SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 29, 1996
ARTISTIC GREETINGS INCORPORATED
(Exact Name of Registrant as specified in its Charter)
DELAWARE 0-7513 16-0909929
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
ONE KOMER CENTER, ELMIRA, NEW YORK 14902
(Address of Principal Executive Offices)
Telephone Number, including area code: (607) 737-5235
Former name or former address, if changed since last report: Not
Applicable.
<PAGE>
ITEM 5. OTHER EVENTS.
On August 29, 1996, Artistic Greetings Incorporated (the "Company")
completed an outsourcing transaction with John H. Harland Company
("Harland"). This transaction consisted of two parts: (1) the cash
purchase by Harland of the Company's check production assets for their book
value of approximately $3.48 million; and (2) the outsourcing of the
Company's check production to Harland at a fixed cost per box.
The Company used the proceeds received from the sale of its check
production assets to pay off two equipment term loans that had been used to
fund the purchase of those assets.
The Master Agreement, Fulfillment Agreement and Equipment Purchase
Agreement that collectively constitute this outsourcing transaction are
filed as exhibits to this Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS. See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
ARTISTIC GREETINGS INCORPORATED
(Registrant)
Date: September 20, 1996 By: /S/ THOMAS C. WYCKOFF
Title: Senior VP and General Counsel
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGES
10-1 Master Agreement between Artistic Greetings Filed herewith
Incorporated and John H. Harland Company,
dated August 29, 1996
10-2 Fulfillment Agreement between Artistic Filed herewith
Greetings Incorporated and [NOTE: This Exhibit
John H. Harland Company, is the subject of a
dated August 29, 1996 request for
Confidential Treatment
before the SEC]
10-3 Agreement for Purchase of Equipment between Filed herewith
Artistic Greetings Incorporated and
John H. Harland Company, dated
August 29, 1996
Exhibit 10-1
MASTER AGREEMENT
THIS MASTER AGREEMENT (the "Agreement"), dated as of the 29th day
of August, 1996, by and among ARTISTIC GREETINGS INCORPORATED, a Delaware
corporation ("AGI") and JOHN H. HARLAND COMPANY, a Georgia corporation
("JHH").
W I T N E S S E T H :
WHEREAS, AGI and JHH desire to enter a series of transactions,
pursuant to which, among other things, (i) JHH will supply AGI's future
fulfillment requirements for certain check products and (ii) JHH will
purchase from AGI certain check production assets; and
WHEREAS, the parties are desirous of setting forth herein certain
terms and conditions pursuant to which such transactions shall be
consummated.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and conditions herein contained, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth below:
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person.
"Bridge Agreement" means the Bridge Agreement, dated as of July
8, 1996, by and between AGI and JHH.
"Business Day" means any day other than Saturday, Sunday or a
federal holiday.
"Common Stock" shall mean the Common Stock, $0.10 par value, of
AGI.
"Confidentiality Agreement" means the Confidentiality Agreement,
dated March 8, 1996, between AGI and JHH.
"Equipment Purchase Agreement" means the Agreement For Purchase
of Equipment, dated as of the date hereof, between AGI and JHH, in the form
of Exhibit B hereto.
"Fulfillment Agreement" means the Fulfillment Agreement, dated as
of the date hereof, between AGI and JHH, in the form of Exhibit A hereto.
"Other Agreements" means the Fulfillment Agreement and the
Equipment Purchase Agreement.
"Person" means an individual, partnership, corporation
(including, without limitation, a business trust), limited liability
company, trust, unincorporated association, joint venture or other entity,
government or governmental authority.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Standstill Period" shall mean the period commencing on the date
hereof and continuing through the earlier of the tenth anniversary of the
date hereof or fifteen (15) months following the termination of the
Fulfillment Agreement.
"Voting Securities" shall mean the Common Stock and any other
voting securities of AGI now or hereafter authorized to be issued and any
option, warrant or other right to receive any such securities.
2. REPRESENTATIONS AND WARRANTIES OF AGI
AGI hereby represents and warrants to JHH as follows:
2.1 ORGANIZATION AND GOOD STANDING. AGI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
2.2 AUTHORITY RELATIVE TO AGREEMENTS. AGI has all requisite
power and authority to execute, deliver and perform its obligations under
this Agreement and the Other Agreements. The execution and delivery by AGI
of this Agreement and the Other Agreements, and the consummation by AGI of
the transactions contemplated hereby and thereby (i) have been authorized
by all necessary action on the part of AGI, (ii) do not violate any
provision of law or regulation applicable to AGI and (iii) are not in
conflict or inconsistent with or do not result in a breach of any of the
terms, covenants, conditions or provisions of, or constitute a default
under, the certificate of incorporation or bylaws of AGI, or any indenture,
mortgage, deed of trust, agreement, order, judgment, decree or other
instrument binding upon AGI.
2.3 CONSENTS AND APPROVALS. No filing or registration with,
notification to, or authorization, consent or approval of, any
governmental entity or third party is required by AGI in connection with
the execution and delivery of this Agreement and the Other Agreements, or
the consummation of the transactions contemplated hereby or thereby.
2.4 EFFECT OF AGREEMENT. This Agreement and the Other
Agreements have been duly executed and delivered by AGI and (assuming the
due authorization, execution and delivery by JHH) constitute legal, valid
and binding obligations of AGI enforceable against AGI in accordance with
their respective terms.
2.5 BROKERS, FINDERS, ETC. AGI is not subject to the valid
claim of any broker, finder, consultant or other intermediary in connection
with the transactions contemplated hereby or by the Other Agreements.
3. REPRESENTATIONS AND WARRANTIES
OF JHH
JHH hereby represents and warrants to AGI as follows:
3.1 ORGANIZATION AND GOOD STANDING. JHH is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia.
3.2 AUTHORITY RELATIVE TO AGREEMENTS. JHH has all requisite
power and authority to execute, deliver and perform its obligations under
this Agreement and the Other Agreements. The execution and delivery by JHH
of this Agreement and the Other Agreements, and the consummation by JHH of
the transactions contemplated hereby and thereby (i) have been authorized
by all necessary action on the part of JHH, (ii) do not violate any
provision of law or regulation applicable to JHH and (iii) are not in
conflict or inconsistent with or do not result in a breach of any of the
terms, covenants, conditions or provisions of, or constitute a default
under, the certificate of incorporation or bylaws of JHH, or any indenture,
mortgage, deed of trust, agreement, order, judgment, decree or other
instrument binding upon JHH.
3.3 CONSENTS AND APPROVALS. No filing or registration with,
notification to, or authorization, consent or approval of, any governmental
entity or third party is required by JHH in connection with the execution
and delivery of this Agreement or the Other Agreements, or the consummation
of the transactions contemplated hereby and thereby.
3.4 EFFECT OF AGREEMENT. This Agreement and the Other
Agreements have been duly executed and delivered by JHH and (assuming the
due authorization, execution and delivery by AGI) constitute legal, valid
and binding obligations of JHH enforceable against JHH in accordance with
their respective terms.
3.5 BROKERS, FINDERS, ETC. JHH is not subject to the valid
claim of any broker, finder, consultant or other intermediary in connection
with the transactions contemplated hereby or by the Other Agreements.
4. CONDITIONS PRECEDENT TO OBLIGATIONS OF AGI
The obligations of AGI to effect the transactions contemplated by
this Agreement and the Other Agreements shall be subject to the
satisfaction, or waiver by AGI on the Closing Date, of the following
conditions:
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each
of the representations and warranties of JHH contained herein and in the
Other Agreements shall be true and correct in all material respects on and
as of the Closing Date, and JHH shall have performed and complied in all
material respects with the covenants and provisions contained herein and in
the Other Agreements required to be performed or complied with at or prior
to the Closing.
4.2 NO PROCEEDING OR LITIGATION. Neither party hereto shall be
legally enjoined by a writ, order, decree or injunction from a court of
competent jurisdiction or governmental entity from consummating the
transactions contemplated by this Agreement or by the Other Agreements, and
no proceeding shall have been commenced by any governmental entity seeking
to enjoin the consummation of the transactions contemplated hereby or by
the Other Agreements.
4.3 OFFICER'S CERTIFICATE. AGI shall have received a
certificate from JHH to the effect set forth in Section 4.1 hereof, dated
the Closing Date, signed by a duly authorized officer of JHH.
4.4 CONSENTS AND APPROVALS. All necessary consents and
approvals of any United States or any other governmental authority or any
other third party required for the consummation of the transactions
contemplated by this Agreement and by the Other Agreements shall have been
obtained.
4.5 AGREEMENTS. Each of this Agreement and the Other Agreements
shall have been duly authorized, executed and delivered by each of the
parties signatory thereto.
4.6 OPINION OF COUNSEL. AGI shall have received an opinion of
internal counsel to JHH, containing customary qualifications reasonably
acceptable to AGI, to the effect of Sections 3.1, 3.2, 3.3 and 3.4 hereof.
5. CONDITIONS PRECEDENT TO OBLIGATIONS
OF JHH
The obligations of JHH to effect the transactions contemplated by
this Agreement and the Other Agreements shall be subject to the
satisfaction, or waiver on the Closing Date, of the following conditions:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each
of the representations and warranties of AGI contained herein and in the
Other Agreements shall be true and correct in all material respects on and
as of the Closing Date, and AGI shall have performed and complied in all
material respects with the covenants and provisions contained herein and in
the Other Agreements required to be performed or complied with at or prior
to the Closing.
5.2 NO PROCEEDING OR LITIGATION. Neither party hereto shall be
legally enjoined by a writ, order, decree or injunction from a court of
competent jurisdiction or governmental entity from consummating the
transactions contemplated by this Agreement or the Other Agreements, and
no proceeding shall have been commenced by any governmental entity seeking
to enjoin the consummation of the transactions contemplated hereby or by
the Other Agreements.
5.3 OFFICER'S CERTIFICATE. JHH shall have received a
certificate from AGI to the effect set forth in Section 5.1 hereof, dated
the Closing Date, signed by a duly authorized officer of AGI.
5.4 CONSENTS AND APPROVALS. All necessary consents and
approvals of any United States or any other governmental authority or any
other third party required for the consummation of the transactions
contemplated by this Agreement and by the Other Agreements shall have been
obtained.
5.5 AGREEMENTS. Each of this Agreement and the Other Agreements
shall have been duly authorized, executed and delivered by each of the
parties signatory thereto.
5.6 OPINION OF COUNSEL. JHH shall have received an opinion of
internal counsel to AGI, containing customary qualifications reasonably
acceptable to JHH to the effect of Sections 2.1, 2.2, 2.3 and 2.4. hereof.
6. CLOSING
6.1 CLOSING DATE. The closing with respect to the transactions
provided for in this Agreement (the "Closing") shall take place at the
offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, on the date hereof (or at such other time or location as AGI and JHH
may agree) (such date being herein referred to as the "Closing Date").
6.2 PROCEEDINGS. All proceedings that shall be taken and all
documents that shall be executed and delivered by the parties hereto on the
Closing Date shall be deemed to have been taken and executed simultaneously
and no proceedings shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered. By a party's
proceeding with the Closing, the conditions to such party's obligations set
forth in Article 4 or 5 hereof, as the case may be, shall be deemed
satisfied or waived.
7. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
7.1 GENERAL SURVIVAL. The representations and warranties
contained in this Agreement and the Other Agreements shall survive for a
period of two years following the Closing.
7.2 INDEMNIFICATION. JHH (on the one hand) or AGI (on the other
hand) (the "Indemnifying Party") shall indemnify AGI (on the one hand) or
JHH (on the other hand), respectively (the "Indemnified Party"), as the
case may be, and their respective directors, officers, agents and
affiliates, against and in respect of any liabilities, damages, losses,
costs and expenses (including reasonable expenses of investigation and
litigation and reasonable attorneys', accountants' and other professionals'
fees and costs incurred in the investigation or defense thereof or the
enforcement of rights hereunder) incurred by the Indemnified Party
("Losses") as a result or arising out of any breach of the Indemnifying
Party's representations and warranties or covenants and agreements set
forth in this Agreement or the Other Agreements.
7.3 METHOD OF ASSERTING CLAIMS, ETC. All claims for
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.3.
(a) The Indemnified Party shall give prompt written notice (a
"Claim Notice") to the Indemnifying Party of any assertion of
liability which might give rise to a claim for indemnification based
on the provisions of Section 7.2 hereof, which notice shall state the
nature and basis of the assertion and the estimated amount thereof to
the extent then feasible (which amount shall not be conclusive of the
final amount), provided, however, that failure to give any such Claim
Notice shall not relieve the Indemnifying Party from any liability
hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve the Indemnifying Party from
any liability which it may have otherwise than on account of this
Agreement.
(b) If any claim is made or any action, suit or proceeding is
brought by a third party (a "Third Party Claim") against an
Indemnified Party with respect to which the Indemnifying Party may
have liability under the provisions of Section 7.2 hereof, the
Indemnifying Party shall have the right to defend such Third Party
Claim with counsel approved by the Indemnified Party, which approval
shall not be unreasonably withheld, provided that the Indemnifying
Party gives written notice to the Indemnified Party within 30 days
after its receipt of the related Claim Notice that such Third Party
Claim is covered by the provisions of Section 7.2 hereof.
(c) Notwithstanding the provision of the previous subsection,
until the Indemnifying Party shall have so assumed the defense of any
such Third Party Claim, the Indemnified Party shall retain the right
to handle the defense thereof. Furthermore, if (i) the Indemnified
Party shall have reasonably concluded that there are likely to be
defenses available to the Indemnified Party that are different from or
in addition to those available to the Indemnifying Party; or (ii) the
Third Party Claim involves other than money damages and seeks
injunctive or other equitable relief, the Indemnifying Party shall not
be entitled to assume the defense of such Third Party Claim and the
defense of the Third Party Claim shall be handled by the Indemnified
Party. If under any such circumstances the defense of the Third Party
Claim is handled by the Indemnified Party, the Indemnifying Party
shall pay all legal and other expenses reasonably incurred by the
Indemnified Party in conducting such defense in accordance with
Section 7.2 hereof.
(d) In any Third Party Claim initiated by a third party and
defended by the Indemnifying Party (i) the Indemnified Party shall
have the right to be represented by its own counsel and accountants,
at its own expense, (ii) the Indemnifying Party shall keep the
Indemnified Party fully informed as to the status of such Third Party
Claim, at all stages thereof, whether or not the Indemnified Party is
represented by its own counsel, (iii) the Indemnifying Party and the
Indemnified Party shall make available at its offices and at
reasonable times to the other, and its counsel, accountants and other
representatives, all of such party's books and records relating to
such Third Party Claim and (iv) the parties shall render to each other
such assistance, including the availability as consultants or
witnesses of its officers, agents and other employees, as may be
reasonably required in order to ensure the proper and adequate defense
of such Third Party Claim.
(e) With respect to any Third Party Claim for which indemnity
may be sought hereunder, neither party shall have the right to settle
or compromise such Third Party Claim without the prior written consent
of the other party, which consent shall not be unreasonably withheld.
8. COVENANTS
8.1 PUBLICITY. Except as required by law, each party hereto
agrees not to make any press release or public statement about the
transactions contemplated hereby or by the Other Agreements without the
prior approval of the other party hereto with respect to the form and
content of such disclosure, such approval not to be unreasonably withheld.
8.2 COVENANTS NOT TO COMPETE.
(a) For the period from the Closing Date to eighteen (18) months
following the termination of the Fulfillment Agreement, JHH agrees, subject
to Section 8.2(b) hereof, that neither JHH nor any of its Affiliates shall
engage, directly or indirectly, on its own account, or as a shareholder,
agent, officer, director, partner or joint venturer in any corporation or
business entity, in any business engaged in the direct mail marketing of
checks and/or the direct mail sale of checks from, at or into the United
States (a "Competing Business"); nor within the same area to lend money or
otherwise furnish services to any Competing Business or any proposed
Competing Business the purpose or effect of which would be to give to JHH
or any Affiliate of JHH effective control of such Competing Business or
proposed Competing Business; nor without the consent of AGI, directly or
indirectly discuss, publish or otherwise divulge any information regarding
the business of the direct marketing and sale of checks or its methods of
operation, unless such information is publicly known, other than by reason
of a violation of this Agreement or any Other Agreement by JHH; provided
that nothing contained in this Section 8.2 shall be construed as preventing
an investment in AGI by JHH in compliance with the other provisions of this
Agreement and the Other Agreements. If any of these restrictions shall for
any reason be held by a court of competent jurisdiction to be excessively
broad as to duration, geographical scope, activity or subject, such
restrictions shall be construed so as thereafter to be limited or reduced
to be enforceable to the extent compatible with the applicable law as it
shall then appear, it being understood that by the execution of this
Agreement the parties hereto regard such restrictions as reasonable and
compatible with their respective rights.
Notwithstanding the foregoing, nothing in this Agreement shall
restrict the right of JHH to continue to conduct its business as presently
conducted which involves relationships with (a) catalog companies which
place, and/or distribute catalogs containing, ads for distinctive, premium
priced checks which are produced and designed by JHH, (b) large affinity
groups which sell ad space in their publications in which JHH advertises
such affinity group's specialty checks, (c) third party marketing groups
which promote distinctive, premium priced checks and whereby JHH provides
entry, printing and customer service for such groups, (d) financial
software companies where JHH provides private label order fulfillment and
direct mail campaigns to those companies' customers and (e) direct mail
companies where JHH provides order fulfillment and/or provides supplies.
(b) In the event JHH or any of its Affiliates directly or
indirectly acquires any Person which is engaged in a Competing Business
through merger or purchase of assets or otherwise, JHH or its Affiliate, as
the case may be, shall within fifteen (15) days of acquiring such Competing
Business offer to sell such Competing Business to AGI at a price determined
by JHH (the "JHH Offer Price") by giving written notice to AGI (the "JHH
Notice"). After the JHH Notice, JHH shall promptly furnish to AGI all
information with respect to the Competing Business reasonably requested by
AGI. If the JHH Offer Price is not acceptable to AGI, AGI shall within
thirty (30) days of receiving the JHH Notice submit the JHH Offer Price and
a competing price determined by AGI (the "AGI Price") to a mutually agreed
upon independent appraiser. The independent appraiser shall choose either
the JHH Offer Price or the AGI Price as being closest to the fair market
value of such Competing Business. JHH and AGI shall promptly furnish to
the independent appraiser all information required by the independent
appraiser to determine such fair market value. The decision of the
independent appraiser shall be given no later than thirty (30) days after
its selection. In the event the independent appraiser chooses the AGI
Price, AGI shall be obligated to purchase the Competing Business at the AGI
Price, subject to customary conditions, including material adverse change
and regulatory approvals. In the event the independent appraiser chooses
the JHH Offer Price, AGI may purchase such Competing Business at the JHH
Offer Price by giving notice (the "Purchase Notice") to JHH within fifteen
(15) days of the decision of the independent appraiser. In the event that
AGI gives notice to JHH that it will not purchase such Competing Business
at the JHH Offer Price or has not given the Purchase Notice to JHH by the
fifteenth day after the decision of the independent appraiser, JHH or its
Affiliate, as the case may be, shall sell such Competing Business to a
third party within one year of the date JHH or its Affiliate, as the case
may be, acquired such Competing Business. In the event such Competing
Business has not been sold within such one year period, JHH may request
AGI's consent to an additional six month period to sell such Competing
Business, which such consent shall not be unreasonably withheld. The
expense of the independent appraiser shall be borne by the party that makes
the offer not chosen by the independent appraiser.
(c) In connection with JHH's subsidiary, The Check Store, Inc.
("CSI"), the parties agree as follows: (i) notwithstanding the provisions
of clause (a) above, JHH may continue to own its interest in CSI, may
increase such interest to 100%, and CSI may continue to service initial
orders and reorders received; (ii) so long as JHH shall own a majority of
the voting stock of CSI, JHH shall cause CSI (x) to place only such
advertising as shall have been committed prior to the date of this
Agreement, which in any event shall not exceed $500,000, any other
advertising of any kind by CSI shall be prohibited and JHH will use its
reasonable best efforts to cause CSI to cancel and/or terminate any
committed advertising which can be cancelled without penalty; and (y) to
not expand its business in any way beyond the servicing of initial orders
and reorders as provided herein; (iii) if JHH shall receive a firm offer
for the sale of its interest in CSI or CSI shall receive a firm offer for
the sale of all or a portion of its customer list, trade names, trademarks
and/or associated rights (each, a "third party offer"), JHH shall, or shall
cause CSI to, offer to sell such interest or assets, as the case may be,
to AGI at the same price and in substantially the same form (i.e., cash or
securities or a combination thereof), as the offer received, and AGI shall
have thirty (30) days after receiving notice of such third party offer
specifying the details of such third party offer to accept such offer and
JHH shall promptly furnish to AGI all information with respect to CSI and
such third party offer reasonably requested by AGI; (iv) if AGI shall,
within such period, accept such offer, then, subject to customary
conditions, including material adverse change and regulatory approvals, the
closing on such sale (at which AGI shall be entitled to receive opinions,
certificates and other documents standard for such a transaction) shall
take place not later than thirty (30) days after the date of such
acceptance; and (v) if AGI shall not accept such offer within the
applicable 30-day period or the closing shall not occur within the
applicable 30-day period, JHH or CSI, as the case may be, shall be entitled
to sell such interest or assets in accordance with such third party offer,
provided, however, that if such transaction is not closed within six months
of the date of such third party offer, then any sale shall again become
subject to the provisions of this clause (c).
(d) For the period from the Closing Date to eighteen (18) months
following the termination of the Fulfillment Agreement, AGI agrees that,
without the consent of JHH, neither AGI nor any of its Affiliates shall
engage, directly or indirectly, on its own account, or as a shareholder,
agent, officer, director, partner or joint venturer in any corporation or
business entity, in any business engaged in the entering into of direct
contractual relationships with banking institutions (other than credit
unions or other banking institutions owned by their depositors which are
not doing business with JHH and which are located in the upstate New York
geographic area) to supply check products to customers of such banking
institutions in the United States (a "Banking Business"); nor within the
same area to lend money or otherwise furnish services to any Banking
Business or any proposed Banking Business the purpose or effect of which
would be to give to AGI or any Affiliate of AGI effective control of such
Banking Business or proposed Banking Business; nor without the consent of
JHH, directly or indirectly discuss, publish or otherwise divulge any
information regarding the Banking Business conducted by JHH or its methods
of operation, unless such information is publicly known, other than by
reason of a violation of this Agreement or any Other Agreement by AGI. If
any of these restrictions shall for any reason be held by a court of
competent jurisdiction to be excessively broad as to duration,
geographical scope, activity or subject, such restrictions shall be
construed so as thereafter to be limited or reduced to be enforceable to
the extent compatible with the applicable law as it shall then appear, it
being understood that by the execution of this Agreement the parties hereto
regard such restrictions as reasonable and compatible with their respective
rights.
8.3 STAMPS. JHH and AGI agree to negotiate in good faith on
terms pursuant to which (i) AGI shall produce 100% of JHH's fulfillment
requirements of personalized stamps and (ii) AGI shall have the option to
acquire any or all of the stamp production assets of JHH.
8.4 ADVERTISING INSERTS. JHH and AGI agree to continue to
negotiate in good faith on terms pursuant to which AGI shall provide
advertising materials to be placed in outgoing check boxes of JHH and CSI
such that orders in connection therewith shall be received, processed,
manufactured and shipped by AGI.
9. CERTAIN STANDSTILL RESTRICTIONS
9.1 STANDSTILL. During the Standstill Period, neither JHH nor
any Affiliate of JHH shall:
(a) acquire, directly or indirectly, by purchase or otherwise,
any Common Stock, Voting Securities or securities of AGI convertible
into Common Stock or Voting Securities; or
(b) form, participate in or encourage the formation of or
participation in, directly or indirectly, any "Group" (as that term is
used in Section 13(d)(3) of the Securities Exchange Act) formed or to
be formed in respect of the securities of AGI, including the
acquisition or voting of securities of AGI or the acquisition, by
merger, consolidation, asset purchase or otherwise, of control of AGI.
9.2 JHH EXCEPTION. Notwithstanding Section 9.1 hereof, JHH may
acquire up to 5% of the Common Stock outstanding.
10. MISCELLANEOUS
10.1 WAIVERS AND AMENDMENTS.
(a) This Agreement may not be amended, modified or supplemented
except by a written instrument executed by AGI and JHH. The provisions of
this Agreement may be waived only by an instrument in writing executed by
the party granting the waiver. The waiver by any party hereto of
compliance with any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such noncompliance or as a
waiver of any other or subsequent noncompliance.
(b) No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. No course of
dealing between the parties will be deemed effective to modify, amend or
discharge any part of this Agreement or the rights or obligations of any
party hereunder.
10.2 FEES AND EXPENSES. Each party hereto shall be responsible
for its costs and expenses, including all fees and expenses of attorneys,
investment bankers, lenders, financial advisors and accountants, in
connection with the negotiation, execution and delivery of this Agreement
and the Other Agreements and the consummation of the transactions
contemplated hereby and by the Other Agreements, whether or not such
transactions are consummated.
10.3 NOTICES. All notices which are required or permitted to be
given pursuant to the terms of this Agreement shall be in writing and shall
be deemed effective (i) upon receipt if given in writing and delivered
personally or by facsimile transmission with receipt confirmed, (ii) five
(5) Business Days after it shall have been deposited in the United States
mails, registered or certified mail, postage prepaid or (iii) one (1)
Business Day after it shall have been delivered to an overnight courier
service, such as Federal Express, all charges prepaid, addressed as
follows:
If to AGI, to: Artistic Greetings Incorporated, One Komer
Center, Elmira, New York 14902, Attention: Thomas C. Wyckoff, Esq.; and
If to JHH, to: John H. Harland Company, 2939 Miller Road,
Decatur, Georgia 30035, Attention: John C. Walters, Esq.
Any of the addresses set forth above may be changed from time to
time by written notice from the party requesting the change.
10.4 ENTIRE AGREEMENT. This Agreement, the Other Agreements and
the Confidentiality Agreement set forth the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and thereof and supersede any prior negotiations, agreements,
understandings or arrangements between the parties hereto (including the
Bridge Agreement) with respect to the subject matter hereof and thereof.
10.5 BINDING EFFECT; BENEFITS. This Agreement and the Other
Agreements shall inure to the benefit of and be binding upon the parties
hereto and their respective successors.
10.6 ASSIGNABILITY. This Agreement and any rights pursuant
hereto shall not be assignable by any party hereto without the prior
written consent of the other parties, provided that AGI may assign its
rights and obligations hereunder without the consent of the other parties
hereto in connection with a sale or transfer of all or substantially all of
the assets or business of either AGI or its direct mail check business.
10.7 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to the conflicts of law principles thereof.
10.8 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
10.9 INJUNCTIVE RELIEF. In the event of a breach or threatened
breach by either party of any of the terms of Sections 9.1 and 9.2 of this
Agreement, the other shall be entitled to an injunction restraining the
breaching party from committing any breach of this Agreement, without
showing or proving any actual damages and without diminishing any other
right or remedy which the other may have at law or in equity to enforce the
provisions of this Agreement. Each party waives any right it may have to
require the other to post a bond or other security with respect to
obtaining or continuing any injunction or temporary restraining order.
10.10 SPECIFIC PERFORMANCE. Each party declares that it may be
impossible to measure in money the damages which will accrue to it or its
successors, assigns or legal representatives, by reason of the other's
failure to perform any of the obligations under Sections 9.1 and 9.2 of
this Agreement. Therefore, if either party, its successors, assigns or
legal representatives, shall institute any proceeding, to enforce the
provisions of Sections 9.1 and 9.2 of this Agreement, the party against
whom such action or proceeding is brought hereby waives the claim or
defense that money damages are an adequate remedy and that therefore the
party instituting the proceeding is not entitled to specific performance of
the terms of Sections 9.1 and 9.2 of this Agreement.
10.11 SUBMISSION TO JURISDICTION.
(a) Each of the parties hereto irrevocably consents that any
action or proceeding brought by the other party hereto in respect of the
transactions contemplated by this Agreement and by the Other Agreements may
be brought in the courts of the State of New York in the Borough of
Manhattan or of the United States of America for the Southern District of
New York and, by execution and delivery of this Agreement, the parties
hereto hereby irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which any of them may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdiction.
(b) Each of the parties hereto irrevocably consents to the
service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered mail, postage
prepaid, to such party at its address provided herein.
10.12 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; provided,
however, that this Agreement shall not be effective unless and until at
least one counterpart is executed and delivered by each party hereto.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have caused this Agreement to be duly executed on the day and year
first above written.
ARTISTIC GREETINGS INCORPORATED
By: /S/ THOMAS C. WYCKOFF
Name: Thomas C. Wyckoff
Title: Senior Vice President
JOHN H. HARLAND COMPANY
By: /S/ JOHN C. WALTERS
Name: John C. Walters
Title: Senior Vice President
[Note: The Registrant agrees to furnish supplementally to the Commission a
copy of any omitted schedules or exhibits to this Agreement upon request.]
*[ ] DENOTES CONFIDENTIAL TREATMENT REQUESTED OF REDACTED INFORMATION
Exhibit 10-2 EXHIBIT A
EDITED VERSION: SUBJECT TO CONFIDENTIAL TREATMENT TO MASTER
REQUEST AGREEMENT
FULFILLMENT AGREEMENT
THIS FULFILLMENT AGREEMENT (the "Agreement"), dated as of the
29th day of August, 1996, by and between ARTISTIC GREETINGS INCORPORATED, a
Delaware corporation ("AGI"), and JOHN H. HARLAND COMPANY, a Georgia
corporation ("JHH").
WITNESSETH:
WHEREAS, AGI and JHH are parties to a Master Agreement dated as
of the date hereof (the "Master Agreement"), pursuant to which, among other
things, JHH will purchase from AGI certain check production assets; and
WHEREAS, in connection with the Master Agreement, AGI wishes to
assure the future supply from JHH, and JHH wishes to assure the future
furnishing, on the terms and conditions hereinafter set forth, of AGI's
future fulfillment requirements for check products.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. Certain terms are used in this Agreement as
specifically defined herein. In addition:
"ADJUSTED PURCHASE PRICE" means the Purchase Price (i) decreased
by * $[ ] per Box of Checks for each Weekly Order which *consists of [ ] or
more Boxes of Checks per Business Day and less than *[ ] Boxes of Checks
per Business Day, (ii) decreased by *$[ ] per Box of Checks for each Weekly
Order which consists of *[ ] or more Boxes of Checks per Business Day and
less than *[ ] Boxes of Checks per Business Day, (iii) decreased by * $[]
per Box of Checks for each Weekly Order which consists of *[ ] or more
Boxes of Checks per Business Day, (iv) increased by *$[ ]per Box of Checks
for each Weekly Order beginning with the first Weekly Order transmitted to
JHH after the date which is six months from the Effective Date which
consists of less than *[ ] Boxes of Checks *per Business Day and more than
*[ ] Boxes of Checks per Business Day, (v) increased by *$[ ]per Box of
Checks for each Weekly Order beginning with the first Weekly Order
transmitted to JHH after the date which is six months from the Effective
Date which consists of less than *[ ] Boxes of Checks per Business Day and
more than *[ ] Boxes of Checks per Business Day, (vi) increased by *$[ ]
per Box of Checks for each Weekly Order beginning with the first Weekly
Order transmitted to JHH after the date which is six months from the
Effective Date which consists of less than *[ ] Boxes of Checks per
Business Day, and (vii) adjusted pursuant to Sections 4.2, 4.3 and 4.4, as
applicable.
"AFFILIATE" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person.
"BOX OF CHECKS" means a box of check products consisting of
either 200 single checks or 150 duplicate checks, which conform to the
Check Specifications (as defined in Section 3.3 hereof).
"BOX OF DEPOSIT TICKETS" means a box of deposit tickets
consisting of either 200 single deposit tickets or 100 triplicate deposit
tickets.
"BUSINESS DAY" means any day other than Saturday, Sunday or a
federal holiday.
"EFFECTIVE DATE" means August 29, 1996.
"FULFILLMENT AMOUNT" means (i) from the Effective Date to August
30, 1996, up to *[ ] Boxes of Checks per Business Day, (ii) from September
1, 1996 to September 14, 1996, up to *[ ] Boxes of Checks per Business
Day, (iii) from September 15, 1996 to September 27, 1996, up to *[ ] Boxes
of Checks per Business Day, and (iv) from September 30, 1996 to the date of
termination of this Agreement, *[ ] of AGI's fulfillment requirements for
Boxes of Checks, other than Specialty Requirements.
"PERSON" means a corporation, association, partnership, limited
liability company, joint venture, trust, organization, business, individual
or government or any governmental agency or political subdivision thereof.
"PURCHASE PRICE" means (i) *$[ ]per Box of Checks minus the
Volume Discount, as applicable, (ii) with respect to Boxes of Checks which
constitute current foil checks, the Purchase Price as determined in clause
(i) plus *$[ ] per Box of Checks, (iii) with respect to Boxes of Checks
which constitute side tear checks, the *Purchase Price as determined in
clause (i) plus *$[ ] per Box of Checks, if AGI purchases the paper stock,
and *$[ ] per Box of Checks, if JHH furnishes the paper stock, and (iv) with
respect to each Box of Deposit Tickets, the Purchase Price as determined in
clause (i) plus *$[ ] per Box of Deposit Tickets.
"SPECIALTY REQUIREMENTS" means AGI's existing Rockwell design or
other Boxes of Checks with specialty design or styling features which
require special pricing or other mutually agreed upon designs or styles.
"VOLUME DISCOUNT" means, without duplication, if the aggregate
number of Boxes of Checks sold by JHH to AGI hereunder from the date of
this Agreement exceeds (i) *[ ] at any time until the fifth anniversary
of the Effective Date, (ii) *[ ] at any time between the fifth and seventh
anniversary of the Effective Date or (iii) *[ ] thereafter, then a
discount of *$[ ]per Box of Checks sold by JHH to AGI thereafter.
"WEEKLY ORDER" means the number of Boxes of Checks transmitted to
JHH for order by AGI for each calendar week.
2. TERM AND TERMINATION.
2.1. TERM. This Agreement shall commence on the Effective Date
and continue until terminated pursuant to Section 2.2 hereof (the "Term").
2.2. TERMINATION. This Agreement may be terminated:
2.2.1. by the mutual written consent of AGI and JHH;
2.2.2. by AGI in the event that JHH breaches Sections 9.1
and 9.2 of the Master Agreement;
2.2.3. by JHH in the event AGI breaches this Agreement by
failing to pay the Weekly Purchase Price and Postage Costs
pursuant to Section 6 hereof, and such breach remains uncured for
fifteen (15) days after receipt of notice of such breach by AGI
from JHH;
2.2.4. other than with respect to a failure by AGI to make
payment pursuant to Section 6, by either AGI or JHH in the event
the other party fails to materially perform its obligations under
this Agreement; provided that the terminating party has given at
least one (1) year's prior written notice to the other party
specifying the nature of the material nonperformance;
2.2.5. by either AGI or JHH, following the seventh (7th)
anniversary of the Effective Date; provided that the terminating
party has given at least two (2) years' prior written notice to
the other party of its desire to terminate this Agreement. Such
notice of termination may be given at any time after the fifth
(5th) anniversary of the Effective Date; and
2.2.6. each termination notice described in this Section 2
shall be delivered in accordance with Section 12 hereof. This
Agreement will terminate, (i) in the case of Section 2.2.2, on
the date set forth in such termination notice, (ii) in the case
of Section 2.2.3, on the date a termination notice is received by
AGI from JHH, provided that AGI had first received a notice of
breach from JHH pursuant to Section 2.2.3 and such breach had
remained uncured for at least fifteen (15) days thereafter, (iii)
in the case of Section 2.2.4, on the first anniversary of the
date the termination notice is received by the non-terminating
party, and (iv) in the case of Section 2.2.5, on the second
anniversary of the date the notice of termination is received by
the non-terminating party.
3. ORDER AND FURNISHING OF BOXES OF CHECKS.
3.1. During the Term and subject to all of the terms and
conditions hereof, AGI agrees to order the Fulfillment Amount of Boxes of
Checks from JHH, and JHH agrees to furnish the Fulfillment Amount of Boxes
of Checks.
3.2. Notwithstanding Section 3.1 but subject to Section 10.1,
should JHH at any time be unwilling or unable, due to capacity constraints
or otherwise, to furnish the Fulfillment Amount of Boxes of Checks, then,
upon JHH's failure to cure after 5 days' written notice to JHH of JHH's
failure to furnish the Fulfillment Amount, AGI may order from other
suppliers that portion of its requirements that JHH does not furnish, and
such orders shall not be deemed in any way a breach or termination by AGI
of any term or condition of this Agreement or a waiver of any remedy AGI
may be entitled to pursuant to this Agreement or otherwise.
3.3. The Boxes of Checks to be ordered and furnished hereunder
shall be produced and printed by JHH to conform to the printing and other
specifications set forth on Exhibit A hereto or to such other
specifications as to which AGI and JHH mutually agree from time to time
(the "Check Specifications"). Each of AGI and JHH agrees to use its
reasonable best efforts to agree on any proposed change to the Check
Specifications, including, without limitation, any change to the Purchase
Price per Box of Checks related to such proposed change.
4. PRICE.
4.1. The price to be paid to JHH by AGI for each Weekly Order of
Boxes of Checks furnished hereunder by JHH shall be equal to the product of
(i) the Adjusted Purchase Price per Box of Checks and (ii) the Weekly Order
(the "Weekly Purchase Price").
4.2. Commencing on the first anniversary of the Effective Date,
and on each subsequent anniversary of the Effective Date thereafter during
the Term, if the annual CPI (Consumer Price Index -- All Urban Consumers,
U.S. City Average, 1982-84 = 100) ("CPI") has changed by more than 1% over
the preceding twelve (12) months, then, with respect to the first
anniversary of the Effective Date, the Adjusted Purchase Price for the
subsequent calendar year shall be adjusted by the percentage amount equal
to one-half of the percentage amount (the "Excess Amount") by which the
annual CPI increase over the preceding twelve (12) months exceeds 1.0% and,
with respect to each subsequent anniversary of the Effective Date, the
Adjusted Purchase Price for the subsequent calendar year shall be adjusted
by the percentage amount equal to the Excess Amount.
4.3. In the event the percentage of Boxes of Checks which
consist of duplicate checks to total Boxes of Checks for any Weekly Order
exceeds 60%, AGI shall reimburse JHH an additional *amount equal to $[ ]
per Box of Checks for materials and labor *and $[ ] per Box of Checks for
Postage Costs to the extent such costs are associated with producing and
printing Boxes of Checks which consist of duplicate checks above such 60%
threshold. Such reimbursement amount shall be adjusted from time to time
as mutually agreed between the parties.
4.4. In the event AGI develops designs that are more costly to
produce than the designs existing on the date hereof, the pricing of those
orders will be adjusted by mutual agreement to reflect the increased
production and materials costs for those Boxes of Checks.
4.5. Notwithstanding anything to the contrary in this Section 4,
if at any time JHH shall sell or furnish any Boxes of Checks to any Person
engaged in the direct mail marketing and/or sale of Boxes of Checks at a
price less than the then Adjusted Purchase Price minus, in the event the
Volume Discount is not applicable, an amount equal to the Volume Discount,
then the Adjusted Purchase Price to be paid to JHH by AGI for such similar
quantity shall be equal to the price paid by such Person. In the event
that an adjustment is made pursuant to this Section and as a result of such
adjustment the Adjusted Purchase Price for a quantity of Boxes of Checks is
less than the Adjusted Purchase Price for a greater quantity of Boxes of
Checks, the Adjusted Purchase Price for such greater quantity of Boxes of
Checks shall also be equal to the price paid by such Person.
4.6. In the event of a material change in technology with
respect to the printing of Boxes of Checks, the parties hereto agree to
negotiate in good faith on how to distribute the benefits of such change in
technology between the parties hereto.
5. ELECTRONIC TRANSFER OF DATA, ORDERS AND DELIVERIES.
5.1. AGI shall perform all order entry functions for the Boxes
of Checks it purchases from JHH. AGI shall electronically transmit to JHH
such information as is mutually agreed upon to be necessary for JHH to
produce and ship the Boxes of Checks (the "AGI Electronic Instructions").
JHH shall electronically transmit to AGI such information as is mutually
agreed upon to be necessary for AGI to keep its database of orders current
(the "JHH Electronic Instructions"). The AGI Electronic Instructions and
the JHH Electronic Instructions shall be formatted as set forth on Exhibit
B hereto or to such other formatting as AGI and JHH may from time to time
mutually agree. All costs associated with the AGI Electronic Instructions
and the JHH Electronic Instructions shall be borne equally by the parties
or as otherwise mutually agreed between the parties hereto.
5.2. AGI and JHH shall jointly develop and implement a system of
transferring orders from AGI to JHH on an "on demand" basis. This project
shall commence on the Effective Date.
5.3. AGI shall deliver to JHH any bind-in advertising inserts in
a timely and commercially reasonable manner. AGI may also deliver to JHH
in a timely and commercially reasonable manner reorder envelopes,
merchandise inserts, coupon package and check brochure to be placed in each
order.
5.4. JHH agrees to ship an average of 90% of the Boxes of Checks
within two (2) Business Days and an average of 98% of the Boxes of Checks
within four (4) Business Days of receiving the AGI Electronic Instructions
(the "Shipping Deadline") in accordance with the instructions specified on
Exhibit C hereto or to such other instructions as shall be mutually agreed
to from time to time by AGI and JHH (the "Shipping Instructions"). AGI's
address shall be the return address on all Boxes of Checks furnished by JHH
pursuant to this Agreement.
5.5. AGI agrees to reimburse JHH (i) *[ ] per Box of Checks and
Box of Deposit Tickets and the actual cost to deliver each Box of Checks
and Box of Deposit Tickets to the bulk mail center (currently aggregating
*$[ ] per Box of Checks) plus *$[ ] for each Box of Checks mailed USPS and
(ii) *[ ] rate then in effect for each order of Boxes of Checks mailed *[ ]
plus a surcharge of *$[ ] for each order mailed *[ ] and *$[ ] for each
order mailed by *[ ] (the "Postal Costs"). AGI and JHH agree to use best
efforts to agree to (i) a reimbursement rate for Boxes of Checks mailed
USPS in the event of a change in the USPS mailing rates and (ii) share any
savings in postage costs resulting from the use of a third-party
consolidator or through other means.
6. PAYMENT OF PURCHASE PRICE AND POSTAGE. Payment of the Weekly
Purchase Price and reimbursement of Postage Costs and any costs pursuant to
Section 4.3 hereof shall be made to JHH within thirty (30) days of the date
of the invoice by wire transfer or other mutually agreed upon method. Any
past due payment hereunder shall be subject to an interest charge of 1% per
month (or portion thereof).
7. WARRANTIES AND GUARANTEES OF JHH.
JHH hereby warrants and guarantees that:
7.1. The Boxes of Checks furnished hereunder shall conform to
the Check Specifications and shall be shipped in accordance with the
Shipping Instructions and the AGI Electronic Instructions as furnished to
JHH on or prior to the Shipping Deadline.
7.2. JHH will conform to all statutes or regulations of any
governmental agency with respect to the production, printing and shipping
of the Boxes of Checks and the transmission of the JHH Electronic
Instructions.
8. WARRANTIES AND GUARANTEES OF AGI.
AGI hereby warrants and guarantees that it will conform to all
statutes or regulations of any governmental agency with respect to the
transmission of the AGI Electronic Instructions.
9. INDEMNIFICATION.
9.1. AGI hereby indemnifies and holds JHH harmless from and
against any and all claims, actions, suits, losses, demands, costs and
expenses (including reasonable attorneys' fees) of every kind, nature, or
description brought (collectively "Damages") as a result of or arising from
(i) AGI's breach or failure of any warranty, covenant or agreement
contained in this Agreement and (ii) any negligent act or omission by AGI.
9.2. JHH hereby indemnifies and holds AGI harmless from and
against any and all Damages as a result of or arising from (i) JHH's breach
or failure of any warranty, covenant or agreement contained in this
Agreement and (ii) any negligent act or omission by JHH.
9.3. All claims for indemnification hereunder shall be asserted
and resolved as set forth in Section 7.3 under the Master Agreement.
10. FORCE MAJEURE. Neither party hereto shall be considered in
default in the performance of its obligations hereunder to the extent that
the performance thereof is prevented or delayed by act of God or the public
enemy, rebellions, civil strife, riots, interference by civil or military
authorities, compliance with governmental laws or rules and regulations or
any other cause which is beyond the control of such party; provided,
however, that the party whose due performance hereunder is prevented by the
force majeure shall use its best reasonable business efforts to remove the
disability and recommence due performance hereunder at the earliest
reasonable time.
10.1. On the happening of an event of force majeure, the parties
shall be governed by the following provisions:
10.1.1. The party forced by the event of force majeure to
suspend performance (the "Suspending Party") shall promptly
advise the other party (the "Recipient Party") of the event of
force majeure, the cause thereof and, to the extent reasonably
possible, its best reasonable estimate of the duration of the
suspension (the "Failure Period"). The notice described in this
paragraph shall hereafter be referred to as the "Suspension
Notice."
10.1.2. If a failure of performance due to a force majeure
occurs and continues for a period in excess of five (5) days, or
if a Suspension Notice advises the Recipient Party that a failure
of performance will continue for a period in excess of five (5)
days, then the Recipient Party may, at its option, contract with
any third Person for an alternate supply of any product or
service to which the failure of performance applies. Any such
contract shall be referred to hereafter as an "Alternate Source
Contract."
10.1.3. The Recipient Party shall use all good faith,
consistent with sound business practice, to obtain an Alternate
Source Contract which will not extend for a period longer than
the length of any stated Failure Period; provided, however, no
Alternate Source Contract shall extend for a period longer than
six (6) months unless consented to in writing by the Suspending
Party, or unless the Failure Period described in any Suspension
Notice is greater than six (6) months (in which case an Alternate
Source Contract may extend for the length of the Failure Period
described in the Suspension Notice).
10.1.4. If any Failure Period continues for a period in
excess of twelve (12) months, or if the Suspension Notice states
that the Failure Period will continue for greater than twelve
(12) months, the Recipient Party may at its option terminate this
Agreement, only with respect to the products or services subject
to such force majeure, by ninety (90) days' written notice. If
not so terminated, however, this Agreement shall remain in full
force and effect until this Agreement is terminated by its terms.
11. ASSIGNMENT. Except as otherwise expressly provided herein, this
Agreement may not be assigned by either party hereto, whether by operation
of law or otherwise, without the written consent of the other party hereto,
and any such attempted assignment shall be void and unenforceable;
provided, however, that AGI may assign its rights and obligations
hereunder without the consent of the other party in connection with a sale
or transfer of all or substantially all of the assets or business of either
AGI or its direct mail check business.
12. NOTICES. All notices which are required or permitted to be given
pursuant to the terms of this Agreement shall be in writing and shall be
deemed effective (i) upon receipt if given in writing and delivered
personally or by facsimile transmission with receipt confirmed, (ii) five
(5) Business Days after they shall have been deposited in the United States
mails, registered or certified mail, postage prepaid, or (iii) one (1)
Business Day after they shall have been delivered to an overnight courier
service, such as Federal Express, all charges prepaid, addressed as
follows:
If to AGI, to: Artistic Greetings Incorporated, One Komer
Center, Elmira, New York 14902, Attention: Thomas C. Wyckoff, Esq.; and
If to JHH, to: John H. Harland Company, 2939 Miller Road,
Decatur, Georgia 30035, Attention: John C. Walters, Esq.
Any of the addresses or addressees set forth above may be changed
from time to time by written notice from the party requesting the change.
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof.
14. AGREEMENT. This Agreement, the Master Agreement, the Equipment
Purchase Agreement and the Confidentiality Agreement (as such terms are
defined in the Master Agreement) constitute the entire agreement between
the parties hereto relating to the subject matter hereof and supersede all
prior or contemporaneous negotiations, representations, agreements and
understandings of the parties relating thereto (including the Bridge
Agreement (as defined in the Master Agreement)).
15. NONDISCLOSURE. The parties hereto agree that, except to the
extent required by law, neither party will disclose the existence of any of
the terms of, or parties to, this Agreement to any Person which is not an
Affiliate of such party or an employee or agent of such party or such an
Affiliate without the prior written consent of the other party, which
consent will not be unreasonably withheld.
16. CONFIDENTIAL AND PROPRIETARY INFORMATION.
16.1. AGI may, from time to time, in connection with this
Agreement, disclose certain of its confidential information to JHH,
including, but not limited to, database information for AGI's customers.
JHH will not itself use for any purpose other than for which it was
disclosed, and shall prevent the disclosure to third parties of, any and
all of such confidential information, provided that JHH's obligation
hereunder shall not apply to information that:
(a) is already in JHH's possession at the time of disclosure
thereof;
(b) is or subsequently becomes part of the public domain through
no action of JHH;
(c) is subsequently received by JHH from a third party having no
obligation of confidentiality to the party disclosing the confidential
information; or
(d) is disclosed to third parties as required by law.
16.2. JHH may, from time to time, in connection with this
Agreement, disclose certain of its confidential information to AGI. AGI
will not itself use for any purpose other than for which it was disclosed,
and shall prevent the disclosure to third parties of, any and all of such
confidential information, provided that AGI's obligation hereunder shall
not apply to information that:
(a) is already in AGI's possession at the time of disclosure
thereof;
(b) is or subsequently becomes part of the public domain through
no action of AGI;
(c) is subsequently received by AGI from a third party having no
obligation of confidentiality to the party disclosing the confidential
information; or
(d) is disclosed to third parties as required by law.
16.3. All proprietary artwork, photographs, designs and negatives
furnished by AGI to JHH (hereinafter "Artwork") shall remain the property
of AGI. At AGI's request or upon termination of this Agreement, JHH shall
return to AGI the Artwork in the same condition as received, ordinary wear
and tear excepted; provided, however, that any inability of JHH to fulfill
its obligations under this Agreement by virtue of JHH's return of the
Artwork to AGI upon its request shall not constitute a breach of this
Agreement. JHH will make no use of the Artwork except to satisfy and
complete its obligations under this Agreement or as otherwise approved in
writing by AGI.
17. MODIFICATION AND AMENDMENT. No supplement, modification or
amendment of this Agreement shall be binding unless in writing and executed
by AGI and JHH.
18. SEVERABILITY. To the extent that any provision of this Agreement
is found by a court of general jurisdiction to violate any applicable law
or regulation in any jurisdiction, or does so in the opinion of counsel
mutually acceptable to both parties, such provision shall be deemed
modified only in that jurisdiction and only to the extent necessary to
comply with such law or regulation. In such circumstances, the parties
agree to negotiate in good faith amendments to this Agreement designed to
restore to the parties the economic benefits they held under this Agreement
prior to the modification.
19. COUNTERPARTS AND HEADINGS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. All headings
and captions are inserted for convenience of reference only and shall not
affect the meaning or interpretation of any provision hereof.
IN WITNESS WHEREOF, the parties hereto have set their hands
through their authorized representatives, whereby they evidence their
intention to be legally bound.
ARTISTIC GREETINGS INCORPORATED
By:/s/ Thomas C. Wyckoff
Name: Thomas C. Wyckoff
Title: Senior Vice President
JOHN H. HARLAND COMPANY
By:/s/ John C. Walters
Name: John C. Walters
Title: Senior Vice President
<PAGE>
EXHIBIT A
TO FULFILLMENT
AGREEMENT
PRINTING AND OTHER SPECIFICATIONS
CHECK PACKAGES
<circle> Package size - singles - 200
duplicates - 150
<circle> Number of sheets - singles - 200 checks/40 deposit slips
duplicates - 150 checks/30 deposit slips
<circle> Ancillary items to be included in check package
<circle> Liability Notice
<circle> Reorder form
<circle> Up to to ten other bind-in inserts
<circle> Tag board backers
<circle> Register (with each box)
<circle> Cover (supplied with each order)
<circle> Reorder envelope (per order)
<circle> Artistic cross-sell package (per order)
<circle> Artistic designed top box cover
<circle> Plain box bottom
<circle> Shipping container with AGI's return address
<circle> Typefaces and special accent cuts to be utilized as required per
AGI Electronic Instructions.
<circle> Side-tear products will follow substantially the same
specifications as top-tear.
<circle> Any changes to specifications must be mutually agreed to, in
writing, by both parties.
<circle> JHH agrees to maintain a 90% average two Business Day service
for orders and to maintain a 98% average four Business Day service for
orders.
<circle> JHH is to notify AGI of any out-of-stock situations as they
occur. This information is to be supplied via the customer service
designees at all applicable locations.
<circle> AGI will provide a six-week lead time to JHH for the addition of
any new printed stock after the negatives have been finalized.
<circle> AGI will provide bi-weekly demand reports to JHH so it can
forecast potential stock usage.
<circle> AGI will provide JHH with a three-month notice of intent to
discontinue or revise any check style.
<circle> After one year, the offerings of the check styles will not
exceed eighty SKU's at any given time. An SKU could be top or side
tear, singles or duplicates. Offerings of deposit slips are not
included.
<circle> JHH will have the first opportunity to produce any bind-in
insert for AGI as long as cost and delivery are competitive.
<circle> All proprietary artwork, photographs, designs and negatives
furnished by AGI to JHH shall remain the property of AGI. JHH shall
return this property to AGI at the end of this Agreement. JHH will
make no use of the artwork except to satisfy and complete its
obligations under this Agreement or as otherwise approved in writing
by AGI.
QUALITY
<circle> All checks will be printed on paper that meets or exceeds all
specifications of paper as specified in ANSI standard x 9.18.
<circle> All micr printing will conform to ANSI standard x 9.27.
<circle> JHH shall maintain a micr quality rate of at least 99.9%. AGI
retains the right to periodically request micr quality sample of
documents produced.
<circle> AGI, with notice, has the right to visit producing plants to
audit quality, production and reports.
<circle> The exchange rate of JHH's quality errors shall not exceed .5%
of boxes produced.
<circle> All reprint costs (priority mail or Federal Express if
requested) will be borne by the responsible party.
<PAGE>
EXHIBIT B
TO FULFILLMENT
AGREEMENT
ELECTRONIC TRANSMISSION FORMATTING
The AGI Electronic Instructions and the JHH Electronic
Instructions shall be sent using record formats that are developed and
tested jointly. The data will be sent using PC technology and PROCOMM
Communications software. Other technologies, such as Electronic Data
Interchange, may be introduced in the future as the need arises.
On-line electronic access to JHH fulfillment database (AOI
System) shall be provided for a minimum of 12 users, and attached to each
JHH manufacturing site. Three end user terminals will be supplied by JHH.
Training in the use of the AOI System will be provided by JHH on-site at
AGI. This will provide JHH personnel the ability to inquire on orders that
have been sent to JHH for production.
<PAGE>
*[ ] DENOTES CONFIDENTIAL TREATMENT REQUESTED OF EXHIBIT C
REDACTED INFORMATION TO FULFILLMENT
AGREEMENT
SHIPPING INSTRUCTIONS
<circle> Definite promise (DP) orders will be shipped bulk mail, priority
mail or Federal Express. Shipping methods are to be determined by AGI
via transmission. DP orders which are transmitted by 2:00 p.m. (EST)
are to be shipped SAME DAY. AGI agrees to reimburse JHH *$[ ]per Box
of Checks for each DP order and for each "in plant rush" for which AGI
specifically requires JHH to perform additional tasks to complete.
<circle> All shipping labels used must always conform to current postal
regulations.
<circle> Shipment methods are hereby defined as bulk mail, priority mail,
USPS and Federal Express.
<circle> Shipment methods will be defined by AGI via AGI Electronic
Instructions.
<circle> Per definition, real time is stated as 12:01 a.m. through 11:59
p.m.
<circle> Service (shipment) time is defined as two scheduled working days
from receipt of real time transmissions.
EXHIBIT 10-3 EXHIBIT B
TO MASTER
AGREEMENT
AGREEMENT FOR PURCHASE OF EQUIPMENT
THIS AGREEMENT (the "Agreement"), dated as of the 29th day of
August, 1996, by and between ARTISTIC GREETINGS INCORPORATED, a Delaware
corporation (the "Seller"), and JOHN H. HARLAND COMPANY, a Georgia
corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to a Master Agreement dated
as of the date hereof (the "Master Agreement"), pursuant to which, among
other things, Buyer will supply Seller's future fulfillment requirements
for certain check products;
WHEREAS, in connection with the Master Agreement, Seller desires
to sell and Buyer desires to buy all of Seller's right, title and interest
in the machinery and equipment further described herein; and
WHEREAS, the parties are desirous of setting forth herein the
terms and conditions pursuant to which the sale and purchase shall be
consummated.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and conditions herein contained, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. PURCHASE AND SALE OF MACHINERY AND EQUIPMENT.
Subject to the terms and conditions of this Agreement, Seller
shall sell, convey, transfer and assign to Buyer, and Buyer shall purchase
and acquire from Seller on the Closing Date (as defined in the Master
Agreement), all of Seller's right, title and interest in and to all of the
machinery and equipment set forth on Schedule A hereto, including all
additions, accessions and associated parts and tools (all of the foregoing,
as so set forth on Schedule A, are hereinafter collectively referred to as
the "Purchased Assets"). In addition, subject to the terms and conditions
of this Agreement, Seller shall transfer to Buyer all books and records,
correspondence, files and other materials (or copies thereof) which relate
to the Purchased Assets which are under the possession or control of
Seller.
Seller shall remain in possession of the Purchased Assets after
the Closing Date and shall have the right to use the Purchased Assets in
its business for a period of time to be mutually agreed between Buyer and
Seller. During such period of time, Seller shall have responsibility for,
and risk of loss with respect to, the Purchased Assets.
2. PURCHASE PRICE.
In consideration of the sale, conveyance, transfer and assignment
of the Purchased Assets by Seller to Buyer, Buyer agrees to pay to Seller
on the Closing Date, by wire transfer or certified check, the sum of
$3,487,187.72 (the "Closing Payment").
3. NO ASSUMPTION OF LIABILITIES.
(a) Buyer shall acquire the Purchased Assets free and clear of
all liens, security interests, charges, encumbrances, obligations and
liabilities. By acquisition of the Purchased Assets, Buyer is not assuming
any debt, liability or obligation of Seller, whether known or unknown,
fixed or contingent.
(b) No provision of this Agreement shall be construed as an
implied assumption by the Buyer of any debt, liability or obligation of
Seller.
(c) Without prejudice to any of this paragraph 3, Seller shall
indemnify Buyer against any liability to any third party arising from
Seller's use, operation or ownership of the Purchased Assets prior to the
delivery of the Purchased Assets to Buyer following the period during which
Seller is using the Purchased Assets subsequent to the Closing Date as
discussed in Section 1.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
(a) Seller represents and warrants that it owns the Purchased
Assets free and clear of all liabilities, mortgages, security interests,
leases, claims, liens, pledges, encumbrances, restrictions, charges or
imperfections of title whatsoever as of the Closing Date and as of the end
of the period of use subsequent to the Closing Date referred to in Section
1, so that Buyer shall, after consummation of the transactions contemplated
hereunder and delivery of possession in accordance with the terms hereof,
be free to utilize, sell or otherwise dispose of all of the Purchased
Assets in whatever manner and at whatever locations Buyer may desire.
(b) NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION OR ANY
OTHER SECTION OF THIS AGREEMENT OR ANY OTHER AGREEMENT, DOCUMENT OR
INSTRUMENT CONTEMPLATED HEREBY, IT IS THE EXPLICIT INTENT OF EACH PARTY
HERETO THAT SELLER IS MAKING NO OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY MADE IN SECTIONS
4(a) AND 4(c), INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OR
REPRESENTATION AS TO THE CONDITION, MERCHANTABILITY OR SUITABILITY OF THE
PURCHASED ASSETS AND THE PURCHASED ASSETS ARE SOLD BY SELLER TO BUYER ON AN
"AS IS, WHERE IS" BASIS.
(c) The information in this Agreement and the Schedule hereto is
true and correct as of the date hereof.
5. REMOVAL OF THE PURCHASED ASSETS.
Buyer shall remove the Purchased Assets from the Seller's
premises at its own cost, risk and expense no later than forty-five (45)
days following the date Seller ceases using the same in its business.
During such period Buyer, alone or together with third parties, shall have
the right to inspect the Purchased Assets on Seller's premises for the
purpose of selling or otherwise disposing of the Purchased Assets at
reasonable times such as not to interfere with Seller's business and upon
reasonable notice. Seller shall use its best efforts to cooperate with
Buyer in such removal; provided, however, that Seller shall not in any way
be liable for any losses incurred by Buyer and/or any of its officers,
directors, employees and agents in connection with such removal other than
losses arising from Seller's negligence or willful misconduct. Buyer shall
indemnify and hold harmless Seller and each of its officers, directors,
employees or agents from and against any and all losses arising out of or
in connection with any damage to the facilities or businesses of Seller
resulting from the removal of the Purchased Assets other than losses
arising from Seller's negligence or willful misconduct.
6. SALES AND USE TAXES.
Buyer shall be liable for, and shall hold Seller harmless from
and against, all Taxes and Tax Losses, if any, that may be payable as a
result of the sale of the Purchased Assets contemplated hereby. As used in
this Section 6, the term "Taxes" includes only taxes payable under the New
York Sales and Use tax and any other applicable sales or use tax and the
term "Tax Losses" includes only penalties, fines, interest, settlement
costs and costs and expenses (including reasonable legal expenses) directly
related to the payment of any Taxes. The term "Taxes" expressly does not
include any federal, state or local income tax that may be payable by
Seller as a result of the sale of the Purchased Assets contemplated hereby
nor does the term "Tax Losses" include any penalties, fines, interest,
settlement costs and costs and expenses (including reasonable legal
expenses) directly related to the payment of any such federal, state or
local income tax.
Buyer shall have the right, at its own expense, to control any
audit or examination and to contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed
adjustment, in each case relating to any Taxes (collectively, "Tax
Proceedings"). Seller shall notify Buyer in writing of the commencement of
any Tax Proceeding and Buyer shall notify Seller in writing of its
assumption of control of any Tax Proceeding. Seller may, at its own
expense, participate in any Tax Proceedings; provided, however, that in the
event that Buyer does not assume control of any Tax Proceeding, Seller
shall assume such control at Buyer's sole expense as aforesaid.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligation of Buyer to acquire the Purchased Assets as
provided hereunder is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:
(a) All corporate and other actions necessary to authorize and
effectuate the consummation of the transactions contemplated hereby by
Seller shall have been duly taken prior to the Closing Date.
(b) The representations and warranties of Seller set forth in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though all such
representations and warranties had been made on and as of such date.
(c) Seller shall have performed all acts necessary to evidence,
to Buyer's reasonable satisfaction, that Seller can transfer title to
the Purchased Assets to Buyer free and clear of all liens, claims and
encumbrances.
(d) Seller shall tender to Buyer evidence of transfer of title
to the Purchased Assets to Buyer in a form reasonably acceptable to
Buyer.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
The obligation of Seller to sell or otherwise transfer the
benefits of the Purchased Assets hereunder is subject to the satisfaction,
on or prior to the Closing Date, of the following condition:
(a) Buyer shall tender to Seller the Closing Payment by means of
a wire transfer of immediately available funds or certified check.
9. FURTHER ASSURANCES.
Buyer and Seller each agree to execute and deliver all such other
documents and take all such other action as either party may reasonably
request from time to time, before or after the delivery by Seller to Buyer
of the Purchased Assets and without payment of further consideration, in
order to effectuate the transactions provided for herein. The parties
shall cooperate fully with each other and with their respective counsel and
accountants in connection with any steps required to be taken as part of
their respective obligations under this Agreement.
10. ENTIRE AGREEMENT.
This Agreement, the Master Agreement, the Fulfillment Agreement
and the Confidentiality Agreement (as such terms are defined in the Master
Agreement) contain the entire agreement between the parties hereto, and
there are no other terms, obligations, covenants, representations,
statements or conditions, oral or written, of any kind whatsoever,
concerning the sale and purchase of the Purchased Assets, which are not
included herein or therein. This Agreement may only be altered, modified
or changed by a writing executed by the parties hereto. The schedule
attached hereto is hereby incorporated by reference into, and made a part
of, this Agreement.
11. SEVERABILITY.
Any provision of this Agreement which may prove unenforceable
under any law shall not affect the validity of any other provisions hereof.
12. NATURE OF AGREEMENT; ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflicts of
law principles thereof.
14. COUNTERPARTS.
This Agreement may be executed in two or more counterparts each
of which shall be deemed as original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties have caused this Agreement to be duly executed on the day and year
first above written.
ARTISTIC GREETINGS INCORPORATED
By: /S/ THOMAS C. WYCKOFF
Name: Thomas C. Wyckoff
Title: Senior Vice President
JOHN H. HARLAND COMPANY
By: /S/ JOHN C. WALTERS
Name: John C. Walters
Title: Senior Vice President
<PAGE>
Schedule A
PURCHASED ASSETS
[Note: The Registrant agrees to furnish supplementally to the Commission a
copy of any omitted schedules or exhibits to this Agreement upon request.]
