the Company shall pay Executive the
Severance Payment for the three year Restriction Period in cash in a lump sum thirty (30)
days following the Date of Termination.

          (e) Return of Confidential Information. Promptly following the Executive’s
termination of employment, including due to expiration of the Employment Period, the Executive
shall return to the Company all property of the Company and its respective subsidiaries and
affiliates, and all copies thereof, in the Executive’s possession or under his control, including,
without limitation, all Confidential Information in whatever media such Confidential Information is
maintained.

          (f) Injunctive Relief. The Executive acknowledges and agrees that the Restriction
Period and the covenants and obligations of the Executive in Section 8 and this Section 9 with
respect to non-competition, nonsolicitation and confidentiality and with respect to the property of
the Company and its subsidiaries and controlled affiliates, and the territories covered thereby,
are fair and reasonable and the result of negotiation. The Executive further acknowledges and
agrees that the covenants and obligations of the Executive in Section 8 and this Section 9 with
respect to noncompetition, nonsolicitation and confidentiality and with respect to the property of
the Company and its subsidiaries and controlled affiliates, and the territories covered thereby,
relate to special, unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company and its subsidiaries and affiliates
irreparable injury for which adequate remedies are not available at law. Therefore, the Executive
agrees that the Company shall be entitled to an injunction, restraining order or such other
equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain
the Executive from committing any violation of such covenants and obligations. These injunctive
remedies are cumulative and are in addition to any other rights and remedies the Company may have
at law or in equity. If, at the time of enforcement of Section 8 and/or this Section 9, a court
holds that any of the restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope, and/or geographical area legally
permissible under such circumstances will be substituted for the period, scope and/or area stated
herein.

     10. Successors.

          (a) This Agreement is personal to the Executive and shall not be assignable by the Executive.
This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal
representatives and heirs and successors.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

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     11. Miscellaneous.

          (a) This Agreement shall be governed by, and construed in accordance with, the laws of the
State of New York, without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified except by a written agreement executed by the parties hereto or
their respective heirs, successors and legal representatives.

          (b) All notices and other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party or by overnight courier or by registered or certified
mail, return receipt requested, postage prepaid, or by facsimile (with receipt confirmation),
addressed as follows:

	 	 	 

	If to the Executive:

	 	James M. Harrison
	 

	 	16 High Street
	 

	 	East Williston, NY 11596
	 

	 	Fax no.:
	 
	 	 
	If to the Company:

	 	Amscan Holdings, Inc.
	 

	 	80 Grasslands Road
	 

	 	Elmsford, NY 10523
	 

	 	Attention: Corporate Secretary
	 

	 	Fax no.: (914) 345-2056

or to such other address as either party furnishes to the other in writing in accordance with this
Section 11(b). Notices and communications shall be effective when actually received by the
addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

          (d) Notwithstanding any other provision of this Agreement, the Company may withhold from
amounts payable under this Agreement all federal, state, local and foreign taxes that are required
to be withheld by applicable laws or regulations. In addition, the obligations of the Company under
this Agreement shall be conditional on compliance with this Section 11(d), and the Company shall,
to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise
due to the Executive.

          (e) Any party’s failure to insist upon strict compliance with any provision of, or to assert
any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.

          (f) The Executive acknowledges that this Agreement, together with the Exhibits hereto (and the
other agreements referred to herein and therein), supersedes all other agreements and
understandings, both written and oral, between the Executive and the Company with respect to the
subject matter hereof, including, without limitation, the Prior Employment Agreement.

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          (g) This Agreement may be executed in counterparts, each of which shall be deemed to be an
original, but all of which shall together constitute one and the same instrument.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization of its Board of Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.

	 	 	 	 	 
	 	AMSCAN HOLDINGS, INC.

 	 
	 	By:  	/s/ Michael A. Correale	 
	 	 	Name:  	Michael A. Correale 	 
	 	 	Title:  	Vice President 	 
	 
	 	     /s/ James M. Harrison	 
	 	JAMES M. HARRISON

 	 
	 	 	 
	 	 	 
	 	 	 
	 

10exv10w6

Exhibit 10.6

Execution Copy

AAH HOLDINGS CORPORATION

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

Dated as of August 19, 2008

 

 

AAH HOLDINGS CORPORATION

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	1.1. Certain Matters of Construction
	 	 	1	 
	1.2. Definitions
	 	 	2	 
	ARTICLE II. COVENANTS AND CONDITIONS
	 	 	12	 
	2.1. Restrictions on Transfers; Involuntary Transfers
	 	 	12	 
	2.2. Call by the Company of Management Stockholders’ Equity Interests
	 	 	14	 
	2.3. Management Stockholder Put
	 	 	16	 
	2.4. Take Along
	 	 	18	 
	2.5. Come Along
	 	 	20	 
	2.6. Corporate Governance
	 	 	23	 
	2.7. Rights of Participation
	 	 	24	 
	2.8. Financial and Business Information
	 	 	26	 
	2.9. Confidentiality
	 	 	26	 
	2.10. Approval Rights
	 	 	27	 
	ARTICLE III. REGISTRATION RIGHTS
	 	 	27	 
	3.1. General
	 	 	27	 
	3.2. Demand Registration Initiated by the Berkshire Stockholders or the WP Stockholders
	 	 	27	 
	3.3. Piggyback Registration; Reduction in Registration
	 	 	28	 
	3.4. Obligations of the Company
	 	 	30	 
	3.5. Furnish Information
	 	 	31	 
	3.6. Expenses of Registration
	 	 	31	 
	3.7. Underwriting Requirements
	 	 	32	 
	3.8. Indemnification
	 	 	33	 
	3.9. Registration on Form S-3
	 	 	35	 
	3.10. Reports Under Securities Exchange Act of 1934
	 	 	35	 
	3.11. No Inconsistent Agreements
	 	 	36	 
	3.12. Stock Split
	 	 	36	 
	3.13. Timing and Other Limitations
	 	 	36	 
	3.14. Lock-up
	 	 	37	 
	ARTICLE IV. MISCELLANEOUS
	 	 	38	 
	4.1. Appointment of the Management Proxy
	 	 	38	 

 

 

	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	4.2. Remedies
	 	 	38	 
	4.3. Entire Agreement; Amendment; Waiver
	 	 	38	 
	4.4. Severability
	 	 	39	 
	4.5. Notices
	 	 	39	 
	4.6. Binding Effect; Assignment
	 	 	41	 
	4.7. Governing Law
	 	 	41	 
	4.8. Termination
	 	 	41	 
	4.9. Recapitalizations, Exchanges, Etc
	 	 	41	 
	4.10. Action Necessary to Effectuate the Agreement
	 	 	41	 
	4.11. Purchase for Investment; Legend on Certificate
	 	 	42	 
	4.12. Effectiveness of Transfers
	 	 	42	 
	4.13. Other Stockholders
	 	 	42	 
	4.14. No Waiver
	 	 	43	 
	4.15. Costs and Expenses
	 	 	43	 
	4.16. Counterpart
	 	 	43	 
	4.17. Headings
	 	 	43	 
	4.18. Third Party Beneficiaries
	 	 	43	 
	4.19. Consent to Jurisdiction
	 	 	43	 
	4.20. WAIVER OF JURY TRIAL
	 	 	44	 

 

 

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

     This Amended and Restated Stockholders Agreement (this “Agreement”) is entered into as of the
19th day of August, 2008 by and among (i) AAH Holdings Corporation, a Delaware corporation
(together with its successors and permitted assigns, the “Company”) and (ii) the Stockholders (as
defined below) party hereto.

     WHEREAS, following consummation of the transactions contemplated by that certain Agreement and
Plan of Merger dated as of March 26, 2004 (the “Merger Agreement”) by and among the Company, AAH
Acquisition Corporation and Amscan Holdings, Inc., the Berkshire Stockholders (as defined below),
the WP Stockholders (as defined below), the Management Stockholders (as defined below) and the
Other Stockholders (as defined below) owned shares of Common Stock (as defined below) and options
to purchase shares of Common Stock, each as set forth in the books and records of the Company;

     WHEREAS, on April 30, 2004, the parties hereto entered into a Stockholder Agreement (as
amended and in effect as of the date hereof, the “Original Agreement”) for the purpose of
regulating certain relationships of the Stockholders with regard to the Company and certain
restrictions on the Common Stock and other equity securities owned by the Stockholders; and

     WHEREAS, the parties hereto now desire to amend and restated the Original Agreement as
provided for herein.

     NOW, THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants and conditions set forth in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

     1.1. Certain Matters of Construction. In addition to the definitions referred to or
set forth below in this Section 1:

     (a) The words “hereof,” “herein,” “hereunder” and words of similar import shall refer
to this Agreement as a whole and not to any particular Section or provision of this
Agreement, and reference to a particular Section of this Agreement shall include all
subsections thereof;

     (b) References to Sections and Articles refer to Sections and Articles of this
Agreement;

     (c) Definitions shall be equally applicable to both nouns and verbs and the singular
and plural forms of the terms defined; and

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     (d) The masculine, feminine and neuter genders shall each include the other.

     1.2. Definitions. For the purposes of this Agreement, the following terms shall
have the following meanings:

     “15% Stockholder” means any stockholder of the Company owning fifteen percent (15%) or more of
the outstanding shares of Common Stock.

     “1933 Act” shall mean the Securities Act of 1933, as amended, or any successor act.

     “1934 Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor act.

     “Acquired Shares” shall have the meaning as set forth in Section 2.2(b)(i).

     “Adverse Claim” shall have the meaning set forth in Section 8.102 of the applicable Uniform
Commercial Code.

     “Affiliate” shall mean, with respect to any specified Person, any other Person which, directly
or indirectly, through one or more intermediaries controls, or is controlled by, or is under common
control with, such specified Person (for the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise).

     “Agreement” shall have the meaning set forth in the first paragraph of this Agreement.

     “Approved Company Sale” shall mean a sale of the Company (by sale of securities, merger,
consolidation, sale of substantially all of the assets, or any similar transaction) if (a) it is
consummated after the third anniversary date of this Agreement, or (b) it results in the receipt by
the WP Stockholders of cash or Marketable Securities (valued at Fair Market Value) having a value
of at least equal to 200% of the Investment Price of the Shares held by the WP Stockholders.

     “Associate” (i) when used to indicate a relationship with any Person shall mean, (a) any
corporation or organization of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities,
(b) any trust or other estate in which such Person has a substantial beneficial interest or as to
which such Person serves as a trustee or in a similar fiduciary capacity, and (c) any relative of
such Person who has the same home as such Person, is a parent, sibling, spouse, in-law, child or
grandchild of such Person, or the spouse of any of them, or (ii) when used to indicate a
relationship with the Company, shall also mean a director or officer of the Company or any
Subsidiary. Neither the Company nor any of its Subsidiaries shall be deemed an Associate of any
Stockholder.

     “Berkshire Representatives” shall have the meaning as set forth in Section 2.6(a).

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     “Berkshire Stockholders” shall mean (i) those Persons listed as the Berkshire Stockholders on
the signature pages hereof, and (ii) their Permitted Transferees (other than the Company or the WP
Stockholders), as evidenced by an executed counterpart to this Agreement or a joinder to this
Agreement, in either case, indicating that such Permitted Transferee will be a Berkshire
Stockholder.

     “Board” or “Board of Directors” shall mean the Board of Directors of the Company as the same
shall be constituted from time to time.

     “Board Determination Procedures” shall mean the procedures by which the Board calculates the
Board Participation Determination. Such procedures shall include, but not be limited to, a good
faith estimate by the Board of any acceleration of vesting of any Time Options and/or Performance
Options upon consummation of the proposed Transfer, the Applicable Percentage (as defined in the
Performance Options), the IRR (as defined in the Performance Options) and the number of Shares the
prospective transferee will ultimately purchase in the proposed Transfer.

     “Board Participation Determination” shall mean for each Management Stockholder a good faith
estimate of the number of Time Options which will vest upon the consummation of the proposed
Transfer and the number of Performance Options which will vest and be earned upon consummation of
the proposed Transfer, determined in accordance with the Board Determination Procedures.

     “Call Event” shall have the meaning as set forth in Section 2.2(a).

     “Call Group” shall have the meaning as set forth in Section 2.2(a).

     “Call Notice” shall have the meaning as set forth in Section 2.2(a).

     “Call Option” shall have the meaning as set forth in Section 2.2(a).

     “Call Price” shall have the meaning as set forth in Section 2.2(b).

     “Call Securities” shall mean all of (i) the Shares, (ii) vested Time Options, (iii) Rollover
Options, (iv) vested and earned Performance Options and (v) if the Determination Date has not yet
occurred, vested and unearned Performance Options, in each case which are owned by the members of
the Call Group on the date of a Call Event.

     “Cause” shall have the meaning as set forth below, except with respect to any Management
Stockholder who is employed by the Company or one of its Subsidiaries pursuant to an effective
written employment agreement, if any, between the Company and/or one of its Subsidiaries and such
Management Stockholder in which there is a definition of “Cause,” in which event the definition of
“Cause” as set forth in such employment agreement shall be deemed to be the definition of “Cause”
herein solely for such Management Stockholder and only for so long as such employment agreement
remains effective.

     In all other events, the term “Cause” shall mean that the Board of Directors has determined in
its reasonable judgment, that any one or more of the following has occurred:

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     (i) the Management Stockholder shall have been convicted of, or shall have
pleaded guilty or nolo contendere to, any felony or any crime involving dishonesty
or moral turpitude;

     (ii) the Management Stockholder shall have breached, any non-competition
agreements with the Company and/or its Affiliates; or

     (iii) the Management Stockholder shall have openly disregarded his or her
responsibilities to the Company and/or its Affiliates and shall have refused to
devote substantial time and energy to the business and affairs of the Company and/or
its Affiliates (other than due to Disability or temporary disability which, in the
reasonable judgment of the Board of Directors, causes the Management Stockholder to
be incapable of devoting such time and energy) within 30 days after written
notification by the Board of Directors that, in their good faith judgment, the
Management Stockholder has consistently failed to do so.

     “Change in Control” shall mean after the date hereof (i) any transaction or series of related
transactions in which any Person that is not a current 15% Stockholder or an Affiliate thereof,
shall (A) acquire, whether by purchase, exchange, tender offer, merger, consolidation,
recapitalization or otherwise, or (B) otherwise be the owner of (as a result of a redemption of
Shares or otherwise), Shares (or shares in a successor corporation by merger, consolidation or
otherwise) such that following such transaction or transactions, such Person or group and their
respective Affiliates beneficially own fifty percent (50%) or more of the voting power at elections
for the board of directors of the Company or any successor corporation, or (ii) the sale or
transfer of all or substantially all of the Company’s assets and following such sale or transfer,
there is a liquidation of the Company.

     “Class A Common Stock” shall mean the shares of Class A common stock of the Company, $0.01 par
value per share.

     “Class B Common Stock” shall mean the shares of Class B common stock of the Company, $0.01 par
value per share.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Come Along Percentage” shall have the meaning set forth in Section 2.5(a).

     “Common Stock” shall mean the Company’s common stock, par value $.01 per share (including any
class thereof), that the Company may be authorized to issue from time to time, any other securities
of the Company into which such Common Stock may hereafter be changed or for which such Common Stock
may be exchanged after giving effect to the terms of such change or exchange (by way of
reorganization, recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the Company of any other
class hereafter authorized which is not preferred as to dividends or distribution of assets in
liquidation over any other class of capital stock of the Company and which has ordinary voting
power for the election of directors of the Company.

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     “Common Stock Equivalents” shall mean all shares of Common Stock (i) owned by, or (ii)
issuable upon exercise of Performance Options (solely to the extent such Performance Options, on or
prior to the time the determination of Common Stock Equivalents is made, are vested and earned),
Time Options (solely to the extent such Time Options, on or prior to the time the determination of
Common Stock Equivalents is made, are vested), Rollover Options, warrants, or other equity
interests convertible into Common Stock held by, each Stockholder.

     “Company” shall have the meaning set forth in the first paragraph of this Agreement.

     “Company Note” shall have the meaning as set forth in Section 2.2(c).

     “Company Option Period” shall have the meaning as set forth in Section 2.1(c)(ii).

     “Company Sale” shall mean any transaction or a series of related transactions through which
the holders of Common Stock Equivalents and their Affiliates immediately prior to the transaction
or series of related transactions shall own less than fifty percent (50%) of all Common Stock
Equivalents (including without limitation, all shares issued in respect of any such Common Stock
Equivalents by way of stock dividend, stock split or combination of shares) immediately following
the transaction or series of related transactions.

     “Default” shall have the meaning as set forth in Section 2.2(c).

     “Determination Date” shall have the meaning ascribed it in the relevant Performance Option
certificate.

     “Disability” shall mean permanent disability within the meaning of Section 22(e)(3) of the
Code, unless otherwise defined in a separate written employment agreement between the Company
and/or one of its Subsidiaries and the person whose disability is in question in which event the
definition of “Disability” as set forth in such employment agreement shall be deemed to be the
definition of “Disability” herein solely for such person and only for so long as such employment
agreement remains effective.

     “earned” shall mean, when used in connection with Performance Options that such Performance
Options have been earned in accordance with the relevant Incentive Plan and the certificates issued
pursuant thereto.

     “Executive Put Event” shall have the meaning as set forth in Section 2.3(c).

     “Executive Put Notice” shall have the meaning as set forth in Section 2.3(c).

     “Executive Put Option” shall have the meaning as set forth in Section 2.3(c).

     “Executive Put Price” shall have the meaning as set forth in Section 2.3(c).

     “Executive Put Securities” shall mean the number of Rollover Shares and Rollover Options held
by the Executive Stockholder (or the Permitted Transferee of the Executive Stockholder) exercising
the Executive Stockholder Put pursuant to Section 2.3(c) such that on the date of the Executive Put
Event, the value of the Executive Put Securities (valued at Fair Market Value) does not exceed the
Put Investment Price for such Executive Stockholder.

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     “Executive Stockholder” shall mean Gerald Rittenberg and/or James Harrison.

     “Fair Market Value” shall mean:

	 	(a)	 	with respect to Shares (other than Marketable Securities), the
fair value per share of the applicable Shares as of the applicable date on the
basis of a sale of such Shares in an arms length private sale between a willing
buyer and a willing seller, neither acting under compulsion. In determining
such Fair Market Value, no discount shall be taken for constituting a minority
interest or for the illiquidity of such Shares and no upward adjustment or
discount shall be taken relating to the fact that the Shares in question are
subject to the restrictions and entitled to the rights provided hereunder.
Such Fair Market Value shall be determined in good faith by the Board of
Directors.
	 
	 	(b)	 	with respect to Marketable Securities, the average of the daily
average of the high and low sales price of such Marketable Securities for the
10 days preceding the applicable date.

     “Federal Bankruptcy Code” means Title 11 of the United States Code.

     “Holder” or “Holders” have the meaning as set forth in Section 3.1.

     “Incentive Plan” shall mean AAH Holdings Corporation 2004 Equity Incentive Plan.

     “Investment Price” shall mean with respect to Shares, an amount per Share equal to the price
per Share paid (whether through cash or exchange of existing securities, or otherwise) for such
Share at the time of initial purchase thereof (subject to appropriate adjustments for stock splits,
recapitalizations and the like).

     “Involuntary Transfer” shall have the meaning as set forth in Section 2.1(c)(vi).

     “Management Proxy” shall have the meaning as set forth in Section 4.1.

     “Management Representatives” shall have the meaning as set forth in Section 2.6(a).

     “Management Stockholders” shall mean (i) those Persons listed as the Management Stockholders
on the signature pages hereof and (ii) their Permitted Transferees (other than the Company), as
evidenced by an executed counterpart to the Agreement or a joinder to this Agreement, in either
case, indicating that such Permitted Transferee will be a Management Stockholder.

     “Marketable Securities” shall mean stocks and bonds of companies that are immediately and
freely tradable on stock exchanges or in over the counter markets or that can otherwise readily be
sold for cash.

     “Merger” shall mean the merger contemplated by the Merger Agreement.

     “Merger Agreement” shall have the meaning as set forth in the recitals.

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     “Mid-term Applicable Federal Rate” shall mean the mid-term applicable federal rate as defined
in Section 1274 of the Code.

     “New Securities” shall have the meaning as set forth in Section 2.7(b).

     “Options” shall mean Performance Options, Time Options and Rollover Options.

     “Original Agreement” shall have the meaning as set forth in the recitals.

     “Other Stockholders” shall mean (i) those Persons listed as the Other Stockholders on the
signature pages hereof, (ii) their Permitted Transferees (other than the Company) as evidenced by
an executed counterpart to the Agreement or a joinder to this Agreement, in either case, indicating
that such Permitted Transferee will be an Other Stockholder and (iii) those Persons described in
Section 4.13(iii).

     “Participating Offeree” shall have the meaning as set forth in Section 2.5(a).

     “Participation Notice” shall have the meaning as set forth in Section 2.5(a).

     “Participation Securities” shall have the meaning as set forth in Section 2.5(a).

     “Performance Options” shall mean, collectively, the options granted to certain Management
Stockholders under the Incentive Plan to purchase shares of Common Stock, the number of vested and
earned options of which is subject to the attainment of certain targets set forth in the Incentive
Plan and the option certificates issued pursuant thereto.

     “Performance Option Note” shall mean, for purposes of Sections 2.2(b)(iii) and 2.3(a)(iv), a
note with a face amount equal to the difference between (i) the Fair Market Value as of the date of
such call or put, as the case may be, of the Shares underlying Performance Options which have been
called or put, and (ii) the exercise price of such Performance Options. To the extent that
conditions occur such that the Shares underlying such Performance Options would have become vested
and earned in accordance with the terms of the Performance Option as in effect as of the time of
such call or put, the Performance Option Note will be payable by the Company at the lesser of (x)
its face amount, or (y) the difference between (A) the Fair Market Value of the underlying Shares
as of the Determination Date and (B) the exercise price of such Performance Options.
Notwithstanding the foregoing, however, the face amount of a Performance Option Note with respect
to any Performance Options that cannot become earned as of the time of a call or put, as the case
may be, shall be zero.

     “Permitted Transfer” shall mean:

     (i) a Transfer of Shares by any Stockholder who is a natural person to (a) such
Stockholder’s spouse, children (including legally adopted children and
stepchildren), spouses of children, grandchildren, spouses of grandchildren, parents
or siblings; (b) a trust for the benefit of the Stockholder and/or any of the
Persons described in clause (a); or (c) a corporation, limited partnership or
limited liability company whose sole shareholders, partners or members, as the case
may be, are the Stockholder and/or any of the Persons described in clause (a) or
clause

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(b); provided, that in any of clauses (a), (b) or (c), the Stockholder
transferring such Shares retains exclusive power to exercise all rights under this
Agreement.

     (ii) a Transfer of Shares by any Stockholder to the Company (including, without
limitation, any pledge of Shares or Options to the Company);

     (iii) a Transfer of Shares by a Stockholder upon death or incapacity to such
Stockholder’s estate, executors, administrators and personal representatives, and
then to such Stockholder’s legal representatives, heirs or legatees (whether or not
such recipients are a spouse, children, spouses of children, grandchildren, spouses
of grandchildren, parents or siblings of such Stockholder); provided, that, in the
case of a Management Stockholder whose Shares were subject to the provisions of
Section 2.2 immediately prior to such Management Stockholder’s death, the Company
has not exercised its Call Option with respect to such Shares under Section 2.2;

     (iv) a Transfer of Shares (a) by the Berkshire Stockholders to any Affiliate of
Berkshire Partners LLC or any of the employees, partners, members or Affiliates of
such Berkshire Stockholder or any such Affiliate, (b) between any Berkshire
Stockholders; (c) by the WP Stockholders to any Affiliate of Weston Presidio Service
Company LLC or any of the employees, partners, members or Affiliates of such WP
Stockholder or any such Affiliate, (d) between any WP Stockholders or (e) between
any WP Stockholders and any Berkshire Stockholders;

     (v) a Transfer of Shares by any Other Stockholder who is not a natural person
to any Affiliate of such Other Stockholder; and

     (vi) within ninety (90) days of the date of the Stockholder Agreement, a
Transfer of Shares by any Stockholders to any of the Berkshire Stockholders and/or
the WP Stockholders, with the consent of the Berkshire Stockholders and the WP
Stockholders.

provided, however, that Performance Options, Time Options and Rollover Options may only be
transferred in accordance with the terms of the Incentive Plan; and provided, further, that a
Permitted Transfer from a Management Stockholder (other than an Executive Stockholder) to any
Permitted Transferee must be approved by the Management Proxy; and provided, further, that no
Permitted Transfer shall be effective unless and until the transferee of the Shares, Performance
Options, Time Options or Rollover Options so transferred complies with Section 4.13 including
without limitation, executing and delivering to the Company a counterpart of this Agreement and
agreeing to be bound hereunder in the same manner and to the same extent as the Stockholder from
whom the Shares, Performance Options, Time Options or Rollover Options were transferred. Except in
the case of a Permitted Transfer pursuant to clause (ii) above, from and after the date on which a
Permitted Transfer becomes effective, the Permitted Transferee of the Shares, Performance Options,
Time Options or Rollover Options so transferred shall have the same rights, and shall be bound by
the same obligations, under this Agreement as the transferor of such Shares, Performance Options,
Time Options or Rollover

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Options and shall be deemed for
all purposes hereunder (i) a “Berkshire Stockholder” in the case of a Permitted Transfer from a
Berkshire Stockholder (other than pursuant to clause (iv)(e) in which case such Permitted
Transferee shall be a WP Stockholder), (ii) a “WP Stockholder” in the case of a Permitted Transfer
from a WP Stockholder (other than pursuant to clause (iv)(e) in which case such Permitted
Transferee shall be a Berkshire Stockholder), (iii) a “Management Stockholder” in the case of a
Permitted Transfer from a Management Stockholder or (iv) an “Other Stockholder” in the case of a
Permitted Transfer from an Other Stockholder. No Permitted Transfer shall conflict with or result
in any violation of a judgment, order, decree, statute, law, ordinance, rule or regulation.

     “Permitted Transferee” shall mean any Person who shall have acquired and who shall hold
Shares, Performance Options, Time Options or Rollover Options pursuant to a Permitted Transfer.

     “Person” shall mean any individual, partnership, corporation, association, limited liability
company, trust, joint venture, unincorporated organization or entity, or any government,
governmental department or agency or political subdivision thereof.

     “Proportionate Share” shall have the meaning as set forth in Section 2.1(c)(iii)

     “Proprietary Information” shall have the meaning as set forth in Section 2.9.

     “Public Offering” shall mean the completion of a sale of Common Stock pursuant to a
registration statement which has become effective under the 1933 Act (excluding registration
statements on Form S-4, S-8 or similar limited purpose forms), in which the Common Stock shall be
listed and traded on a national exchange or on the NASDAQ National Market System.

     “Put Event” shall have the meaning as set forth in Section 2.3(a).

     “Put Investment Price” shall mean, for each Executive Stockholder, the amount set forth
opposite the name of such Executive Stockholder on Exhibit A hereof.

     “Put Notice” shall have the meaning as set forth in Section 2.3(a).

     “Put Option” shall have the meaning as set forth in Section 2.3(a).

     “Put Price” shall have the meaning as set forth in Section 2.3(b).

     “Put Securities” shall mean all of (i) the Shares, (ii) vested Time Options, (iii) Rollover
Options, (iv) vested and earned Performance Options and (v) if the Determination Date has not yet
occurred, vested and unearned Performance Options, in each case which are owned by the Management
Stockholder on the date of a Put Event.

     “Qualified Initial Public Offering” shall mean an underwritten initial pubic offering of
shares (i) resulting in proceeds to the Company and, if applicable, to any selling Stockholders, of
not less than $25 million, (ii) unless otherwise waived by the WP Stockholders, at an offering
price which, when multiplied by the number of Shares then held by the WP Stockholders (and their
Permitted Transferees) and adding the amount of all cash and/or Marketable Securities

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therefore received by the WP Stockholders (and their Permitted Transferees), is at least equal
to the Investment Price initially paid by the WP Stockholders for their Shares at closing; and
(iii) following which the Shares are listed for trading on the New York Stock Exchange or the
NASDAQ National Market.

     “register,” “registered” and “registration” shall have the meaning as set forth in Section
3.1.

     “Registrable Securities” shall mean (i) all shares of Class A Common Stock held by any
Stockholder, (ii) all shares of Class A Common Stock issuable upon the exercise of Performance
Options, Time Options and Rollover Options, in each case, to the extent exercisable, held by any
Stockholder, (iii) all shares of Class A Common Stock issuable upon the conversion of Class B
Common Stock, and (iv) any other common equity securities of the Company issued in exchange for,
upon a reclassification of, or in a distribution with respect to, such Class A Common Stock which
are (y) held by a party hereto or (z) otherwise entitled to registration rights pursuant to a grant
of such rights by the Company. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (a) a registration statement (other than a registration
statement on Form S-8) with respect to the sale of such securities shall have become effective
under the 1933 Act and such securities shall have been disposed of in accordance with such
registration statement, (b) a registration statement on Form S-8 with respect to such securities
shall have become effective under the 1933 Act, or (c) such securities shall have been sold under
Rule 144 (or any successor provision) under the 1933 Act and such securities may be resold by the
Holder thereof without registration under the 1933 Act.

     “Registration Rights Holder” shall mean any stockholder of the Company that has been granted
registration rights by the Company.

     “Rollover Options” shall mean, collectively, the vested options retained by certain Management
Stockholders under the Incentive Plan, to purchase shares of Common Stock on the terms set forth
therein and in the Stock Option Agreements issued pursuant thereto.

     “Rollover Shares” shall mean, collectively, the Shares received by the Executive Stockholders
immediately prior to the consummation of the Merger in exchange for shares of common stock of
Amscan Holdings, Inc.

     “Sale Request” shall have the meaning as set forth in Section 2.4(a).

     “Schedule” shall refer to the Schedule of Stockholders attached hereto as Exhibit B,
as amended from time to time.

     “SEC” shall mean the United States Securities and Exchange Commission.

     “Seller” shall have the meaning as set forth in Section 2.4(a).

     “Shares” shall mean (i) shares of Common Stock held by Stockholders from time to time, or (ii)
securities of the Company issued in exchange for, upon reclassification of, or as a distribution in
respect of, the foregoing.

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     “Stockholders” shall mean, collectively, the Berkshire Stockholders, the WP Stockholders, the
Management Stockholders and the Other Stockholders.

     “Subsidiary” with respect to any entity (the “parent”) shall mean any corporation, company,
firm, association or trust of which such parent, at the time in respect of which such term is used,
(i) owns directly or indirectly more than fifty percent (50%) of the equity or beneficial interest,
on a consolidated basis, or (ii) owns directly or controls with power to vote, directly or
indirectly through one or more Subsidiaries, shares of the equity or beneficial interest having the
power to elect more than fifty percent (50%) of the directors, trustees, managers or other
officials having powers analogous to that of directors of a corporation. Unless otherwise
specifically indicated, when used herein the term Subsidiary shall refer to a direct or indirect
Subsidiary of the Company.

     “Take Along Group” shall have the meaning as set forth in Section 2.4(a).

     “Third Party” shall mean any Person other than the Company.

     “Time Options” shall mean, collectively, the time vested options, granted to certain
Management Stockholders under the Incentive Plan, to purchase shares of Common Stock on the terms
set forth therein and in the certificates and agreements issued pursuant thereto.

     “Transfer” shall mean to transfer, sell, assign, pledge, hypothecate, give, create a security
interest in or lien on, place in trust (voting or otherwise), assign or in any other way encumber
or dispose of, directly or indirectly and whether or not by operation of law or for value, any
Shares, Performance Options, Time Options or Rollover Options.

     “Transfer Date” shall have the meaning as set forth in Section 2.1(c)(i).

     “Transferor” shall have the meaning as set forth in Section 2.5(a).

     “Transferring Stockholder” shall have the meaning as set forth in Section 2.1(c)(i).

     “Voluntary Termination” shall mean any voluntary termination of employment with the Company or
a Subsidiary of the Company by a Management Stockholder, except as otherwise specified in an
effective written agreement, if any, between the Company and/or one of its Subsidiaries and such
Management Stockholder. The term Voluntary Termination shall not include termination of employment
due to death, Disability or retirement in accordance with Company policy.

     “WP Representatives” shall have the meaning as set forth in Section 2.6(a).

     “WP Stockholders” shall mean (i) those Persons listed as the WP Stockholders on the signature
pages hereof, and (ii) their Permitted Transferees (other than the Company or the Berkshire
Stockholders), as evidenced by an executed counterpart to this Agreement or a joinder to this
Agreement, in either case, indicating that such Permitted Transferee will be a WP Stockholder.

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ARTICLE II.

COVENANTS AND CONDITIONS

     Subject to the provisions of Section 4.8 hereof relating to the termination of certain
provisions of this Agreement, the following covenants and conditions shall apply.

     2.1. Restrictions on Transfers; Involuntary Transfers.

     (a) No Management Stockholder or Other Stockholder may Transfer all or any of the
Shares owned by such Management Stockholder or Other Stockholder to any Person other than
(i) a Permitted Transferee, (ii) pursuant to Section 2.2, (iii) pursuant to the exercise of
the Put Option set forth in Section 2.3, (iv) pursuant to Section 2.4 in accordance with a
Sales Request, or (v) pursuant to Section 2.5 as a Participating Offeree. Any attempted
Transfer of Shares not permitted by this Section 2.1 shall be null and void, and the Company
shall not in any way give effect to such nonpermissible Transfer. Any attempted Transfer of
Performance Options, Time Options or Rollover Options not permitted by the Incentive Plan
shall be null and void, and the Company shall not in any way give effect to such
nonpermissible Transfer.

     (b) Transferred Shares Subject to Transfer Restrictions. Except for transfers
to the Company, any Shares Transferred pursuant to this Section 2.1 shall remain subject to
the Transfer restrictions of this Agreement and each intended transferee pursuant to this
Section shall execute and deliver to the Company a counterpart of this Agreement, which
shall evidence such transferee’s agreement that the Shares intended to be transferred shall
continue to be subject to this Agreement and that as to such Shares the transferee shall be
bound by the restrictions of this Agreement as a Stockholder hereunder.

     (c) Involuntary Transfers.

     (i) Any Stockholder who is the subject of an Involuntary Transfer (as defined
below) (the “Transferring Stockholder”), shall notify the Company and the other
Stockholders in writing within ten (10) days of such Involuntary Transfer (but the
failure to give such notice shall not affect the rights of the parties hereunder).
For purposes of this Section 2.1(c), the later of receipt of such notice by the
Company and the other Stockholders and the date of such Involuntary Transfer shall
be the “Transfer Date”.

     (ii) For a period of twenty (20) days after the Transfer Date (the “Company
Option Period”), the Company may, by notice in writing to the Transferring
Stockholder, elect in writing to purchase any or all of the Shares subject to the
Involuntary Transfer at the Fair Market Value of such Shares.

     (iii) If the Company does not elect to purchase any of the Shares subject to
the Involuntary Transfer, or exercises such right only with respect to a portion of
such Shares, then for a period of twenty (20) days commencing on the earlier of (a)
the date, if any, that the Transferring Stockholder notifies the other Stockholders
in writing that the Company has determined either not to exercise

12

 

such right of purchase or to exercise such right only with respect to a portion
of the Shares subject to the Involuntary Transfer, and (b) the expiration of the
Company Option Period, the other Stockholders shall have the right to purchase all
or any portion of such Shares subject to the Involuntary Transfer not so elected to
be purchased by the Company, at the Fair Market Value of such Shares. The specific
number of such Shares subject to the Involuntary Transfer remaining after the
Company has exercised its right pursuant to clause (ii) to which each other
Stockholder shall be entitled to purchase shall be determined on a pro rata basis in
proportion to the respective number of shares of Common Stock owned beneficially by
each such Stockholder as of the Transfer Date in relation to the total number of
shares of Common Stock owned beneficially by all such Stockholder (for each such
Stockholder, its “Proportionate Share”). Each such Stockholder shall also be
entitled to indicate a desire to purchase all or a portion of any Shares subject to
the Involuntary Transfer remaining after such pro rata allocation. Each such
Stockholder shall be allocated the maximum amount of Shares subject to the
Involuntary Transfer set forth in such Stockholder’s offer to purchase, unless such
allocation would result in the allocation of more securities in the aggregate than
are available for purchase by the other Stockholders, in which case such Shares
subject to the Involuntary Transfer shall be allocated among the Stockholders pro
rata in accordance with each such Stockholder’s Proportionate Share; provided,
however, that if the foregoing results in any Stockholder being allocated more than
the maximum amount of Shares subject to the Involuntary Transfer specified in such
Stockholder’s offer to purchase, such Stockholder will be allocated such maximum
amount and the excess will be allocated as provided in this sentence (including this
proviso).

     (iv) Any Shares subject to the Involuntary Transfer not accepted pursuant to
clauses (ii) and (iii) above shall be Transferred in accordance with the terms and
conditions of the Involuntary Transfer.

     (v) The closing of the purchase and sale of any Shares subject to the
Involuntary Transfer hereunder shall be held at the offices of the Company on such
dates and times as the parties may agree but in all events within twenty (20) days
following termination of the offer period granted to the other Stockholders.

     (vi) For purposes of this Agreement, the term “Involuntary Transfer” shall mean
any involuntary sale, transfer, encumbrance or other disposition (other than as a
result of the death of the Stockholder) by or in which any Stockholder shall be
deprived or divested of any right, title or interest in or to any Shares, including
without limitation (I) any levy of execution, transfer in connection with
bankruptcy, reorganization, insolvency or similar proceedings, (II) any transfer to
a public officer or agency pursuant to any abandoned property or escheat law, or
(III) any transfer to the spouse of an individual or change in the record holder
made pursuant to divorce proceedings. A Transfer pursuant to Section 2.2 shall not
be deemed to be an Involuntary Transfer.

13

 

     2.2. Call by the Company of Management Stockholders’ Equity Interests.

     (a) Upon the termination of the employment of any Management Stockholder by the Company
or any of its Subsidiaries (a “Call Event”) for any reason, the Company or its designee
shall have the right to purchase (the “Call Option”), by delivery of a written notice (the
“Call Notice”) to such terminated Management Stockholder no later than ninety (90) days
after the date of such Call Event, and such Management Stockholder and such Management
Stockholder’s Permitted Transferees (collectively, the “Call Group”) shall be required to
sell all (but not less than all) of the Call Securities at a price per share (or per option)
equal to the Call Price (as defined below) of such Call Securities determined as of the date
of repurchase pursuant to the Call Notice. Notwithstanding the foregoing, with respect to
Call Securities that are Time Options or Shares issued upon exercise of Time Options, the
company (i) may not give a Call Notice until the later of (A) the date of the Call Event and
(B) the date which is six months and one day after the applicable Time Option has been
exercised and (ii) must deliver such Call Notice within ninety (90) days thereafter.

     (b) For purposes of this Section 2.2, the term “Call Price” shall mean:

     (i) With respect to Rollover Shares and other Shares acquired on or after the
date hereof (whether by purchase, upon exercise of Options or otherwise (the
“Acquired Shares”)):

     (A) in the event of a termination of a Management
Stockholder’s employment (A) by the Company without Cause, (B) by virtue of
death or Disability, (C) upon retirement in accordance with Company policy,
or (D) by Voluntary Termination on or after the third anniversary of the
date hereof, the Fair Market Value of such Management Stockholder’s Rollover
Shares and Acquired Shares;

     (B) in the event of a termination of a Management
Stockholder’s employment by Voluntary Termination prior to the third
anniversary of the date hereof (A) the Fair Market Value of any Rollover
Shares and Acquired Shares (including Shares acquired upon the exercise of
Rollover Options, but not including Shares acquired upon the exercise of
Time Options or Performance Options), or (B) the lower of (x) the Investment
Price or (y) the Fair Market Value of any Acquired Shares acquired upon the
exercise of Time Options or Performance Options;

     (C) in the event of a termination of a Management
Stockholder’s employment by the Company for Cause, the lower of (x) the
Investment Price or (y) the Fair Market Value of such Management
Stockholder’s Rollover Shares and Acquired Shares;

     (ii) With respect to any vested Time Options, vested and earned Performance
Options or Rollover Options, the difference between (x) the Call Price for the
Shares underlying such Time Options, Performance Options or

14

 

Rollover Options, as the case may be (calculated as if the Shares underlying
such Time Options, Performance Options or Rollover Options, as the case may be, were
outstanding and had been called pursuant to this Section 2.2 and therefore
calculated in accordance with the procedures set forth in clauses 2.2(b)(i) above)
minus (y) the exercise price of such vested Time Options, vested and earned
Performance Options or Rollover Options, as the case may be; provided, that such
difference shall not be less than zero;

     (iii) with respect to vested Performance Options which have been called
pursuant to this Section prior to a Determination Date (so it is not then known how
many, if any, of such Performance Options will be earned), the Company will issue,
in exchange for such securities, a Performance Option Note to the Management
Stockholder; provided, however, in the event of a termination of a
Management Stockholder’s employment (A) by the Company for Cause or (B) by Voluntary
Termination prior to the fifth anniversary of the date hereof, the Call Price shall
be zero and no Performance Option Note shall be issued to the Management
Stockholder.

     (iv) with respect to any unvested Time Options or unvested or unearned
Performance Options, such Options shall automatically expire as set forth in the
Option Certificates pursuant to which they were granted.

     (c) The closing of any purchase of Call Securities by the Company pursuant to Section
2.2(a) shall take place at the principal office of the Company on a date determined by the
Company no later than six months after delivery of the Call Notice pursuant to Section
2.2(a). At such closing, the Company shall deliver to the Call Group consideration in an
amount equal to the aggregate Call Price payable in respect of such Call Securities against
delivery of (i) original stock certificates and stock powers duly endorsed in favor of the
Company representing the Call Securities, and (ii) an executed agreement, in form reasonably
satisfactory to the Company, evidencing the cancellation of any Time Options, Rollover
Options and Performance Options purchased at such closing. The Company shall pay the Call
Price by paying the Call Group in cash and, if applicable, a Performance Option Note, as
described in clause (b)(iii) above); provided, however, that in the event that any such cash
payment could, in the reasonable judgment of the Board, cause the Company or any Subsidiary
to be in violation of applicable law or in default under or otherwise in violation of the
terms of any senior secured or other material loan or credit agreement to which the Company
or any of its Subsidiaries is a party (a “Default”), the Company shall pay such cash portion
of the Call Price by issuing a subordinated promissory note in a principal amount equal to
the cash portion of the purchase price (the “Company Note”). The principal of such note
will be due and payable in five equal annual installments, the first such installment
becoming due and payable on the first anniversary of the issuance of such note, and interest
will accrue thereon at a rate equal to the Mid-term Applicable Federal Rate plus three
percent (3%) from the date of issuance of the Company Note and will be payable quarterly in
arrears. Such Company Note may be prepaid by the Company in whole at any time or in part
from time to time without premium or penalty and shall otherwise be in the form acceptable
to the Board; provided, however, that if at any time after a Company Note has

15

 

been issued, the Board determines that prepaying such Company Note in whole would not
reasonably be likely to cause a Default, the Company Note shall then be prepaid in full at
such time. Notwithstanding anything to the contrary in this Agreement, the Company shall
not be obligated to make any cash payment pursuant to this Section 2.2(c) or any cash
payment of principal or interest due under a Company Note if such payment would cause a
Default. In the event the Company cannot make any cash payment under this Section 2.2(c) or
the cash payments of principal and interest due under a Company Note because it is in
Default or would be in Default by virtue of such payments, the Company will undertake to
make such payments at such time as the Company is no longer in, or would no longer be by
virtue of such payments in, Default.

     2.3. Management Stockholder Put.

     (a) Upon the termination of the employment of any Management Stockholder with the
Company or any of its Subsidiaries (a “Put Event”) by virtue of death or Disability, then
such Management Stockholder (and each Permitted Transferee of such Management Stockholder
who has been transferred Shares pursuant to this Agreement from such Management Stockholder)
shall have the right to sell (the “Put Option”), by delivery of a written notice (the “Put
Notice”) to the Company no later than sixty (60) days after the date of such Put Event, and
the Company shall be required to purchase all (but not less than all) of the Put Securities
at a price per share equal to the Put Price (as defined below) of such Put Securities as of
the date the Put Notice is delivered. For purposes of this Section 2.3(a), the term “Put
Price” shall mean:

     (i) with respect to any Shares held by a Management Stockholder or his
Permitted Transferees, the Fair Market Value of such Shares;

     (ii) with respect to any vested Time Options, the difference between (x) the
Put Price for the Shares underlying such Time Options (calculated as if the Shares
underlying such Time Options were outstanding and had been put pursuant to this
Section 2.3(a) and therefore calculated in accordance with the procedures set forth
in clause (i) above) minus (y) the exercise price of such vested Time Options;
provided, that such difference shall not be less than zero;

     (iii) with respect to any vested and earned Performance Options, the difference
between (x) the Put Price for the Shares underlying such Performance Options
(calculated as if the Shares underlying such Performance Options were outstanding
and had been put pursuant to this Section 2.3(a) and therefore calculated in
accordance with the procedures set forth in clause (i) above) minus (y) the
exercise price of such vested and earned Performance Options; provided, that such
difference shall not be less than zero; and

     (iv) with respect to any vested Performance Options which have been put
pursuant to this section prior to a Determination Date (so it is not known how many,
if any, of such Performance Options will be earned), a Performance Option Note.

16

 

     (b) The closing of any purchase of Put Securities by the Company pursuant to Section
2.3(a) shall take place at the principal office of the Company no later than the 60th day
after the Put Event. At such closing, the Company shall deliver to the Management
Stockholder (and his Permitted Transferees, as the case may be) exercising the Put Option
consideration in an amount equal to the aggregate Put Price payable in respect of such Put
Securities against delivery of (i) original stock certificates and stock powers duly
endorsed in favor of the Company representing the Put Securities, and (ii) an executed
agreement, in form reasonably satisfactory to the Company, evidencing the cancellation of
any Options purchased at such Closing. The Company shall pay the Put Price by paying the
Management Stockholder (and his or her Permitted Transferees, as the case may be) in cash;
provided, however, that in the event that any such cash payment would cause the Company or
any Subsidiary to be in Default, the Company shall pay such cash portion of the Put Price by
issuing a Company Note. The principal of such Company Note will be due and payable in five
equal annual installments, the first such installment becoming due and payable on the first
anniversary of the issuance of such note, and interest will accrue thereon at a rate equal
to the Mid-term Applicable Federal Rate plus three percent (3%) from the date of issuance of
the Company Note and will be payable in quarterly arrears. Such Company Note may be prepaid
by the Company in whole at any time or in part from time to time without premium or penalty
and shall otherwise be in the form acceptable to the Board; provided, however, that if at
any time after a Company Note has been issued, the Board determines that prepaying such
Company Note in whole would not reasonably be likely to cause a Default, the Company Note
shall then be prepaid in full at such time. Notwithstanding anything to the contrary in
this Agreement, the Company shall not be obligated to make any cash payment pursuant to this
Section 2.3(b) or any cash payment of principal or interest due under a Company Note if such
cash payment would cause a Default. In the event the Company cannot make any cash payment
under this Section 2.3(b) or the cash payments of principal and interest due under a Company
Note because it is in Default or would be in Default by virtue of such payments, the Company
will undertake to make such payment at such time as the Company is not longer in, or would
no longer be by virtue of such payments in, Default.

     (c) Without duplication of clause (a), upon the termination of the employment of either
Executive Stockholder with the Company (a “Executive Put Event”) by virtue of (i) death or
Disability, (ii) by the Company without Cause, or (iii) by virtue of retirement in
accordance with Company policy at or after age 62, then such Executive Stockholder (and each
Permitted Transferee of such Executive Stockholder who has been transferred Shares pursuant
to this Agreement from such Executive Stockholder) shall have the right to sell (the
“Executive Put Option”), by delivery of a written notice (the “Executive Put Notice”) to the
Company no later than sixty (60) days after the date of such Executive Put Event, and the
Company shall be required to purchase the Executive Put Securities at a price per share
equal to the Executive Put Price (as defined below) of such Executive Put Securities as of
the date the Executive Put Notice is delivered. For purposes of this Section 2.3(c), the
term “Executive Put Price” shall mean

     (i) with respect to Rollover Options held by such Executive Stockholder, the
difference between (x) the Fair Market Value of the Shares

17

 

underlying such Rollover Option and (y) the exercise price of such Rollover
Option; and

     (ii) with respect to Rollover Shares held by such Executive Stockholder, the
Fair Market Value of such Rollover Shares.

     (d) The closing of any purchase of Executive Put Securities by the Company pursuant to
Section 2.3(c) shall take place at the principal office of the Company no later than the
60th day after the Executive Put Event. At such closing, the Company shall deliver to the
Executive Stockholder (and his Permitted Transferees, as the case may be) exercising the
Executive Put Option consideration in an amount equal to the aggregate Executive Put Price
payable in respect of such Executive Put Securities against delivery of (i) original stock
certificates and stock powers duly endorsed in favor of the Company representing the
Executive Put Securities, and (ii) an executed agreement, in form reasonably satisfactory to
the Company, evidencing the cancellation of any Rollover Options purchased at such Closing.
The Company shall pay the Executive Put Price by paying the Executive Stockholder (and his
or her Permitted Transferees, as the case may be) in cash; provided, however, that in the
event that any such cash payment would cause the Company or any Subsidiary to be in Default,
the Company shall pay such cash portion of the Executive Put Price by issuing a Company
Note. The principal of such Company Note will be due and payable in five equal annual
installment, the first such installment becoming due and payable on the first anniversary of
the issuance of such note, and interest will accrue thereon at a rate equal to the Mid-term
Applicable Federal Rate plus three percent (3%) from the date of issuance of the Company
Note and will be payable in quarterly arrears. Such Company Note may be prepaid by the
Company in whole at any time or in part from time to time without premium or penalty and
shall otherwise be in the form acceptable to the Board; provided, however, that if at any
time after a Company Note has been issued, the Board determines that prepaying such Company
Note in whole would not reasonably be likely to cause a Default, the Company Note shall then
be prepaid in full at such time. Notwithstanding anything to the contrary in this
Agreement, the Company shall not be obligated to make any cash payment pursuant to this
Section 2.3(d) or any cash payment of principal or interest due under a Company Note if such
cash payment would cause a Default. In the event the Company cannot make any cash payment
under this Section 2.3(d) or the cash payments of principal and interest due under a Company
Note because it is in Default or would be in Default by virtue of such payments, the Company
will undertake to make such payment at such time as the Company is not longer in, or would
no longer be by virtue of such payments in, Default.

     2.4. Take Along.

     (a) If at any time, any of the Stockholders constituting more than fifty (50%) of the
Common Stock Equivalents, individually or acting as a group (such Stockholders, as
applicable, being referred to herein as the “Take Along Group”) elect to consummate, or
cause the Company to consummate, a Company Sale to a Third Party which is not an Affiliate
of any Stockholder included in the Take Along Group, then upon twenty (20) days’ written
notice by the Take Along Group to each other Stockholder, which notice

18

 

shall set forth the terms and conditions of such proposed Company Sale, including the
name of the prospective transferee, the number of shares of Common Stock and Common Stock
Equivalents proposed to be sold by the Take Along Group in the Company Sale, the
consideration to be received by the Take Along Group and the proposed time and place of
closing (such notice being referred to as the “Sale Request”), each other Stockholder (each,
a “Seller”), in the event the Company Sale is consummated, shall be obligated to consummate,
consent to and raise no objection to the proposed Company Sale and take all other actions
reasonably necessary or desirable to consummate the proposed Company Sale on the terms
proposed by the Take Along Group as set forth in the Sale Request. Without limiting the
generality of the foregoing, (i) if the Company Sale is structured as a merger,
consolidation or similar business transaction, each Seller will vote or cause to be voted
all Shares that he holds or with respect to which he has the power to direct the voting and
which he is entitled to vote on such proposed Company Sale in favor of such proposed Company
Sale and will waive all appraisal and dissenters rights and hereby grants a proxy in favor
of the Take Along Group to vote the Seller’s Shares in accordance with this Section 2.4(a)
and (ii) if the Company Sale is structured as a sale or redemption of Common Stock, each
Seller will agree to sell his pro rata portion of Common Stock Equivalents (including his
pro rata portion of Time Options, Rollover Options and Performance Options which would
become Common Stock Equivalents by reason of the Company Sale) being sold in the Company
Sale on the same terms and conditions as the Take Along Group. A Stockholder’s pro rata
portion, for purposes of this Section 2.4(a), is the product of (i) a fraction, the
numerator of which is the number of outstanding Common Stock Equivalents which such
Stockholder then owns and the denominator of which is the total number of such Common Stock
Equivalents then actually outstanding and (ii) the total number of Common Stock Equivalents
being sold in the Company Sale. Each proxy granted above in this Section 2.4(a) is
irrevocable, coupled with an interest and shall survive until the expiration of the
provisions of this Section 2.4(a). If required, each Seller shall (i) deliver certificates
for all of its Shares being Transferred pursuant to this Section 2.4(a) at the closing of
the proposed Transfer, free and clear of all claims, liens and encumbrances. The terms and
conditions of any sale pursuant to this Section 2.4(a) shall be the same as set forth in the
Sale Request; provided, however, that in the case of Performance Options, Time Options and
Rollover Options, the holders of such securities shall have the opportunity to either (i)
exercise such Performance Options, Time Options and Rollover Options (if such Performance
Options, Time Options or Rollover Options are exercisable or would be exercisable upon
consummation of the Company Sale) and participate in such sale as holders of Common Stock
issuable upon such exercise, or (ii) upon the consummation of the sale, receive in exchange
for such Performance Options, Time Options and Rollover Options the amount determined by
multiplying (1) the same amount of consideration per share received by the Stockholders for
which the Performance Option, Time Option or Rollover Option is exercisable less the
exercise price or conversion price per share of such Performance Option, Time Option or
Rollover Option by (2) the number of shares of Common Stock represented by such Performance
Options, Time Options and Rollover Options.

     (b) Each Stockholder, whether in his capacity as a Seller, Stockholder, officer or
director of the Company, or otherwise, shall take or cause to be taken all commercially
reasonable actions in order expeditiously to consummate any Company Sale and any

19

 

related transactions, including, without limitation, executing, acknowledging and
delivering consents, assignments, waivers and other documents or instruments as may be
reasonably requested and otherwise cooperating with the Take Along Group and any prospective
buyer; provided, however, that Stockholders shall be obligated to become liable in respect
of any representations, warranties, covenants, indemnities or otherwise to the Third Party
solely to the extent provided in the immediately following sentence. Without limiting the
generality of the foregoing, each Stockholder agrees to execute and deliver such agreements
as may be reasonably specified by the Take Along Group to which such Take Along Group will
also be party, including, without limitation, agreements to (i) (1) make individual
representations, warranties, covenants and other agreements as to the unencumbered title to
its Shares and the power, authority and legal right to Transfer such Shares and the absence
of any Adverse Claim with respect to such Shares and (2) be liable without limitation as to
such representations, warranties, covenants (including without limitation, covenants not to
compete, as appropriate) and other agreements and (ii) be liable (whether by purchase price
adjustment, indemnity payments or otherwise) in respect of representations, warranties,
covenants and agreements in respect of the Company and its subsidiaries; provided, however,
that the aggregate amount of liability described in this clause (ii) in connection with any
Company Sale shall not exceed the lesser of (I) such Stockholder’s pro rata portion of any
such liability, to be determined in accordance with such Stockholder’s portion of the total
value for his, her or its Shares included in such Company Sale or (II) the proceeds to such
Stockholder in connection with such Company Sale.

     (c) The provisions of this Section 2.4 shall only apply to the WP Stockholders in the
event that either the Company Sale is an Approved Company Sale or the WP Stockholders
otherwise consent to such Company Sale.

     (d) In the event the consideration to be paid in exchange for Common Stock Equivalents
in a Company Sale proposed pursuant to this Section 2.4 includes an securities, and the
receipt thereof by a Stockholder would require under applicable law (a) the registration or
qualification of such securities or of any person as a broker or dealer or agent with
respect to such securities or (b) the provision to any Stockholder of any information
regarding the Company, such securities or the issuer thereof, such Stockholder shall not
have the right to sell shares of Common Stock and Common Stock Equivalents in such proposed
Company Sale. In such event, the Take Along Group shall have the right, but not the
obligation, to cause to be paid to such Stockholder in lieu thereof, against surrender of
the Common Stock Equivalents which would have otherwise been included in the Company Sale,
an amount in cash equal to the Fair Market Value of such Common Stock Equivalents as of the
date such securities would have been issued in exchange for such Common Stock Equivalents.

     2.5. Come Along. No Stockholder may Transfer Shares to a Third Party who is not a
Permitted Transferee without complying with the terms and conditions set forth in this Section
2.5.

     (a) Any Stockholder or group of Stockholders when desiring to Transfer Shares (the “Transferor”)
shall give not less than fifteen (15) days prior written notice of

20

 

such intended Transfer to each other Stockholder and the Company. Such notice
(the “Participation Notice”) shall set forth the terms and conditions of such proposed
Transfer, including the name of the prospective transferee, the number of Shares proposed to
be transferred (the “Participation Securities”) by the Transferor, the percentage of the
total number of shares of Common Stock held by the Transferor that the Participation
Securities constitutes of such class (the “Come Along Percentage”), the purchase price per
share of Common Stock proposed to be paid therefor, the payment terms and type of transfer
to be effectuated and the proposed time and place of closing. Within fifteen (15) days
following the delivery of the Participation Notice by the Transferor to each other
Stockholder and to the Company, each other Stockholder desiring to participate in such
proposed Transfer (each, a “Participating Offeree”) shall, by notice in writing to the
Transferor and to the Company, have the opportunity and right to sell to the purchasers in
such proposed Transfer (upon the same terms and conditions as the Transferor) up to that
number of shares of Common Stock, as the case may be, subject to the last sentence of
Section 2.5(c) below, as shall equal the product of (i) the Come Along Percentage for the
Common Stock, as the case may be, and (ii) the number of shares of Common Stock which will
be owned by such Participating Offeree as of the proposed date of closing set forth in the
Participation Notice without giving effect to the transfer contemplated hereby; provided,
however, that for purposes of determining whether Options owned by a Management Stockholder
will be vested (in the case of Time Options) or vested and earned (in the case of
Performance Options), such determination will be made after giving effect to the transfer
contemplated hereby and the Board, in its reasonable judgment, within five (5) business days
after the Participation Notice is delivered to the Company, will make a Board Participation
Determination for each Management Stockholder and notify such Management Stockholder of such
Board Participation Determination. No Management Stockholder may participate in the
proposed Transfer with respect to any Options which may vest in the case of Time Options or
vest and be earned in the case of Performance Options upon consummation of the Transfer in
excess of the Board Participation Determination and notwithstanding the Board Participation
Determination, no Management Stockholder may sell or transfer in the proposed Transfer any
unvested Time Options or any unvested or unearned Performance Options if such options do not
become vested (in the case of Time Options) or vested and earned (in the case of Performance
Options) upon consummation of the proposed Transfer. The Transferor shall attempt to obtain
inclusion in the proposed Transfer of the entire number of Shares which the Transferor and
the Participating Offerees desire to have included in the proposed Transfer. In the event
the Transferor shall be unable to obtain the inclusion of such entire number of shares of
Common Stock in the proposed Transfer, the number of shares of Common Stock to be sold in
the Proposed Transfer by each Participating Offeree and the Transferor shall be determined
in accordance with Section 2.5(c) below. The terms and conditions of any sale pursuant to
this Section 2.5(a) shall be the same as set forth in the Participation Notice, except as is
provided in Section 2.5(c) below and except that the actual date of the closing of any
proposed Transfer may change.

     (b) At the closing of any proposed Transfer in respect of which a Participation Notice
has been delivered, the Transferor, together with all Participating Offerees, shall deliver
to the proposed transferee certificates evidencing the Shares to be sold thereto duly
endorsed with stock powers and shall receive in exchange therefor the consideration

21

 

to be
paid or delivered by the proposed transferee in respect of such Shares as described in the
Participation Notice.

     (c) The acceptance of each Participating Offeree shall be irrevocable except as
hereinafter provided, and each such Participating Offeree shall be bound and obligated to
sell, on the same terms and conditions specified in the Participation Notice as the
Transferor (subject to all of the provisions of this Agreement), such number of Shares as
specified in such Participating Offeree’s written commitment; provided, however, that in the
case of Performance Options, Time Options and Rollover Options (for which the exercise price
is less than the price per share of Common Stock being paid in the Transfer), the holders of
such securities shall have the opportunity to either (i) exercise such Performance Options,
Time Options and Rollover Options (if then exercisable) and participate in such sale as
holders of Common Stock issuable upon such exercise or conversion, or (ii) upon the
consummation of the sale, receive in exchange for such Options the amount determined by
multiplying (1) the same amount of consideration per share of Common Stock received by the
other Stockholders less the exercise price per share of such Performance Option, Time Option
and Rollover Option by (2) the number of shares of Common Stock of such class represented by
such Performance Option, Time Option or Rollover Option. In the event the Transferor shall
be unable to obtain the inclusion in the sale of all Shares which the Transferor and each
Participating Offeree desires to have included in the sale, the number of Shares to be sold
in the sale by the Transferor and each Participating Offeree shall be reduced on a pro rata
basis according to the proportion which the number of Shares which each such party desires
to have included in the sale bears to the total number of Shares desired by all such parties
to have included in the sale.

     (d) The provisions of this Section 2.5 shall not in any way limit or affect the
restrictions placed on the Stockholders by Section 2.1 and shall not apply to (i) any
Transfer to the Company or other Stockholders pursuant to Section 2.1, (ii) any Transfer
pursuant to Section 2.2, (iii) any Transfer pursuant to Section 2.3, (iv) any Transfer
pursuant to Section 2.4 or (v) any Permitted Transfer.

     (e) In the event the consideration to be paid in exchange for shares of Common Stock in
a Transfer proposed pursuant to this Section 2.5 includes any securities, and the receipt
thereof by a Stockholder would require under applicable law (a) the registration or
qualification of such securities or of any person as a broker or dealer or agent with
respect to such securities or (b) the provision to any Stockholder of any information
regarding the Company, such securities or the issuer thereof, such Stockholder shall not
have the right to transfer shares of Common Stock in such proposed Transfer. In such event,
the Tranferors shall have the right, but not the obligation, to cause to be paid to such
Stockholder in lieu thereof, against surrender of the shares of Common Stock which would
have otherwise been transferred by such Stockholder in the proposed Transfer, an amount in
cash equal to the Fair Market Value of such shares of Common Stock as of the date such securities would have been issued in exchange for such shares of Common Stock.

22

 

     2.6. Corporate Governance.

     (a) Board of Directors. At each annual meeting of the Stockholders and at each
special meeting of the Stockholders called for the purpose of electing directors of the
Company, and at any time at which stockholders of the Company shall have the right to, or
shall, vote for directors of the Company, then, and in each event, the Stockholders hereby
agree to attend each meeting in person or by proxy and hereby agree to vote stock of the
Company and shares of the Company now owned or hereafter acquired by him, her or it (whether
at a meeting or by written consent in lieu thereof) (i) to fix the number of members of the
Board at up to eleven (11) (unless the Board is expanded pursuant to Section 2.6(b) hereto,
in which case to fix the number of members of the Board in accordance with Section 2.6(b)
hereto), and (ii) to elect and thereafter to continue in office as a director of the Company
the following: (a) three (3) directors nominated by the Berkshire Stockholders (who shall
initially be Richard Lubin, Robert Small and Jordan Kahn) (collectively the “Berkshire
Representatives”); (b) three (3) directors nominated by the WP Stockholders (who shall
initially be Michael Cronin, Kevin Hayes and Carol Meyrowitz) (collectively, the “WP
Representatives”); and (c) two (2) directors nominated by the Management Stockholders (who
shall initially be Gerald Rittenberg and James Harrison) (collectively, the “Management
Representatives”). As to the directors elected to the Board pursuant to this Section 2.6(a)
or Section 2.6(b), the following provisions shall apply: (i) no Berkshire Representative
may be removed without the consent of a majority in interest of the Berkshire Stockholders,
except for cause as determined in good faith by unanimous decision of all directors other
than the Berkshire Representatives, (ii) no WP Representative may be removed without the
consent of a majority in interest of the WP Stockholders, except for cause as determined in
good faith by unanimous decision of all directors other than the WP Representatives, (iii)
no Management Representative may be removed without the consent of a majority in interest of
the Management Stockholders, except for cause as determined in good faith by unanimous
decision of all directors other than the Management Representatives, provided, that in the
event of a determination by the Board pursuant to clause (i), (ii) or (iii) of this sentence
to remove a director, each Stockholder shall take all action as may be necessary or
appropriate, including without limitation, the voting of all Shares owned by such
Stockholder, to effect the removal of such director. Any vacancy on the Board shall be
filled by the designee of the Stockholders who would be entitled to designate such director
pursuant to this Section 2.6(a), Section 2.6(b) or Section 2.6(c), as the case may be, and
if there shall be no such designation right, such vacancy may be filled by the remaining
directors. Each Stockholder shall, upon receipt of notice identifying such designee, take
all action as may be necessary or appropriate, including without limitation, the voting of
all Shares owned by such Stockholder, to elect the director so designated.

     (b) Proportional Representation. Upon (i) approval, if required, of the Class
B Common Stockholders as set forth in Section 3.2 of the Second Amended and Restated
Certificate of Incorporation of the Company, dated as of August 19, 2008, as amended from
time to time, and (ii) a majority vote of the holders of Common Stock, the
composition of the directors constituting the Board of Directors shall be changed so
that after designating directors in accordance with this Section 2.6(b), each of the
Berkshire Stockholders, the WP Stockholders and the Management Stockholders shall have

23

 

represented on the Board that number of directors (rounded up to the nearest whole number)
represented by the percentage equal to (x) the number of shares of Common Stock held by such
stockholder group over (y) the total number of shares of Common Stock held by all
Stockholders. In the event that the size of the Board of Directors needs to be increased in
order to establish the foregoing representation, each Stockholder shall take all action as
may be necessary or appropriate, including without limitation, the voting of all Shares
owned by such Stockholder, to effect the increase in the size of the Board. Each
Stockholder agrees that such Stockholder shall take all action as may be necessary or
appropriate, including without limitation, the voting of all Shares owned by them, to elect
the directors so designated by the Stockholders as set forth in this Section 2.6(b).

     (c) Subsidiaries; Committees. Unless the Board unanimously determines
otherwise, the board of directors of each Subsidiary of the Company and the audit committee,
the compensation committee and all other authorized committees of the Board and of each
Subsidiary’s board of directors shall be composed so that the representation thereon shall
be in the same proportion, as nearly as may be possible (subject to any foreign law
requirements, where applicable), as the representation of such directors on the Board;
provided, however, that no Management Representative shall sit on the audit committee or the
compensation committee.

     (d) Expenses. In the discretion of the Board, each director may be paid such
fees for his services as director and be reimbursed for his reasonable expenses incurred in
the performance of his duties as director as the Board from time to time may determine.
Nothing contained in this section shall be construed to preclude any director from serving
the corporation in any other capacity and receiving reasonable compensation therefor.

     2.7. Rights of Participation.

     (a) Rights of Participation. The Company hereby grants (i) to each Stockholder
so long as it shall own at least 5% of the Shares, (ii) to each Berkshire Stockholder so
long as the Berkshire Stockholders collectively own at least 5% of the Shares, (iii) to each
WP Stockholder so long as the WP Stockholders collectively own at least 5% of the Shares,
and (iv) to each Stockholder listed on Exhibit C hereof so long as it shall own at least the
number of Shares set forth on such Exhibit, the right to purchase up to a pro rata portion
of New Securities (as defined in paragraph (b) below) which the Company, from time to time,
proposes to sell or issue following the date hereof. For purposes of this Section 2.7(a), a
Stockholder’s pro rata portion, for purposes of this Section 2.7, is the product of (A) a
fraction, the numerator of which is the number of outstanding Shares which such Stockholder
then owns (on a fully diluted basis after giving effect to the exercise of all Rollover
Options, if any, and the conversion of all securities convertible into or exchangeable for
Common Stock) and the denominator of which is the total number of such Shares held by all
Stockholders (on a fully diluted basis after giving effect to the exercise of all Rollover
Options, if any and the conversion of all
securities convertible into or exchangeable for Common Stock), multiplied by (B) the
number of New Securities the Company proposes to sell or issue.

24

 

Notwithstanding the foregoing, in the event that the participation by any Stockholder in a
sale by the Company of New Securities would require under applicable law (x) the
registration or qualification of such securities or of any Person as a broker or dealer or
agent with respect to such securities or (y) in the case of those Stockholders specified
under clause (i) in the preceding paragraph, the provision to any such Stockholder of any
material non-public information regarding the Company or such securities, such Stockholder
shall not have the right to purchase New Securities pursuant to this Section, unless
otherwise authorized by the Board. Without limiting the generality of the foregoing, it is
understood and agreed that the Company shall not be under any obligation to effect a
registration of such securities under the 1933 Act or similar state statutes.

     (b) Definition of New Securities. “New Securities” shall mean any Common Stock
or other equity securities of the Company whether now authorized or not, any rights, options
or warrants to purchase Common Stock or other equity securities and any indebtedness or
preferred stock of the Company which is convertible into Common Stock or other equity
securities (or which is convertible into a security which is, in turn, convertible into
Common Stock or other equity securities); provided, that the term “New Securities” does not
include (i) indebtedness of the Company which is not by its terms convertible into Common
Stock; (ii) Common Stock issued as a stock dividend to all holders of Common Stock pro rata
or upon any subdivision or combination of shares of Common Stock; (iii) Common Stock issued
to any employee or director and approved by the Board of Directors and any employee or
director stock options approved by the Board of Directors; (iv) Common Stock issued in
exchange for the cancellation or retirement of any debt securities of the Company or in
connection with any restructuring or other financial workout of the Company; (v) Common
Stock or warrants to purchase Common Stock issued to non-Affiliates of the Company as part
of a bona fide debt offering of units comprised of such Common Stock or warrants and a debt
security of the Company; (vi) Common Stock issued in connection with the acquisition of
another corporation or other entity by the Company by merger, purchase of substantially all
assets or other reorganization; (vii) the issuance of Common Stock upon the exercise or
conversion of any rights, options or warrants to purchase Common Stock; (viii) Common Stock
issuable in a Public Offering; or (ix) Common Stock issued in respect of services provided
(other than as an employee) to the Company or its subsidiaries and approved by the Board of
Directors; and provided, further, that if any “New Securities” include Common Stock and
other equity securities coupled as a package, “New Securities” shall mean the package of
securities and not each class of securities individually. If and to the extent that either
the Berkshire Stockholders or the WP Stockholders have the right to receive New Securities
in any transaction contemplated by clauses (iv) or (vi) above, the Company will grant each
Stockholder the right to purchase a pro rata portion of such New Securities determined as
set forth in Section 2.7(a).

     (c) Notice from the Company. In the event the Company proposes to issue New
Securities, the Company shall give each Stockholder who has a right of participation under
this Section 2.7 written notice of such proposal, describing the type of New
Securities and the price and the terms upon which the Company proposes to issue the
same. For a period of ten (10) business days following the delivery of such notice by the
Company, the Company shall be deemed to have irrevocably offered to sell to each

25

 

Stockholder
its pro rata share of such New Securities for the price and upon the terms specified in the
notice. Each Stockholder may exercise its rights of participation hereunder by giving
written notice to the Company and stating therein the quantity of New Securities to be
purchased. Each Stockholder shall also be entitled to indicate a desire to purchase all or
a portion of any New Securities remaining after such pro rata allocation. If, as a result
of such oversubscription right, such oversubscriptions exceed the total number of New
Securities available in respect of such oversubscription right, the oversubscribing
Stockholders shall be cut back with respect to their oversubscriptions on a pro rata basis
or as they may otherwise agree among themselves.

     (d) Sale by the Company. In the event that the Stockholders who have a right
of participation under this Section 2.7 fail to commit to purchase all of such New
Securities within said ten (10) business day period, the Company shall have ninety (90) days
thereafter to sell the New Securities with respect to which the right of participation was
not exercised, at a price and upon terms no more favorable to the purchasers thereof than
specified in the Company’s notice given pursuant to Section 2.7(c).

     (e) Closing. The closing for any such issuance shall take place as proposed by
the Company with respect to the New Securities to be issued, at which closing the Company
shall deliver certificates for the New Securities in the respective names of the purchasing
Stockholders against receipt of payment therefor.

     2.8. Financial and Business Information. From and after the date hereof, each
Stockholder (other than those Stockholders set forth on Exhibit D hereto) holding more than five
percent (5%) of the outstanding Shares shall be entitled to receive from the Company, upon
request, the following information (i) as soon as practicable following the end of each fiscal
quarter of the Company, unaudited quarterly financial reports; (ii) as soon as practicable
following the end of each fiscal year of the Company, audited annual financial reports; and (iii)
when and as approved by the Board of Directors, budgets and business plans of the Company. In
addition, the Berkshire Stockholders and the WP Stockholders shall be entitled to receive from the
Company, as soon as practicable following the end of each month, unaudited financial results.
Each Stockholder listed on Exhibit D hereof, so long as it shall own at least the number of Shares
set forth on such Exhibit, shall be entitled to receive from the Company, upon request, unaudited
consolidated monthly financial statements, and at any time Amscan Holdings, Inc. or any successor
is not required or does not elect to file public information with the SEC, upon reasonable
request, the following information: (i) as soon as practicable following the end of each fiscal
quarter of the Company, unaudited consolidated quarterly financial statements and (ii) as soon as
practicable following the end of each fiscal year of the Company, audited consolidated annual
financial statements; provided, however, that such Stockholder shall not be entitled to receive
any such statements or information in the event that the Board of Directors of the Company
reasonably and in good faith determines at any tine that such Stockholder or an Affiliate of such
Stockholder is competing with the Company or any of its subsidiaries.

     2.9. Confidentiality. Each Stockholder shall maintain the confidentiality of any
confidential and proprietary information of the Company (“Proprietary Information”) using the same
standard of care, but in no event less than reasonable care, as it applies to its own

26

 

confidential
information, except for any Proprietary Information which is publicly available or a matter of
public knowledge generally. Nothing herein shall prevent any Stockholder from using Proprietary
Information to enforce its rights under this Agreement or from disclosing a summary of Proprietary
Information to the partners of such Stockholder as to the performance of the Company.

     2.10. Approval Rights. For so long as (i) the WP Stockholders (and their Permitted
Transferees) continue to hold, in the aggregate, at least 20% of the Shares initially acquired by
the WP Stockholders upon the closing of the Merger, the Company shall not, without the prior
consent of the WP Stockholders (and their Permitted Transferees), or (ii) the Berkshire
Stockholders (and their Permitted Transferees) continue to hold, in the aggregate, at least 20% of
the Shares initially acquired by the Berkshire Stockholders upon the closing of the Merger, the
Company shall not, without the prior consent of the Berkshire Stockholders (and their Permitted
Transferees), effect any:

     (i) public offering other than a Qualified Initial Public Offering;

     (ii) sale of the Company (by sale of securities, merger, consolidation, sale
of substantially all of the assets, or any similar transaction) other than an
Approved Company Sale; or

     (iii) transaction in which the WP Stockholders and the Berkshire Stockholder
are not entitled to be treated on a pro rata basis.

ARTICLE III.

REGISTRATION RIGHTS

     3.1. General. For purposes of Article III: (a) the terms “register,” “registered”
and “registration” refer to a registration effected by preparing and filing a registration
statement in compliance with the 1933 Act and the declaration or ordering of effectiveness of such
registration statement; (b) the term “Holder” means any Stockholder holding Registrable
Securities; and (c) the shares of Common Stock issuable upon the exercise of vested Time Options,
Rollover Options and vested and earned Performance Options shall be deemed to be outstanding and
held by the holders of such vested Time Options, Rollover Options and vested and earned
Performance Options.

     3.2. Demand Registration Initiated by the Berkshire Stockholders or the WP
Stockholders.

     (a) Subject to paragraph (b) hereof, on or after the date on which the Company has
effected a Public Offering, if the Company shall receive a written request (specifying that
it is being made pursuant to this Section 3.2) by or on behalf of either Berkshire
Stockholders or the WP Stockholders, holding an aggregate of fifty percent (50%) or more of
the Registrable Securities held by the Berkshire Stockholders or the WP Stockholders, that
the Company file a registration statement under the 1933 Act, or a
similar document pursuant to any other statute then in effect corresponding to the 1933
Act, covering the registration of at least the lesser of (i) $20 million of Registrable
Securities (determined based upon the Fair Market Value of such Registrable Securities

27

 

on
the date of request), or (ii) eighty-five percent (85%) of the Registrable Securities then
held by the Berkshire Stockholders or the WP Stockholders, as the case may be, then the
Company shall promptly notify all other Registration Rights Holders of such request and
shall use its best efforts to cause all Registrable Securities that the Registration Rights
Holders have requested (within thirty (30) days after such Company notice) be registered, to
be registered under the 1933 Act.

     (b) If the total amount of Registrable Securities that the Registration Rights Holders
request to be included in such offering exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the offering, then the
Company will include in such registration only the number of securities which, in the
opinion of such underwriters, can be sold in accordance with the procedures set forth in
Section 3.3(b);

     (c) The Company shall be obligated to effect for each of the Berkshire Stockholders two
(2) registrations of Registrable Securities pursuant to this Section 3.2, and the WP
Stockholders one (1) registration of Registrable Securities pursuant to this Section 3.2;
provided, that in the event that, at the request of the underwriters, the amount of
Registrable Securities that the Berkshire Stockholders or the WP Stockholders requested to
be included in any offering is reduced by more than thirty percent (30%), such offering
shall be deemed not to be a registration demanded by the Berkshire Stockholders or the WP
Stockholders for purposes of this Section 3.2.

     3.3. Piggyback Registration; Reduction in Registration.

     (a) If, at any time, the Company determines to register any of its equity securities
for its own account under the 1933 Act in connection with a Public Offering of such
securities, other than the first Public Offering of its Common Stock, solely for cash on a
form that would also permit the registration of any of the Registrable Securities, the
Company shall, at each such time, promptly give each Holder written notice of such
determination. Upon the written request of any Holder received by the Company within thirty
(30) days after the giving of any such notice by the Company, the Company shall use its best
efforts to cause to be registered under the 1933 Act all of the Registrable Securities of
such Holder that each Holder has requested be registered. If the total amount of
Registrable Securities that are to be included by the Company for its own account and at the
request of Registration Rights Holders exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the offering, then the
Company will include in such registration only the number of securities which in the opinion
of such underwriters can be sold, in the following order:

     (i) first, the equity securities to be registered on behalf of the Company; and

     (ii) then the Registrable Securities requested to be included by the
Registration Rights Holders, pro rata, based on the number of Registrable Securities
owned by each of them which each of them request be included in such registration;
provided, however, that if an underwriter who is not an Affiliate or

28

 

Associate of
any Holder, in good faith requests for the success of the offering, that the number
of Registrable Securities to be sold by any Holder be apportioned or excluded, such
number of Registrable Securities of such Holder shall be reduced or not included to
the extent so requested by said underwriter;

provided, however, that if in the first Public Offering of its Common Stock, solely for cash
on a form that would also permit the registration of any of the Registrable Securities the
Company shall permit any Holder to register its Registrable Securities, then the provisions
of this clause (a) shall apply to such Public Offering as if it were not the first Public
Offering.

     (b) If the Company at any time proposes to register any of its equity securities for
the account of any Holder pursuant to Section 3.2 or Section 3.9 of this Agreement or for
the account of any other Registration Rights Holder pursuant to a demand or S-3 registration
under the 1933 Act in connection with the public offering of such securities solely for cash
on a form that would also permit the registration of any of the Registrable Securities, the
Company shall, at each such time, promptly give each Holder written notice of such
determination. Upon the written request of any Holder received by the Company within thirty
(30) days after the giving of any such notice by the Company, the Company shall use its best
efforts to cause to be registered under the 1933 Act all of the Registrable Securities of
such Holder that such Holder has requested be registered. If the total amount of
Registrable Securities requested to be included by the requesting Holders under Section 3.2
or 3.9, and at the request of other Registration Rights Holders pursuant to applicable
piggy-back registration rights, the Company and the other Holders, exceeds the amount of
securities that the underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the number of securities
which in the opinion of such underwriters can be sold, in the following order:

     (i) first, the equity securities to be registered on behalf of Stockholders
initiating the demand, pro rata, based on the number of Registrable Securities owned
by each of them which each of them request be included in such registration;

     (ii) second, the equity securities to be registered on behalf of the Company;
and

     (iii) third, the Registrable Securities requested to be included by the other
Registration Rights Holders, pro rata, based on the number of Registrable Securities
owned by each of them which each of them request be included in such registration;

provided, however, that if an underwriter who is not an Affiliate or Associate of any Holder
or the Company, in good faith, requests for the success of the underwritten offering that
the number of Registrable Securities to be sold by any Holder or the Company be apportioned
or excluded, such number of Registrable Securities of such

29

 

Holder or the Company shall be
reduced or not included to the extent so requested by said underwriter.

     (c) In the event that the BP Stockholders or the WP Stockholders (or, in each case,
their Permitted Transferees) are cutback disproportionately with respect to the percentage
of their shares that they may include in any Public Offering in which other Registration
Rights Holders are participating, the Company shall only allow such other Registration
Rights Holders including shares of Common Stock in such Public Offering in an amount that
represents the ownership percentage that such BP Stockholders or the WP Stockholders (or, in
each case, their Permitted Transferees) are allowed to sell.

     3.4. Obligations of the Company. Whenever required under Sections 3.2, 3.3 or 3.9
to use its best efforts to effect the registration of any Registrable Securities, the Company
shall:

     (a) prepare and file with the SEC a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration statement to
become and remain effective;

     (b) as expeditiously as reasonably possible, prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities covered by such
registration statement;

     (c) as expeditiously as reasonably possible, furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with requirements
of the 1933 Act, and such other documents they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them;

     (d) as expeditiously as reasonably possible, use its best efforts to register and
qualify the securities covered by such registration statement under the securities or Blue
Sky laws of such jurisdictions as shall be reasonably appropriate for the distribution of
the securities covered by the registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdiction, and further provided
that (anything in this Agreement to the contrary notwithstanding with respect to the bearing
of expenses) if any jurisdiction in which the securities shall be qualified shall require
that expenses incurred in connection with the qualification of the securities in that
jurisdiction be borne by selling stockholders, then such expenses shall be payable by
selling stockholders pro rata, to the extent required by such jurisdiction;

     (e) use its best efforts to cause all Registrable Securities covered by such
registration statement to be registered with, or approved by, such other governmental
agencies or authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;

     (f) notify each seller of Registrable Securities covered by such registration
statement, at any time when a prospectus relating thereto is required to be delivered under

30

 

the 1933 Act, upon discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect, includes 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 the light of
the circumstances under which they were made, and at the request of any such seller or
Holder, promptly prepare and file with the SEC and furnish to such seller or Holder a
reasonable number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include 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 under which they were made; provided, that,
each Holder agrees that it shall not sell any Registrable Securities covered by such a
registration statement upon notice from the Company until receipt of notice that such
statement or omission has been corrected.

     (g) otherwise use its best efforts to comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first full calendar month after the effective date
of such registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933 Act, and will furnish to each seller at least two (2) business
days prior to the filing thereof a copy of any amendment or supplement to such registration
statement or prospectus and shall not file any amendment or supplement thereof to which any
such seller shall have reasonably objected, except to the extent required by law, on the
grounds that such amendment or supplement does not comply in all material respects with the
requirements of the 1933 Act or of the rules or regulations thereunder;

     (h) provide and cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by such registration statement from and after a date not
later than the effective date of such registration statement; and

     (i) use its best efforts to list all Registrable Securities covered by such
registration statement on a securities exchange or the NASDAQ National Market on which any
class of Registrable Securities is then listed.

     3.5. Furnish Information. It shall be a condition precedent to the obligations of
the Company to take any act pursuant to this Article III that the Holders selling Registrable
Securities shall furnish to the Company such information regarding them, the Registrable
Securities held by them and the intended method of disposition of such securities as the Company
shall reasonably request and as shall be required in connection with the action to be taken by the
Company.

     3.6. Expenses of Registration. All expenses incurred in connection with a
registration pursuant to Sections 3.2, 3.3 or 3.9 (excluding underwriters’ discounts and
commissions, which shall be borne by the sellers), including without limitation all registration
and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the
Company (which

31

 

counsel shall be reasonably satisfactory to the holders of a majority of the
Registrable Securities then being registered), and the reasonable fees and disbursements of one
counsel for the selling Holders (which counsel shall be selected by the Holders which own a
majority of the Registrable Securities being sold under the applicable registration) shall be
borne by the Company; provided, however, that all such expenses in connection with any amendment
or supplement to a registration statement or prospectus filed more than nine (9) months after the
effective date of such registration statement because any Holder of Registrable Securities has not
effected the disposition of the securities requested to be registered shall be paid by such
Holder; provided, further, however, that Holders initiating a demand may withdraw any request made
pursuant to Section 3.2, in which event such first withdrawn request shall be deemed for all
purposes herein not to have been made.

     3.7. Underwriting Requirements.

     (a) The Berkshire Stockholders and WP Stockholders, together with any other 15%
Stockholder, will have the right to approve the selection of the lead underwriter for the
first Public Offering, which approval will not be unreasonably withheld.

     (b) Each Holder selling Registrable Securities in any registration pursuant to Sections
3.2 or 3.3 shall, as a condition for inclusion of such Registrable Securities in such
underwritten registration, execute and deliver an underwriting agreement (i) acceptable to
the Company and consented to by the Berkshire Stockholders or the WP Stockholders, as the
case may be, in the case of a registration pursuant to Section 3.2, (ii) acceptable to the
Company and consented to by the Registration Rights Holder requesting a demand registration,
in the case of a registration pursuant to Section 3.3 in connection with a demand
registration not initiated pursuant to Section 3.2, or (iii) acceptable to Holders who own a
majority of the Registrable Securities to be included in such registration, in the case of a
registration pursuant to Section 3.3 (and not described by clause (ii) of this sentence),
and the underwriters with respect to such registration. Such underwriters shall be selected
(i) by the Company and consented to by the Berkshire Stockholders or the WP Stockholders, as
the case may be, in the case of a registration pursuant to Section 3.2, (ii) by the Company
and consented to by the Registration Rights Holder requesting a demand registration, in the
case of a registration pursuant to Section 3.3 in connection with a demand registration not
initiated by Section 3.2, or (iii) by a majority in interest of the Registrable Securities
to be included in such registration in all other cases and shall be reasonably acceptable to
the Company, in the case of a registration pursuant to Section 3.3 (and not described by
clause (ii) of this sentence). Notwithstanding the foregoing, each Holder shall take all
action reasonably necessary with respect to executing such underwriting agreement, including
being liable in respect of (i) any representations and warranties being made by each selling
Holder, and (ii) any indemnification agreements and “lock-up” agreements made by each
selling Holder for the benefit of the underwriters in such underwriting agreement; provided,
however, that except with respect to individual representations and warranties regarding
such matters as
legal capacity or due organization of such participating Holder, authority to
participate in the Public Offering, compliance by such Holder with laws and agreements
applicable to it, ownership (free and clear of liens, charges, encumbrances and adverse
claims) of Registrable Securities to be sold by such Holder and accuracy of information with
respect

32

 

to such Holder furnished for inclusion in any disclosure document relating to each
Public Offering, the aggregate amount of the liabilities of such participating Holder
pursuant to such underwriting agreement shall not exceed either (a) such participating
Holder’s pro rata portion of any such liability, in accordance with such participating
Holder’s portion of the total number of Registrable Securities included in the public
offering, or (b) the net proceeds received by such participating Holder from the public
offering.

     3.8. Indemnification. In the event any Registrable Securities are included in a
registration statement under this Article III:

     (a) To the fullest extent permitted by law, the Company will indemnify and hold
harmless each Holder (which term, for purposes of this Section 3.8, shall include each
Stockholder, including the Berkshire Stockholders, the WP Stockholders, the Management
Stockholders and the Other Stockholders holding Registrable Securities, and shall also
include the directors, officers and employees of the Stockholders and their Affiliates)
requesting or joining in a registration, any underwriter (as defined in the 1933 Act) for a
registration, and each Person, if any, who controls such Holder or such underwriter within
the meaning of the 1933 Act, against any and all losses, claims, damages or liabilities,
joint or several, to which any such Holder, underwriter or Person may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact contained in a
registration statement relating to a registration pursuant to this Article III, including
any preliminary prospectus or final prospectus contained therein or any amendments or
supplements 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, or arise out of any violation by the Company of the 1933
Act or any rule or regulation promulgated under the 1933 Act applicable to the Company and
relating to action or inaction required of the Company in connection with any such
registration, and will reimburse each such Holder, underwriter or control Person for any and
all legal or other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding; provided, however,
that the indemnity agreement contained in this Section 3.8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, action or proceeding if such
settlement is effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to anyone for any such loss, claim,
damage, liability, action or proceeding to the extent that it arises out of or is based upon
an untrue statement or omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto in reliance
upon and in conformity with written information furnished expressly for use in connection
with such registration by such Holder, underwriter or control Person. Such indemnity shall
remain in full force and
effect regardless of any investigation made by or on behalf of such Holder, underwriter
or control Person and shall survive the transfer of such securities by such Holder.

33

 

     (b) To the fullest extent permitted by law, each Holder requesting or joining in a
registration will indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each Person, if any, who controls
the Company within the meaning of the 1933 Act, and each agent and any underwriter for the
Company and any Person who controls any such agent or underwriter and each other Holder and
any Person who controls such Holder (within the meaning of the 1933 Act) against any and all
losses, claims, damages or liabilities, joint or several, to which the Company or any such
director, officer, control Person, agent, underwriter or other Holder may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened in respect thereto) arise out of or
are based upon an untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon the 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 omission was made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by such Holder (other than information furnished by such
Holder on behalf of the Company in his or her capacity as an officer or director of the
Company) expressly for use in connection with such registration; and such Holder will
reimburse the Company and each such director, officer, control Person, agent, underwriter or
other Holder for any and all legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, the indemnity obligation of each such Holder hereunder
shall be limited to and shall not exceed the proceeds actually received by such Holder upon
a sale of Registrable Securities pursuant to a registration statement hereunder; and
provided, further that the indemnity agreement contained in this Section 3.8(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability, action or
proceeding if such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any such director,
officer, Holder, underwriter or control Person and shall survive the transfer of such
securities by such Holder.

     (c) Any Person seeking indemnification under this Section 3.8 will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks indemnification
(but the failure to give such notice will not affect the right to indemnification hereunder,
unless and to the extent the indemnifying party is materially prejudiced by such failure)
and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest may
exist between such indemnified and indemnifying parties with respect to such claim, permit
such indemnifying party, and other indemnifying parties similarly situated, jointly to
assume the defense of such claim with counsel reasonably satisfactory to the parties. In
the event that the indemnifying parties
cannot mutually agree as to the selection of counsel, each indemnifying party may
retain separate counsel to act on its behalf and at its expense. The indemnified party
shall in all events be entitled to participate in such defense at its expense through its
own counsel. If

34

 

such defense is not assumed by the indemnifying party, the indemnifying
party will not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable judgment of
any indemnified party a conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of such
additional counsel.

     (d) If for any reason the foregoing indemnification is unavailable to any party or
insufficient to hold it harmless as and to the extent contemplated by the preceding
paragraphs of this Section 3.8, then each indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative benefits received by
the applicable indemnifying party, on the one hand, and the applicable indemnified party, as
the case may be, on the other hand, and also the relative fault of the applicable
indemnifying party and the applicable indemnified party, as the case may be, as well as any
other relevant equitable considerations.

     3.9. Registration on Form S-3. After the date on which the Company has effected a
Public Offering, if (i) a Holder or Holders request in writing (specifying that such request is
being made pursuant to this Section 3.9) that the Company file a registration statement on Form
S-3 (or any successor form to Form S-3 regardless of its designation) for a public offering of
securities having an aggregate value of not less than $1,000,000 and (ii) the Company is entitled
to use such form to register such securities, then the Company shall file a Form S-3 with respect
to such securities within ninety (90) days from the date of such request, and shall use its best
efforts to cause such registration statement to become effective; provided, that the Company shall
not be required to effect any such registration more frequently than once every six (6) months.

     3.10. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders and their Permitted Transferees the benefits of Rule 144 promulgated
under the 1933 Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration, the Company agrees to
use its best efforts to:

     (a) make and keep public information available, as those terms are understood and
defined in Rule 144, at all times subsequent to ninety (90) days after the effective date of
the first registration statement covering a Public Offering filed by the Company;

     (b) file with the SEC in a timely manner all reports and other documents required of
the Company under the 1933 Act and the 1934 Act; and

35

 

     (c) furnish to any Holder forthwith upon request a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at any time after ninety
(90) days after the effective date of said first registration statement filed by the
Company), and of the 1933 Act and the 1934 Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC permitting the selling
of any such securities without registration.

     3.11. No Inconsistent Agreements. The Company represents and warrants that it has
not entered into, and covenants that it will not hereafter enter into, any agreement with respect
to the registration of its securities that is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement without the prior written consent of a majority in
interest of the Holders. For the avoidance of doubt, the stockholders party hereto acknowledge
that the Registration Rights and Information Agreement between the Company and any certain
stockholders dated as of the date hereof does not violate this Section 3.11.

     3.12. Stock Split. If, on or after the receipt by the Company of a request for
registration of a public offering pursuant to Section 3.2, the proposed managing underwriter or
underwriters of such offering reasonably believes that the number of shares to be registered is
less than the minimum number necessary for the success of such offering, the Company will promptly
prepare and submit to its Board of Directors, use its best efforts to cause to be adopted by its
Board of Directors and stockholders, and, if so adopted, file and cause to become effective, an
amendment to its certificate of incorporation so as to cause each share of its outstanding Common
Stock to be converted into such number of shares of such Common Stock so that the number of shares
of Registrable Securities to be registered is equal to the minimum number which such managing
underwriter or underwriters reasonably believes is necessary for the success of such offering.
Each Stockholder, together with his or its Permitted Transferees, hereby agrees to vote the shares
of the Company’s Common Stock held by him or it in favor of adopting such amendment.

     3.13. Timing and Other Limitations.

     (a) No request shall be made with respect to any registration pursuant to Section 3.2
within one hundred twenty (120) days immediately following the effective date of any
registration statement filed by the Company.

     (b) If the Company shall furnish to the Holders of Registrable Securities requesting a
registration pursuant to Section 3.2 a certificate signed by a majority of the Board of
Directors stating that in the good faith judgment of the Board of Directors, it would be
seriously detrimental to the Company or its stockholders for such registration statement to
be filed on or before the date filing would be required and it is therefore advisable to
defer the filing of such registration statement, then the Company shall have the right to
defer the filing of the registration statement for a period of not more than one
hundred twenty (120) days and the request pursuant to Section 3.2 then made shall not
be counted for purposes of determining the number of registrations pursuant to Section 3.2;

36

 

provided, however, that the Company may not utilize such right more than once in any
twelve-month period.

     3.14. Lock-up.

     (a) In connection with the first Public Offering of Shares, no holder of Shares shall
Transfer any Shares for a period beginning seven (7) days immediately preceding the date
upon which the Company in good faith believes that the relevant registration statement shall
become effective, and ending on the one hundred eightieth (180th) day (or, at the discretion
of the underwriter, such lesser period) following the effectiveness of such registration
statement with respect to such Public Offering without the prior written consent of the
underwriters managing the offering, and at the request of the underwriter, each holder of
Shares shall enter into an agreement to such effect with the underwriter; provided, however,
that the provisions of this Section 3.14 shall not prohibit any Permitted Transfers,
provided that the Permitted Transferee agrees to be bound by the terms of this Agreement,
including this Section 3.14.

     (b) In connection with a Public Offering initiated pursuant to Section 3.2 hereof, at
the request of the initiating Stockholder, no holder of Shares shall Transfer any Shares
without the prior written consent of the underwriters managing the offering. The request
made by the initiating Stockholder pursuant to this clause (b) shall not be made within
sixty (60) days of the expiration of any other contractual lock-up period (which 60 day
period shall be increased by the number of days the Company’s insider trading window has
been closed during such 60-day period) and shall expire ninety (90) days (or such shorter
period to which the underwriter shall agree) following the effectiveness of the registration
statement with respect to such public offering. At the request of the underwriter, such
holder of Shares shall enter into an agreement with the underwriter to the effect of the
foregoing. The provisions of this Section 3.14(b) shall not be applicable to Permitted
Transferees of any Holder who are shareholders, partners or members, respectively, of such
Holder, who in each case, received Shares after the initial Public Offering and not
otherwise during any lock-up period, (ii) any Holder more than once during any calendar
year, (iii) any Holder (other than the Company’s directors and officers ) that is not
provided the opportunity to include Shares in such Public Offering on a pro rata basis with
all holders according to the total amount of Registrable Securities then owned by such
holder, and (iv) any Holder who holds less than 5% of the Company’s outstanding common
stock, other than the Company’s directors and officers.

     (c) The Company shall ensure that any underwriting agreement entered into in connection
with an underwriting in which any BP Stockholder or WP Stockholder (or, in each case, their
Permitted Transferees) participates will provide that in the event that any 15% Stockholder
is released by the underwriters managing an offering covered by this Section 3.14 from its
obligations under this Section 3.14 (or any similar lock-up restriction), any BP Stockholder
or WP Stockholder (or, in each case, their Permitted Transferees) shall also be released by
the underwriters managing such offering from their
obligations under this Section 3.14 (or any similar lock-up restriction), on a pro rata
basis, in accordance with their respective number of Registrable Shares held by them.

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ARTICLE IV.

MISCELLANEOUS

     4.1. Appointment of the Management Proxy. Each of the Management Stockholders
(other than any Executive Stockholder) hereby appoints James Harrison (the “Management Proxy”) as
the agent, proxy, and attorney-in-fact for the Management Stockholders (including, without
limitation, full power and authority to act on the Management Stockholders’ behalf) to take any
action, should the Management Proxy elect to do so in his sole discretion: (i) to vote on all
matters to be voted on under this Agreement, (ii) to receive all notices on behalf of each
Management Stockholder, (iii) to execute and deliver on behalf of the Management Stockholders any
amendment to this Agreement so long as such amendments shall apply to all Management Stockholders
and (iv) to take all other actions to be taken by or on behalf of the Management Stockholders as a
group and exercise any and all rights which the Management Stockholders are permitted or required
to do or exercise under this Agreement other than exercise any rights with respect to investment
decisions set forth in Sections 2.1(c), 2.3, 2.5, 2.7 or 3.3 hereof. Each of the Management
Stockholders hereby agrees not to assert any claim against, and agrees to indemnify and hold
harmless, the Management Proxy from and against any and all losses incurred by the Management
Proxy or any of his Affiliates, partners, employees, agents, investment bankers or
representatives, or any Affiliate of any of the foregoing, relating to the Management Proxy’s
capacity as the Management Proxy other than such claims or losses resulting from the Management
Proxy’s gross negligence or willful misconduct. By execution hereof, James Harrison hereby agrees
to act as Management Proxy until such time as a new Management Proxy is elected by the majority in
interest of the Management Stockholders.

     4.2. Remedies. The parties to this Agreement acknowledge and agree that the
covenants of the Company and the Stockholders set forth in this Agreement may be enforced in
equity by a decree requiring specific performance. In the event of a breach of any material
provision of this Agreement, the aggrieved party will be entitled to institute and prosecute a
proceeding to enforce specific performance of such provision, as well as to obtain damages for
breach of this Agreement. Without limiting the foregoing, if any dispute arises concerning the
Transfer of any of the Shares subject to this Agreement or concerning any other provisions hereof
or the obligations of the parties hereunder, the parties to this Agreement agree that an
injunction may be issued in connection therewith (including, without limitation, restraining the
Transfer of such Shares or rescinding any such Transfer). Such remedies shall be cumulative and
non-exclusive and shall be in addition to any other rights and remedies the parties may have under
this Agreement or otherwise.

     4.3. Entire Agreement; Amendment; Waiver. This Agreement, together with the
Schedule hereto, sets forth the entire understanding of the parties, and as of the closing
contemplated by the Merger Agreement supersedes all prior agreements and all other arrangements
and communications, whether oral or written, with respect to the subject matter hereof. The
Schedule may be amended to reflect changes in the composition of the
Stockholders as a result of Permitted Transfers or Transfers permitted under Article II.
Amendments to the Schedule reflecting Permitted Transfers or Transfers permitted under Article II
shall become effective when a copy of the Agreement as executed by any new

38

 

transferee is filed
with the Company, except as otherwise provided in Section 4.13. Any other amendments to, or the
termination of, this Agreement shall require the prior written consent of a majority of the
Stockholders; provided, that (a) any such amendment which would have an adverse effect on the
Berkshire Stockholders, if such adverse effect would be borne solely by the Berkshire Stockholders
or would be borne disproportionately by the Berkshire Stockholders relative to the other
Stockholders, shall require the written consent of the Berkshire Stockholders holding a majority
of the Shares held by the Berkshire Stockholders, (b) any such amendment which would have an
adverse effect on the WP Stockholders, if such adverse effect would be borne solely by the WP
Stockholders or would be borne disproportionately by the WP Stockholders relative to the Berkshire
Stockholders, shall require the written consent of WP Stockholders holding a majority of the
Shares held by the WP Stockholders, (c) any such amendment which would have an adverse effect on
the Management Stockholders, if such adverse effect would be borne solely by the Management
Stockholders or would be borne disproportionately by the Management Stockholders relative to the
Berkshire Stockholders, shall require the written consent of Management Stockholders holding a
majority of the Shares held by the Management Stockholders, and (d) any such amendment which would
have an adverse effect on the Other Stockholders, if such adverse effect would be borne solely by
the Other Stockholders or would be borne disproportionately by the Other Stockholders relative to
the Berkshire Stockholders, shall require the written consent of Other Stockholders holding a
majority of the Shares held by the Other Stockholders. Without the consent of the Management
Stockholders holding a majority of the Shares held by the Management Stockholders, no amendment
may be made to Section 2.2. Without the consent of each Executive Stockholder, no amendment may
be made to Section 2.3. Without the consent of the Berkshire Stockholders and the WP
Stockholders, no amendment may be made to Section 2.10 and 3.2. Without the consent of an
affected Stockholder, no amendment may be made to modify, in any adverse respect, the rights of
such Stockholder under Section 2.7(a) or Section 2.8; provided, however, that nothing herein shall
prohibit the granting of any additional participation rights under 2.7(a) or information rights
under Section 2.8 to any other Stockholders unless otherwise prohibited by the terms of this
Agreement. Notwithstanding any provisions to the contrary contained herein, any party may waive
any rights with respect to which such party is entitled to benefits under this Agreement. No
waiver of or consent to any departure from any provision of this Agreement shall be effective
unless signed in writing by the party entitled to the benefit thereof.

     4.4. Severability. It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, the invalidity or
unenforceability of any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid or unenforceable in such jurisdiction, it shall, as to
such jurisdiction, be so more narrowly drawn, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.

     4.5. Notices. All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered in the manner specified herein or, in the

39

 

absence of such specification, shall be deemed to have been duly given seven (7) days after
mailing by certified mail, when delivered by hand, upon confirmation of receipt by telecopy, or
one (1) business day after sending by overnight delivery service, to the respective addresses of
the parties set forth below:

     (a) For notices and communications to the Company to:

	 	 	 	AAH Holdings Corporation

c/o Berkshire Partners LLC

One Boston Place

Boston, MA 02108

Attention: Robert J. Small and Sharlyn Heslam

Facsimile: (617) 227-6105
	 
	 	 	 	with a copy to:
	 
	 	 	 	Ropes & Gray

One International Place

Boston, MA 02110

Attention: Jane D. Goldstein, Esq.

Facsimile: (617) 951-7050

     (b) for notices and communications to the Berkshire Stockholders, to their respective
addresses set forth in the Schedule, with a copy to:

	 	 	 	Ropes & Gray

One International Place

Boston, Massachusetts 02110

Attention: Jane D. Goldstein, Esq.

Facsimile: (617) 951-7050

     (c) for notices and communications to the WP Stockholders, to their respective address
set forth in the Schedule, with a copy to:

	 	 	 	Ropes & Gray

One International Place

Boston, Massachusetts 02110

Attention: Jane D. Goldstein, Esq.

Facsimile: (617) 951-7050

     (d) for notices and communications to any Management Stockholders, to their respective
addresses set forth in the Schedule, with a copy to:

	 	 	 	AAH Holdings Corporation

c/o Berkshire Partners LLC

One Boston Place

Boston, MA 02108

40

 

	 	 	 	Attention: Robert J. Small and Sharlyn Heslam

Facsimile: (617) 227-6105

     (e) for notices and communications to any Other Stockholders, to their respective
addresses set forth in the Schedule.

By notice complying with the foregoing provisions of this Section 4.5, each party shall have the
right to change the mailing address for future notices and communications to such party.

     4.6. Binding Effect; Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective transferees, successors and assigns;
provided, however, that no right or obligation under this Agreement may be assigned except as
expressly provided herein, it being understood that the Company’s rights hereunder may be assigned
by the Company to any corporation which is the surviving entity in a merger, consolidation or like
event involving the Company. No such assignment shall relieve an assignor of its obligations
hereunder.

     4.7. Governing Law. This Agreement shall be governed by the law of the State of New
York (regardless of the laws that might otherwise govern under applicable New York principles of
conflicts of law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.

     4.8. Termination. Without affecting any other provision of this Agreement requiring
termination of any rights in favor of any Stockholder or any transferee of Shares, the provisions
of Article II shall terminate as to such Stockholder or transferee, when, pursuant to and in
accordance with this Agreement, such Stockholder or transferee, as the case may be, no longer owns
any Shares (including Rollover Shares or Acquired Shares), Performance Options, Rollover Options
or Time Options; provided, that termination pursuant to this Section 4.8. shall only occur in
respect of a Stockholder after all Permitted Transferees in respect thereof also no longer own any
Shares. Notwithstanding the foregoing, Article II shall terminate upon the earlier of a Change in
Control or the consummation of a Public Offering; provided, that the Company shall be obligated to
consummate the purchase of any vested Time Options, Rollover Options and vested and earned
Performance Options which have been called pursuant to Section 2.2, or put pursuant to Section
2.3, prior to such termination, but have not otherwise been paid for as of such date.

     4.9. Recapitalizations, Exchanges, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Shares, to any and all shares of
capital stock of the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or
in substitution of the Shares, by reason of a stock dividend, stock split, stock issuance, reverse
stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise.

     4.10. Action Necessary to Effectuate the Agreement. The parties hereto agree to
take or cause to be taken all such corporate and other action as may be necessary to effect the
intent and purposes of this Agreement.

41

 

     4.11. Purchase for Investment; Legend on Certificate. Each of the parties
acknowledges that all of the Shares held by such party are being (or have been) acquired for
investment and not with a view to the distribution thereof and that no transfer, hypothecation or
assignment of Shares may be made except in compliance with applicable federal and state securities
laws. All the certificates of Shares which are now or hereafter owned by the Stockholders and
which are subject to the terms of this Agreement shall have endorsed in writing, stamped or
printed, thereon the following legend:

“The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold, offered for sale, pledged or hypothecated in the absence of
an effective registration statement as to the securities under said
Act or an opinion of counsel satisfactory to the Company and its
counsel that such registration is not required.”

“The securities represented by this Certificate are subject to the
terms and conditions, including certain restrictions on transfer, of
a Stockholders Agreement dated as of April 30, 2004, as amended from
time to time, and none of such securities, or any interest therein,
shall be transferred, pledged, encumbered or otherwise disposed of
except as provided in that Agreement. A copy of the Stockholders
Agreement is on file with the Clerk of the Company and will be
mailed to any properly interested person without charge within five
(5) business days after receipt of a written request.”

     All shares shall also bear all legends required by federal and state securities laws.

     4.12. Effectiveness of Transfers. All Shares transferred by a Stockholder (other
than pursuant to an effective registration statement under the 1933 Act or pursuant to a Rule 144
transaction) shall, except as otherwise expressly stated herein, be held by the transferee thereof
subject to this Agreement. Such transferee shall, except as otherwise expressly stated herein,
have all the rights and be subject to all of the obligations of a Stockholder under this Agreement
(as though such party had so agreed pursuant to Section 4.13) automatically and without requiring
any further act by such transferee or by any parties to this Agreement. Without affecting the
preceding sentence, if such transferee is not a Stockholder on the date of such transfer, then
such transferee, as a condition to such transfer, shall confirm such transferee’s obligations
hereunder in accordance with Section 4.13. No Shares shall be transferred on the Company’s books
and records, and no transfer of Shares shall be otherwise effective, unless any such transfer is
made in accordance with the terms and conditions of this Agreement, and the Company is hereby
authorized by all of the Stockholders to enter appropriate stop transfer notations on its transfer
records to give effect to this Agreement.

     4.13. Other Stockholders. Subject to the restrictions on transfers of Shares
contained herein, any Person who is not already a Stockholder acquiring Shares, shall, on or
before the transfer or issuance to it of Shares, sign a counterpart or joinder to this Agreement
in form reasonably satisfactory to the Company and shall thereby become a party to this Agreement
to

42

 

be bound hereunder as (i) a Berkshire Stockholder if a transferee (other than the Company or a
WP Stockholder) of a Berkshire Stockholder, (ii) a WP Stockholder if a transferee (other than the
Company or a Berkshire Stockholder) of a WP Stockholder, (iii) a Management Stockholder if a
transferee (other than the Company) of a Management Stockholder or (iv) an Other Stockholder if
such transferee (other than the Company, a Berkshire Stockholder or a WP Stockholder) does not
fall within clause (i), (ii) or (iii) above. Each such additional Stockholder shall be listed on
the Schedule, as amended from time to time.

     4.14. No Waiver. No course of dealing and no delay on the part of any party hereto
in exercising any right, power or remedy conferred by this Agreement shall operate as waiver
thereof or otherwise prejudice such party’s rights, powers and remedies. No single or partial
exercise of any rights, powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.

     4.15. Costs and Expenses. Each party shall pay its own costs and expenses incurred
in connection with this Agreement, and any and all other documents furnished pursuant hereto or in
connection herewith.

     4.16. Counterpart. This Agreement may be executed in two or more counterparts each
of which shall be deemed an original but all of which together shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

     4.17. Headings. All headings and captions in this Agreement are for purposes of
reference only and shall not be construed to limit or affect the substance of this Agreement.

     4.18. Third Party Beneficiaries. Nothing in this Agreement is intended or shall be
construed to entitle any Person other than the Company and the Stockholders to any claim, cause of
action, right or remedy of any kind.

     4.19. Consent to Jurisdiction. The Company and each of the Stockholders, by its,
his or her execution hereof, (i) hereby irrevocably submit to the exclusive jurisdiction of the
federal courts in the State of New York for the purposes of any claim or action arising out of or
based upon this Agreement or relating to the subject matter hereof, (ii) hereby waive, to the
extent not prohibited by applicable law, and agree not to assert by way of motion, as a defense or
otherwise, in any such claim or action, any claim that it or he is not subject personally to the
jurisdiction of the above-named courts, that its, his or her property is exempt or immune from
attachment or execution, that any such proceeding brought in the above-named court is improper or
that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii)
hereby agree not to commence any claim or action arising out of or based upon this Agreement or
relating to the subject matter hereof other than before the above-named courts nor to make any
motion or take any other action seeking or intending to cause the transfer or removal of any such
claim or action to any court other than the above-named courts whether on the grounds of
inconvenient forum or otherwise. The Company and each of the
Stockholders hereby consent to service of process in any such proceeding, and agree that
service of process by registered or certified mail, return receipt requested, at its address
specified pursuant to Section 4.5 is reasonably calculated to give actual notice.

43

 

     4.20. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY,
PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES
THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.20 CONSTITUTES A
MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.
ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.20 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

[The rest of this page has intentionally been left blank]

44

 

     IN WITNESS WHEREOF, each of the stockholders of AAH Holdings Corporation has duly executed
this Stockholders Agreement (or caused this Stockholders Agreement to be executed on its behalf by
its officer or representative thereunto duly authorized) as of the date first above written.

     [Signature Pages to come]

 

 

	 	 	IN WITNESS WHEREOF, each of the stockholders of AAH Holdings Corporation has duly executed
this Agreement (or caused this Agreement to be executed on its behalf by its officer or
representative thereunto duly authorized) as of the date first above written.

     MANAGEMENT STOCKHOLDERS:

	 	 	 	 	 

	 

	 	/s/ James M. Harrison
 

James M. Harrison, as attorney-in-fact
for each of the Management Holders listed on
Attachment A in his capacity as Management
Proxy pursuant to Section 4.1 of the
Agreement.
	 	 

(Signature Page to Amended and Restated Stockholders Agreement)

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 	 	 
	BERKSHIRE FUND V, LIMITED PARTNERSHIP	 	WESTON PRESIDIO CAPITAL IV, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	Fifth Berkshire Associates, LLC,

Its General Partner
	 	By:
	 	Weston Presidio Capital

Management IV, LLC, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert J. Small	 	By:	 	/s/ Therese A. Mrozek	 	 
	Name:

	 	 

Robert J. Small
	 	Name:
	 	 

Therese A. Mrozek
	 	 
	Title:

	 	Managing Director
	 	Title:
	 	Chief Operating Officer	 	 
	 
	 	 	 	 	 	 	 	 
	BERKSHIRE FUND VI, LIMITED PARTNERSHIP	 	WPC ENTREPRENEUR FUND II, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	Sixth Berkshire Associates, LLC,

Its General Partner
	 	By:
	 	Weston Presidio Capital Management

IV, LLC, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert J. Small	 	By:	 	/s/ Therese A. Mrozek	 	 
	Name:

	 	 

Robert J. Small
	 	Name:
	 	 

Therese A. Mrozek
	 	 
	Title:

	 	Managing Director
	 	Title:
	 	Chief Operating Officer	 	 
	 
	 	 	 	 	 	 	 	 
	BERKSHIRE INVESTORS LLC	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ Robert J. Small	 	 	 	 	 	 
	Name:

	 	 

Robert J. Small
	 	 	 	 	 	 
	Title:

	 	Managing Director	 	 	 	 	 	 

(Signature Page to Amended and Restated Stockholders Agreement)

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