EXHIBIT 4-1
INVESTMENT AGREEMENT
This Agreement is by and between ARTISTIC GREETINGS INCORPORATED, a
Delaware corporation, with an address of Xxx Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000 (the "Company"), and Valcheck Company, a Delaware general partnership
with an address of 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx 00000 ("Valcheck").
WHEREAS, pursuant to an Asset Purchase Agreement of even date herewith
among the Company, Valcheck and Valassis Communications, Inc., the Company
is purchasing certain assets from Valcheck; and
WHEREAS, as part of the consideration for the transactions
contemplated in the Asset Purchase Agreement, the Company will issue to
Valcheck 500,000 shares of the Company's Common Stock, par value $.10 per
share (the "Shares");
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1) INVESTMENT INTENT. Valcheck is acquiring the Shares for investment
purposes, for its own account and not with a view to, or for resale in
connection with, any distribution of the Shares.
2) DUE DILIGENCE. Valcheck has received the Company's Form 10-K
Report for its year ended December 31, 1994, its Form 10-Q for its quarter
ended March 31, 1995, its Proxy Statement for its 1995 Annual Meeting of
Shareholders and its 1994 Annual Report, and has had an opportunity to
discuss the Company, its business plans and prospects with the senior
management of the Company. Valcheck understands the financial risks
involved with this investment and has the financial ability to hold the
Shares for investment purposes.
3) RESTRICTED SECURITIES. Valcheck understands and acknowledges that
the Shares are being offered and sold to it pursuant to an exemption from
registration under the Securities Act of 1933 (the "Act") that depends upon
its representations contained in this Agreement and that the Company is
relying on such representations as a condition precedent to issuing the
Shares to it. Valcheck acknowledges and agrees that, since the Shares will
be "restricted securities" within the meaning of Rule 144 under the Act,
absent their registration for public sale or an exemption from the
registration requirements of the Act other than that provided by Rule 144,
it must hold the Shares a minimum of two years from their date of
acquisition before any of them may be sold under Rule 144, and that any
sales thereafter made by it under Rule 144 can only be made in limited
quantities and only under the terms and conditions of said Rule; and that
any other public resale of the Shares may require registration under the
Act or reliance upon an applicable exemption from registration. Valcheck
also understands that the Company is under no obligation to register the
Shares in the future.
4) TRANSFER RESTRICTIONS. Valcheck agrees that the Shares may not be
transferred, and that the Company shall not be required to register any
such transfer in its stock transfer records, unless and until the Company
shall have been informed of the proposed transfer and:
(a) A registration statement with respect to the Shares shall be
effective under the Act; or
(b) Valcheck has obtained an opinion of counsel, in form and
content satisfactory to the Company and its counsel, that such
transfer complies with an applicable exemption from the registration
requirements of the Act, together with such other documentation as
counsel for the Company may in its reasonable discretion require as a
condition precedent in order to make a determination that the transfer
will not involve a violation of the registration provisions of the
Act.
Valcheck agrees that appropriate legends may be placed on any
certificates delivered to it representing the Shares in order to give
notice of the transfer restrictions set forth in this Agreement.
5) REPURCHASE OPTION. At any time during the 30 day period beginning
on the second anniversary of the closing date of the transactions
contemplated under the Asset Purchase Agreement (the "Put Option Term"),
Valcheck shall have the right to require the Company to repurchase some or
all of the Shares at a price of $5.00 per share (the "Put Option"), and the
Company will repurchase the number of Shares designated by Valcheck in such
notice within 30 days following the Company's receipt of such request from
Valcheck. The Company shall take whatever action is necessary or
appropriate to ensure that any sale of the Shares by Valcheck to the
Company pursuant to the Put Option complies with the Act. The Put Option
shall not be transferable to any third party except to Valassis
Communications, Inc., DRB Holdings, Inc., and/or Valassis Direct Response,
Inc.
6) RIGHT OF FIRST REFUSAL. With respect to any sales of any of the
Shares made by Valcheck at any time, Valcheck hereby grants the Company a
right of first refusal to purchase such Shares being sold by it on the same
price and other terms as are applicable to any disposition contemplated by
Valcheck. If such Shares are to be sold in the public market, the Company
shall pay the Closing Price for the Company's Common Stock in trading on
the National Association of Securities Dealers Inc. ("NASD") Automated
Quotation System ("Nasdaq") National Market List on the date the notice of
such proposed disposition is received by the Company. If such shares are
to be sold in a transaction other than in the public market, the Company
shall pay the price agreed to in such transaction. Valcheck must give the
Company five days notice of such a proposed disposition, to which the
Company must respond within five days following its receipt of such notice
or the right of first refusal with respect to the specific disposition
contemplated shall automatically expire. This right shall specifically
survive the expiration of the Put Option Term indefinitely. Closing of the
purchase by the Company of any Shares it may determine to purchase through
the exercise of this right of first refusal shall take place within 15 days
following the date on which the Company at any time exercises this right.
7) BOARD REPRESENTATION; VOTING RIGHTS.
(a) BOARD REPRESENTATION. So long as Valcheck controls at least
300,000 of the Shares, it shall have the right to designate one
representative as a member of the Company's Board of Directors. Upon the
closing of the transactions contemplated hereby, the Company agrees to take
all actions necessary to expand the size of its Board by one and to fill
the vacancy created thereby by electing to its Board an individual named by
Valcheck and reasonably acceptable to the Company. Subject to the
foregoing, at each Annual Meeting of the Company's shareholders, the
Company agrees to nominate an individual named by Valcheck and reasonably
acceptable to the Company, for inclusion in the slate of Directors to be
nominated by the Company for election to its Board, and agrees to solicit
and vote all proxies received in favor of electing such individual to its
Board.
(b) VOTING OF SHARES. So long as Valcheck controls any of the Shares,
with respect to all matters that are put before the Company's shareholders
for a vote, whether at a meeting or by written consent, Valcheck agrees to
vote all such Shares in favor of the Company's slate of nominees for
election to its Board of Directors and in accordance with the Board's
recommendation with respect to all other matters, and Valcheck agrees that
the Company may enforce these rights by injunctive action in any court of
competent jurisdiction.
8) GENERAL.
(a) NOTICE. Any notice required or permitted hereunder shall be in
writing and shall be deemed to have been duly given (i) upon hand delivery,
or (ii) on the third day following delivery to the U.S. Postal Service as
certified mail, return receipt requested and postage prepaid, or (iii) on
the first day following delivery to a nationally recognized U.S. overnight
courier service, fee prepaid and return receipt or other confirmation of
delivery requested, or (iv) when telecopied or sent by facsimile
transmission. Any such notice shall be delivered to a party at its address
first set forth above, or at such other address as may be designated by one
party in a notice given to the other from time to time in accordance with
the terms of this paragraph.
(b) ASSIGNMENT. This Agreement may not be assigned in whole or in
part without the written consent of all parties.
(c) ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Asset Purchase Agreement, contains the entire understanding between the
parties hereto and supersedes any prior agreements, understandings,
discussions, or writings between the parties with respect to the subject
matter hereof. This Agreement may only be amended by a written document
signed by all parties hereto. There are no representations, warranties, or
obligations of any party not expressly contained herein.
(d) WAIVER. No waiver by any party of a breach of any term or
condition of this Agreement by any other party shall be effective unless in
writing and duly executed by the waiving party. No such waiver shall
constitute a waiver of any subsequent breach of the same or any other term
or condition of this Agreement.
(e) CONSTRUCTION. Should an occasion arise in which interpretation of
this Agreement becomes necessary, such construction or interpretation shall
not presume that the terms hereof be more strictly construed against one
party by reason of any rule of construction or authorship.
(f) DUPLICATE ORIGINALS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original. It shall not be
necessary in making proof of this Agreement to produce or account for more
than one of such counterparts.
(g) HEADINGS. The headings included herein are for convenience only
and do not constitute a portion of this Agreement and shall not be used in
any construction hereof.
(h) APPLICABLE LAW; SEVERABILITY. This Agreement shall be governed and
construed in accordance with the laws of the State of New York pertaining
to contracts made and to be wholly performed within such state, without
taking into account conflict of laws principles. If any provision
contained herein is held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions shall not in any way be affected
or impaired.
(i) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the
courts of the State of New York and/or the Federal Courts located in the
State of New York shall have jurisdiction over each of the parties hereto
and over the subject matter of any such proceedings, and the venue of any
such action shall be in Monroe County, New York and/or the U.S. District
Court for the Western District of New York.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the 30th day of May, 1995.
ARTISTIC GREETINGS INCORPORATED VALCHECK COMPANY
By: Valassis Direct Response, Inc.,
its Managing Partner
By: /s/ Xxxxx X. Xxx
By: /s/ Xxxxxx X. Xxxxxxx
Title: President and COO
Title: CFO and Treasurer
