UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
(Mark One)
|x| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993 or
| | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________________ to _______________
Commission file number 1-6352
John H. Harland Company
(Exact name of registrant as specified in its charter)
Georgia 58-0278260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2939 Miller Road, Decatur, Georgia 30035
(Address of principal executive offices) (Zip Code)
(404) 981-9460
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------------- -----------------------------------------
Common Stock $1 par value New York Stock Exchange
Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports re-
quired to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of the close of business on March 15, 1994 was $684,127,134.
The number of shares of the Registrant's Common Stock outstanding on March
15, 1994 was 30,485,953.
A portion of the Registrant's Definitive Proxy Statement dated March 17, 1994
is incorporated by reference in Part III hereof.
-1-
<PAGE>
<PAGE>
John H. Harland Company and Subsidiaries
Index to Annual Report on Form 10-K
Page
Part I
Item 1: Business 3
Item 2: Properties 6
Item 3: Legal Proceedings 7
Item 4: Submission of Matters to a Vote of Security Holders 7
Item X: Executive Officers of the Registrant 7
Part II
Item 5: Market for the Registrant's Common Equity and
Related Stockholder Matters 8
Item 6: Selected Financial Data 8
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 8: Financial Statements and Supplementary Data 8
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 9
PART III
Item 10: Directors and Executive Officers of the Registrant 9
Item 11: Executive Compensation 9
Item 12: Security Ownership of Certain Beneficial Owners
and Management 9
Item 13: Certain Relationships and Related Transactions 9
PART IV
Item 14: Exhibits, Financial Statement Schedules and
Reports on Form 8-K 9
-2-
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
John H. Harland Company (the "Company" or the "Registrant") was founded in
1923 as a general printer and lithographer. Today, the Company is a leading
printer and supplier of checks, business documents and forms to the financial
industry. The Company also designs and produces optical mark reading ("OMR")
and optical character recognition ("OCR") forms and equipment for use in
educational and commercial markets. The Company, a Georgia corporation, is
headquartered in Atlanta, Georgia and operates primarily in the printing
industry. In addition, the Company operates one major subsidiary, Scantron
Corporation ("Scantron").
Scantron produces and provides OMR equipment and scannable forms to the
educational and commercial markets. Scantron is a Delaware corporation based
in Tustin, California. In November 1991, Scantron acquired the remaining 50%
of Datascan, its European partner in OMR/OCR machine development and
distribution, for $3 million. In September 1993, Scantron acquired Economics
Research, Inc. ("ERI"), a software company based in Costa Mesa, California.
ERI provides test development, scoring, analysis and grade management
products for educational markets.
In February 1992, the Company acquired the net assets of Interchecks Inc.
("Interchecks"), a Seattle, Washington-based check printer for $50 million in
cash. Interchecks was purchased from the United Kingdom company Bowater plc
through its United States subsidiary Rexham Inc. On January 1, 1993, the
Company acquired substantially all the net assets of Rocky Mountain Bank Note
Company ("RMBN"), a Lakewood, Colorado-based check printer, for $37.9 million
in cash. A portion of the consideration was financed through borrowings under
the Company's unsecured line of credit and the balance was paid in cash. RMBN
assets were purchased from ROMO Corp., the sole shareholder of RMBN.
In October 1993, the Company announced the formation of a new subsidiary,
The Check Store, Inc. ("The Check Store"), which will market checks and
related products directly to consumers. The Check Store will become
operational during the first half of 1994.
On January 7, 1994, the Company acquired Marketing Profiles, Inc. ("MPI").
MPI is based in Maitland, Florida and is a database marketing and consulting
company which provides software products and related marketing services to
the financial industry. On March 24, 1994, the Company announced that it had
signed a definitive agreement to purchase the net assets of FormAtion
Technologies, Inc.("FTI"). FTI develops, markets and supports lending and
platform automation software for the financial services industry. The FTI
acquisition is expected to be completed by March 31, 1994. Both the MPI and
FTI transactions were for cash amounts which are not considered material.
During 1993, the Company developed three strategic alliances with
independent companies to provide its financial industry customers with
additional services and products. Through its alliance with TeleCheck
Services, Inc., the nation's leading provider of check authorization and
related guarantee services, the Company addresses security and fraud concerns
of financial institutions. Through Cardpro Services, Inc., a nationwide
provider of magnetic stripe cards, the Company provides full-service plastic
card programs for financial institutions. Through its alliance with
Bottomline Technologies, Inc. , a leader in desktop printing of magnetic ink
character recognition ("MICR") readable documents, the Company offers point
of service production capabilities of MICR readable documents.
-3-
<PAGE>
<PAGE>
DESCRIPTION OF BUSINESS UNITS
Overview
In 1993, the Company operated under two business units, the Financial
Services Group ("FSG") and the Data Services Group ("DSG"). Both units oper-
ate primarily within the printing industry segment. FSG provides financial
documents to support America's payment systems. DSG's principal operation is
the production of data collection forms which are used in conjunction with
form reading equipment.
Approximately 95% of the Company's consolidated revenues during the three
years ended December 31, 1993, 1992 and 1991, respectively, were from sales
of checks and related items, business documents, and scannable forms.
Approximately 5% of the Company's consolidated revenues during the periods
were from sales of scanning equipment and revenues from other areas.
Financial Services Group
FSG includes the Company's check printing operations and specialty
printing operations. FSG's principal products consist of MICR encoded checks,
deposit tickets and related forms for financial institutions and their
customers. The product line consists of a number of different styles of
checks including scenic checks, which incorporate multi-colored backgrounds,
personal and business three-to-the-page checks and carbonized payroll,
voucher, window, and computer generated checks (includes continuous form
checks and checks produced with laser printers). In 1993, FSG's overall
prices of its checks and related products remained essentially unchanged from
1992 due to competitive conditions in the check printing industry.
FSG, through its specialty print operations, also produces a number of
printed or lithographed custom printed packages, forms, business products and
computer-related documents for sale to financial institutions and other
commercial establishments. Such custom printed items include specially
designed checks and deposit tickets printed with a customer's individual
design, magnetically encoded internal control documents and carbon-
interleaved forms.
FSG's documents are printed on stock lithographed in its 7 base stock
plants and at its specialty printing plant. FSG imprints checks and related
product documents at its 50 check printing facilities located in 33 states
and 1 plant in Puerto Rico. All of these plants are devoted exclusively to
printing checks, deposit tickets and related forms.
FSG's products are marketed across the United States and in Puerto Rico
through a sales force of approximately 360 personnel. FSG's sales
organization is organized by customer type through three distinct sales
support units, Primary, National and Business Services. The Primary sales
unit, consisting of approximately 280 sales representatives, serves community
based financial institutions. The National Accounts sales unit of 70 sales
representatives serves the top 400 financial institutions in the country. The
Business Services unit, consisting of approximately 10 representatives,
serves selected retail markets such as superstores, software companies and
catalog merchandisers. The primary responsibility of the sales force is to
consult with customers regarding their needs and provide solutions to meet
those needs. FSG also uses catalogs, brochures and similar sales aides to
present solutions to customers.
Data Services Group
The DSG provides creative data collection and management solutions for its
customers. Data collection represents diverse technologies with similar
-4-
<PAGE>
<PAGE>
objectives -- converting information into a computer-compatible format, then
providing information that can be used for a specific function. DSG
concentrates on the production and distribution of OMR, OCR and imaging forms
and systems within the data collection market. DSG's principal products are
scanning equipment and the scannable forms used in conjunction with the
equipment. DSG also offers maintenance services for the scanning machines and
software products related to data collection and analysis activities.
DSG forms and equipment are used as a solution for capturing, tabulating
and analyzing data. DSG's primary market is the educational field for test
scoring and grade reporting. Within the commercial sector, DSG equipment and
forms are used to collect and analyze survey responses, inventory informa-
tion, employee evaluations, order information and other forms of data collec-
tion and analysis.
The products are marketed primarily through 193 sales and service
representatives located in 49 locations throughout the United States and 2
locations in Canada. Representatives sell and place new equipment and provide
ongoing assistance, such as machine servicing and development of new forms.
DSG's products are also marketed in certain foreign countries through
distributorships.
Other Information Relating to Business of the Company
Seasonal Business
There is a seasonal nature to DSG's business in the educational market,
but it does not significantly affect the Company's consolidated results.
Patent, Trademarks, Licenses, Franchises and Concessions
On February 4, 1992, the Company received a patent on a Scannable Form and
System developed by Scantron. This patent expires February 4, 2009. Also,
the Company has trademarks on names of several of its products and services.
The Company believes these patents and trademarks impact business, however,
it does not consider any of them to be critical to its operation.
Competition
Financial Services Group -- At the present time, there are a number of
domestic companies specializing in the production of MICR encoded checks and
related items similar to those produced by the Company. The Company believes
that the primary competitive factors considered by customers are printing
accuracy, service capabilities, price and the availability of a complete
product line. The Company compares favorably with its competitors with regard
to these above mentioned factors. Although complete statistics on check
production are not available, the Company believes it is among the largest
printers of MICR encoded personalized checks in the United States. One other
printer has substantially greater sales and financial resources than the
Company.
Technological advancements in electronics have created possible
alternatives to the check as a medium of transferring funds. While electronic
funds transfer has gained acceptance for some applications, it has had
minimal acceptance by consumers as a mode of personal payment. At this time,
the Company cannot determine or predict what effect this technology may
eventually have on the check printing business.
Data Services Group -- The data collection market is a highly fragmented
industry, with many large and small competitors, and is growing at
approximately 15% annually. DSG products are sold mainly in the United States
with minor sales activity in Puerto Rico, Canada, Europe, the Middle East and
-5-
<PAGE>
<PAGE>
the Far East. Scannable forms are produced by commercial and specialized
forms printers throughout the United States. DSG has attempted to identify
and develop specialized products for niche markets. DSG believes it is the
leading provider of OMR stand-alone equipment to the educational market in
the United States. In Canada, one competitor has substantially larger sales.
The loss of any one customer in the FSG or DSG would not have a material
adverse effect on the Company.
Raw Materials
The Company purchases its principal raw materials (safety paper, form
paper and MICR bond) from several large domestic manufacturers. Past
conditions in the paper market have resulted in temporary increases in paper
prices and required advanced scheduling of paper deliveries. However, raw
materials have traditionally been readily available, and the Company has
never experienced a paper shortage.
The Company purchases other raw materials, such as vinyl (used in the
production of check book covers), inks, checkboards, packaging materials and
miscellaneous paper from a number of suppliers.
The components used in the assembly and manufacturing of the OMR equipment
are purchased from equipment manufacturers, supply firms and others. The
Company has no reason to believe that it cannot continue to obtain such
materials or suitable substitutes for its operation. The Company has no long-
term contracts with any of its raw material suppliers.
Number of Employees
As of December 31, 1993, the Company and its subsidiaries employed ap-
proximately 7,300 people (includes 649 temporary employees).
ITEM 2. PROPERTIES
As of December 31, 1993, the Company and its subsidiaries owned 49
facilities located in 30 states of which all but 2 facilities were production
and service facilities. Approximate square footage of owned facilities to-
taled 2,000,000 square feet. The Company leases approximately 591,000 square
feet in 22 facilities for printing and/or warehouse activities. The leased
facilities are located in 14 states and Puerto Rico.
Printing production locations:
Alburqueque, NM Miami (Sunrise), FL
Atlanta (Decatur), GA (2) Milwaukee (Waukesha), WI
Baltimore (Columbia), MD Minneapolis (Plymouth), MN
Birmingham, AL Nashville (Antioch), TN
Boise, ID New Orleans, LA
Boston (Rockland), MA Newark (West Caldwell), NJ
Centralia, WA (2) Oklahoma City, OK
Chicago (Burr Ridge), IL Orlando, FL
Cincinnati, OH Phoenix, AZ
Cleveland (East Lake), OH Pittsburgh (Mars), PA
Concord, CA Portland (Tualatin), OR
Covington, GA Richmond, VA
Dallas (Irving), TX Rochester, NY
Denver (Aurora), CO Salt Lake City, UT (2)
Denver (Lakewood), CO San Antonio, TX
Des Moines (Urbandale), IA San Diego, CA
Detroit (Plymouth), MI San Francisco (Livermore), CA
-6-
<PAGE>
<PAGE>
El Paso, TX San Juan (Carolinas), PR
Essex, MD San Juan (Gurabo), PR
Fresno, CA Shreveport (Bossier City), LA
Greensboro, NC St. Louis (St. Peters), MO
Hartford (Enfield), CT St. Petersburg, FL
Houston, TX Tucson, AZ
Indianapolis, IN Tustin, CA
Jackson, MS West Columbia, SC
Jacksonville, FL Wilkes-Barre, PA
Kansas City, MO Yorba Linda, CA
Memphis (Bartlett), TN
Idle production locations:
Birmingham, AL (leased) Memphis, TN (sold 2/94)
Cincinnati, OH (leased) Philadelphia (West Chester), PA
Denver (Wheat Ridge), CO (sold 2/94)
(lease terminated 3/94) Portland (Beaverton), OR (leased)
Gulfport, MS (sold 1/94) Richmond, VA (leased)
Warehouse locations:
Chicago (Arlington Heights), IL West Columbia, SC
Fresno, CA
The foregoing information excludes Company held properties leased to
others. The Company leases office space for sales and services activities in
areas where there are no production facilities. These leases are not
considered to be significant.
The Company also has a facility in Villeret, Switzerland (9,000 square
feet).
The Company's executive offices are located in Atlanta, Georgia.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names and ages of all executive
officers of the Company and all positions and offices with the Company
presently held by such executive officers.
Name Age Office Held
Robert R. Woodson 61 Chairman, President and Chief Executive Officer
William M. Dollar 45 Vice President, Treasurer, and Chief Financial
Officer
Earl W. Rogers Jr. 45 Senior Vice President
Michael S. Rupe 43 Senior Vice President
Victoria P. Weyand 43 Vice President and Secretary
Of the foregoing officers, Mr. Woodson is also a Director of the
-7-
<PAGE>
<PAGE>
Registrant. Officers are elected annually by the Board of Directors.
Mr. Woodson was elected Chairman of the Board in April 1992 and has been
Chief Executive Officer since April 1990 and President since April 1984.
Mr. Dollar was elected Vice President in April 1992 and has been Treasurer
and Chief Financial Officer of the Registrant since February 1990. Prior to
his employment with the Company, Mr. Dollar served as Assistant Vice
President and Regional Controller of units of Sonat Inc., a Birmingham,
Alabama-based energy company, from 1981 through 1989.
Mr. Rogers was elected Vice President in April 1989 and Senior Vice
President in April 1993 and was named manager of the Company's Financial
Services Group in July 1993. Mr. Rogers joined the Company in 1976 and has
served in the positions of plant manager, district operations manager and
FSG operations manager.
Mr. Rupe was elected Senior Vice President in 1991. In 1987, Mr. Rupe was
Treasurer and Chief Financial Officer of the Company, prior to that time,
Mr. Rupe had served in the positions of Assistant-Treasurer and Controller.
In 1989, Mr. Rupe left the Company to assume the position of Executive Vice
President with Profit Freight Systems. Mr. Rupe returned to the Company in
March 1991.
Ms. Weyand was elected Secretary of the Registrant in January 1994 and is
Vice President-Investor Relations. Ms. Weyand's responsibilities also
include investor relations, shareholder relations and strategic
planning/acquisition support. Ms. Weyand was elected Vice President of the
Registrant in 1980 and has served the Company in a variety of positions
including Vice President-Human Resources.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
See the information with respect to the market for an number of holders of
the Company's common stock, quarterly market information and dividend
information which is set forth on page F16 of this Annual Report on Form 10-
K. The number of holders of record of the Company's common stock was
computed by a count of record holders on December 31, 1993.
ITEM 6. SELECTED FINANCIAL DATA
See the information with respect to selected financial data on page F16 of
this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See the information under the caption Management's Discussion and Analysis
of Results of Operations and Financial Condition on pages F17 through F19 of
this Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the information with respect to Financial Statements and Supplementary
Data on pages F2 through F15 and page F16, respectively of this Annual
Report on Form 10-K.
-8-
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding Directors required herein is incorporated by
reference to the information under the caption "Management of the Company"
in the Registrant's Definitive Proxy Statement for the Annual Shareholders'
Meeting dated March 17, 1994 (the "Proxy Statement").
The information regarding Executive Officers required herein is included
in Part I, Item X of this report and incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive compensation is incorporated by
reference to the information under the caption "Executive Compensation and
Other Information" in the Registrant's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required herein is incorporated by reference to the
information under the caption "Management of the Company -- Beneficial
Ownership" in the Registrant's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required herein is incorporated by reference to the
information under the caption "Certain Transactions" in the Registrant's
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Page in this
Annual Report
on Form 10-k
-------------
(a)1. Financial Statements:
Management Responsibility for Financial Statements F2
Independent Auditors' Report F3
Consolidated Balance Sheets F4
Consolidated Statements of Income F6
Consolidated Statements of Cash Flows F7
Consolidated Statements of Shareholders' Equity F8
Notes to Consolidated Financial Statements. F9
Quarterly Financial Information (unaudited) F16
-9-
<PAGE>
<PAGE>
Page in this
Annual Report
on Form 10-k
-------------
(a)2. Financial Statement Schedules:
Schedule V. Property, plant and equipment S1
Schedule VI. Accumulated depreciation and amortization
of property, plant and equipment S2
Schedule VIII. Valuation and qualifying accounts S3
Schedule IX. Short-term borrowings S4
Schedule X. Supplementary income statement information S5
(a)3. Exhibits
(Asterisk indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.)
3.1 Amended and Restated Articles of Incorporation.
3.2 * By-Laws, as amended. Adopted by the Board of Directors on July 27, 1990
filed as Exhibit 3(D) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990.
4.1 Indenture, as supplemented and amended, relating to 6.75% Convertible
Subordinated Debentures due 2011 of Scantron Corporation (omitted
pursuant to Item 601(b)(4)(iii) of Regulation S-K; will be filed upon
request).
4.2 * Form of Rights Agreement dated as of June 9, 1989, between the
Registrant and Citizens and Southern Trust Company. Filed as Exhibit 1
to Form 8-K dated June 9, 1989.
4.3 * First Amendment dated June 12, 1992 to Rights Agreement dated June 9,
1989 between the Company and NationsBank of Georgia Inc., N.A., succes-
sor to Citizens and Southern Trust Company. Filed as exhibit 4.1 on
Form 10-Q for the quarter ended September 30, 1992.
4.4 * Second Amendment dated July 24, 1992 to Rights Agreement dated June 9,
1989 between the Company and Trust Company Bank, successor to
NationsBank of Georgia Inc., N.A., and to Citizens and Southern Trust
Company. Filed as exhibit 4.2 on Form 10-Q for the quarter ended
September 30, 1992.
4.5 Note Agreement dated as of December 1, 1993 between the Company and the
purchasers listed on Schedule I of the agreement, for the issuance and
sale of $85,000,000 aggregate principle amount of 6.60% Series A Senior
Notes Due December 30, 2008.
10.1 Form of Deferred Compensation Agreement between the Registrant and the
following Executive Officer and Director: Mr. Woodson and the follow-
ing Retired Executive Officer and Current Director: Mr. Lang.
10.2 * Form of Monthly Benefit Amendment to Deferred Compensation Agreement
between the Registrant and the following Executive Officer and
Director: Mr. Woodson and the following Retired Executive Officer and
Current Director: Mr. Lang. Filed as Exhibit 10(H) to the Registrant's
Annual Report on Form 10-K for the year ended December 3l, 1990.
10.3 Form of Deferred Compensation Agreement between the Registrant and the
following Executive Officers: Messrs. Dollar, Rogers and Rupe.
10.4 Form of Deferred Compensation Agreement between the Registrant and the
following Executive Officer: Ms. Weyand.
10.5 Form of Frozen Benefit Amendment to Deferred Compensation Agreement
between the Registrant and the following Executive Officer: Ms.
-10-
<PAGE>
<PAGE>
Weyand.
10.6 Form of Amendment to Deferred Compensation Agreement between the Regis-
trant and the following Executive Officer and Director: Mr. Woodson
and the following Retired Executive Officer and Current Director: Mr.
Lang and the following Executive Officers: Messrs. Dollar, Rogers and
Rupe and Ms. Weyand.
10.7 Form of Non-Compete and Termination Agreement between the Registrant
and the following Executive Officer and Director: Mr. Woodson, the
following Retired Executive Officer and Current Director: Mr. Lang and
the following Executive Officers: Messrs. Dollar, Rogers and Rupe.
10.8 Form of Executive Life Insurance Plan between the Registrant and the
following Executive Officer and Director: Mr. Woodson, the following
Retired Executive Officer and Current Director: Mr. Lang and the fol-
lowing Executive Officers: Messrs. Dollar, Rogers and Rupe and Ms.
Weyand.
10.9 * The John H. Harland Company Incentive Stock Option Plan filed as Exhib-
it (28)(a) to the Registrant's Registration Statement on Form S-8 (no.
33-1402).
10.10 Amendment to the John H. Harland Company Incentive Stock Option Plan.
10.11 * John H. Harland Company 1981 Incentive Stock Option Plan, As Extended.
Filed as Exhibit 10.1 to the Registrant's Report on Form 10-Q for the
quarterly period ended June 30, 1993.
10.12 * Asset Purchase Agreement, dated as of February 7, 1992, by and among
the Registrant , Rexham, Inc. ("Rexham") and Interchecks; as partially
assigned to Centralia Holding Corp. ("Centralia") on February 19, 1992;
and as amended on February 19, 1992 by and among the Registrant, Cen-
tralia, Rexham and Interchecks. Filed as exhibit 2.1 on Form 8-K dated
March 4, 1992 by Form SE dated March 4, 1992.
10.13 * Asset Purchase Agreement, dated as of November 13, 1992, by and among
the Registrant, The Rocky Mountain Bank Note Company and Romo Corp.;
and as amended on November 25, 1992, by and among the Registrant, The
Rocky Mountain Bank Note Company and Romo Corp. Filed as exhibit 2.1
and 2.2 on Form 8-K dated January 11, 1993.
10.14 Term Loan Agreement dated as of October 25, 1993 between the Company
and Trust Company Bank for a $15,000,000 Term Loan due 2003.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors
b. Report on Form 8-K
No reports on Form 8-K were filed by the Registrant during the last quarter
of the period covered by this report.
-11-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
JOHN H. HARLAND COMPANY
William M. Dollar
____________________
William M. Dollar
Vice President, Treasurer and
Chief Financial Officer
March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Robert R. Woodson 3/30/94 John J. McMahon, Jr. 3/30/94
______________________ ________ ______________________ ________
Robert R. Woodson Date John J. McMahon, Jr. Date
Chairman, President and Director Director
(Principal Executive Officer)
William M. Dollar 3/30/94
______________________ ________ ______________________ ________
William M. Dollar Date G. Harold Northrop Date
Vice President, Treasurer and Director
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Juanita Powell Baranco 3/30/94 H.G. Pattillo 3/30/94
______________________ ________ ______________________ ________
Juanita Powell Baranco Date H.G. Pattillo Date
Director Director
______________________ ________ ______________________ ________
I. Ward Lang Date Larry L. Prince Date
Director Director
Lawrence L.
Gellerstedt Jr. 3/30/94 John H. Weitnauer, Jr. 3/30/94
______________________ ________ ______________________ ________
Lawrence L. Date John H. Weitnauer, Jr. Date
Gellerstedt Jr. Director
Director
Edward J. Hawie 3/30/94 L. C. Whitney 3/30/94
______________________ ________ ______________________ ________
Edward J. Hawie Date L. C. Whitney Date
Director Director
-12-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY
_______________________
Management Responsibility For Financial Statements
Independent Auditors' Report
Consolidated Financial Statements and
Notes to Consolidated Financial Statements
Supplemental Financial Information
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Supplemental Financial Statement Schedules
For Inclusion in the Annual Report on Form 10-K
to the Securities and Exchange Commission
for the year ended December 31, 1993.
-F1-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
The financial statements and related financial information included in
this report were prepared by the Company in conformity with generally
accepted accounting principles consistently applied. Management's best
estimates and judgments were used, where appropriate. Management is
responsible for the integrity of the financial statements and for other
financial information included in this report. The consolidated financial
statements and supplementary financial schedules have been audited by the
Company's independent auditors, Deloitte & Touche. As set forth in their
report, their audits were conducted in accordance with generally accepted
auditing standards and formed the basis for their opinion on the
accompanying financial statements. They consider the Company's control
structure and perform such tests and other procedures as they deem necessary
to express an opinion on the fairness of the financial statements.
The Company maintains a control structure which is designed to provide
reasonable assurance that assets are safeguarded and that the financial
records reflect the authorized transactions of the Company. As a part of this
process, the Company has an internal audit function which evaluates the
adequacy and effectiveness of the control structure.
The Audit Committee of the Board of Directors includes directors who are
neither officers nor employees of the Company. The Committee meets
periodically with management, internal auditors and the independent auditors
to discuss auditing, the Company's control structure and financial reporting
matters. The Director of Internal Audit and the independent auditors have
full and free access to meet with the Audit Committee.
William M. Dollar
Vice President, Treasurer and
Chief Financial Officer
-F2-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
John H. Harland Company:
We have audited the accompanying consolidated balance sheets of John H.
Harland Company and its subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of income, cash flows and shareholders'
equity for each of the three years in the period ended December 31, 1993.
Our audits also included the financial statement schedules listed in Item
14(a)2. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedules
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of John H. Harland Company and
its subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects the information set
forth therein.
As discussed in Note 8 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income
taxes to conform with the provisions of Statement of Financial Accounting
Standards No. 109.
DELOITTE & TOUCHE
Atlanta, Georgia
January 28, 1994
-F3-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
December 31
1993 1992
- ----------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,224 $ 19,133
Short-term investments 1,900 150
Accounts receivable from customers, less
allowance for doubtful accounts of $1,753
and $1,343 63,660 56,700
Inventories:
Raw materials and semi-finished goods 22,389 20,692
Hardware component parts 1,478 2,547
Finished goods 2,133 3,882
Deferred income taxes 6,694
Other 10,417 7,555
----------------------
Total current assets 134,895 110,659
----------------------
INVESTMENTS AND OTHER ASSETS:
Investments 8,103 7,705
Goodwill and other intangibles - net 54,053 37,528
Acquisition deposit and other 7,014 36,259
----------------------
Total investments and other assets 69,170 81,492
----------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 9,201 8,746
Buildings and improvements 72,212 66,394
Machinery and equipment 204,405 186,400
Furniture and fixtures 15,082 13,259
Leasehold improvements 2,134 2,050
Additions in progress 2,008 1,434
----------------------
Total 305,042 278,283
Less accumulated depreciation and amortization 152,656 130,554
----------------------
Property, plant and equipment - net 152,386 147,729
----------------------
Total $ 356,451 $ 339,880
======================
See Notes to Consolidated Financial Statements.
-F4-
<PAGE>
<PAGE>
CONSOLIDATED BALANCE SHEETS (continued)
December 31
1993 1992
- -----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 4,000 $ 22,000
Accounts payable - trade 8,690 9,639
Accrued liabilities:
Salaries, wages and employee benefits 15,458 11,966
Taxes 649 4,090
Other 15,182 11,771
----------------------
Total current liabilities 43,979 59,466
----------------------
LONG-TERM LIABILITIES:
Long-term debt 111,542 12,622
Deferred income taxes 6,393 1,987
Other 10,863 9,583
----------------------
Total long-term liabilities 128,798 24,192
----------------------
Total liabilities 172,777 83,658
----------------------
SHAREHOLDERS' EQUITY
Series preferred stock, authorized 500,000
shares of $1.00 par value, none issued
Common stock, authorized 144,000,000 shares of
$1.00 par value, 37,907,497 shares issued 37,907 37,907
Additional paid-in capital 4,225 4,326
Foreign currency translation adjustment 72 187
Retained earnings 325,323 303,249
----------------------
Total shareholders' equity 367,527 345,669
Less 7,421,903 and 3,858,049 shares in
treasury, at cost 183,853 89,447
----------------------
Shareholders' equity - net 183,674 256,222
----------------------
TOTAL $ 356,451 $ 339,880
======================
See Notes to Consolidated Financial Statements.
-F5-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
Year ended December 31
1993 1992 1991
- --------------------------------------------------------------------------
NET SALES $ 519,486 $ 444,980 $ 378,659
--------------------------------
COST AND EXPENSES:
Cost of sales 288,786 236,559 189,835
Selling, general and administrative
expenses 125,077 111,100 94,060
Employees' profit sharing 9,614 9,118 8,105
Amortization of intangibles 8,702 4,673
Restructuring charge 12,191
--------------------------------
Total 432,179 361,450 304,191
--------------------------------
INCOME FROM OPERATIONS 87,307 83,530 74,468
INTEREST AND OTHER INCOME (EXPENSE)-NET (1,633) 4,737 5,234
--------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 85,674 88,267 79,702
INCOME TAXES 33,152 31,629 29,882
--------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 52,522 56,638 49,820
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 2,385
--------------------------------
NET INCOME $ 52,522 $ 56,638 $ 47,435
================================
PER COMMON SHARE:
Income before cumulative effect of
change in accounting principle $ 1.62 $ 1.59 $ 1.33
--------------------------------
Net Income $ 1.62 $ 1.59 $ 1.27
================================
See Notes to Consolidated Financial Statements.
-F6-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31
1993 1992 1991
- -------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net Income $ 52,522 $ 56,638 $ 47,435
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 35,102 29,662 22,684
Deferred income taxes (2,288) (2,135) (5,767)
Loss (gain) on sale of assets 599 (3,410)
Provision for restructuring charge 12,191
Provision for postretirement benefits 768 640 4,156
Other 965 1,070 1,915
Change in assets and liabilities net of
effects of businesses acquired:
Accounts receivable 3,059 (3,706) 6,740
Inventories and other current assets 3,347 1,540 (1,398)
Accounts payable and accrued expenses (2,969) (2,142) 5,502
Other - net (434) 229 (238)
-------------------------------
Net cash provided by operating activities 90,671 78,386 93,220
-------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (27,121) (18,721) (16,899)
Proceeds from sale of property, plant and
equipment 1,474 1,979 1,059
Change in short-term investments - net (1,750) 52,350 (32,465)
Payment for acquisition of businesses -
net of cash acquired (9,564) (54,826)
Acquisition deposit (31,900)
Proceeds from sale of Puerto Rico bonds 49,982
Other - net (2,469) (2,169) 1,989
-------------------------------
Net cash used in investing activities (39,430) (3,305) (46,316)
-------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 100,000
Short-term borrowings (18,000) 18,000
Purchases of treasury stock (99,435) (65,565) (22,806)
Issuance of treasury stock 4,779 4,818 4,061
Dividends paid (30,448) (32,088) (32,196)
Other - net (1,046) (36) 806
-------------------------------
Net cash used in financing activities (44,150) (74,871) (50,135)
-------------------------------
Increase (decrease) in cash and cash
equivalents 7,091 210 (3,231)
Cash and cash equivalents at beginning of
year 19,133 18,923 22,154
-------------------------------
Cash and cash equivalents at end of year $ 26,224 $ 19,133 $ 18,923
===============================
Cash paid during the year for:
Interest $ 2,144 $ 998 $ 1,115
===============================
Income Taxes $ 38,785 $ 36,613 $ 31,972
===============================
See Notes to Consolidated Financial Statements.
-F7-
<PAGE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands except share and per share amounts)
<CAPTION> Foreign
Additional Currency
Common Paid-In Retained Treasury Translation
Stock Capital Earnings Stock Adjustments
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990 $ 37,907 $ 5,661 $ 263,460 $ (11,845) $ 503
Net Income 47,435
Cash dividends, $.86 per share (32,196)
Purchase of 1,024,213 shares of treasury
stock (22,806)
Issuance of 238,235 shares of treasury
stock under employee stock plans (1,253) 5,272
Foreign currency translation adjustment (197)
Other 285 37
---------------------------------------------------------
BALANCE, DECEMBER 31, 1991 37,907 4,693 278,699 (29,342) 306
Net Income 56,638
Cash dividends, $.90 per share (32,088)
Purchase of 2,781,813 shares of treasury
stock (65,565)
Issuance of 261,308 shares of treasury
stock under employee stock plans (642) 5,460
Foreign currency translation adjustment (119)
Other 275
---------------------------------------------------------
BALANCE, DECEMBER 31, 1992 37,907 4,326 303,249 (89,447) 187
Net Income 52,522
Cash dividends, $.94 per share (30,448)
Purchase of 3,792,377 shares of treasury
stock (99,435)
Issuance of 228,523 shares of treasury
stock under employee stock plans (250) 5,029
Foreign currency translation adjustment (115)
Other 149
---------------------------------------------------------
BALANCE, DECEMBER 31, 1993 $ 37,907 $ 4,225 $ 325,323 $ (183,853) $ 72
=========================================================
</TABLE>
See Notes to Consolidated Financial Statements.
-F8-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Consolidation - The consolidated financial statements include the
financial statements of John H. Harland Company and its wholly owned
subsidiaries (the "Company"). Intercompany balances and transactions have
been eliminated.
Cash Equivalents - The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Inventories - Inventories are stated at the lower of cost or market. Cost
of inventory for checks and related forms is determined by average costing.
Cost of scannable forms and hardware component parts inventories is
determined by the first-in, first-out method. Cost of data entry terminals is
determined by the specific identification method.
Investments - Short-term investments are carried at cost plus accrued
interest, which approximates market, and consist primarily of certificates of
deposit and demand notes with original maturities in excess of three months.
Marketable equity securities included in long-term investments are carried at
the lower of cost or market. Other long-term investments are carried
principally at cost.
Property, Plant and Equipment - Property, plant and equipment are carried
at cost. Depreciation of buildings is computed primarily by the declining
balance method. Depreciation of equipment, furniture and fixtures is
calculated by the straight-line or sum-of-the-years digits methods. Leasehold
improvements are amortized by the straight-line method over the life of the
lease or the life of the property, whichever is shorter. Accelerated methods
are used for income tax purposes for all property where it is allowed.
Goodwill and Other Intangibles - Amortization of goodwill is calculated by
the straight-line method over a 40-year period. The Company periodically
assesses the recoverability of goodwill based on its judgment as to the
future profitability of its operations. Other intangible assets consist
primarily of purchased customer lists and non-compete covenants. Amortization
of other intangible assets is calculated by the straight-line method over the
estimated useful life which is primarily a 5-year period.
Net Income Per Share - Net income per common share is based on the
weighted average number of shares of common stock and common share
equivalents outstanding during each year which was 32,460,128 for 1993,
35,688,645 for 1992 and 37,468,637 for 1991. Common share equivalents include
the number of shares issuable upon the exercise of the Company's stock
options and the conversion of convertible securities. The difference between
primary and fully diluted common share equivalents is not significant.
Income Taxes - Effective Jan. 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") in which deferred tax liabilities and assets are determined based on
the difference between financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
2. BUSINESS SEGMENTS: The Company operates principally within the printing
industry.
-F9-
<PAGE>
<PAGE>
3. ACQUISITIONS: On January 1, 1993, the Company completed the acquisition
of substantially all the net assets of the Denver-based Rocky Mountain Bank
Note Company ("RMBN") for cash of $37.9 million and acquisition related costs
of approximately $8.9 million. The purchase was funded through short-term
borrowings of $18.0 million and by internally generated funds. The acquisi-
tion has been accounted for as a purchase and, accordingly, the acquired net
assets and operations have been included in the consolidated financial state-
ments from the date of acquisition. Assets acquired totaled $46.8 million,
net of liabilities assumed of $2.0 million. Of the total acquisition cost,
$25.7 million was allocated to intangible assets, of which $10.7 million
represented goodwill.
On February 19, 1992, the Company completed the acquisition of
substantially all the net assets of Interchecks Inc. ("Interchecks"), a
Seattle, Washington-based check printer for a cash purchase price of $50
million and acquisition related costs of $9.4 million. The acquisition has
been accounted for as a purchase and, accordingly, the acquired net assets
and operations have been included in the consolidated financial statements
from the date of acquisition. Assets acquired totaled $59.4 million, net of
liabilities assumed of $4.7 million. Of the total acquisition cost, $38.4
million was allocated to intangible assets, of which $13.4 million
represented goodwill.
The following represents the unaudited pro forma results of operations
which assumes the acquisitions occurred at the beginning of the respective
year in which the assets were acquired as well as the beginning of the
immediately preceding year. These results include certain adjustments,
primarily increased amortization of intangible assets, reduced interest
income and reduced depreciation expense (in thousands of dollars, except per
share amounts):
1992 1991
- -----------------------------------------------------------------------
Net sales $ 539,889 $ 453,541
Income before cumulative effect of change
in accounting principle 55,968 45,938
Net income 55,968 43,553
Per common share:
Income before cumulative effect of change
in accounting principle 1.57 1.21
Net income 1.57 1.15
The pro forma financial information presented above does not purport to be
indicative of either the results of operations that would have occurred had
the acquisitions taken place at the beginning of the periods presented or of
future results of operations of the combined businesses.
4. RESTRUCTURING CHARGE: During the fourth quarter of 1991, the Company
recorded a provision of $12,191,000 for the restructuring and revaluation of
certain subsidiaries and investments of $9,191,000 and for taxes of
$3,000,000 for the repatriation of earnings from Puerto Rico. The Company's
policy had been to invest such earnings long term to avoid the payment of
taxes upon repatriation.
5. INVESTMENTS AND OTHER ASSETS: Long-term investments at December 31, 1993
primarily consisted of investments in limited partnerships.
Other assets at December 31, 1992 included a $31,900,000 deposit related
to the acquisition of RMBN.
-F10-
<PAGE>
<PAGE>
6. SHORT-TERM DEBT: At December 31, 1993, the Company had available unsecured
lines of credit under which it could borrow up to $111,000,000 in the form of
short-term notes for which no compensating balances or commitment fees are
required. At December 31, 1992, the Company had borrowed $18,000,000 under
the lines of credit at an interest rate of 3.8%. No amounts were outstanding
under the lines of credit at December 31, 1993.
In addition, the Company had outstanding at December 31, 1993 and 1992 an
Industrial Revenue Bond, due on demand, in the amount of $4,000,000 which
bears interest at an average rate of 5.26%.
7. LONG-TERM DEBT: The Company's long-term debt consists of (in thousands):
1993 1992
- ------------------------------------------------------------------------
Series A Senior Notes $ 85,000
Term Loan 15,000
Convertible Subordinated Debentures 10,600 $ 10,579
Other 1,477 2,573
-----------------------
112,077 13,152
Less current portion 535 530
-----------------------
Long-term Debt $ 111,542 $ 12,622
=======================
In December 1993, the Company issued $85,000,000 of Series A Senior Notes
("Senior Notes") and arranged a $15,000,000 Term Loan ("Term Loan"). The
Senior Notes and the Term Loan are at fixed interest rates of 6.60% and
6.63%, respectively. The Senior Notes mature from 2004 to 2008 and the Term
Loan is due 2003. Both the Term Loan and the Senior Notes contain certain
covenants, the most restrictive of which limit the amount of funded
indebtedness of the Company and require the Company to maintain a minimum
fixed charge coverage ratio. At December 31, 1993, the Company was in
compliance with the covenants associated with these agreements.
The Company's 6.75% convertible subordinated debentures are convertible
into common stock of the Company at any time prior to maturity, at a
conversion price of $25.17 per share, subject to adjustment in certain
events. At December 31, 1993, there were 328,249 shares of common stock
reserved for conversion of the debentures. The debentures are entitled to an
annual mandatory sinking fund, commencing June 1, 1996, calculated to retire
75% of the debentures prior to maturity in 2011. The debentures are
redeemable, in whole or in part, at any time at the option of the Company at
specific redemption prices plus accrued interest. The debentures are
subordinated to all senior debt.
Other long-term debt relates principally to capitalized lease obligations.
Annual maturities of long-term debt including sinking fund requirements
during the next five years are: 1994-$535,000; 1995-$519,000; 1996-$813,000;
1997-$559,000; and 1998-$550,000.
8. INCOME TAXES: Effective January 1, 1993, the Company adopted SFAS 109.
Previously, the Company had computed its income tax expense in accordance
with the provisions of the Accounting Principles Board Opinion No. 11. The
cumulative effect of adopting SFAS 109 was not significant to the Company's
consolidated financial statements.
-F11-
<PAGE>
<PAGE>
The provision for income taxes for the years ended December 31, 1993, 1992
and 1991 (including the impact of the accounting change in 1991) includes the
following (in thousands):
1993 1992 1991
- ------------------------------------------------------------------------
Current:
Federal $ 28,350 $ 29,709 $ 29,259
State 7,090 4,055 4,959
--------------------------------------
Total 35,440 33,764 34,218
--------------------------------------
Deferred:
Federal (1,999) (1,879) (5,254)
State (289) (256) (513)
--------------------------------------
Total (2,288) (2,135) (5,767)
--------------------------------------
Total $ 33,152 $ 31,629 $ 28,451
======================================
The tax effects of significant items comprising the Company's net deferred
tax asset and liability as of December 31, 1993 are as follows (in
thousands):
- ------------------------------------------------------------------------
Current deferred tax asset:
Accrued vacation $ 2,634
Other accrued liabilities 4,742
Other (682)
--------
Total 6,694
--------
Noncurrent deferred tax liability:
Difference between book and tax basis of property (13,976)
Other liabilities 5,542
Postretirement benefit obligation 2,085
Other (44)
--------
Total (6,393)
Valuation allowance 0
Net deferred tax asset $ 301
========
A reconciliation between the Federal income tax statutory rate and the
Company's effective income tax rate is as follows:
1993 1992 1991
- ------------------------------------------------------------------------
Statutory rate 35.0% 34.0% 34.0%
State and local income taxes net
of Federal income tax benefit 5.0 4.3 4.0
Income from Puerto Rico (3.7) (3.3) (2.3)
Other, net 2.4 0.8 1.8
----------------------------------
Effective income tax rate 38.7% 35.8% 37.5%
==================================
-F12-
<PAGE>
<PAGE>
9. SHAREHOLDERS' EQUITY: Each share of common stock includes a stock purchase
right which is not currently exercisable but would become exercisable upon
occurrence of certain events as provided for in the Rights Agreement. The
rights expire on July 5, 1999.
10. EMPLOYEE STOCK PURCHASE PLAN: The Company has an Employee Stock Purchase
Plan under which employees are granted an option to purchase shares of the
Company's common stock during the quarter in which the option is granted. The
option price is 85% of the fair market value of the stock at the beginning or
end of the quarter, whichever is lower. Options for shares were exercised at
prices ranging from $18.70 to $23.06 in 1993, $17.64 to $20.24 in 1992 and
$16.26 to $19.60 in 1991. At December 31, 1993, there were 672,657 shares of
common stock reserved for purchase under the plan.
11. STOCK OPTION PLANS: The Company has granted incentive and non-qualified
stock options to certain key employees to purchase shares of the Company's
common stock at the fair market value of the common stock on the date of the
grant. The options generally become exercisable one year from the date of
grant.
Option transactions during the three years ended December 31, 1993 are as
follows:
Exercise
Shares Price
- ------------------------------------------------------------------------
Balance, December 31, 1990 460,541 $ 9.11 - 25.13
Options
Granted 68,000 22.75
Exercised (76,202) 9.11 - 21.88
Cancelled (47,100) 21.88 - 25.13
---------
Balance, December 31, 1991 405,239 9.11 - 25.13
Options
Granted 92,500 23.88 - 24.75
Exercised (90,414) 9.11 - 23.50
Cancelled (47,176) 11.59 - 25.13
---------
Balance, December 31, 1992 360,149 9.11 - 24.75
Options
Granted 102,157 23.88 - 26.25
Exercised (55,467) 9.11 - 23.50
Cancelled (31,151) 11.34 - 24.75
---------
Balance, December 31, 1993 375,688 9.11 - 26.25
=========
At December 31, 1993, there were options for 273,531 shares exercisable
and 682,978 shares of common stock reserved for options under the plans.
12. PROFIT SHARING AND DEFERRED COMPENSATION: The Company has a non-
contributory profit sharing plan to provide retirement income for most of its
employees. The Company is required to contribute to the profit sharing plan's
trust fund an amount equal to 7.5% of its income before income taxes and
profit sharing contribution plus such additional amount as the Board of
Directors may determine, up to a maximum of 15% of the aggregate compensation
of participating employees (see Consolidated Statements of Income).
-F13-
<PAGE>
<PAGE>
The Company has deferred compensation agreements with certain officers.
The present value of cash benefits payable under the agreements is being
provided over the periods of active employment. The charge to expense for the
agreements was $345,000 in 1993, $286,000 in 1992 and $463,000 in 1991.
13. POSTRETIREMENT BENEFITS: The Company sponsors two defined postretirement
benefit plans that cover qualifying salaried and non-salaried employees. One
plan provides health care benefits and the other provides life insurance
benefits. The medical plan is contributory and contributions are adjusted
annually based on actual claims experience, while the life insurance plan is
noncontributory. The Company's intent is that the retiree provide
approximately 50% of the actual cost of providing the medical plan. Neither
plan is funded.
In 1991, the Company adopted the provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and elected
immediate recognition of the transition amount of $3,816,000 ($2,385,000
after income taxes).
As of December 31, 1993, the accumulated postretirement benefit obligation
("APBO") was $7,614,000. The following table reconciles the plans' status to
the accrued postretirement health care and life insurance liability as
reflected on the balance sheet as of December 31, (in thousands):
1993 1992
- ------------------------------------------------------------------------
APBO:
Retirees $ 1,890 $ 1,834
Fully eligible participants 1,790 1,057
Other participants 3,934 2,907
--------------------
7,614 5,798
Unrecognized net loss (1,195) (457)
---------------------
Accrued postretirement benefit obligation
- included in Other Liabilities $ 6,419 $ 5,341
=====================
Net postretirement costs are summarized as follows (in thousands):
1993 1992 1991
- ------------------------------------------------------------------------
Service costs $ 245 $ 184 $ 131
Interest on APBO 523 456 338
--------------------------------
Net periodic postretirement cost $ 768 $ 640 $ 469
================================
For measurement purposes, the cost of providing medical benefits was
assumed to increase by 12% in 1993, decreasing to an annual rate of 7.5%
after 1998. The medical cost trend rate assumption could have a significant
effect on amounts reported. An increase of 1% in the assumed rate of increase
would have had the effect of increasing the APBO by $851,000 and the net
periodic postretirement cost by $113,000. The weighted average discount rate
used in determining the APBO was 7.5% in 1993, 8.5% in 1992 and 9% in 1991
and employee earnings were estimated to increase 4.5% annually until age 65.
-F14-
<PAGE>
<PAGE>
14. FINANCIAL INSTRUMENTS: The following methods and assumptions were used to
estimate the fair value of each class of financial instruments for which it
is practicable to estimate that value:
Short-term investments - The carrying amount approximates fair value
because of the short maturity of those instruments.
Long-term investments - The fair values of certain investments are
estimated based on quoted market prices. The fair values of the Company's
investments in limited partnerships are based on estimates by general
partners in the absence of readily ascertainable market values. For the
Company's other investments, which are not actively traded and are
immaterial, fair value is based on an estimate of the net realizable value of
those investments.
Long-term debt - The fair values of the Company's convertible debentures
are based on recent market quotes. The fair value of the other long-term debt
is based on estimated rates currently available to the Company for debt with
similar terms and maturities.
The carrying value and estimated fair values of the Company's financial
instruments at December 31, 1993 and 1992 are as follows (in thousands):
Carrying Value Fair Value
1993 1992 1993 1992
- ------------------------------------------------------------------------
Assets:
Short-term investments $ 1,900 $ 150 $ 1,900 $ 150
Long-term investments 8,103 7,705 9,169 8,601
Liabilities:
Long-term debt 111,542 12,622 112,105 13,931
15. COMMITMENTS AND CONTINGENCIES: Total rental expense was $12,257,000 in
1993, $6,969,000 in 1992, and $3,731,000 in 1991. Minimum annual rentals
under non-cancellable operating leases total $22,471,000 and range from
$7,536,000 in 1994 to $1,847,000 in 1998.
16. SUBSEQUENT EVENT: On January 7, 1994, the Company acquired Marketing
Profiles, Inc. ("MPI") for $18,000,000 in cash and a contingent purchase
payment payable in 1997 to the former MPI shareholders. The contingent
purchase payment is based upon a multiple of MPI's 1996 operating results as
defined in the acquisition agreement. The acquisition price was funded with a
portion of the proceeds received in the December 1993 issuance of long-term
debt (See Note 7). The acquisition will be accounted for using the purchase
method of accounting and, accordingly, the results of operations of MPI will
be included in the Company's consolidated financial statements from the date
of acquisition. MPI is based in Maitland, Florida and is a database marketing
and consulting company which provides software products and related marketing
services to the financial industry.
-F15-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES - Supplemental Financial Information
SELECTED QUARTERLY FINANCIAL DATA,
DIVIDENDS PAID AND STOCK PRICE RANGE
(unaudited)
(In thousands except per share amounts)
--------- Quarter ended ----------
March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------
1993:
Net sales $ 133,504 $ 129,979 $ 129,922 $ 126,081
Gross profit 58,928 59,814 56,892 55,066
Net income 13,119 14,127 13,318 11,958
Per common share:
Net income .39 .42 .42 .39
Dividends paid .235 .235 .235 .235
Market price:
High 27 1/2 28 1/8 27 3/4 25 5/8
Low 24 1/4 25 5/8 25 1/4 20 7/8
1992:
Net sales 103,629 113,766 113,975 113,610
Gross profit 49,917 53,677 52,804 52,023
Net income 14,869 14,530 13,671 13,568
Per common share:
Net income .41 .40 .39 .39
Dividends paid .225 .225 .225 .225
Market price:
High 25 1/4 25 24 1/4 27 1/4
Low 22 1/8 20 1/2 20 5/8 22 1/2
The Company's common stock (symbol:JH) is listed on the New York Stock
Exchange. At December 31, 1993 there were 8,044 shareholders of record.
SELECTED FINANCIAL DATA
(In thousands except per share amounts)
--------- Year ended December 31 ---------
1993 1992 1991 1990 1989
- ----------------------------------------------------------------------
Net sales $ 519,486 $ 444,980 $ 378,659 $ 366,834 $ 344,734
Net income 52,522 56,638 47,435 57,167 58,052
Total assets 356,451 339,880 351,554 347,105 321,081
Long-term debt 111,542 12,622 11,661 11,304 11,276
Per common share:
Net income 1.62 1.59 1.27 1.52 1.54
Dividends paid .94 .90 .86 .78 .68
Average number of
shares outstanding 32,460 35,689 37,469 37,604 37,797
Refer to Note 13 of the Notes to Consolidated Financial Statements
regarding the impact of change in accounting method for postretirement
benefits in 1991 and to Note 4 for impact of a restructuring charge in
1991. Refer to Note 3 regarding the impact of acquisitions in 1992 and
1993.
-F16-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
1993 versus 1992
1993 consolidated net sales increased $74.5 million or 16.7% over 1992 and
represented the 44th consecutive year of sales increases. The Company's
Financial Services Group ("FSG") had a net sales increase of $72.1 million or
18.4% which consisted of an 18.1% increase in units and a price and product
mix increase of 0.3%. The FSG sales increase is attributable to the
acquisition of Rocky Mountain Bank Note Company ("RMBN") in January 1993
coupled with the impact of the February 1992 acquisition of Interchecks, Inc.
("Interchecks") (see Note 3 of the Notes to Consolidated Financial
Statements). Competitive pricing pressures within the check printing
industry contributed to the mild change in the FSG price and product mix. Net
sales by the Company's Data Services Group ("DSG") increased $2.4 million or
4.6% in 1993 primarily due to increases in hardware sales and service-related
revenues while 1993 form sales were flat compared to 1992. The hardware sales
and service-related revenue increases offset sales decreases by DSG's
European sales subsidiary Datascan and the loss of revenues associated with
American Testronics Company, the assets of which were sold in June 1992.
Consolidated cost of goods sold increased $52.2 million or 22.1% and
increased as a percentage of sales to 55.6% from 53.2% in 1992. FSG's cost of
goods sold increased as a percentage of sales to 56.0% from 53.4% in 1992
primarily due to acquired operations, which had lower margins, and
duplication of costs during integration of acquired operations. FSG achieved
labor productivity improvements of 0.6% in 1993. DSG's cost of goods sold
increased slightly as a percentage of sales to 51.8% in 1993 from 51.1% in
1992. DSG's gross margin improved as a result of the 1992 sale of American
Testronics Company, which had lower margins, but the improvement was offset
by increased machine sales and service-related revenues, which have lower
margins than forms, and by increased product development costs.
Consolidated selling, general and administrative expenses increased $14.0
million or 12.6% in 1993 primarily due to acquired operations, higher
information systems costs and increases in employee health care costs. As a
percentage of sales, consolidated selling, general and administrative
expenses decreased from 25.0% in 1992 to 24.1% in 1993. The consolidation of
selling and certain administrative functions of the acquired operations was a
primary factor contributing to this decrease. Profit sharing costs increased
$0.5 million but decreased as a percentage of sales from 2.0% in 1992 to 1.9%
in 1993.
Due to the February 1992 acquisition of Interchecks and the January 1993
acquisition of RMBN, amortization of intangibles increased $4.0 million over
1992 and was 1.7% as a percentage of sales in 1993 compared to 1.1% in 1992.
Of the total 1993 amortization of intangibles, $8.0 million relates to
intangible assets which are being amortized over 5 years.
Interest and other income (expense) - net decreased $6.4 million from
1992. The primary components of the change were gains of $3.4 million
realized in 1992 on the dispositions of American Testronics Company and the
Puerto Rico bond investment portfolio and increased interest expense, which
totaled $2.6 million in 1993 due to increased levels of debt. Another
component of the interest and other income (expense) - net change was reduced
interest income earned in 1993 due to lower average cash and investment
balances.
Income before income taxes decreased $2.6 million or 2.9% from 1992 and
-F17-
<PAGE>
<PAGE>
decreased as a percentage of sales from 19.8% in 1992 to 16.5% in 1993. The
effective consolidated income tax rate for 1993 was 38.7% compared to 35.8%
in 1992. The effective tax rate increased primarily as a result of the
Omnibus Tax Reconciliation Act of 1993, which increased the federal corporate
tax rate from 34% to 35%, and certain nonrecurring tax exempt items and
higher tax exempt income in 1992.
1992 versus 1991
Consolidated 1992 sales increased $66.3 million or 17.5% over 1991. Both
FSG and DSG experienced sales increases with FSG contributing $60.7 million
of the increase and DSG contributing $5.6 million. FSG's sales growth was
attributable to a 25.7% increase in check unit production tempered by a 7.4%
reduction from price and product mix. The unit increase came principally from
the new business obtained through the acquisition of Interchecks in February
1992 with a lesser portion due to an increase in FSG's core business. Lower
pricing in 1992 resulted from competitive conditions in the check printing
industry. DSG's sales increased 11.8% partially due to the consolidation of
Datascan's results of operations after acquisition of the remaining 50% of
Datascan's stock in December 1991 and to sales increases in educational
markets.
Consolidated gross profit margin declined in 1992 to 46.8% from 49.9% in
1991. Margins in both FSG and DSG were negatively impacted by acquired
operations (Interchecks and Datascan, respectively); however, FSG realized an
increase in labor efficiency of 3.6% in its core operations as a result of
completion of the conversion to offset printing and computerized production
systems in 1991. DSG's margin declines were moderated by the sales increase
in standard forms in its educational markets which generally provide higher
margins.
Selling, general and administrative expenses increased $17.0 million in
1992 or 18.1% and, as a percentage of sales, increased to 25.0% from 24.8% in
1991. The primary components of this increase were employee health care
costs, the costs of enhanced data processing systems, expenses of acquired
operations and marketing costs associated with customer relations. Profit
sharing costs increased $1.0 million but decreased as a percentage of sales
from 2.1% in 1991 to 2.0% in 1992.
Amortization of intangibles costs associated with the acquired operations
totaled $4.7 million or 1.1% as a percentage of sales.
Interest and other income decreased $0.5 million or 9.5% from 1991, which
is attributable to both lower interest rates and significantly lower
investment balances, a result of the use of funds for the acquisitions of
Interchecks and Datascan and for the stock repurchase program. The reduced
interest and other income was offset by $3.4 million of gains realized in the
sale of the Puerto Rico bond investment portfolio and the sale of the assets
of American Testronics Company.
The Company's effective consolidated income tax rate decreased to 35.8%
from 37.5% primarily due to the higher level of tax exempt income in 1992.
Outlook
The Company will continue its efforts to further diversify its business
during 1994. On January 7, 1994, the Company acquired Marketing Profiles,
Inc. ("MPI"), a database marketing and consulting company which provides
software products and related marketing services to the financial industry.
See Note 16 of the Notes to Consolidated Financial Statements.
In October 1993, the Company announced the formation of a new subsidiary,
The Check Store, Inc. ("The Check Store"), which will market checks and
related products directly to consumers. The direct marketing of checks and
related products to consumers is currently the fastest growing segment of the
-F18-
<PAGE>
<PAGE>
check printing market and The Check Store, which will become operational
during the first half of 1994, represents the Company's entry into this
distribution channel. It is anticipated that The Check Store will have lower
margins than the Company's traditional check printing operations and, due to
start-up costs and expenditures for marketing and product development, will
negatively impact the Company's results and cash flows during 1994. The
Company is unable to determine if or when The Check Store operations will
contribute positively to cash flow or operating results.
The Company expects that its check printing operations will continue to
experience competitive pricing pressures during 1994, and as a result the
price component of changes in revenue might be flat or negative. However, the
Company anticipates that profit margins should experience a slight
improvement in 1994 as a result of the continued integration of acquired
operations along with other cost control measures.
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
Cash flows provided by operations in 1993 were $90.7 million compared to
$78.4 million in 1992, an increase of 15.7%. The primary uses of funds in
1993 were for the purchase of the Company's common stock, the acquisition of
the net assets of RMBN, additions to property, plant and equipment and
dividends paid to the Company's shareholders.
In December 1993, the Company issued $85.0 million of Series A Senior
Notes ("Senior Notes") with a final maturity of December 2008, and also
arranged a $15.0 Million Term Loan ("Term Loan") due December 2003. The
Senior Notes and the Term Loan have a fixed annual interest rate of 6.60% and
6.63%, respectively. Proceeds from these obligations were used to repay
amounts outstanding under short-term lines of credit and to fund the January
1994 purchase of MPI and will be used to fund additional purchases of Company
stock and for general corporate purposes.
The Company has unsecured lines of credit which provide for borrowing up
to $111.0 million. At December 31, 1993, no amounts were outstanding under
these lines, a decrease of $18.0 million from December 31, 1992.
Excluding the borrowings under the unsecured lines of credit, which the
Company replaced with long-term financing, the ratio of current assets to
current liabilities increased from 2.7 at December 31, 1992 to 3.1 at
December 31, 1993, and working capital increased to $90.9 million at December
31, 1993 from $69.2 million at December 31, 1992.
In March 1993, the Company completed a program announced in November 1991
to repurchase 4.0 million shares of its common stock. In June 1993, the
Company initiated a new program to repurchase 3.4 million additional common
shares which was completed in November 1993 at an average cost of $26.24 per
share. In December 1993, the Company announced another program to repurchase
1.5 million common shares but had not purchased any shares under this program
as of December 31, 1993.
Additions to property, plant and equipment for 1993 were $27.1 million
compared to $18.7 million in 1992. The Company anticipates 1994 capital
expenditures will total approximately $37 million.
On December 31, 1993, the Company had $28.1 million in cash and cash
equivalents and short-term investments. The Company believes that its current
cash position, funds from operations and available amounts under its lines of
credit will be sufficient to meet anticipated requirements for working
capital, dividends, capital expenditures, the purchase of MPI, the announced
stock repurchase program and other corporate needs.
-F19-
<PAGE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
________________________________________________________________________________________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
CLASSIFICATION BALANCE AT BEGINNING ADDITIONS AT RETIREMENTS OTHER CHANGES BALANCE AT END
OF PERIOD COST ADD(DEDUCT) OF PERIOD
(1) (2)
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Land. . . . . . . . . . . . . . . . $ 8,746 $ 450 $ 182 $ 187 $ 9,201
Buildings and Improvements. . . . . 66,394 5,882 297 233 72,212
Machinery and Equipment . . . . . . 186,400 19,156 5,490 4,339 204,405
Furniture and Fixtures. . . . . . . 13,259 873 130 1,080 15,082
Leasehold Improvements. . . . . . . 2,050 186 102 2,134
Additions in Progress . . . . . . . 1,434 574 2,008
---------- ---------- ---------- ---------- ----------
Total $ 278,283 $ 27,121 $ 6,201 $ 5,839 $ 305,042
========== ========== ========== ========== ==========
Year Ended December 31, 1992
Land. . . . . . . . . . . . . . . . $ 8,098 $ 488 $ 160 $ 8,746
Buildings and Improvements. . . . . 63,892 843 1,659 66,394
Machinery and Equipment . . . . . . 165,953 14,605 $ 6,733 12,575 186,400
Furniture and Fixtures. . . . . . . 11,500 1,534 401 626 13,259
Leasehold Improvements. . . . . . . 1,902 165 17 2,050
Additions in Progress . . . . . . . 348 1,086 1,434
---------- ---------- ---------- ---------- ----------
Total $ 251,693 $ 18,721 $ 7,151 $ 15,020 $ 278,283
========== ========== ========== ========== ==========
Year Ended December 31, 1991
Land. . . . . . . . . . . . . . . . $ 8,263 $ 165 $ 8,098
Buildings and Improvements. . . . . 60,878 $ 3,104 447 $ 357 63,892
Machinery and Equipment . . . . . . 174,468 13,694 22,371 162 165,953
Furniture and Fixtures. . . . . . . 10,180 1,528 300 92 11,500
Leasehold Improvements. . . . . . . 1,863 100 61 1,902
Additions in Progress . . . . . . . 1,875 (1,527) 348
---------- ---------- ---------- ---------- ----------
Total $ 257,527 $ 16,899 $ 23,344 $ 611 $ 251,693
========== ========== ========== ========== ==========
<FN>
NOTES:
(1) Increase in additions in progress, at cost, less transfers of completed projects to buildings and improvements,
machinery and equipment, and furniture and fixtures.
(2) The 1993 amount consists of $6,065,000 of assets obtained in the acquisition of RMBN and the remaining balance is
foreign currency exchange adjustments. Of the 1992 amount, $14,672,000 relates to assets obtained in the Interchecks
acquisition, $319,000 to revaluation of certain Datascan assets acquired in 1991 and the remaining balance to foreign
currency exchange adjustments. The 1991 amount of $611,000 relates to the acquisition of the remaining interest in
Datascan in November 1991.
</TABLE>
-S1-
<PAGE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANIES AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(In thousands of dollars)
<CAPTION>
________________________________________________________________________________________________________________________________
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
DESCRIPTION BALANCE AT BEGINNING ADDITIONS CHARGED TO RETIREMENTS OTHER CHARGES BALANCE AT END
OF PERIOD COSTS AND EXPENSES ADD (DEDUCT) OF PERIOD
(1)
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Buildings and Improvements. . . $ 18,504 $ 2,534 $ 79 $ 5 $ 20,964
Machinery and Equipment . . . . 102,151 21,695 3,844 (120) 119,882
Furniture and Fixtures. . . . . 8,270 1,904 102 4 10,075
Leasehold Improvements. . . . . 1,629 206 101 1,735
--------- --------- --------- ---------- ---------
Total $ 130,554 $ 26,339 $ 4,126 $ (111) $ 152,656
========= ========= ========= ========== =========
Year Ended December 31, 1992
Buildings and Improvements. . . $ 15,985 $ 2,477 $ 42 $ 18,504
Machinery and Equipment . . . . 87,189 20,511 $ 5,605 56 102,151
Furniture and Fixtures. . . . . 6,949 1,707 351 (35) 8,270
Leasehold Improvements. . . . . 1,443 202 16 1,629
--------- --------- --------- ---------- ---------
Total $ 111,566 $ 24,897 $ 5,972 $ 63 $ 130,554
========= ========= ========= ========== =========
Year Ended December 31, 1991
Buildings and Improvements. . . $ 13,818 $ 2,341 $ 174 $ 15,985
Machinery and Equipment . . . . 85,528 18,554 16,893 87,189
Furniture and Fixtures. . . . . 5,723 1,469 243 6,949
Leasehold Improvements. . . . . 1,273 230 60 1,443
--------- --------- --------- ---------
Total $ 106,342 $ 22,594 $ 17,370 $ 111,566
========= ========= ========= =========
<FN>
NOTE:
(1) Classification changes and foreign currency exchange adjustments arising from changes in current rates of exchange.
</TABLE>
-S2-
<PAGE>
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
_____________________________________________________________________________________________________________________________
COLUMN A COLUMN B ----------COLUMN C --------- COLUMN D COLUMN E
ADDITIONS
BALANCE AT BEGINNING CHARGED TO CHARGED TO BALANCE AT END
DESCRIPTION OF PERIOD COSTS AND EXPENSES OTHER ACCOUNTS DEDUCTIONS OF PERIOD
(1) (2)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Allowance for doubtful accounts $ 1,343 $ 620 $ 215 $ 425 $ 1,753
======= ======= ====== ====== =======
Year Ended December 31, 1992
Allowance for doubtful accounts $ 1,348 $ 583 $ 332 $ 920 $ 1,343
======= ======= ====== ====== =======
Year Ended December 31, 1991
Allowance for doubtful accounts $ 916 $ 1,002 $ 249 (3) $ 819 $ 1,348
======= ======= ====== ====== =======
<FN>
Notes:
(1) Represents recovery of previously written-off and credit balance accounts receivable.
(2) Represents write-offs of uncollectible accounts receivable.
(3) Includes $140,000 related to acquisition of subsidiary.
</TABLE>
-S3-
<PAGE>
<TABLE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
<CAPTION>
_________________________________________________________________________________________________________
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM AT END AVERAGE DURING THE DURING THE DURING THE
_________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
- ----------------------------
Notes Payable (1) $ -0- 3.5% $ 78,000 $ 34,214 3.5%
======== ======== ========
Industrial Revenue Bond (2) $ 4,000 5.1% $ 4,000 $ 4,000 5.1%
======== ======== ========
Year Ended December 31, 1992
- ----------------------------
Notes Payable (1) $ 18,000 3.8% $ 18,000 $ 49 3.8%
======== ======== ========
Industrial Revenue Bond (2) $ 4,000 5.3% $ 4,000 $ 4,000 5.3%
======== ======== ========
Year Ended December 31, 1991
- ----------------------------
Industrial Revenue Bond (2) $ 4,000 7.2% $ 4,000 $ 4,000 7.2%
======== ======== ========
<FN>
(1) Represents borrowings under an unsecured line of credit for which no compensating balances or
commitment fees are required.
(2) The Industrial Revenue Bond amounts outstanding at December 31, 1993, 1992 and 1991 are payable
upon demand. The Company borrowed the funds on July 12, 1984.
(3) "Average Amount Outstanding During The Period" calculated based on daily outstanding
balances.
(4) "Weighted Average Interest Rate During The Period" calculated based on interest expense
and average amount outstanding during the period.
</TABLE>
-S4-
<PAGE>
<PAGE>
JOHN H. HARLAND COMPANY AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands of dollars)
___________________________________________________________________________
ITEM 1993 1992 1991
___________________________________________________________________________
MAINTENANCE AND REPAIRS........ $ 15,790 $ 12,127 $ 9,785
======== ======== =======
Other items required by this schedule were less than one percent of net
sales or not applicable.
-S5-
<PAGE>
<PAGE>
EXHIBIT INDEX
(* indicates document is incorporated by reference)
Page Number
Location of
Documents or
Exhibit Incorporation
Desig- by Reference
nation Description (Inclusive)
______ ___________ ___________
3.1 * Amended and Restated Articles of Incorporation. 10
3.2 * By-laws, as amended. Adopted by the Board of
Directors on July 27, 1990. 10
4.1 Indenture, as supplemented and amended, relating
to 6.75% Convertible Subordinated Debentures due
2011 of Scantron Corporation (omitted pursuant to
Item 601(b)(4)(iii) of Regulation S-K; will be
filed upon request). 10
4.2 * Form of Rights Agreement, dated as of June 9,
between the Registrant and Citizens and Trust
Company. 10
4.3 * First Amendment dated June 12, 1992 to Rights
Agreement dated June 9, 1989 between the Company
and NationsBank of Georgia Inc., N.A., successor
to Citizens and Southern Trust Company. 10
4.4 * Second Amendment dated July 24, 1992 to Rights
Agreement dated June 9, 1989 between the Company
and Trust Company Bank, successor to NationsBank
of Georgia Inc., N.A., and to Citizens and
Southern Trust Company. 10
4.5 Note Agreement dated as of December 1, 1993
between the Company and the purchasers listed on
Schedule I of the agreement, for the issuance and
sale of $85,000,000 aggregate principle amount of
6.60% Series A Senior Notes Due December 30,
2008. 10
10.1 Form of Deferred Compensation Agreement between
the Registrant and the following Executive
Officer and Director: Mr. Woodson and the
following Retired Executive Officer and Current
Director: Mr. Lang. 10
10.2 * Form of Monthly Benefit Amendment to Deferred
Compensation Agreement between the Registrant and
following Executive Officer and Director: Mr.
Woodson and the following Retired Executive
Officer and Current Director: Mr. Lang. 10
10.3 * Form of Deferred Compensation Agreement between the
Registrant and the following executive officers:
Messrs. Dollar, Rogers and Rupe. 10
10.4 Form of Deferred Compensation Agreement
between the Registrant and Ms. Weyand,
Executive Officer. 10
10.5 Form of Frozen Benefit Amendment to
Deferred Compensation Agreement between
the Registrant and Ms. Weyand, Executive
Officer. 10
-X1-
<PAGE>
<PAGE>
EXHIBIT INDEX continued
Page Number
Location of
Documents or
Exhibit Incorporation
Desig- by Reference
nation Description (Inclusive)
______ ___________ ___________
10.6 Form of Amendment to Deferred Compensation
Agreement between the Registrant and the
following Executive Officer Director: Mr.
Woodson and the following Retired Executive
Officer and Current Director: Mr. Lang and the
following Executive Officers: Messrs. Dollar,
Rogers and Rupe and Ms. Weyand. 11
10.7 Form of Non-Compete and Termination Agreement
between the Registrant and the following
Executive Officer and Director: Mr. Woodson, the
following Retired Executive Officer and Current
Director: Mr. Lang and the following Executive
Officers Messrs. Dollar, Rogers and Rupe. 11
10.8 Form of Executive Life Insurance Plan between the
Registrant and the following Executive Officer
and Director: Mr. Woodson, the following Retired
Executive Officer and Current Director: Mr. Lang
and the following Executive Officers: Messrs.
Dollar, Rogers and Rupe and Ms. Weyand. 11
10.9 * The John H. Harland Company Incentive Stock
Option Plan. 11
10.10 Amendment to the John H. Harland Company
Incentive Stock Option Plan. 11
10.11 * John H. Harland Company 1981 Incentive Stock
Option Plan, As Extended. 11
10.12 * Asset Purchase Agreement, dated as of February 7,
1992, by and among the Registrant , Rexham, Inc.
("Rexham") and Interchecks; as partially assigned
to Centralia Holding Corp. ("Centralia") on
February 19, 1992; and as amended on February 12,
1992 by and among the Registrant, Centralia,
Rexham and Interchecks. 11
10.13 * Asset Purchase Agreement, dated as of November
13, 1992, by and among the Registrant, The Rocky
Mountain Bank Note Company and Romo Corp.; and as
amended on November 25, 1992, by and among the
Registrant, The Rocky Mountain Bank Note Company
and Romo Corp. 11
10.14 Term Loan Agreement dated as of October 25, 1993
between the Company and Trust Company Bank for a
$15,000,000 Term Loan due 2003. 11
21.1 Subsidiaries of the Registrant. 11
23.1 Independent Auditors' Consent 11
-X2-
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF THE REGISTRANT
-1-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
RESTATED
ARTICLES OF INCORPORATION OF
JOHN H. HARLAND COMPANY
----------------------------
The provisions hereof constitute the Restated Articles
of Incorporation of John H. Harland Company, as adopted by the
corporation pursuant to 22-907 of Georgia Business Corporation
Code. Certain amendments to the Articles of Incorporation as
heretofore amended are adopted in this restatement as is au-
thorized by the Code. Further, as required by the Code, the
corporation hereby certifies that:
(a) These Articles restate those provisions of the
original Articles of Incorporation as amended in effect as of
the date of filing hereof which are not amended in this re-
statement and such provisions, together with the amendments
adopted in the form of this restatement, constitute the Re-
stated Articles of Incorporation.
(b) The Restated Articles of Incorporation were sub-
milted to the shareholders at special meetings of share-
holders duly called and held on August 25, 1969. The share-
holder vote required to amend and restate the Articles of
Incorporation at the time of the meetings was an affirmative
vote of the holders of a majority of the outstanding Common
Voting Stock and a separate affirmative vote of the holders of
a majority of the outstanding Five (5%) Percent Cumulative
-2-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
Preferred Stock, each voting separately as a class thereon. As
of the record date for the shareholders' meetings there were
159,533 shares of the Common Voting Stock and 2,148 shares
of the Five (5%) Percent Cumulative Preferred Stock out-
standing and entitled to vote. At the meetings 158,673
shares of the Common Voting Stock and 1,928 shares of the
Five (5%) Percent Cumulative Preferred Stock, each voting sep-
arately as a class, voted for the said amendment and restatement
of the Articles of Incorporation contained herein. The number
of shares voted in each case was in excess of the number of
shares required for approval of the Restated Articles of Incor-
poration.
(c) The holders of the outstanding Common Voting Stock of
Ten ($10) Dollars par value per share have approved a reclassifica-
tion of the stock of the corporation pursuant to which each such
share will become eight (8) shares of Common Stock of One Dollar ($1)
par value per share. Such reclassification will take effect upon
the filing of these Restated Articles of Incorporation in the office
of the Clerk of the Superior Court of Fulton County, Georgia, at
which time each certificate evidencing shares of Common Voting Stock
of Ten ($10) Dollars par value will become evidence of the same num-
ber of shares of Common Stock of One Dollar ($1) par value and the
holder thereof will receive an additional certificate representing
seven (7) additional shares of Common Stock of One Dollar ($1) par
value for each share of Common Voting Stock of Ten ($10) Dollars
par value previously held by him. Such reclassification will reduce
the stated capital of the corporation from $1,598,430 to $1,278,744,
and $319,686 will be transferred to the paid-in surplus account.
-3-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
(d) These Restated Articles of Incorporation completely
supersede the original Articles of Incorporation of the corpora-
lion as heretofore amended.
I.
The name of the corporation is:
"JOHN H. HARLAND COMPANY."
II.
The corporation shall have perpetual duration.
III.
The nature of the business of the corporation and the
objects or purposes to be transacted, promoted or carried on
by it are as follows:
To engage in the business of the manufacture, distribu-
tion and sale of checks, drafts, and other printed and business
forms of every kind and character for business and personal use,
and the purchase and sale of business forms and supplies of
every kind and character for business and personal use and, as
the Board of Directors of the corporation shall determine, to
conduct any other business and engage in any other activities
not specifically prohibited to corporations for profit under the
Georgia Business Corporation Code; and the corporation shall
have all powers necessary and convenient to conduct such busi-
nesses and engage in such activities, including (but not limited
to) the powers enumerated in the Georgia Business Corporation
Code, or any amendment thereto.
The foregoing provisions shall be construed both as
purposes and powers of the corporation and the enumeration of
-4-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
specific purposes and powers shall not be held to exclude by in-
ference any other objects, purposes or powers of the corporation.
IV.
The corporation shall have authority to issue not more than
three million, five hundred five thousand (3,505,000) shares of
stock, which shall be divided into classes as follows:
(A) Three million (3,000,000) shares of Common Stock having
a par value of One ($1) Dollar per share. Except as herein set
forth with regard to the Five (5%) Percent Cumulative Preferred
Stock herein authorized, and except as herein set forth or as
fixed and determined with regard to the Series Preferred Stock
by resolution of the Board of Directors of the corporation pursuant
to the express authority set forth herein, the Common Stock shall
be entitled to the entire stock voting power in regard to the
corporation, to all dividends declared, and to all assets of the
corporation upon liquidation.
(B) Five thousand (5,000) shares of Five (5%) Percent Cumu-
lative Preferred Stock of One Hundred ($100) Dollars par value
per share (hereinafter called "5% Preferred Stock") and having
the following rights, privileges and perquisites:
(1) Annual dividends of Five ($5) Dollars per share
shall be payable from profits or surplus at the rate of
Two and One-Half ($2.50) Dollars per share on or before
the fifteenth day of March and September in each year,
as and when declared by the Company's Board of Directors;
-5-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
provided that such dividends shall be cumulative and that
no dividends may be declared or paid on any share of Common
Stock unless and until all dividends on the 5% Preferred
Stock have been paid in full and if, at any time, the Company
is in arrears in the payment of dividends on any share of
5% Preferred Stock by as much as Ten ($10) Dollars, each
share of 5% Preferred Stock then issued and outstanding shall
be entitled to one hundred votes per share at any stock-
holders' meeting until such time as all dividends on such
5% Preferred Stock have been paid in full.
(2) Each share of 5% Preferred Stock shall be callable
at the option of the Company by a vote of a majority of the
members of its Board of Directors at any time for a call
price of $101.50 per share. In all cases there shall be
added to the call price all unpaid dividends, whether or not
declared, accrued to date of payment of call price.
(3) A majority of the members of the Company's Board
of Directors shall fix the number of shares to be called.
and shall designate the method of selecting particular
shares to be called, which method shall be equitable and
fair to all holders of such 5% Preferred Stock.
(4) Upon any liquidation of the assets of the corpora-
tion, whether voluntarily by corporate action or involuntarily
in bankruptcy, receivership or by order of any court or credi-
tors' committee, the holders of 5% Preferred Stock shall be
-6-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
entitled to preference of One Hundred ($100) Dollars
per share plus all unpaid dividends, whether or not
declared, accrued to date of payment before the hold-
ers of any shares of Common Stock shall be entitled
to any distribution whatever.
(C) Five hundred thousand (500,000) shares of Series
Preferred Stock of One ($1) Dollar par value per share
which shall be issued in the manner and with the designa-
tions, rights, preferences and limitations set forth here-
inafter:
(1) Dividends to which holders of said Series
Preferred Stock are entitled, as fixed and determined
by the Board of Directors pursuant to the express au-
thority herein, shall be cumulative and shall accumu-
late from the date fixed and determined by the Board
of Directors. Said dividends shall be payable quarterly
in the months of February, May, August and November of
each year, as and when declared by the Board of Directors.
(2) The Series Preferred Stock shall be in pari
passu and rank equally with the 5% Preferred Stock as
to the payment of dividends and as to any preference
payment due upon any liquidation of the Corporation; provided,
however, that the Board of Directors shall have authority at
the time of issuance to designate that any series of such
Series Preferred Stock shall be subordinate to the 5% Preferred
Stock as to dividends and upon liquidation. In the event that
funds available are not sufficient to pay any dividend or
-7-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
liquidation preference amounts due the 5% Preferred Stock and
the Series Preferred Stock, then the outstanding shares of 5%
Preferred Stock and the Series Preferred Stock (except any
series designated as subordinate to the 5% Preferred Stock)
shall receive payments ratably, such that holders of each such
class of stock shall receive the same percentage of the amount
then due as the holders of the other class receive.
(3) All shares of Series Preferred Stock shall be
identical except that the Board of Directors of the
corporation is hereby expressly authorized and empowered
to divide the class of Series Preferred Stock into one
or more series, and, prior to the issuance of any of
such shares in any particular series, to fix and deter-
mine, in the manner provided by law, the following pro-
visions of such series:
(i) The distinctive designation of such series
and the number of shares which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors in creating
such series) or decreased (but not below the number of
shares thereof then outstanding) from time to time by
like action of the Board of Directors;
(ii) The annual rate of dividends payable on
shares of such series and the date from which such divi-
dends shall be accumulated;
-8-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
(iii) Whether, the time or times when, the
price or prices at which, and the terms and conditions
upon which, the shares of such series shall be redeem-
able at the option of the corporation;
(iv) The amount payable on shares of such series
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corpora-
tion;
(v) Whether or not the shares of such series
shall be entitled to the benefit of a sinking fund, retire-
ment fund or a purchase fund to be applied to the redemption
or purchase of shares of such series, and if so entitled,
the amount of such fund and the manner of its application,
including the price or prices at which the shares of such
series may be redeemed or purchased through the application
of such fund;
(vi) The rights, if any, of the holders of shares
of such series to convert such shares into, or exchange
such shares for, shares of Common Stock or shares of any
other class or series of preferred stock and the terms and
conditions of such conversion or exchange;
(vii) Whether or not the shares of such series
shall have any voting powers and, if voting powers are so
granted, the extent of such voting powers and the terms
and conditions under which such voting powers may be ex-
-9-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ercised. Unless expressly granted by the Board of
Directors, no series of Series Preferred Stock shall
have the right to vote for directors or in any other
matter except as required by Georgia law; and
(viii) The relative preferences and priorities as to divi-
dends and payments upon liquidations as between any two or more
series of Series Preferred Stock which are designated as sub-
ordinate to the 5% Preferred Stock.
(4) Each share of stock within an individual series
shall be identical in all respects with the other shares
of such series, except as to the date from which divi-
dends thereon shall accumulate.
(5) The holders of Series Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors and paid by the corporation from funds legally
available for such payment, cash dividends at the annual
rate for each particular series of Series Preferred Stock
set by the Board of Directors as herein authorized, such
dividends to be payable before any dividend, other than
a dividend on the 5% Preferred Stock and other than a divi-
dend in Common Stock on Common Stock, shall be paid or set
aside for payment. Arrearage in the payment of such divi-
dends shall not bear interest.
(6) In the event of any dissolution, liquidation or
winding up of the affairs of the corporation, after pay-
ment or provision for payment of the debts and other lia-
abilities of the corporation, the holders of each series of
-10-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
Series Preferred Stock shall be entitled to receive
out of the net assets of the corporation an amount in
cash for each share equal to the amount fixed and de-
termined by the Board of Directors in the resolution
providing for the issuance of the particular series
of Series Preferred Stock, plus an amount equal to
any dividends payable to such holders which are then
unpaid either under the provisions of the resolution
of the Board of Directors providing for the issuance
of such series of Series Preferred Stock, or by declara-
tion of the Board of Directors, on each such share up
to the date fixed for distribution, and no more, before
any distribution shall be made to the holders of Common
Stock. Neither the merger nor consolidation of the
corporation, nor the sale, lease or conveyance of all
or a part of its assets shall be deemed to be a liquida-
tion, dissolution or winding up of the affairs of the
corporation.
(D) The Common Stock, the 5% Preferred Stock and the Series
Preferred Stock herein authorized may be issued from time to
time for such consideration, having a value as determined by
the Board of Directors of not less than the par value of the
shares so issued, or as a dividend, as the Board of Directors
may determine. Upon receipt by the corporation of payment of
consideration so determined for the issuance of shares, such
-11-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
issued shares shall be deemed to be fully paid and non-
assessable.
(E) The corporation shall have the power to create and
issue, whether or not in connection with the issuance and sale
of any of its shares or other securities, rights or options
entitling the holders thereof to purchase from the corpora-
tion, upon such consideration, terms and conditions as may be
fixed by the Board of Directors, shares of any class or series
of the corporation, whether authorized but unissued shares or
treasury shares; provided that the price or prices so fixed
by the Board of Directors for shares so issued shall not be
less than the par value of the said shares.
(F) The corporation shall have the full power to purchase
and otherwise acquire, and dispose of, its own shares and se-
curities and shall have the right to purchase its shares out
of its unreserved and unrestricted capital surplus available
therefor, as well as out of its unreserved and unrestricted
earned surplus available therefor.
V.
Unless otherwise determined by the Board of Directors,
no holder of stock of the corporation shall be entitled as such,
as a matter of right, to purchase or subscribe for any stock of
any class which the corporation may issue or sell, whether or
not exchangeable for any stock of the corporation of any class
-12-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
or classes and whether out of unissued shares authorized by
these Articles or out of shares of stock of the corporation ac-
quired by it after the issue thereof, and whether issued for
cash, labor done, personal property, or real property, or
leases thereof, nor shall he be entitled to any right or sub-
scription to any thereof; nor, unless otherwise determined by
the Board of Directors, shall the holder of any shares of the
capital stock of the corporation be entitled as such, as a
matter of right, to purchase or subscribe for any obligation
which the corporation may issue or sell that shall be convert-
ible into or exchangeable for any shares of the stock of the
corporation of any class or classes, or to which shall be
attached or appurtenant any warrant or warrants or other
instrument or instruments that shall confer upon the holder
or holders of such obligation the right to subscribe for or
purchase from the corporation any shares of its capital stock
of any class or classes.
VI.
The Board of Directors shall have the management of the
business of the corporation, and subject to any restrictions
imposed by law or by these Articles, may exercise all of the
powers of the corporation.
VII.
The corporation reserves the right to amend, alter,
change or repeal any provision contained in these Articles of
-13-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon shareholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, John H. Harland Company has caused
these Restated Articles of Incorporation to be executed and
its corporate seal to be affixed and has caused its seal and
the execution hereof to be attested, all by its duly authorized
officers, this 2nd day of September, 1969.
JOHN H. HARLAND COMPANY
By: s/J. William Robinson
---------------------
President
ATTEST: s/I. Ward Lang
--------------
Secretary
-14-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
---------------------
1.
The name of the corporation is JOHN H. HARLAND
COMPANY.
2.
The amendment to its Articles of Incorporation
effected hereby is to delete in their entirety the first
paragraph and paragraph (A) of Article IV and to add a new
first paragraph and a new paragraph (A) to Article IV, which
shall read as follows:
The corporation shall have authority
to issue not more than six million, five
hundred five thousand (6,505,000) shares
of stock, which shall be divided into
classes as follows:
(A) Six million (6,000,000) shares
of Common Stock having a par value of
one ($1) Dollar per share. Except as
herein set forth with regard to the Five
(5%) Percent Cumulative Preferred Stock
herein authorized, and except as herein
set forth or as fixed and determined
with regard to the Series Preferred
Stock by resolution of the Board of
Directors of the corporation pursuant
to the express authority set forth
herein, the Common Stock shall be entitled
to the entire voting stock power in regard
to the corporation, to all dividends de-
clared, and to all assets of the corpora-
tion upon liquidation.
The remainder of Article IV shall remain unamended.
3.
Said amendment was duly adopted by the shareholders
on April 28. 1972.
-15-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
4.
The affirmative vote of a majority of the out-
standing shares of common stock of the corporation was
required to adopt said amendment. As of March 15, 1972, the
record date for shareholders entitled to vote on said amend-
ment, there were two million, five hundred eighty-three
thousand, seven hundred thirty-four (2,583,734) shares of
common stock outstanding and entitled to vote on said amend-
ment, and on April 28, 1972 two million, two hundred eleven
thousand, four hundred fifty-five (2,211,455) such shares
were voted for said amendment.
IN WITNESS WHEREOF, said corporation has caused
these Articles of Amendment to be duly executed and its
corporate seal to be affixed and its seal and the execution
hereof to be attested, all by its duly authorized officers,
this 17th day of May, 1972.
JOHN H. HARLAND COMPANY
[CORPORATE SEAL] By: s/John A. Conant
------------------
John A. Conant, Vice President
Attest:
s/I. Ward Lang
----------------------
I. Ward Lang, Secretary
-16-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF MERGER
OF
ROYAL CHECK, INC.
WITH AND INTO
JOHN H. HARLAND COMPANY
I.
The Plan and Agreement of Merger (the "Plan") between
Royal Check, Inc., a Massachusetts corporation ("Royal"), and
John H. Harland Company, a Georgia corporation ("Company" or
the "Surviving Corporation"), pursuant to which Royal is to be
merged with and into Company, is as follows:
PLAN AND AGREEMENT OF MERGER
----------------------------
THIS PLAN AND AGREEMENT OF MERGER (this "Plan"), made
and entered into this 22nd day of July, 1977 by and between JOHN
H. HARLAND COMPANY, a Georgia corporation (hereinafter referred
to as "Company" or the "Surviving Corporation"), and ROYAL
CHECK, INC., a Massachusetts corporation (hereinafter referred
to as "Royal") (Company and Royal are sometimes hereinafter
collectively referred to as the "Constituent Corporations");
W I T N E S S E T H:
--------------------
WHEREAS Royal is the wholly-owned subsidiary of Company;
WHEREAS, the respective Boards of Directors of each of
the Constituent Corporations deem it advisable and in the best
interests of their respective corporations and shareholders
that Royal merge with and into Company, with Company to be the
surviving corporation;
WHEREAS, the corporate laws of Georgia and Massachusetts
permit the merger of domestic and foreign corporations in
accordance with the terms of this Plan; and
WHEREAS, the parties hereto desire to set forth all of
the terms and conditions of the merger of Royal with and into
Company;
-17-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
NOW, THEREFORE, in consideration of the premises and
the mutual promises and agreements contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
Section 1. Merger.
On the "Merger Date" (as hereinafter defined), Royal
shall be merged with and into Company, and the separate existence
of Royal shall cease (the merger of Royal with and into Company
hereunder being sometimes hereinafter referred to as the "Merger").
Company shall be the surviving corporation and shall continue
its corporate existence as a Georgia corporation governed by
the laws of the State of Georgia.
Section 2. Articles of Incorporation and Name.
The Articles of Incorporation of Company in effect
immediately prior to the Merger Date shall remain unchanged and
shall continue to be the Articles of Incorporation of the
Surviving Corporation and the name of the Surviving Corporation
shall continue to be "John H. Harland Company."
Section 3. By-Laws.
The By-Laws of Company immediately prior to the Merger
Date shall continue to be the By-Laws of the Surviving Corpora-
tion until altered or repealed in the manner provided by such
By-Laws and the Georgia Business Corporation Code.
Section 4. Directors.
The directors of Company immediately prior to the
Merger Date shall be the directors of the Surviving Corporation,
holding office as provided in the By-Laws of the Surviving
Corporation.
Section 5. Officers.
The officers of Company immediately prior to the Merger
Date shall be the officers of the Surviving Corporation after
the Merger Date and shall continue to serve in their respective
-18-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
offices in accordance with the By-Laws of the Surviving Corpora-
tion.
Section 6. Manner and Basis of Converting Shares.
6.1. Royal. Each share of stock of Royal which
shall, immediately prior to the Merger Date, be outstanding or
which shall be issued and held in the treasury of Royal shall,
by virtue of the Merger and without any action on the part of
the holder thereof, be cancelled and retired and all certifi-
cates representing such shares shall be cancelled, and no cash
or securities or other property shall be issued in the Merger in
respect thereof.
6.2. Company. Each share of stock of Company
which shall, immediately prior to he Merger Date, be outstand-
ing or which shall be issued and held in the treasury of Company
shall be unaffected by the Merger and shall remain outstanding
or shall continue to be held in the treasury of Company, as the
case may be, without change of any kind or nature.
Section 7. Effect of Merger.
7.1. Assets. Upon consummation of the Merger, the
Surviving Corporation shall thereupon and thereafter possess all
the rights, privileges, immunities, and franchises, as well of
a public as a private nature, of each of the Constituent
Corporations; and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to
shares, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Constituent
Corporations, shall be taken and deemed to be transferred to
and vested in the Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein,
vested in either of the Constituent Corporations shall not revert
or be in any way impaired by reason of the Merger.
-19-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
7.2. Liabilities. Upon consummation of the Merger,
the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the
Constituent Corporations; and any claim existing or action or
proceeding pending by or against either of such Corporations
may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place. Neither
the rights of creditors nor any liens upon the property of
either of the Constituent Corporations shall be impaired by the
Merger.
7.3. Confirmations of Title. If at any time the
Surviving Corporation shall consider or be advised that any
further assignment or assurance in law or other action is neces-
sary or desirable to vest, perfect or confirm, on record or other-
wise, in the Surviving Corporation the title to any property or
rights of Royal acquired by or as a result of the Merger, the
f officers of Royal in office on the date of the Merger shall be
fully authorized to execute and deliver such deeds, assignments
and assurances in law and to take such other action as may be
necessary or proper in the name of Royal to vest, perfect or
confirm title to such property or rights in the surviving Corpo-
ration and otherwise to carry out the purposes of this Plan.
Section 8. Effective Time of Merger.
The Merger shall become effective end shall have been
consummated by operation of law without further act or deed on
the part of the Constituent Corporations at 12:01 a.m. on
August 4, 1977; provided, however, that, if duly executed
Articles of Merger of the Constituent Corporations have not been
filed on or before August 3, 1977 with the Secretary of State
of Georgia in the manner provided in the Georgia Business
Corporation Code, the Merger shall become effective on the date
and at the time of such filing. As used herein, the term "Merger
-20-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
Date" shall mean the date and time at which the Merger becomes
effective.
Section 9. Abandonment of Merger.
Notwithstanding any other provisions hereof, this Plan
and the Merger contemplated hereby may, at any time prior to
the issuance of the certificate of merger with respect to the
Merger by the Secretary of State of Georgia, be terminated and
abandoned pursuant to action taken by mutual agreement by each
of the Constituent Corporations, with the approval of their
respective Boards of Directors. If for any reason this Plan
ceased to be binding upon the Constituent Corporations because
of termination as provided herein or otherwise, it shall thence-
forth be void.
Section 10. Miscellaneous.
10.1. Binding Effect. This Plan shall be binding
upon and inure to the benefit of Company and Royal and their
respective successors and assigns.
10.2. Headings. The section and paragraph headings
contained in this Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Plan.
10.3. Governing Law. This Plan shall be deemed to
be made in, and in all respects shall be interpreted, construed
and governed by and in accordance with, the laws of the State
of Georgia.
10.4. Entire Agreement. This Plan is intended by
the parties hereto to be the final expression of their agreement
and is the complete and exclusive statement of the terms thereof
if notwithstanding any representations or statements to the contrary
heretofore made. This Plan may be modified only by written
instrument signed by each of the parties hereto.
-21-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
II.
Under the Plan, Company is to be the surviving corpo-
ration, and its Articles of Incorporation are not amended by the
Plan, and its name shall thereafter continue to be "John H.
Harland Company."
III.
Since Company is the owner of all of the outstanding
capital stock of Royal and since the laws of the State of
Massachusetts permit a merger of a parent and subsidiary corpo-
ration under substantially the same terms and conditions as in
Section 22-1005 of the Georgia Business Corporation Code, the
approval of the shareholders of Company and Royal is not required
to consummate the merger in accordance with Sections 22-1005 and
22-1008 of the Georgia Business Corporation Code.
(a) The affirmative vote of six Directors of Company,
constituting a majority of the members of the Board of Directors
of Company, was required to adopt the Plan; and on July 22, 1977,
the Plan was adopted by the unanimous vote of the Board of
Directors of Company (which consists of eleven directors).
(b) The affirmative vote of three Directors of Royal,
constituting a majority of the members of the Board of Directors
of Royal, was required to adopt the Plan; and on July 22, 1977,
the Plan was adopted by the unanimous vote of the Board of
Directors of Royal (which consists of five directors).
IV.
The merger of Royal and Company pursuant to the Plan
shall become effective and shall have been consummated by opera-
tion of law without further act or deed on the part of Royal or
Company at 12:01 a.m. on August 4, 1977; provided, however, that.
if duly executed Articles of Merger of Company and Royal have
-22-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
not been filed on or before August 3, 1977 with the secretary of
State of Georgia in the manner provided in the Georgia Business
Corporation Code, the Merger shall become effective on the date
and at the time of such filing.
IN WITNESS WHEREOF, each of the merging corporations
has caused these Articles of Merger to be executed and sealed
by its duly authorized officers, this 27 day of July, 1977.
JOHN H. HARLAND COMPANY
[CORPORATE SEAL] By: s/J. William Robinson
---------------------
President
Attest:
s/I. Ward Lang
--------------
Secretary
ROYAL CHECK, INC.
[CORPORATE SEAL] By: s/J. William Robinson
---------------------
President
Attest:
s/I. Ward Lang
--------------
Secretary
-23-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
---------------------
1.
The name of the corporation is John H. Harland
Company.
2.
An amendment to its Articles of Incorporation
adopted by the Corporation is to amend Article 4 of the
Articles of Incorporation so that it shall hereafter read as
follows:
"The Corporation shall have authority to
issue not more than twelve million, five hundred
thousand (12,500,000) shares of stock, which shall
be divided into classes as follows:
(A) Twelve million (12,000,000) shares
of Common Stock having a par value of One
($1) Dollar per share. Except as otherwise
hereinafter set forth or as fixed and deter-
mined with regard to the Series Preferred
Stock, the Common Stock shall be entitled to
the entire stock voting power in regard to
the corporation, to all dividends declared,
and to all assets of the corporation upon
liquidation.
(B) Five hundred thousand (500,000)
shares of Series Preferred Stock of One ($1)
Dollar par value per share which shall be
issued in the manner and with the designa-
tions, rights, preferences and limitations
set forth hereinafter:
(1) Dividends to which holders
of said Series Preferred Stock are en-
titled, as fixed and determined by the
Board of Directors pursuant to the ex-
press authority herein, shall be cumu-
lative and shall accumulate from the
date fixed and determined by the Board
of Directors. Said dividends shall be
payable quarterly in the months of
February, May, August and November of
each year, as and when declared by the
Board of Directors.
(2) All shares of Series Preferred
Stock shall be identical except that
the Board of Directors of the corpora-
tion is hereby expressly authorized and
empowered to divide the class of Series
Preferred Stock into one or more series,
-24-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
and, prior to the issuance of any of such
shares in any particular series, to fix
and determine, in the manner provided by
law, the following provisions of such
series:
(i) The distinctive designa-
tion of such series and the number
of shares which shall constitute
such series, which number may be
increased (except where otherwise
provided by the Board of Directors
in creating such series) or decreased
(but not below the number of shares
thereof then issued) from time to
time by like action of the Board of
Directors;
(ii) The annual rate of divi-
dends payable on shares of such
series and the date from which such
dividends shall be accumulated;
(iii) Whether, the time or times
when, the price or prices at which,
and the terms and conditions upon
which, the shares of such series
shall be redeemable at the option
of the corporation;
(iv) The amount payable on
shares of such series in the event
of any voluntary or involuntary
liquidation, dissolution or wind-
ing up of the affairs of the corpo-
ration;
(v) Whether or not the shares
of such series shall be entitled to
the benefit of a sinking fund, re-
tirement fund or a purchase fund
to be applied to the redemption
or purchase of shares of such series,
and if so entitled. the amount of
such fund and the manner of its appli-
cation, including the price or prices
at which the shares of such series
may be redeemed or purchased through
the application of such fund;
(vi) The rights, if any, of
the holders of shares of such series
to convert such shares into, or ex-
change such shares for, shares of
Common Stock or shares of any other
class or series of preferred stock
and the terms and conditions of such
conversion or exchange; and
(vii) Whether or not the shares
of such series shall have any voting
powers and, if voting powers are
-25-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
so granted, the extent of such voting
powers and the terms and conditions
under which such voting powers may
be exercised. Unless expressly
granted by the Board of Directors,
no series of Series Preferred Stock
shall have the right to vote for
directors or in any other matter
except as required by Georgia law.
(3) Each share of stock within an
individual series shall be identical
in all respects with the other shares of
such series, except as to the date from
which dividends thereon shall accumulate.
(4) The holders of Series Preferred
Stock shall be entitled to receive, when
and as declared by the Board of Directors
and paid by the corporation from funds
legally available for such payment, cash
dividends at the annual rate for each
particular series of Series Preferred
Stock set by the Board of Directors as
herein authorized, such dividends to be
payable before any dividend, other than
a dividend in Common Stock on Common
Stock, shall be paid or set aside for
payment on or with respect to Common
Stock. Arrearage in the payment of such
dividends shall not bear interest.
(5) In the event of any dissolu-
tion, liquidation or winding up of the
affairs of the corporation, after pay-
ment or provision for payment of the
debts and other liabilities of the cor-
poration, the holders of each series of
Series Preferred Stock shall be entitled
to receive out of the net assets of the
corporation an amount in cash for each
share equal to the amount fixed and deter-
mined by the Board of Directors in the
resolution providing for the issuance
of the particular series of Series Pre-
ferred Stock, plus an amount equal to
any dividends payable to such holders
which are then unpaid either under the
provisions of the resolution of the Board
of Directors providing for the issuance
of such series of Series Preferred Stock,
or by declaration of the Board of Di-
rectors, on each such share up to the
date fixed for distribution, and no more,
before any distribution shall be made
to the holders of Common Stock. Neither
the merger nor consolidation of the cor-
poration, nor the sale, lease or con-
veyance of all or a part of its assets
shall be deemed to be a liquidation, disso-
lution or winding up of the affairs of
the corporation.
-26-
EXHIBIT 3.1 continued
(C) The Common Stock and the Series
Preferred Stock herein authorized may be
issued from time to time for such considera-
tion, having a value as determined by the
Board of Directors of not less than the par
value of the shares so issued, or as a divi-
dend, as the Board of Directors may determine.
Upon receipt by the corporation of payment
of consideration so determined for the issu-
ance of shares, such issued shares shall be
determined to be fully paid and nonassessable.
(D) The corporation shall have the power
to create and issue, whether or not in con-
nection with the issuance and sale of any of
its shares or other securities, rights or op-
tions entitling the holders thereof to pur-
chase from the corporation, upon such considera-
tion, terms and conditions, whether authorized
but unissued shares or treasury shares; pro-
vided that the price or prices so fixed by the
Board of Directors for shares so issued shall
not be less than the par value of the said
shares.
(E) The corporation shall have the full
power to purchase and otherwise acquire, and
dispose of, its own shares and securities
and shall have the right to purchase its shares
out of its unreserved and unrestricted capital
surplus available therefor, as well as out of
its unreserved and unrestricted earned surplus
available therefor.
3.
Said amendment was adopted by the shareholders of
John H. Harland Company on April 25, 1980.
4.
The affirmative vote of a majority of the out-
standing shares of common stock of the Corporation was
required to adopt the amendment. As of March 7, 1980 there
were four million, one hundred thirteen thousand, six hundred
seventy-one (4,113,671) shares of common stock and no shares
of any other class, outstanding and entitled to vote. On
April 25, 1980, three million, one hundred forty-six thousand,
forty-nine (3,146,049) such shares were voted for said
amendment.
-27-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
IN WITNESS WHEREOF, John H. Harland Company has
caused these Articles of Amendment to be duly executed, its
corporate seal to be affixed, and its seal and the execu-
tion hereof to be attested, all by its duly authorized offi-
cers this 8 day of May, 1980.
JOHN H. HARLAND COMPANY
[CORPORATE SEAL]
By: s/J. William Robinson
----------------------
President
Attest:
s/I. Ward Lang
--------------
Secretary
-28-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
---------------------
1.
The name of the Corporation is John H. Harland
Company
2.
The amendment to its Articles of Incorporation
adopted by the Corporation is to amend Article 4 of the
Articles of Incorporation by deleting the first paragraph
and paragraph "A" of Article 4 of the Articles of Incorporation
and inserting in lieu thereof the following paragraph.
The Corporation shall have authority
to issue not more than thirty-six million,
five hundred thousand (36,500,000)
shares of stock, which shall be divided
into classes as follows:
(A) Thirty-six million (36,000,000)
shares of Common Stock having a par
value of One (1$) Dollar per share.
Except as otherwise hereinafter set
forth or as fixed and determined
with regard to the Series Preferred
Stock, the Common Stock shall be
entitled to the entire stock voting
power in regard to the corporation,
to all dividends declared, and to
all assets of the corporation upon
liquidation.
The remaining paragraphs of Article 4 of the
Articles of Incorporation, which establish the number,
terms, provisions, rights and preferences of the Preferred
Stock, will remain unchanged.
3.
Said Amendment was adopted by the shareholders of
John H. Harland Company on April 22, 1983.
4.
The affirmative vote of a majority of the outstanding
shares of Common Stock of the Corporation was required
to adopt the amendment. As of March 4, 1983, there were eight
million, four hundred twenty-nine thousand, two hundred
-29-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
thirteen (8,429,213) shares of Common Stock and no shares of
any other class, outstanding and entitled to vote. On April
22, 1983, six million, six hundred seventy-eight thousand,
two hundred thirty-five (6,678,235) such shares were voted
for said amendment.
IN WITNESS WHEREOF, John H. Harland Company has
caused these Articles of Amendment to be duly executed, its
corporate seal to be affixed, and its seal and the execution
hereof to be attested, all by its duly authorized officers,
this 20 day of May, 1983.
JOHN H. HARLAND COMPANY
By: s/ J. William Robinson
-----------------------
J. William Robinson
President
[CORPORATE SEAL]
Attest:
s/ I. Ward Lang
--------------
I. Ward Lang
Secretary
-30-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
1.
The name of the corporation is John H. Harland
Company.
2.
An amendment to its Articles of Incorporation
adopted by the Corporation is to add a new Article VIII to
the Articles of Incorporation so that it shall hereafter
read as follows:
"VIII.
I. (A) In addition to any affirmative vote required by
law, these Articles of Incorporation or otherwise with
respect to any shares of Common Stock of the corporation,
and except as otherwise expressly provided in paragraph II
of this Article VIII:
(i) any merger or consolidation of the corporation
or any Subsidiary (as hereafter defined) with (a) any
Interested Shareholder (as hereinafter defined) or (b)
any other corporation (whether or not itself an
Interested Shareholder) which is, or after such merger
or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of transactions (to or with any Interested
Shareholder or any Affiliate of any Interested
Shareholder of any assets of the corporation or any
Subsidiary having an aggregate Fair Market Value (as
hereinafter defined) of $10,000,000 or more; or
(iii) the issuance or transfer by the corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or
any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of
$l,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed
by or on behalf of an Interested Shareholder or any
Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible securities of the
corporation or any Subsidiary which is directly or
-31-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
indirectly owned by any Interested Shareholder or any
affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at
least seventy-five percent (75%) of the outstanding shares
of Common Stock of the corporation, including the affirma-
tive vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Common Stock of the
corporation other than those beneficially owned by the
Interested Shareholder involved in such transaction. Such
affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage
may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(B) The term "Business Combination" as used in this
Article VIII shall mean any transaction which is referred
to in any one or more of clauses (i) through (v) of
subparagraph (A) of this paragraph I.
II. The provisions of paragraph I of this Article VIII
shall not be applicable to any particular Business
Combination, and such Business Combination shall require
only such affirmative vote as is required by law and any
other provision of these Articles of Incorporation, if all
of the conditions specified in either of the following
subparagraphs (A) or (B) are met:
(A) The Business Combination shall have been approved
by at least seventy-five (75%) of the directors of the
Company.
(B) All of the following conditions shall have been
met:
(i) The aggregate amount of (x) cash and (y) the
Fair Market Value (as hereinafter defined) as of the
date of the consummation of the Business Combination
of consideration other than cash to be received per
share by holders of Common Stock in such Business
Combination shall be at least equal to the highest
amount determined under subclauses (a), (b) and (c)
below (taking into account all stock dividends and
stock splits):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by the Interested
Shareholder involved in the Business Combination
for any share of Common Stock acquired by it (1)
within the two-year period immediately prior to the
first public announcement of the proposal of the
Business Combination (the "Announcement Date") or
(2) in the transaction in which it became an
Interested Shareholder, whichever is higher;
(b) the highest Fair Market value per share of
Common Stock during the 30-day period ending on the
Announcement Date or during the 30-day period ending
on the date on which the Interested Shareholder
involved in the Business Combination became an
Interested Shareholder, whichever is higher; and
(c) (if applicable) the price per share equal
to the highest Fair Market value per share of
Common Stock determined pursuant to subparagraph
-32-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
B(i)(b) above, multiplied by the ratio of (1) the
highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder involved
in the Business Combination for any shares of
Common Stock acquired by it within the two-year
period immediately prior to the Announcement
Date to (2) the Fair Market Value per share of
Common Stock on the date that the Interested
Shareholder made its first purchase of shares of
Common Stock during such two-year period.
(ii) The consideration to be received by
holders of outstanding Common Stock shall be in
cash or in the same form as the Interested
Shareholder involved in the Business Combination
has previously paid for shares of Common Stock. If
the Interested Shareholder has paid for shares of
Common Stock with varying forms of consideration, the
form of consideration for Common Stock shall be either
cash or the form used to acquire the largest number
of shares of Common Stock previously acquired by it.
(iii) After the Interested Shareholder involved
in the Business Combination became an Interested
Shareholder and prior to the consummation of such
Business Combination: (a) except as approved by at
least seventy-five percent (75%) of the directors,
there shall have been no failure to declare and pay
at the regular date therefor dividends in full
(whether or not cumulative) on the outstanding
Preferred Stock; (b) there shall have been (1) no
reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect
any subdivision of the Common Stock), except as
approved by at least seventy-five percent (75%)
of the directors, and (2) an increase in such
annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock
split), recapitalization, reorganization, or any
similar transaction which has the effect of
reducing the number of outstanding shares of the
Common Stock, unless the failure so to increase
such annual rate is approved by at least seventy-
five percent (75%) of the directors; and (c) such
Interested Shareholder shall not have become the
beneficial owner of any additional shares of
Common Stock except as part of the transaction
which results in such Interested Shareholder
becoming an Interested Shareholder.
(iv) After the Interested Shareholder
involved in the Business Combination became an
Interested Shareholder, such Interested
Shareholder shall not have received the benefit,
directly or indirectly (except proportionately
as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance
or any tax credits or other tax advantages
provided by the corporation or any of its
Subsidiaries, whether in anticipation of or in
connection with such Business Combination or
otherwise.
(v) A proxy or information statement
-33-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
describing the proposed Business Combination and
complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing
such Act, rules or regulations) shall be mailed
to public shareholders of the corporation at least
30 days prior to the meeting at which the Business
Combination will be voted upon (whether or not such
proxy information statement is required to be mailed
pursuant to such Act or subsequent provisions). The
proxy or information statement shall contain on the
cover page thereof a statement as to how members of
the Board voted on the proposal in question and any
recommendation as to the advisability or
inadvisability of the Business Combination that any
director wishes to make, and shall also contain the
opinion of a reputable national investment banking
firm as to the fairness of the terms of the Business
Combination, from the point of view of the remaining
public shareholders of the corporation (such
investment banking firm to be engaged solely on
behalf of the remaining public shareholders, to be
paid a reasonable fee for its services by the
corporation upon receipt of such opinion and to be
an investment banking firm which has not previously
been associated with the Interested Shareholder).
III. For the purposes of this Article VIII:
A. A "person" shall mean any individual, firm,
corporation or other entity.
B. "Interested Shareholder" shall mean any person
(other than the corporation, any Subsidiary or either the
corporation or any Subsidiary acting as trustee or in a
similar fiduciary capacity) who or which:
(i) is the beneficial owner, directly or
indirectly, of more than 10% of the outstanding
Common Stock; or
(ii) is an Affiliate of the corporation and
at any time within the two-year period immediately
prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of
the then outstanding Common Stock; or
(iii) is an assignee of or has otherwise
succeeded to any shares of Common Stock which were
at any time within the two-year period immediately
prior to the date in question beneficially owned
by any Interested Shareholder, if such assignment
or succession shall have occurred in the course
of a transaction or series of transactions not
involving a public offering within the meaning of
the Securities Act of 1933.
C. A person shall be a "beneficial owner" of any
Common Stock:
(i) which such person or any of its Affiliates
or Associates (as hereinafter defined) beneficially
owns, directly or indirectly; or
(ii) which such person or any of its Affiliates
or Associates has, directly or indirectly, (a) the
-34-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
right to acquire (whether such right is exercisable
immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or b) the
right to vote pursuant to any agreement, arrangement
or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such
person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing
of any shares of Common Stock.
D. For the purposes of determining whether a person
is an Interested Shareholder pursuant to paragraph B of
this Section III, the number of shares of Common Stock
deemed to be outstanding shall include shares deemed owned
through application of paragraph C of this Section III but
shall not include any other shares of Common Stock which
may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrant or options, or otherwise.
E. (i) An "Affiliate" of a specified person is a
person that directly, through one or more intermediaries,
controls, or is controlled by, or is under common control
with, the person specified.
(ii) The term "Associate" used to indicate a
relationship with any person means (1) any firm,
corporation or other entity (other than the corporation
or any Subsidiary) of which such person is an officer
or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities,
(2) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity, and
(3) any relative or spouse of such person, or any relative
of such spouse who has the same home as such person.
F. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly
or indirectly, by the corporation unless owned solely as
trustee or other similar fiduciary capacity.
G. "Fair Market Value" means: (i) in the case of
stock, the closing sales price of a share of such stock on
the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange
Act of 1934 on which such stock is listed, or, if such stock
is not listed on any such exchange, the closing sales price
or the average of the bid and asked prices reported with
respect to a share of such stock on the National Association
of Securities Dealers, Inc. Automatic Quotation System or
any system then in use, or if no such quotations are
available, the fair market value on the date in question of
a share of such stock as determined by the Board of
Directors in good faith; and (ii) in the case of property
other than cash or stock, the fair market value of such
property on the date in question as determined by the Board
of Directors in good faith.
-35-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
H. In the event of any Business Combination in which
the corporation survives, the phrase "consideration other
than cash to be received" as used in paragraph (B)(i) of
Section II of this Article VIII shall include the shares of
Common Stock retained by the holders of such shares.
IV. The Board of Directors of the corporation shall
have the power and duty to determine for the purposes of
this Article VIII, on the basis of information known to
them after reasonable inquiry, (i) whether a person is an
Interested Shareholder, (ii) the number of shares of Common
Stock beneficially owned by any person, (iii) whether a
person is an Affiliate or Associate of another, and (iv)
whether the assets which are the subject of any Business
Combination have an aggregate Fair Market Value of
$10,000,000 or more, and whether the consideration to be
received for the issuance or transfer of securities by the
corporation or any Subsidiary in any Business Combination
has an aggregate Fair Market Value of $1,000,000 or more.
V. Nothing contained in this article VIII shall be
construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
VI. Notwithstanding any other provisions of these
Articles of Incorporation or the bylaws of the corporation
(and notwithstanding the fact that a lesser percentage may
be specified by law), the affirmative vote of the holders
of at least seventy-five percent (75%) of the outstanding
shares of Common Stock of the corporation, including the
affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding shares of Common Stock of
the corporation other than those beneficially owned by any
Interested Shareholder, shall be required to amend or
repeal, or adopt any provisions inconsistent with, this
Article VIII of these Articles of Incorporation. "
----------
The Articles are hereby further amended by adding a new
Article IX which reads as follows:
"IX.
The Board of Directors of the corporation, when
evaluating any offer of a person (as defined in Article
VIII), other than the corporation itself, to (a) make a
tender or exchange offer for any equity security of the
corporation, (b) merge or consolidate the corporation with
another person, or (c) purchase or otherwise acquire all or
substantially all of the properties and assets of the
corporation (an "Acquisition Proposal"), shall, in
connection with the exercise of its business judgment in
determining what is the best interests of the corporation
and its shareholders, give due consideration to all relevant
factors, including without limitation the consideration
being offered in the Acquisition Proposal in relation to
the then-current market price, but also in relation to the
then-current value of the corporation in a freely negotiated
transaction and in relation to the Board of Directors' then
estimate of the future value of the corporation as an
independent entity, the social and economic effects on the
employees, customers, suppliers and other constituents of
the corporation and its subsidiaries and on the communities
in which the corporation and its subsidiaries operate or are
located and the desirability of maintaining independence
from any other entity.
-36-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
Notwithstanding any other provisions of these Articles
of Incorporation or the bylaws of the corporation (and
notwithstanding the fact that a lesser percentage may be
specified by law), the affirmative vote of the holders of at
least seventy-five percent (75%) of the outstanding shares
of Common Stock of the corporation, including the
affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding shares of Common Stock of
the corporation other than those beneficially owned by
any Interested Shareholder, shall be required to amend
or repeal, or adopt any provisions inconsistent with,
this Article IX of these Articles of Incorporation."
----------
The Articles are hereby further amended by adding a
new Articles X which reads as follows:
"X.
Notwithstanding any other provisions of these Articles
of Incorporation or the bylaws of the corporation (and
notwithstanding the fact that a lesser percentage may be
specified by law), neither Section 2 or 8 of Article II of
the bylaws nor this Article X may be amended or repealed nor
may any provisions inconsistent with said Section 2 or 8 of
Article II of the bylaws or this Article X be adopted,
except upon the affirmative vote of the holders of at least
seventy-five percent (75%) of the outstanding shares of
Common Stock of the corporation, including the affirmative
vote of the holders of at least seventy-five percent (75%)
of the outstanding shares of Common Stock of the corporation
other than those beneficially owned by any Interested
Shareholder (as defined in Article VIII hereof), or
alternatively, upon the affirmative vote of at least
seventy-five percent (75%) of the directors."
3.
Said amendments were adopted by the shareholders
of John H. Harland Company on April 27, 1984.
4.
The affirmative vote of a majority of the out-
standing shares of common stock of the Corporation was
required to adopt the amendments. As of March 8, 1984, the
Record Date established by the Board of Directors for the
right to vote at the shareholders' meeting scheduled for
April 27, 1984, there were eight million, four hundred
eighty one thousand, eight hundred eighty five (8,481,885)
shares of common stock and no shares of any other class
were outstanding and entitled to vote. On April 27, 1984,
-37-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
six million, one hundred forty seven thousand, nine hundred
fifty three (6,147,953) such shares were voted in favor of
said amendments.
IN WITNESS WHEREOF, John H. Harland Company has
caused these Articles of Amendment to be duly executed, its
corporate seal to be affixed, and its seal and the execution
hereof to be attested, all by its duly authorized officers
8th day of May, 1984.
JOHN H. HARLAND COMPANY
[CORPORATE SEAL]
By: s/J. William Robinson
-----------------------
Chairman of the Board
Attest:
s/I. Ward Lang
- --------------
Secretary
-38-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
-----------------------
1.
The name of the Corporation is John H. Harland Company.
2.
The amendment to its Articles of Incorporation
effected hereby is to delete in their entirety the first
paragraph and paragraph (A) of Article IV and to add a new
first paragraph and a new paragraph (A) to Article IV , which
shall read as follows:
The Corporation shall have authority to
issue not more than one hundred forty four
million, five hundred thousand (144,500,000)
shares of stock, which shall be divided into
classes as follows:
(A) One hundred forty four million
(144,000,000) shares of Common Stock having
a par value of One ($1) Dollar per share.
Except as otherwise hereinafter set forth or
as fixed and determined with regard to the
Series Preferred Stock, the Common Stock shall
be entitled to the entire stock voting power in
regard to the corporation, to all dividends
declared, and to all assets of the corporation
upon liquidation.
The remaining paragraphs of Article IV of the
Articles of Incorporation, which establish the number, terms,
provisions, rights and preferences of the Preferred Stock,
will remain unchanged.
3.
Said Amendment was adopted by the shareholders of
John H. Harland Company on May 20, 1987.
-39-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
4.
The affirmative vote of a majority of the
outstanding shares of Common Stock of the Corporation was
required to adopt the amendment. As of April 3, 1987, there
were thirty four million, four hundred eleven thousand, two
hundred twenty (34,411,220) shares of Common Stock and no
shares of any other class, outstanding and entitled to vote.
On May 20, 1987, twenty seven million, nine hundred one
thousand, eight hundred eighty seven (27,901,887) such shares
were voted for said amendment.
5.
An amendment to its Articles of Incorporation
adopted by the Corporation is to add a new Article XI to the
Articles of Incorporation which would read as follows:
No Director of the corporation shall be
personally liable to the corporation or its
shareholders for monetary damages for breach
of the duty of care or other duty as a Director,
except for liability (i) for any appropriation,
in violation of his duties, of any business
opportunity of the corporation, (ii) for acts or
omissions not in good faith or which involve
intentional misconduct or a knowing violation of
law, (iii) for the types of liability set forth
in Section 14-2-154 of the Georgia Business
Corporation Code, or (iv) for any transaction
from which the Director derived an improper
personal benefit.
6.
Said Amendment was adopted by the shareholders of
John H. Harland Company on May 20, 1987.
7.
The affirmative vote of a majority of the
outstanding shares of Common Stock of the Corporation was
required to adopt the amendment. As of April 3, 1987, there
were thirty four million, four hundred eleven thousand, two
-40-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
hundred twenty (34,411,220) shares of Common Stock and no
shares of any other class, outstanding and entitled to vote.
On May 20, 1987, twenty seven million, twenty three thousand,
fifty eight (27,023,058) such shares were voted for said
amendment.
IN WITNESS WHEREOF, John H. Harland Company has
caused these Articles of Amendment to be duly executed, its
corporate seal to be affixed, and its seal and the execution
hereof to be attested, all by its duly authorized officers,
this 31st day of July, 1987.
JOHN H. HARLAND COMPANY
By: s/Robert R. Woodson
-------------------------
President
[ CORPORATE SEAL ]
ATTEST:
s/ I. Ward Lang
---------------
Secretary
-41-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
ARTICLES OF AMENDMENT
---------------------
1.
The name of the Corporation is John H. Harland Company.
2.
The existing Articles of Incorporation are hereby
amended by deleting Article IV, Paragraph (F) and replacing it
with the following so that Paragraph (F) shall hereafter read as
follows.
(F) The corporation shall have the full power to
purchase and otherwise acquire, and dispose
of, its own shares and securities and shall
have the right to purchase its shares out of
its unreserved and unrestricted capital surplus
available therefor, as well as out of its
unreserved and unrestricted earned surplus
available therefor. Shares so acquired shall
become treasury shares of the Corporation.
Said amendment was approved by the Board of Directors
of the Corporation at their regular quarterly meeting on October
26, 1990 in accordance with Section 14-2-1003 of the Georgia
Business Corporation Law. Accordingly, the shareholders of the
Corporation are not required to aprove the above amendment.
IN WITNESS WHEREOF, John H. Harland Company has caused
these Articles of Amendment to be duly executed, its corporate
seal to be affixed and its seal and the execution hereof to be
-42-
<PAGE>
<PAGE>
EXHIBIT 3.1 continued
attested, all by its duly authorized officers, this 15th day
of November, 1990.
JOHN H. HARLAND COMPANY
By: s/ Robert R. Woodson
--------------------------
President and
Chief Executive Officer
[Corporate Seal]
ATTEST:
s/ I. Ward Lang
---------------------
Senior Vice President
and Secretary
-43-
EXHIBIT - 4.5
CONFORMED COPY
CONFORMED COPY
________________________________________________________________
________________________________________________________________
JOHN H. HARLAND COMPANY
NOTE AGREEMENT
Dated as of December 1, 1993
$85,000,000 6.60% Senior Notes Due December 30, 2008
________________________________________________________________
________________________________________________________________
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
TABLE OF CONTENTS
(Not a part of the Agreement)
Page
____
1. DESCRIPTION OF NOTES AND COMMITMENT
1.1. Description of Notes ......................
1.2. Commitment, Closing Date ..................
1.3. Other Purchasers ..........................
2. PREPAYMENT OF NOTES
2.1. Required Prepayments ......................
2.2. Optional Prepayments ......................
2.3. Notice of Prepayments .....................
2.4. Allocation of Prepayments .................
2.5. Direct Payment ............................
3. REPRESENTATIONS
3.1. Representations of the Company ............
3.2. Representations of the Purchasers .........
4. CLOSING CONDITIONS
4.1. Representations and Warranties ............
4.2 Legal Opinions ............................
4.3. Events of Default .........................
4.4. Sale of Notes .............................
4.5 Legality of Investment ....................
4.6 Satisfactory Proceedings ..................
4.7. Payment of Fees and Expenses ..............
4.8. Waiver of Conditions ......................
5. COMPANY COVENANTS
5.1 Payment ...................................
5.2. Corporate Existence, etc ..................
5.3. Insurance .................................
5.4. Taxes, Claims for Labor and Materials,
Compliance with Laws.....................
-i-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Page
____
5.5. Maintenance, Etc ..........................
5.6. Nature of Business ........................
5.7. Fixed Charge Coverage .....................
5.8. Limitations of Indebtedness ...............
5.9. Limitations on Liens ......................
5.10.Mergers, Consolidations and Sales of Assets
5.11.Sale of Assets.............................
5.12 Investments ...............................
5.13. Repurchase of Notes.......................
5.14. Transactions with Affiliates..............
5.15. ERISA.....................................
5.16. Reports and Rights of Inspection..........
5.17. Filings with S&P and NAIC.................
5.18 Information to Prospective Purchasers .....
6. EVENTS OF DEFAULT AND REMEDIES THEREFOR
6.1. Events of Default .........................
6.2. Acceleration of Maturities ................
6.3. Rescission of Acceleration ................
6.4. Other Remedies ............................
6.5. Conduct No Waiver; Collection Expenses ....
6.6. Remedies Cumulative .......................
6.7. Notice of Default .........................
7. AMENDMENTS, WAIVERS AND CONSENTS
7.1. Consent Required ..........................
7.2. Effect of Amendment or Waiver .............
7.3. Solicitation of Noteholders ...............
8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. Definitions ...............................
8.2. Accounting Principles .....................
8.3. Directly or Indirectly ....................
8.4. Valuation Principles ......................
9. REGISTRATION, TRANSFER, EXCHANGE AND
REPLACEMENT OF NOTES
9.1. Registered Notes ..........................
9.2. Exchange of Notes ..........................
9.3 Loss, Theft, etc. of Notes ................
-ii-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Page
10. MISCELLANEOUS
10.1.Expenses, Stamp Tax Indemnity .............
10.2.Powers and Rights Not Waived;
Remedies Cumulative
10.3.Notices....................................
10.4.Reproduction of Documents .................
10.5.Successors and Assigns ....................
10.6.Survival of Covenants and Representations..
10.7.Integration; Severability .................
10.8.Governing Law..............................
10.9.Headings ..................................
10.10Counterparts ..............................
10.11Agent's Fees ..............................
10.12Consent to Jurisdiction ...................
10.13Usury Not Intended; Savings Provisions ....
Signature Page ......................................
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Principal Amount of Notes to Be Purchased
Annex I - List of Subsidiaries and Jurisdictions in Which
the Company and Its Subsidiaries Are Qualified as
Foreign Corporations
Annex II - Description of Liens
Annex III - List of Indebtedness
Exhibit A - Form of 6.60% Senior Note Due December 30, 2008
Exhibit B - Legal Opinion of Special Counsel for the
Purchasers
Exhibit C - Legal Opinion of Counsel for the Company
-iii-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
JOHN H. HARLAND COMPANY
2939 Miller Road
Decatur, Georgia 30035
NOTE AGREEMENT
Dated as
of
December 1, 1993
To each of the Purchasers
listed on Schedule I Hereto
Gentlemen:
The undersigned, JOHN H. HARLAND COMPANY, a Georgia
corporation (the "Company"), agrees with each of the purchasers
listed on Schedule I hereto (each, a "Purchaser") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. Description of Notes.
The Company will authorize the
issuance and sale of $85,000,000 aggregate principal amount of
its 6.60% Senior Notes Due December 30, 2008 (the "Notes") to be
dated the date of issue, to bear interest from such date at the
rate of 6.60% per annum, to mature December 30, 2008 and to be
substantially in the form attached hereto as Exhibit A.
Interest on the Notes shall be payable semi-annually on June 30
and December 30 in each year (commencing June 30, 1994) and at
maturity and shall be computed on the basis of a 360-day year of
twelve 30-day months. The Notes are not subject to prepayment
or redemption at the option of the Company prior to their
expressed maturity dates except on the terms and conditions and
in the amounts and with the Make-Whole Amount, if any, set forth
in Section 2 of this Agreement. The term "Notes" as used herein
shall include the Notes delivered pursuant to this Agreement and
each Note issued upon transfer thereof or in exchange therefor.
1.2. Commitment, Closing Date.
Subject to the terms and
conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company agrees to issue
and sell to each of the Purchasers, and each of the Purchasers
agrees to purchase from the Company, Notes of the Company in the
principal amount set opposite such Purchaser's name in
Schedule I at a price of 100% of the principal amount thereof on
the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of
Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower,
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Chicago, Illinois 60610, at 10:00 a.m., Chicago Time, on the
earlier of December 17, 1993 or at such other time or on such
other date as may be mutually agreed upon by the Company and the
Purchasers (the "Closing Date"). Delivery of the Notes to each
of the Purchasers on the Closing Date shall be against payment
of the purchase price thereof in Federal Funds or other
immediately available funds in U.S. dollars transmitted to
NationsBank of Georgia, N.A., ABA #061000052, for deposit in the
Company's Account No. 05211529. The Notes will be delivered to
each Purchaser in the form of a single registered Note for the
full amount of its purchase (unless different denominations are
specified in Schedule I), registered in the name of such
Purchaser or in the name of such Purchaser's nominee, all as
such Purchaser may specify at any time prior to the Closing
Date. If on the Closing Date the Company shall fail to tender
the Note to any Purchaser, such Purchaser shall be relieved of
all remaining obligations under this Agreement. Nothing in the
preceding sentence shall relieve the Company of any liability
occasioned by such failure to deliver the Note.
1.3. Other Purchasers.
The obligation of each Purchaser
and the obligations of the Company hereunder are subject to the
execution and delivery of this Agreement by the other
Purchasers. The obligations of each Purchaser shall be several
and not joint and no Purchaser shall be liable or responsible
for the act of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
2.1. Required Prepayments.
In addition to payment of all
outstanding principal of the Notes at maturity and regardless of
the amount of Notes that may be outstanding from time to time,
the Company agrees that it will prepay and there shall become
due and payable $8,500,000 of the outstanding principal amount
of the Notes, or such lesser amount as would constitute payment
in full of the Notes on such date, on June 30 and December 30 of
each year, commencing June 30, 2004 through June 30, 2008,
inclusive. The entire unpaid principal amount of the Notes
shall become due and payable on December 30, 2008. No premium
shall be payable in connection with any required prepayment made
when due pursuant to this Section 2.1.
2.2. Optional Prepayments.
(a) Upon notice as provided in
Section 2.3, the Company may prepay the outstanding Notes (in
units of $1,000,000 or integral multiples thereof), in whole or
in part, on any June 30 or December 30 by payment of the
principal amount of the Notes to be prepaid, plus accrued
interest thereon to the date of such prepayment, together with a
premium equal to the Make-Whole Amount applicable thereto.
-2-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(b) Except as provided in Section 2.1 and this
Section 2.2, the Notes shall not be prepayable in whole or in
part prior to their maturity.
2.3. Notice of Prepayments.
(a) The Company shall give
written notice of any prepayment of the Notes pursuant to
Section 2.2 to each holder thereof, not less than 30 days nor
more than 60 days before the date fixed for such optional
prepayment, specifying (i) such date, (ii) the principal amount
of such holder's Notes to be prepaid on such date, (iii) the
accrued interest applicable to the prepayment and (iv) an
estimate of the Make-Whole Amount applicable to the Notes to be
prepaid. Notice of such prepayment having been so given, the
aggregate principal amount of the Notes specified in such
notice, together with the Make-Whole Amount, if any, and accrued
interest thereon, shall become due and payable on the prepayment
date specified in such notice.
(b) In the case of any prepayment of Notes pursuant to
Section 2.2, the Company shall also give notice to each holder
of the Notes by telecopy, telegram, telex or other same-day
written communication on the Determination Date (confirmed in a
writing delivered at least two business days prior to the
payment date) of the Make-Whole Amount applicable to such
prepayment and the details of the calculations used to determine
the amount of such Make-Whole Amount.
2.4. Allocation of Prepayments.
All partial prepayments of
the Notes pursuant to Sections 2.1 and 2.2 shall be allocated to
all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof. Any optional prepayment of the
Notes pursuant to Section 2.2 hereof shall be applied in inverse
chronological order to reduce the payments of the Notes required
by Section 2.1.
2.5. Direct Payment.
Notwithstanding any other provision
contained in the Notes or this Agreement, the Company will pay
all sums becoming due on each Note held by any Purchaser by wire
transfer of immediately available funds to such account in the
name of the Purchaser or its nominee as such Purchaser has
designated in Schedule I hereto, or as such Purchaser may
otherwise designate by notice to the Company, in each case
without presentment and without notations being made thereon,
except that any such Note so paid or prepaid in full shall be
surrendered to the Company for cancellation. Any wire transfer
shall identify such payment in the manner set forth in the
attached Schedule I and shall identify the payment as principal,
Make-Whole Amount, if any, and/or interest. If the transferee
of any Note is an Institutional Holder or its nominee and shall
request the Company to make all payments on account of such Note
by check or by wire transfer of immediately available funds at
-3-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
an address specified in such request, the Company will make such
payments in compliance with such request.
SECTION 3. REPRESENTATIONS.
3.1. Representations of the Company.
As an inducement to,
and as part of the consideration for, the purchase of the Notes
by the Purchaser pursuant to this Agreement, the Company
represents and warrants to each of the Purchasers as follows:
(a) Corporate Organization and Authority.
The Company is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has full
corporate power and authority to own and operate its Properties,
to carry on its business as now conducted, to enter into this
Agreement and to issue and sell the Notes as contemplated by
this Agreement. The Company has all licenses and permits
necessary to carry on its business as now being conducted and to
own and operate its Properties.
(b) Qualification to Do Business.
The Company is duly
licensed or qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where
the nature of its business or the character of its Properties
makes such qualification or licensing necessary, except for such
jurisdictions where the failure to be so qualified or licensed
will not have a Material Adverse Effect. A list of those
jurisdictions wherein the Company is qualified to do business is
set forth in the attached Annex I.
(c) Subsidiaries.
The Company has no Subsidiaries except
those listed in Annex I, which correctly sets forth the
percentage of the outstanding capital stock or equivalent
interest of each Subsidiary which is owned, of record or
beneficially, by the Company and/or one or more Subsidiaries.
Each Subsidiary has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction of
incorporation or organization and is duly licensed or qualified
in each other jurisdiction where the nature of its business or
the character of its Properties makes such qualification or
licensing necessary, except for such jurisdictions where the
failure to be so qualified or licensed will not have a Material
Adverse Effect. A list of those jurisdictions wherein each
Subsidiary is qualified to do business is set forth in the
attached Annex I. Each Subsidiary has full corporate power and
authority and all necessary licenses and permits to own its
Properties and to carry on its business as now conducted. The
Company and/or one or more Subsidiaries have good and marketable
title to all of the shares it purports to own of the capital
stock of each Subsidiary, free and clear in each case of any
-4-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
lien or encumbrance, and all such shares have been duly issued
and are fully paid and nonassessable. P.P., Inc., Harland ATM
Services, Inc., Scantron Holding Corp., The Check Store, Inc.
and Centralia Holding Corp. have total assets of less than
$6,500,000.00. The total revenues, on a consolidated basis, of
the Company, Scantron Corporation, J. William Company, John H.
Harland Company of Puerto Rico and Scan-tron Caribe derived
solely from those jurisdictions identified with an asterisk on
Annex I hereto constitute not less than 80% of the consolidated
revenues (excluding sales made outside the United States) of the
Company and its Subsidiaries.
(d) Financial Statements.
The consolidated balance sheets
of the Company and its Subsidiaries as of December 31, 1992,
December 31, 1991 and December 31, 1990, and the related
consolidated statements of income, changes in stockholders'
equity and cash flows for the three years ended December 31,
1992, December 31, 1991 and December 31, 1990, certified by the
Company's independent public accountants, copies of which have
heretofore been delivered to each of the Purchasers, were
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved
and present fairly the financial condition and results of
operations and cash flows of the Company and its Subsidiaries
for and as of the end of each of such years. The unaudited
consolidated balance sheet of the Company and its Subsidiaries
as of September 30, 1993 and the unaudited statements of income,
changes in stockholders' equity and cash flows for the nine-
month period ended on said date have been prepared in accordance
with generally accepted accounting principles consistently
applied and present fairly the financial position of the Company
and its Subsidiaries as of said date and the result of their
operations and cash flows for said period, subject to customary
year-end adjustments.
(e) No Contingent Liabilities or Adverse Changes.
Neither
the Company nor any of its Subsidiaries has any contingent
liabilities which are material to the Company or any of its
Subsidiaries other than as described in the audited consolidated
financial statements of the Company and its Subsidiaries as of
and for the period ending December 31, 1992 referred to in
paragraph (d) of this Section 3.1. Since December 31, 1992,
there has been no Material Adverse Change.
(f) No Pending Litigation or Proceedings.
There are no
actions, suits or proceedings pending or threatened against the
Company or any of its Subsidiaries, at law or in equity or
before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality
or arbitration board or tribunal, domestic or foreign, which
-5-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
might result, either individually or collectively, in any
Material Adverse Change.
(g) Compliance with Law.
(i) Neither the Company nor any
of its Subsidiaries is: (x) in default with respect to any
order, writ, injunction or decree of any court, governmental
authority or arbitration board or tribunal applicable to it; or
(y) in violation of any law, rule, regulation, ordinance or
order relating to its or their respective businesses, except for
any such violations which would not individually or in the
aggregate have a Material Adverse Effect.
(ii) Neither the Company nor any Subsidiary is in
violation of any applicable Federal, state, or local laws,
statutes, rules, regulations or ordinances relating to public
health, safety or the environment, including, without
limitation, relating to releases, discharges, emissions or
disposals to air, water, land or ground water, to the withdrawal
or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil
or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances which violation
could have a Material Adverse Effect. The Company does not know
of any liability or class of liability of the Company or any
Subsidiary under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601 et seq.), or the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).
(iii) Neither the Company nor any Affiliate of the
Company is an entity defined as a "designated national" within
the meaning of the Foreign Assets Control Regulations, 31 C.F.R.
Chapter V, or for any other reason, subject to any restriction
or prohibition under, or is in violation of, any Federal statute
or Presidential Executive Order, or any rules or regulations of
any department, agency or administrative body promulgated under
any such statute or Order, concerning trade or other relations
with any foreign country or any citizen or national thereof or
the ownership or operation of any Property.
(h) Employee Benefit Plans.
Assuming the representations
of the Purchasers in Section 3.2 of this Agreement are true and
accurate, neither the purchase of the Notes by the Purchasers
nor the consummation of the transactions contemplated by this
Agreement (except for any subsequent transfer of a Note pursuant
to Section 9.2 hereof) constitutes a "prohibited transaction"
within the meaning of Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
-6-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
The Internal Revenue Service has issued a determination that
each "employee pension benefit plan," as defined in Section 3 of
ERISA (a "Plan"), maintained or contributed to by the Company or
any Subsidiary (except for any Plan which is unfunded and
maintained primarily for the purpose of providing deferred
compensation and supplemental retirement benefits for a select
group of management or highly compensated employees) is
qualified under Section 401(a) and related provisions of the
Code and that each related trust or custodial account is exempt
from taxation under Section 501(a) of the Code or, if such a
determination letter has not been issued, the Company will
request in a timely manner such a determination from the
Internal Revenue Service and the Company knows of no reason that
would prevent the Internal Revenue Service from issuing such a
determination. With respect to any Plan established, maintained
or contributed to by the Company or any Subsidiary on or after
January 1, 1989 that is intended to be qualified under the Code,
if such Plan is disqualified by the Internal Revenue Service,
the Company's liability under the Code from such
disqualification could not exceed $1,000,000. All Plans of the
Company or any Subsidiary comply in all material respects with
ERISA and other applicable laws. There exist with respect to
the Company or any Subsidiary no "multi-employer plans," as
defined in Section 4001(a)(3) of ERISA and no Plans which are
subject to Title IV of ERISA. There exists with respect to all
Plans or trusts established or maintained by the Company or any
Subsidiary no "prohibited transaction," as that term is defined
in ERISA, which is likely to subject any Plan, trust or party
dealing with any such Plan or trust to any material tax or
penalty on prohibited transactions imposed by Section 4975 of
the Code.
(i) Title to Properties.
Each of the Company and its
Subsidiaries has (i) good title in fee simple under applicable
law to all the real property owned by it and (ii) good title to
all of the other Property it purports to own, including that
reflected in the consolidated balance sheet of the Company and
its Subsidiaries dated as of December 31, 1992, delivered
pursuant to Paragraph (d) of this Section 3.1, or subsequently
acquired by the Company or such Subsidiary (except as sold or
otherwise disposed of in the ordinary course of business), in
each case free from all Liens of any kind, except (x) those
securing Indebtedness for borrowed money of the Company or a
Subsidiary which are listed in the attached Annex II and
(y) other Liens permitted pursuant to Paragraphs (a), (c) or (d)
of Section 5.9 hereof, provided that any such Liens described in
clauses (x) and (y) above do not, individually or in the
aggregate, materially impair the use of the Property in the
operation of the business of the Company and its Subsidiaries.
(j) Leases.
Each of the Company and its Subsidiaries
enjoys peaceful and undisturbed possession under all material
-7-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
leases under which the Company or such Subsidiary is a lessee or
is operating. None of such leases contains any provision which
might materially and adversely affect the operation or use of
the Property so leased. All of such leases which are material
to the operations of the Company and its Subsidiaries are valid
and subsisting and none of them is in default (whether or not
waived).
(k) Franchises, Patents, Trademarks and Other Rights.
Each of the Company and its Subsidiaries has all franchises,
permits, licenses and other authority as are necessary to enable
it to carry on its respective business as now being conducted
and as proposed to be conducted, and none of them is in default
(whether or not waived) under any of such franchises, permits,
licenses or other authority. Each of the Company and its
Subsidiaries owns or possesses all patents, trademarks, service
marks, trade names, copyrights, licenses and rights with respect
to the foregoing necessary for the present conduct of their
businesses, without any known conflict with the rights of
others.
(l) Status of Notes and Sale of Notes.
(1) The Notes have
been duly authorized on the part of the Company and, when
issued, will constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their terms,
except to the extent that enforcement of the Notes may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or secured
parties or by general principles of equity. The sale of the
Notes and compliance by the Company with all of the provisions
of this Agreement and of the Notes (i) are within the corporate
powers of the Company, (ii) have been duly authorized by proper
corporate action and (iii) are legal and will not result in any
breach of any of the provisions of, or constitute a default
under, result in the creation of any lien or encumbrance upon
any Property of the Company or any Subsidiary under the
provisions of, any charter instrument, by-law, loan agreement,
indenture or other agreement or instrument to which the Company
or any Subsidiary is a party or by which any of them or their
Property may be bound.
(2) Upon issuance of the Notes, the Notes are not, or
will not be, of the same class as securities listed on a
national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended, or quoted in a U.S.
automated inter-dealer quotation system, within the meaning of
Rule 144A.
(m) No Defaults.
No event has occurred and no condition
exists which, upon the issuance of the Notes, would constitute a
-8-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Default or an Event of Default under this Agreement. Neither
the Company nor any Subsidiary is in default, no event has
occurred which with notice or passage of time or both would
constitute a default and no temporary waiver of default is
currently in effect under any charter instrument, by-law, loan
agreement, indenture or other agreement or instrument to which
it is a party or by which it or its Property may be bound. The
Company and its Subsidiaries have no Indebtedness for borrowed
money outstanding as of the date hereof and as of the Closing
Date other than as set forth on Annex III.
(n) Governmental Consent.
Neither the nature of the
Company or any of its Subsidiaries, their respective businesses
or Properties, nor any relationship between the Company or any
of its Subsidiaries and any other Person, nor any circumstances
in connection with the offer, issue, sale or delivery of the
Notes is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any
governmental authority in connection with the execution and
delivery of this Agreement or the offer, issue, sale or delivery
of the Notes or compliance with the terms hereof or thereof.
(o) Taxes.
(i) All tax returns required to be filed by
the Company or any Subsidiary in any jurisdiction have in fact
been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or any Subsidiary, or upon
any of their respective Properties, income or franchises, which
are due and payable, have been paid timely or within appropriate
extension periods, except where a failure to pay such taxes,
assessments, fees or charges would not have a Material Adverse
Effect. The Company does not know of any proposed additional
tax assessment against it or of any basis for one which would
have a Material Adverse Effect.
(ii) The respective Federal income tax liabilities of
the Company and its Subsidiaries have been finally determined by
the Internal Revenue Service and satisfied for all taxable years
to and including the taxable year ended December 31, 1991 and no
material controversy in respect of additional income taxes due
since said date is pending or to the knowledge of the Company
threatened. The consolidated provisions for taxes on the books
of the Company and its Subsidiaries are adequate for all open
years and for the current fiscal period.
(p) Status under Certain Statutes.
Neither the Company
nor any Subsidiary is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company"
of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public
utility" as defined in the Federal Power Act, as amended, or
-9-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(iii) an "investment company" or an "affiliated person" thereof
or an "affiliated person" of any such "affiliated person," as
such terms are defined in the Investment Company Act of 1940, as
amended.
(q) Private Offering.
(1) Neither the Company nor
SunTrust-Corporate Finance (the only Person authorized or
employed by the Company as agent, broker, dealer or otherwise in
connection with the offering of the Notes or any similar
security of the Company) has offered any of the Notes or any
similar security of the Company for sale to, or solicited offers
to buy any thereof from, or otherwise approached or negotiated
with respect thereto with, any prospective purchaser, other than
not more than 50 institutional investors, including the
Purchasers, referred to in a letter from SunTrust-Corporate
Finance dated December 10, 1993, a copy of which has been
delivered to the Purchasers and their special counsel, each of
which institutional investors was offered all or a portion of
the Notes at private sale for investment. The Company agrees
that neither the Company nor anyone acting on its authorization
will offer the Notes or any part thereof or any similar
securities for issue or sale to, or solicit any offer to acquire
any of the same from, anyone so as to bring the issuance and
sale of the Notes within the provisions of Section 5 of the
Securities Act.
(2) The aggregate number of persons in the State of
Georgia purchasing securities of the Company from the Company
and all affiliates of the Company pursuant to Section 10-5-9(13)
of the Georgia Securities Act of 1973, as amended, during the 12
month period ending on the Closing Date shall not exceed 15
persons exclusive of persons who acquire securities in
transactions which are not subject to Chapter 5 of Title 10 of
the Official Code of Georgia or which are otherwise exempt from
registration under Section 10-5-8 or Section 10-5-9 of the
Georgia Securities Act of 1973, as amended, or which have been
registered pursuant to Section 10-5-5 of the Georgia Securities
Act of 1973, as amended.
(3) The Notes have not been offered for sale by means of
any form of general or public solicitations or advertisements,
including, but not limited to the following:
(i) publicly disseminated advertisements or sales
literature, through the mails or otherwise;
(ii) any advertisement, article, notice, or other
communication published in any newspaper, magazine, or
other similar media, or broadcast over television or radio;
or
-10-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(iii) any seminar or meeting whose attendees have
been invited by any general solicitation or general
advertising.
(r) Effect of Other Instruments.
Neither the Company nor
any Subsidiary is bound by any agreement or instrument or
subject to any charter or other corporate restriction which
could have a Material Adverse Effect.
(s) Use of Proceeds.
The Company will apply the proceeds
from the sale of the Notes to repay certain short-term debt of
the Company, repurchase outstanding common stock of the Company
and for other corporate purposes and in any event will apply
said proceeds as contemplated by the resolutions of the Board of
Directors of the Company which authorizes the issuance of the
Notes and the execution, delivery and performance of this
Agreement. None of the transactions contemplated in this
Agreement (including, without limitation thereof, the use of the
proceeds from the sale of the Notes) will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934,
as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System (12 C.F.R.,
Chapter II). Neither the Company nor any Subsidiary owns or
intends to carry or purchase any "margin stock" within the
meaning of Regulation G, and none of the proceeds from the sale
of the Notes will be used to purchase or carry or refinance any
borrowing the proceeds of which were used to purchase or carry
any "margin stock" or "margin security" in violation of
Regulations G, T, U or X.
(t) Condition of Property.
All of the Property of the
Company and each of its Subsidiaries are in sound operating
condition and repair except for Property being repaired in the
ordinary course of business.
(u) Books and Records.
Each of the Company and its
Subsidiaries maintains books, records and accounts which, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of their respective assets, and
maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary
(x) to permit preparation of financial statements in accordance
with GAAP and (y) to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
-11-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Each Purchaser shall receive from
Gardner, Carton & Douglas, who are acting as special counsel to
the Purchasers in this transaction, and from King & Spalding,
counsel to the Company, their respective opinions, addressed to
the Purchasers dated the Closing Date, in form and substance
satisfactory to the Purchasers, and covering the matters set
forth in Exhibits B and C, respectively, hereto.
4.3. Events of Default.
No event shall have occurred and
be continuing on the Closing Date which would constitute a
Default or an Event of Default, and the Company shall have
delivered a certificate, dated the Closing Date, executed by the
-13-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
President or the Chief Financial Officer of the Company, to such
effect.
4.4. Sale of Notes.
The Company shall have consummated the
sale of the entire principal amount of the Notes to be sold to
the Purchasers pursuant to this Agreement.
4.5. Legality of Investment.
The acquisition of the Notes
by each of the Purchasers shall constitute a legal investment as
of the Closing Date under the laws and regulations of each
jurisdiction to which such Purchaser may be subject (without
resort to any "basket" or "leeway" provision which permits the
making of an investment without restriction as to the character
of the particular investment being made), and such acquisition
shall not subject such Purchaser to any penalty or other onerous
condition in or pursuant to any such law or regulation; and such
Purchaser shall have received such certificates or other
evidence as it may reasonably request to establish compliance
with this condition.
4.6. Satisfactory Proceedings.
All proceedings taken in
connection with the transactions contemplated by this Agreement,
and all documents necessary to the consummation thereof, shall
be satisfactory in form and substance to the Purchasers and
their special counsel, and the Purchasers and their special
counsel shall have received a copy (executed or certified as may
be appropriate) of all legal documents or proceedings taken in
connection with the consummation of said transactions.
4.7. Payment of Fees and Expenses.
The Company shall have
paid all fees and expenses of special counsel to the Purchasers
incurred through the Closing Date and incident to all
proceedings in connection with, transactions contemplated by,
and documents incident to this Agreement and the Notes.
4.8. Waiver of Conditions.
If on the Closing Date the
Company fails to tender to any of the Purchasers the Notes to be
issued to such Purchaser on such date or if the conditions
specified in this Section 4 have not been fulfilled, each
Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in this Section 4 have
not been fulfilled, each Purchaser may waive compliance by the
Company with any such condition to such extent as it may in its
sole discretion determine. Nothing in this Section 4.8 shall
operate to relieve the Company of any of its obligations
hereunder or to waive any of the Purchasers' rights against the
Company.
-14-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as
any amount remains unpaid on any Note or under this Agreement:
5.1 Payment.
The Company will duly and punctually pay or
cause to be paid the principal of (and Make-Whole Amount, if
any) and interest on the Notes at the times and places and in
the manner specified in the Notes and herein.
5.2. Corporate Existence, etc.
The Company will preserve
and keep in force and effect, and will cause each Subsidiary to
preserve and keep in force and effect, its corporate existence
and all licenses and permits necessary to the proper conduct of
its business and will use, and will cause each Subsidiary to
use, its best efforts to maintain and preserve all of its
rights, powers, privileges and franchises which in the good
faith opinion of the Board of Directors of the Company continue
to be advantageous to the Company and its Subsidiaries, provided
that the foregoing shall not prevent any transaction permitted
by Section 5.10.
5.3. Insurance.
The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage in such forms
and amounts and against such risks (including without limitation
insurance with respect to its Property, the operation thereof
and its business), casualties and contingencies and insurance
against loss or damage from such hazard and risks to the person
or Property of others, with such deductibles and with such
insurers, in each case as is consistent with sound business
practice and as is customary for corporations similarly situated
and engaged in the same or a similar business and owning and
operating similar Properties. All such insurance shall be
carried with financially sound and reputable insurers with a
rating classification of A or better and a size category of X or
larger by A.M. Best Company, Inc.
5.4. Taxes, Claims for Labor and Materials; Compliance with Laws
(a) The Company will promptly pay and discharge when due,
and will cause each Subsidiary promptly to pay and discharge
when due, all taxes, assessments and governmental charges or
levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the
Property or business of the Company or such Subsidiary or upon
Properties leased by it (but only to the extent required to do
so by the applicable lease), all trade accounts payable in
accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might
-15-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
become a lien or charge upon any Property of the Company or such
Subsidiary; provided the Company or such Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount
thereof is being contested in good faith by appropriate actions
or proceedings which will prevent the forfeiture or sale of any
Property of the Company or such Subsidiary and any material
interference with the use thereof by the Company or such
Subsidiary and (ii) the Company or such Subsidiary shall set
aside on its books reserves deemed by it to be adequate with
respect thereto.
(b) The Company will comply and will cause each Subsidiary
to comply with all laws, ordinances or governmental rules and
regulations to which it is subject, including without
limitation, the Occupational Safety and Health Act of 1970,
ERISA and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all
applicable jurisdictions, except where a failure to be in
compliance with such laws, ordinances or governmental rules and
regulations could not reasonably be expected to have a Material
Adverse Effect.
5.5. Maintenance, Etc.
The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve
and keep, its Properties which are used or useful in the conduct
of its business (whether owned in fee or a leasehold interest)
in good repair and working order and from time to time will make
all necessary repairs, replacements, renewals and additions so
that at all times the efficiency thereof shall be maintained;
provided that, notwithstanding the foregoing, the Company and/or
its Subsidiaries may close production facilities if Senior
Management of the Company determines that the operation of such
facilities is no longer in the best interests of the long-term
viability and profitability of the Company and its Subsidiaries
taken as a whole.
5.6. Nature of Business.
Neither the Company nor any of
its Subsidiaries will engage in any business if, as a result,
the general nature of the business, taken on a consolidated
basis, which would then be engaged in by the Company and its
Subsidiaries would be substantially changed from the general
nature of the business engaged in by the Company and its
Subsidiaries on the date of this Agreement and as described in
the Private Placement Memorandum.
5.7. Fixed Charge Coverage.
For a period consisting of any
four consecutive fiscal quarters of each five consecutive fiscal
quarters ending on the last day of a fiscal quarter, the ratio
-16-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
of Income Available for Fixed Charges for such period to Fixed
Charges for such period shall be not less than 2.0 to 1.0.
5.8. Limitations of Indebtedness.
(a) The Company shall
not permit at any time Consolidated Funded Debt to exceed 55% of
Total Capitalization.
(b) The Company shall not permit at any time the aggregate
Indebtedness of its Subsidiaries at any time outstanding to
exceed 13.75% of Total Capitalization.
5.9. Limitations on Liens.
The Company will not, and will
not permit any Subsidiary to, create or incur, or suffer to be
incurred or to exist, any Liens of any kind on its or their
Property, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any Property for the
purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or
acquire or agree to acquire, or permit any Subsidiary to
acquire, any Property upon conditional sales agreements or other
title retention devices, except for any such Liens which equally
and ratably secure the Purchasers and any subsequent holders of
the Notes in respect of the obligations and liabilities of the
Company hereunder and under the Notes, and except:
(a) Liens for property taxes and assessments or
governmental charges or levies, provided that payment thereof is
not at the time required by Section 5.4;
(b) Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not
have expired, or in respect of which the Company or such
Subsidiary shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a stay
of execution pending such appeal or proceeding for review shall
have been secured;
(c) any mechanic's, materialmen's, warehousemen's,
supplier's or vendor's lien or right in respect thereof, and
deposits, pledges or Liens to secure statutory obligations or
surety bonds or other Liens of like general nature incurred in
the ordinary course of business and not in connection with the
borrowing of money, provided that in each case the obligation
secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings that will
prevent a forfeiture or sale of any Property and an adequate
book reserve shall have been set aside with respect thereto;
(d) minor exceptions in the nature of easements, rights of
others for rights-of-way, utilities and other similar purposes,
or zoning or other restrictions as to the use of real properties
-17-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
which customarily exist on real properties of such kind and
which do not materially impair their use and/or value in the
operation of the business of the Company and its Subsidiaries;
(e) Liens existing on Property of a Person at the time
such Person becomes a Subsidiary or is merged into or
consolidated with the Company or any Subsidiary, provided that
after giving effect to the incurrence of Indebtedness secured by
such Liens, the Company is in compliance with Section 5.8
hereof;
(f) Liens securing Indebtedness of a Subsidiary to the
Company or a Wholly-Owned Subsidiary;
(g) Liens or other arrangements for the retention of title
(including Capitalized Leases) incurred after the date hereof
given to secure the payment of the purchase price upon the
acquisition of Property or the cost of construction or
improvement of Property, including Liens existing on such
Property at the time of the acquisition thereof by the Company
or a Subsidiary, provided that (i) the Lien shall attach solely
to the Property acquired, the Property constructed or the
improvement, as the case may be, (ii) the aggregate amount of
Indebtedness secured by Liens on such Property, whether or not
assumed by the Company or a Subsidiary, shall not exceed an
amount equal to the lesser of the total purchase price or fair
market value of such Property acquired, Property constructed or
improvement, as the case may be, at the time of the acquisition
or the completion of construction or improvement (as determined
in good faith by the Board of Directors of the Company), and
(iii) such Lien is incurred at the time of, or within 90 days
after, such acquisition or the completion of such construction
or improvement and provided, further, that after giving effect
to the incurrence of Indebtedness secured by such Liens, the
Company is in compliance with Section 5.8 hereof;
(h) Liens or other arrangements for the retention of title
(including Capitalized Leases) existing as of the date hereof,
securing Indebtedness of the Company or any Subsidiary
outstanding on such date, which are listed in the attached
Annex II;
(i) Liens resulting from extensions, renewals,
refinancings and refundings of Indebtedness secured by Liens,
provided there is no increase in the outstanding principal
amount of Indebtedness secured thereby and any new Lien attaches
only to the same Property theretofore subject to such earlier
Lien; and
(j) in addition to any Liens permitted by the foregoing
paragraphs (a) through (i) above, Liens securing Indebtedness
for borrowed money, provided that the aggregate principal amount
of Indebtedness so secured shall not exceed 10% of Consolidated
Net Worth and provided, further, that after giving effect to the
-18-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
incurrence of Indebtedness secured by such Liens, the Company is
in compliance with Section 5.8 hereof.
In the event that any Property of the Company or any Subsidiary
is subjected to any Lien not permitted by clauses (a) through
(j), inclusive, of this Section 5.9, the Company will make or
cause to be made provision whereby the Notes will be secured
equally and ratably with all other obligations secured thereby,
and in any case the Notes shall have the benefit, to the full
extent that, and with such priority as, the holders may be
entitled thereto under applicable law, of an equitable Lien on
such Property securing the Notes.
5.10. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, and will not permit any
Subsidiary to, consolidate with or be a party to a merger with
any other corporation or, except in the ordinary course of
business and except as provided in Section 5.11, sell, lease or
otherwise dispose of all or a substantial part of the assets of
the Company and its Subsidiaries, provided, however, that:
(i) any Subsidiary may merge or consolidate with or
into the Company or any Wholly-Owned Subsidiary so long as in
any merger or consolidation involving the Company, the Company
shall be the surviving or continuing corporation and in any
merger or consolidation involving a Wholly-Owned Subsidiary (but
not the Company), such Wholly-Owned Subsidiary shall be the
surviving or continuing corporation;
(ii) the Company may consolidate or merge with any
other corporation if (A) the surviving or continuing corporation
shall be the Company and (B) at the time of such consolidation
or merger, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing; and
(iii) any Subsidiary may sell, lease or otherwise
dispose of all or substantially all of its assets to the Company
or any Wholly-Owned Subsidiary.
(b) The Company will not permit any Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for
the purposes of this Section 5.10, any warrants, rights or
options to purchase or otherwise acquire stock or other
securities exchangeable for or convertible into stock) of such
Subsidiary to any Person other than the Company or a Wholly-
Owned Subsidiary, (i) except for the purpose of qualifying
directors, or (ii) except in satisfaction of the validly pre-
existing preemptive rights of minority shareholders in
connection with the simultaneous issuance of stock to the
Company and/or a Subsidiary whereby the Company and/or such
Subsidiary maintain their same proportionate interest in such
-19-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Subsidiary or (iii) except as permitted by subsection (d) of
this Section 5.10.
(c) Except as otherwise provided by subsection (d) of this
Section 5.10, the Company will not sell, transfer or otherwise
dispose of any shares of stock in any Subsidiary (except to
qualify directors) of any Subsidiary, and will not permit any
Subsidiary to sell, transfer or otherwise dispose of (except to
the Company or a Wholly-Owned Subsidiary) any shares of stock of
any other Subsidiary, unless:
(i) simultaneously with such sale, transfer or
disposition, either (A) all shares of stock and all Indebtedness
of such Subsidiary at the time owned by the Company and by every
other Subsidiary shall be sold, transferred or disposed of as an
entirety or (B) to the extent any shares of stock and/or
Indebtedness of such Subsidiary will thereafter be owned by the
Company or any other Subsidiary, such stock and/or Indebtedness
constitute Investments permitted under Section 5.12(h) hereof;
(ii) such stock and Indebtedness is sold, transferred
or otherwise disposed of to a Person, for cash consideration and
on terms reasonably deemed by the Board of Directors to be
adequate and satisfactory;
(iii) the Subsidiary being disposed of, in whole
or in part, shall not have any continuing investment in the
Company or any other Subsidiary not being simultaneously
disposed of; and
(iv) such sale or other disposition of such assets of
the Company and its Subsidiaries is permitted by Section 5.11.
(d) Notwithstanding the foregoing, the Company or any
Subsidiary may sell, transfer or otherwise dispose of, and/or a
Subsidiary may issue or sell, shares of stock of a Subsidiary
(the "Disposed Subsidiary") to Persons other than the Company or
a Wholly-Owned Subsidiary if the following conditions are met:
(i) such stock is sold, transferred or otherwise
disposed of to one or more Persons for cash consideration and on
terms reasonably deemed by the Board of Directors of the Company
to be adequate and satisfactory;
(ii) the Disposed Subsidiary shall not have any
continuing investment in the Company or any other Subsidiary;
(iii) the stock of the Disposed Subsidiary sold by
the Company or any Subsidiary or issued by such Subsidiary shall
be common stock of such Disposed Subsidiary without any
preference or priority as to dividends or assets superior to the
stock of such Disposed Subsidiary held by the Company or any
other Subsidiary;
-20-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(iv) immediately after giving effect to such sale,
transfer, disposition or issuance, such Disposed Subsidiary
shall remain a Subsidiary of the Company; and
(v) to the extent of any sale, transfer or other
disposition of issued and outstanding stock of any Disposed
Subsidiary by the Company or any other Subsidiary, (i) such
sale, transfer or other disposition would be permitted by
Section 5.11 of this Agreement, (ii) after giving effect
thereto, the aggregate book value of all stock so sold,
transferred or otherwise disposed of by the Company or any
Subsidiary from time to time pursuant to this subsection (d) of
Section 5.10 shall not exceed 5% of Consolidated Total Assets,
as shown on the audited consolidated balance sheet of the
Company and its Subsidiaries as of the last day of the
immediately preceding fiscal year, and (iii) after giving effect
thereto, the total revenues and operating income properly
attributable to the minority interests in Subsidiaries sold,
transferred or otherwise disposed of by the Company or any
Subsidiary from time to time pursuant to this subsection (d) of
Section 5.10 shall not exceed 5% of the total revenues and
operating income, respectively, of the Company and its
Subsidiaries, on a consolidated basis, for the immediately
preceding fiscal year, after deducting therefrom portions of
revenues and income for such fiscal year properly attributable
to minority interests in Subsidiaries.
5.11. Sale of Assets.
The Company will not, and will
not permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of (collectively, a "Disposition") any asset (including
without limitation any shares of stock or Indebtedness of, or
any other interest in, any Subsidiary permitted pursuant to
Section 5.10 hereof), other than in the ordinary course of
business, in one or a series of transactions to any Person other
than the Company, unless (a) during any twelve-month period,
after giving effect to such Disposition, the aggregate book
value of all such assets sold, leased, transferred or otherwise
disposed of during such period shall not exceed 15% of
Consolidated Total Assets, as shown on the audited consolidated
balance sheet of the Company and its Subsidiaries as of the last
day of the immediately preceding fiscal year, and (b) after
giving effect to such Disposition, no Default or Event of
Default shall exist.
5.12. Investments.
The Company will not, directly or
indirectly, and will not permit any of its Subsidiaries to, make
any Investment except:
(a) Investments in, or advances to, Wholly-Owned
Subsidiaries or corporations which simultaneous with such
Investment become Wholly-Owned Subsidiaries;
-21-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(b) Investments in, or advances to, the Company by
Subsidiaries;
(c) Investments in direct obligations of the United States
of America or any agency or instrumentality thereof, the
obligations of which are backed by the full faith and credit of
the United States of America maturing not more than one year
after the date of purchase by the Company;
(d) Investments in commercial paper or other short-term
securities of corporations organized under the laws of the
United States of America or any state thereof rated A-1 or
better Standard & Poor's Corporation ("S&P") and P-1 or better
by Moody's Investors Service, Inc. ("Moody's") and maturing not
more than 270 days after the date of purchase by the Company;
(e) Investments in certificates of deposits and bankers'
acceptances, in each case having a maturity of one year or less,
issued by any commercial bank organized under the laws of the
United States of America or any state thereof with capital,
surplus and profits of not less than $250,000,000 and whose
long-term deposit rating is rated AAA or AA (or if such rating
classifications are no longer used, an equivalent rating
thereto) by S&P or Aaa or Aa (or if such rating classifications
are no longer used, an equivalent rating thereto) by Moody's;
(f) notes or accounts receivable from customers, suppliers
or employees arising in the ordinary course of business;
(g) Guaranties of obligations of Subsidiaries, provided
that such Guaranties are permitted pursuant to the provisions of
Section 5.8 hereof;
(h) loans or advances made in the usual and ordinary
course of business to officers, directors and employees for
expenses (including moving expenses related to a transfer)
incidental to the carrying on of business of the Borrower or any
Subsidiary, provided the aggregate amount of such loans and
advances outstanding at any time shall not exceed $500,000;
(i) Investments in municipal bonds maturing in one (1)
year or less from the date of acquisition thereof and accorded
either a long-term or short-term rating no lower than the
highest rating category by S&P or Moody's;
(j) Investments in variable rate preferred stock issued by
corporations organized under the laws of the United States of
America or any state thereof which are accorded a rating no
lower than the second highest rating category by S&P or Moody's;
(k) Investments in variable rate demand obligations, tax-
free preferred stock of corporations organized under the laws of
the United States of America or any state thereof and other tax-
exempt investments which mature in one (1) year or less or have
-22-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
variable rate features and are accorded a rating no lower than
the second highest rating category by S&P or Moody's; and
(l) Investments in and to any Person not permitted by
clauses (a) - (k) above, provided that the aggregate amount of
Investments pursuant to this clause (l) shall not at any time
exceed 15% of Consolidated Net Worth.
5.13. Repurchase of Notes.
Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase
or make any offer to repurchase any Notes unless an offer has
been made in writing to each holder of Notes at the time
outstanding to repurchase Notes, pro rata, from all holders of
the Notes at the same time and upon the same terms. In case the
Company, any Subsidiary or Affiliate repurchases any Notes, such
Notes shall thereafter be cancelled and such Notes shall not be
deemed to be outstanding for any of the purposes of this
Agreement or the Notes and no Notes shall be issued in
substitution therefor.
5.14. Transactions with Affiliates.
The Company will
not, and will not permit any Subsidiary to, enter into or be a
party to, any transaction or arrangement with any Affiliate
(other than a Wholly-Owned Subsidiary) (including without
limitation the purchase from, sale to or exchange of Property
with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company
or such Subsidiary than would obtain in a comparable arm's-
length transaction with a Person other than an Affiliate.
5.15. ERISA.
(a) The Company agrees that all
assumptions and methods used to determine the actuarial
valuation of employee benefits, both vested and unvested, under
any Plan of the Company or any Subsidiary subject to Title IV of
ERISA will comply with ERISA and that each Plan will comply with
ERISA and other applicable laws, except to the extent that any
such noncompliance could not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The Company will not at any time permit any Plan
established, maintained or contributed to by it or any
Subsidiary or member of the "controlled group" (as defined in
Section 4001(a)(14) of ERISA) to:
(1) engage in any "prohibited transaction" as such
term is defined in Section 4975 of the Code or in Section 406 of
ERISA;
-23-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(2) incur any "accumulated funding deficiency" as
such term is defined in Section 302 of ERISA, whether or not
waived; or
(3) be terminated under circumstances which are
likely to result in the imposition of a lien on the Property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA,
if and to the extent such termination is within the control of
the Company;
if the event or condition described in clause (1), (2) or (3)
above is likely to subject the Company or any Subsidiary or
"controlled group" member to a liability which, in the
aggregate, could have a Material Adverse Effect.
(c) Upon the request of any Purchaser or any other
Institutional Holder, the Company will furnish a copy of the
annual report of each Plan (Form 5500) required to be filed with
the Internal Revenue Service. Copies of annual reports shall be
delivered no later than 30 days after the later of the date such
report has been filed with the Internal Revenue Service or the
date the copy is requested.
5.16. Reports and Rights of Inspection.
The Company
will keep, and will cause each Subsidiary to keep, proper books
of record and account in which full and correct entries will be
made of all dealings or transactions of or in relation to the
business and affairs of the Company or such Subsidiary, in
accordance with GAAP, and will furnish to each Purchaser so long
as such Purchaser is the holder of any Note and to each other
Institutional Holder of the then outstanding Notes (in duplicate
if so requested):
(a) Quarterly Statements.
As soon as available and in any
event within 45 days after the end of each of the first three
quarterly fiscal periods of each fiscal year, copies of:
(i) consolidated balance sheets of the Company and
its Subsidiaries as of the close of such quarter setting forth
in comparative form the figures for the corresponding period of
the preceding fiscal year,
(ii) consolidated statements of income and cash flows
of the Company and its Subsidiaries for such quarterly period
and for the portion of the fiscal year ending with such quarter,
setting forth in comparative form the figures for the
corresponding periods of the preceding fiscal year, and
(iii) consolidated statements of changes in
stockholder's equity of the Company and its Subsidiaries for the
portion of the fiscal year ending with such quarter, setting
-24-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
forth in comparative form the figures for the corresponding
period of the preceding fiscal year,
all in reasonable detail prepared in accordance with GAAP,
subject to normal year-end adjustments (it being understood that
so long as the Company files reports on Form 10-Q with the
Securities and Exchange Commission, copies of said Form 10-Q
shall satisfy the obligations to deliver the information
described in clauses (i), (ii) and (iii) of this Paragraph (a)
if and to the extent that said Form 10-Q contains the
information required to be furnished by this Paragraph (a)), and
certified by an authorized financial officer of the Company as
fairly presenting the financial condition and results from
operations of the Company and its Subsidiaries;
(b) Annual Statements.
As soon as available and in any
event within 90 days after the last day of each fiscal year of
the Company, copies of:
(i) consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year, and
(ii) consolidated statements of income, cash flows and
changes in stockholder's equity of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail
(it being understood that so long as the Company files reports
on Form 10-K with the Securities and Exchange Commission, copies
of said Form 10-K shall satisfy the obligations to deliver the
information described in clauses (i) and (ii) of this Paragraph
(b) if and to the extent that said Form 10-K contains the
information required to be furnished by this Paragraph (b)), and
all accompanied by an opinion thereon (which shall not be
qualified by reasons of any limitation as to scope) of Deloitte
& Touche, or any other firm of independent public accountants of
recognized national standing selected by the Company, to the
effect that the consolidated financial statements have been
prepared in accordance with GAAP and present fairly the
financial condition of the Company and its Subsidiaries and that
the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards and accordingly, includes such tests
of the accounting records and such other auditing procedures as
were considered necessary in the circumstances;
(c) Audit Reports.
As soon as practicable after receipt
thereof by the Company or any Subsidiary, a copy of each other
report submitted to the Company or any Subsidiary by its
independent accountants in connection with any interim or
-25-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
special audit made by them of the books of the Company or any
Subsidiary;
(d) SEC and Other Reports.
Promptly upon their becoming
available, one copy of each report, and any registration
statement or prospectus, filed by the Company or any Subsidiary
with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in
any proceedings to which the Company or any of its Subsidiaries
is a party, issued by any governmental agency, Federal or state,
having jurisdiction over the Company or any of its Subsidiaries;
(e) Materials Sent to Stockholders.
Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company or any
Subsidiary to its stockholders generally;
(f) Officers' Certificates.
Within the periods provided
in paragraphs (a) and (b) above, a certificate of an authorized
financial officer of the Company stating that he has reviewed
the provisions of this Agreement and setting forth: (i) the
information and computations (in sufficient detail) required in
order to establish whether the Company was in compliance with
the requirements of Section 5.7 through Section 5.12, inclusive,
at the end of the period covered by the financial statements
then being furnished, and (ii) whether there existed as of the
date of such financial statements and whether, to the best of
his knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial
statements, any Default or Event of Default and, if any such
condition or event existed during such period or exists on the
date of the certificate, specifying the nature and period of
existence thereof and the action the Company has taken, is
taking or proposes to take with respect thereto;
(g) Accountant's Certificates.
Within the period provided
in paragraph (b) above, a certificate of the accountants who
render an opinion with respect to such financial statements,
stating that they have reviewed this Agreement and stating
further, whether in making their audit, such accountants have
become aware of any Default or Event of Default under any of the
terms or provisions of this Agreement insofar as any such terms
or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof; and
(h) Litigation.
Within 10 days after the Company obtains
knowledge thereof, notice of any pending or threatened
litigation or governmental proceeding against the Company or any
-26-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Subsidiary in which the damages sought exceed $5,000,000,
individually or in the aggregate, or which might otherwise have
a Material Adverse Effect.
(i) Requested Information.
With reasonable promptness,
such other data and information as any Purchaser or
Institutional Holder may reasonably request.
Without limiting the foregoing, the Company will permit each
Purchaser, so long as such Purchaser is the holder of any Note,
and each Institutional Holder of the then outstanding Notes (or
such Persons as either such Purchaser or such holder may
designate), to visit and inspect any of the Properties of the
Company or any Subsidiary, to examine all their books of
account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees,
and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with such
Purchaser and/or such holder the finances and affairs of the
Company and its Subsidiaries) all at such reasonable times and
as often as may be reasonably requested; provided that such
Purchaser or other holder shall provide prior notice to the
Company of any meeting with the Company's independent public
accountants and the Company may have a representative present at
such meeting. If a Default or Event of Default shall have
occurred, the Company shall pay or reimburse such Purchaser or
any such holder for expenses which such Purchaser or such holder
may incur in connection with any such visitation or inspection.
5.17 Filings with S&P and NAIC.
The Company consents to
the filing of copies of this Agreement with Standard & Poor's
Corporation ("S&P") in connection with obtaining a "private
placement number" from S&P. The Company further consents to the
furnishing to the National Association of Insurance
Commissioners of copies of the audited financial statements
referred to in Paragraph (b) of Section 5.16.
5.18 Information to Prospective Purchasers.
In the case
that the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company agrees,
upon the request of any Purchaser or any other Institutional
Holder, to deliver to such Purchaser or Institutional Holder and
any prospective purchaser designated by such Purchaser or
Institutional Holder promptly following such request such
information which the Purchaser or the Institutional Holder may
reasonably request in order to comply with the information
requirements of Rule 144A.
-27-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. Events of Default.
Any one or more of the following
shall constitute an "Event of Default" as the term is used
herein:
(a) Default shall occur in the payment of interest on any
Note when the same shall have become due and such default shall
continue for more than five business days; or
(b) Default shall occur in the making of any required
payment on any of the Notes as provided in Section 2.1 or in the
making of any other payment of the principal of any Note or the
Make-Whole Amount thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
(c) Default shall occur in the observance or performance
of any covenant or agreement contained in Section 5.2 or
Sections 5.7 through 5.12, inclusive; or
(d) Default shall occur in the observance or performance
of any other provision of this Agreement which is not remedied
within 60 calendar days after such default shall have become
known to any member of Senior Management; or
(e) Default shall be made in the payment of the principal
of or interest or premium on Indebtedness of the Company or any
Subsidiary aggregating in excess of $5,000,000, as and when the
same shall become due and payable by the lapse of time, by
declaration, by call for redemption or otherwise, and such
default shall continue beyond the period of grace, if any,
allowed with respect thereto; or
(f) Default or the happening of any event shall occur
under any indentures, agreements or other instruments under
which any Indebtedness of the Company or any Subsidiary
aggregating in excess of $5,000,000 may be issued and such
default or event shall continue without being waived or cured
for a period of time sufficient to permit the acceleration of
the maturity of Indebtedness of the Company or any Subsidiary
outstanding thereunder; or the sums due thereunder shall have
been accelerated and such acceleration shall not have been
annulled or rescinded; or
(g) Any representation or warranty made by the Company
herein, or in any statement made or certificate furnished by the
Company in connection with the consummation of the issuance and
delivery of the Notes or furnished by the Company pursuant
hereto, is untrue in any material respect as of the date of the
issuance or making thereof; or
(h) Any judgment, writ or warrant of attachment or any
similar process in an aggregate amount in excess of $1,000,000
-28-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
shall be entered or filed against the Company or any Subsidiary
or against any Property thereof and remain unpaid, unvacated,
unbonded or unstayed (through appeal or otherwise) for a period
of 120 days after the Company receives notice thereof; or
(i) The Company or any Subsidiary shall incur a "Distress
Termination" (as defined in Title IV of ERISA) of any Plan or
Plans or any trusts created thereunder which results in a
liability to the PBGC in the aggregate in excess of $1,000,000,
the PBGC shall institute proceedings to terminate any Plan or
Plans or any trusts created thereunder, or a trustee shall be
appointed by a United States District Court pursuant to Section
4042(b) of ERISA to administer any Plan or Plans or any trusts
created thereunder; or
(j) The Company or any Subsidiary shall
(i) generally not pay its debts as they become due or
admit in writing its inability to pay its debts generally as
they become due;
(ii) file a petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the
Federal Bankruptcy Code, or any similar applicable bankruptcy or
insolvency law, as now or in the future amended (herein
collectively called "Bankruptcy Laws"), or an answer or other
pleading admitting or failing to deny the material allegations
of such a petition or seeking, consenting to or acquiescing in
relief provided for under the Bankruptcy Laws;
(iii) make an assignment of all or a substantial
part of its Property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the
appointment of a receiver, liquidator, custodian or trustee of
it or for all or a substantial part of its Property;
(v) be subject to the entry of a court order, which
shall not be vacated, set aside or stayed within 60 days from
the date of entry, appointing a receiver, liquidator, custodian
or trustee of it or for all or a substantial part of its
Property;
(vi) be subject to the institution against it of
bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings pursuant to the Bankruptcy
Laws or any other proceedings for judicial modification or
alteration of the rights of creditors, which proceedings are not
dismissed within 90 days after such institution or which
otherwise result in the Company or such Subsidiary being finally
adjudicated a bankrupt or insolvent; or
-29-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
(vii) be subject to the assumption of custody or
sequestration by a court of competent jurisdiction of all or a
substantial part of its Property, which custody or
sequestration shall not be suspended or terminated within 90
days from its inception;
6.2. Acceleration of Maturities.
(a) When any Event of
Default described in paragraph (a) or (b) of Section 6.1 has
occurred and is continuing, any holder of any Note may declare
the entire principal, together with the Make-Whole Amount set
forth below, and all interest accrued on all Notes of such
holder, to be, and all the Notes of such holder shall thereupon
become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived. Upon the declaration of any Notes due
and payable pursuant to the preceding sentence, the Company
shall give immediate notice thereof to each other holder of
Notes.
(b) When any Event of Default described in paragraphs (a)
through (i), both inclusive, of said Section 6.1 has occurred
and is continuing, the holder or holders of 25% or more of the
principal amount of the Notes at the time outstanding may, by
notice in writing, declare the entire principal, together with
the Make-Whole Amount set forth below, and all interest accrued
on all Notes, to be, and all Notes shall thereupon become,
forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived.
(c) When any Event of Default described in paragraph (j)
of Section 6.1 has occurred and is continuing, all of the Notes,
together with the Make-Whole Amount (to the extent permitted by
law) set forth below, and all interest accrued thereon, shall
automatically become forthwith due and payable, without any
presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived.
(d) Upon the Notes becoming due and payable as a result of
any Event of Default as aforesaid, the Company will forthwith
pay to the holders of the Notes the entire principal and
interest accrued on the Notes and, to the extent permitted by
law, as liquidated damages, an amount equal to the Make-Whole
Amount. The Company further agrees to pay to the holder or
holders of the Notes all costs and expenses incurred by them in
the collection or enforcement of any Notes upon any default
hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in
connection therewith.
6.3. Rescission of Acceleration.
The provisions of
Section 6.2 are subject to the condition that if the principal
-30-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
of and accrued interest on all or any outstanding Notes have
been declared immediately due and payable by reason of the
occurrence of any Event of Default, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by
written instrument filed with the Company, rescind and annul
such declaration and the consequences thereof, provided that at
the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or Make-Whole Amount on the
Notes which has become due and payable solely by reason of such
declaration under Section 6.2) shall have been duly paid; and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
Section 7.1;
and provided further, that no such rescission and annulment
shall extend to or affect any subsequent Event of Default or
impair any right consequent thereto.
6.4. Other Remedies.
If any Event of Default shall be
continuing, any holder of Notes may enforce its rights by suit
in equity, by action at law or by any other appropriate
proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power
granted in this Agreement, and may enforce the payment of any
Note held by such holder and any of its other legal or equitable
rights.
6.5. Conduct No Waiver; Collection Expenses.
No course of
dealing on the part of any holder of Notes, nor any delay or
failure on the part of any holder of Notes to exercise any of
its rights, shall operate as a waiver of such rights or
otherwise prejudice such holder's rights, powers and remedies.
If the Company fails to pay, when due, the principal of, or the
interest on, any Note, or fails to comply with any other
provision of this Agreement, the Company will pay to each
holder, to the extent permitted by law, on demand, such further
amounts as shall be sufficient to cover the cost and expenses,
including but not limited to reasonable attorneys' fees,
actually incurred by such holders of the Notes in collecting any
sums due on the Notes or in otherwise enforcing any of their
rights.
-31-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
6.6. Remedies Cumulative.
No right or remedy conferred
upon or reserved to any holder of Notes under this Agreement is
intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy given
by this Agreement or by applicable law to any holder of Notes
may be exercised from time to time and as often as may be deemed
expedient by such holder.
6.7. Notice of Default.
With respect to Defaults, Events
of Default or claimed defaults, the Company will give the
following notices:
(a) The Company will immediately, but in any event within
two business days, furnish to each holder of a Note written
notice of the occurrence of a Default or an Event of Default.
Such notice shall specify the nature of such Default or Event of
Default, the period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect
thereto.
(b) If the holder of any Note or of any other evidence of
indebtedness of the Company or any Subsidiary gives any notice
or takes any other action with respect to a claimed default, the
Company will immediately, but in any event within two business
days, give written notice thereof to each holder of the then
outstanding Notes, describing the notice or action and the
nature of the claimed default.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
7.1. Consent Required.
Any term, covenant, agreement or
condition of this Agreement may, with the consent of the
Company, be amended or compliance therewith may be waived
(either generally or in a particular instance and either
retroactively or prospectively), if the Company shall have
obtained the consent in writing of the holders of at least 66-
2/3% in aggregate principal amount of Notes then outstanding;
provided that without the written consent of the holders of all
of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change
the time of payment (including any prepayment required by
Section 2.1) of the principal of or the interest on any Note or
reduce the principal amount thereof or the Make-Whole Amount, if
any, or change the rate of interest thereon, or (ii) which will
change any of the provisions with respect to optional
prepayments, or (iii) which will change the percentage of
holders of the Notes required to consent to any such amendment,
alteration or modification or (iv) will change any of the
provisions of Section 2.4, 2.5, 5.13 or 6 or this Section 7.
-32-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
For the purpose of determining whether holders of the
requisite principal amount of Notes have made or concurred in
any waiver, consent, approval, notice or other communication
under this Agreement, Notes held in the name of, or owned
beneficially by, the Company, any Subsidiary or any Affiliate of
any thereof, shall not be deemed outstanding.
7.2. Effect of Amendment or Waiver.
Any such amendment or
waiver shall apply equally to all of the holders of the Notes
and shall be binding upon them, upon each future holder of any
Note and upon the Company, whether or not such Note shall have
been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent
thereon.
7.3. Solicitation of Noteholders.
The Company will not
solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of the Notes
(irrespective of the amount of Notes then owned by it) shall be
informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver or consent effected pursuant to the
provisions of this Section 7 shall be delivered by the Company
to each holder of outstanding Notes forthwith following the date
on which the same shall have been executed and delivered by the
holder or holders of the requisite percentage of outstanding
Notes. The Company will not, and will not permit any Subsidiary
or Affiliate to, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as
consideration for or as inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the
terms and provisions of the Agreements unless such remuneration
is concurrently paid, on the same terms, ratably to the holders
of all the Notes then outstanding.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
8.1. Definitions.
Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the
following meanings and the following definitions shall be
equally applicable to both the singular and plural forms of any
of the terms herein defined:
"Affiliate" shall mean any Person (i) which directly or
indirectly through one or more intermediaries controls, or is
-33-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of
the Voting Stock of the Company or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The
term "affiliate" shall mean, as to any particular Person other
than the Company, any Person which directly or indirectly
through one or more intermediaries controls, or is controlled
by, or is under common control with such Person. The term
"control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"Capitalized Lease" shall mean any lease of property, real
or personal, the obligation for Rentals with respect to which is
required to be capitalized on a balance sheet of the lessee or
for which the amount of the asset and liability thereunder, as
if so capitalized, would be required to be disclosed in a note
to such balance sheet, in accordance with GAAP.
"Capitalized Lease Obligations" shall mean as of the date
of any determination the amount at which the aggregate Rentals
due and to become due under all Capitalized Leases under which
the Company or any Subsidiary is a lessee would be reflected as
a liability on a consolidated balance sheet of the Company and
its Subsidiaries.
"Consolidated Funded Debt" shall mean all Funded Debt of
the Company and its Subsidiaries, after eliminating inter-
company items, as determined in accordance with GAAP.
"Consolidated Net Income" for any period shall mean the net
income (loss) of the Company and its Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP and after deducting portions of income properly
attributable to outstanding minority interests, if any, in
Subsidiaries, but excluding in any event (to the extent included
in calculating net income) (i) any extraordinary gains or losses
and (ii) net earnings (loss) of any Person (other than a
Subsidiary) with which the Company or any Subsidiary has an
ownership interest unless such net earnings shall have actually
been received by the Company or such Subsidiary in the form of
cash distributions.
"Consolidated Net Worth" as of the date of determination
thereof shall mean the stockholder's equity account as shown on
a consolidated balance sheet of the Company and its Subsidiaries
as of such date, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Assets" shall mean the total amount of
all assets of the Company and its Subsidiaries (less
-34-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
depreciation, depletion and other properly deductible valuation
reserves), determined on a consolidated basis in accordance with
GAAP.
"Default" shall mean any event or condition, the occurrence
of which would, with the lapse of time or the giving of notice
or both, constitute an Event of Default as defined in
Section 6.1.
"Determination Date" shall mean (i) the date which is three
(3) business days before the date fixed for a prepayment
pursuant to Section 2.2 or (ii) the date of declaration of
acceleration pursuant to Section 6.2.
"Event of Default" shall have the meaning assigned thereto
in Section 6.1.
"Fixed Charges" for any period shall mean all amounts which
would, in accordance with GAAP, be deducted as interest expense
in computing Consolidated Net Income of the Company and its
Subsidiaries, including all interest and all amortization of
debt discount and expense (including imputed interest related to
Capitalized Leases) of the Company and its Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness
for borrowed money or which has been incurred in connection with
the acquisition of assets in each case having a final maturity
of one year or more from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a
period or periods more than one year from the date of origin),
including current maturities, whether or not included as current
liabilities on the balance sheet of such Person prepared in
accordance with GAAP, (ii) all Capitalized Lease Obligations in
respect of Capitalized Leases with a term of one year or more
remaining after the date of determination thereof, and (iii) all
Guaranties of Indebtedness of others maturing one year or more
after the date of determination thereof.
"GAAP" shall mean United States generally accepted
accounting principles applicable to the consolidated financial
statements of the Company and its Subsidiaries consistently
applied, except for such changes therein as (i) shall be
consistent with the then effective principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors and successors and (ii) shall be concurred in by
the independent certified public accountants certifying the
financial statements of the Company and its Subsidiaries.
"Guaranties" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly,
-35-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any Property
constituting security therefor, (ii) to advance or supply funds
(x) for the purchase or payment of such Indebtedness or
obligation, or (y) to maintain fixed charge coverage or working
capital or other balance sheet condition or otherwise to advance
or make available funds for the purchase or payment of such
Indebtedness or obligation, or (iii) to lease Property or to
purchase securities or other Property or services primarily for
the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure
the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purposes of
all computations made under this Agreement, a Guaranty in
respect of any Indebtedness for borrowed money shall be deemed
to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a
Guaranty in respect of any other obligation or liability or any
dividend shall be deemed to be Indebtedness equal to the maximum
aggregate amount of such obligation, liability or dividend.
"Income Available for Fixed Charges" for any period shall
mean the sum of Consolidated Net Income for such period, plus
(to the extent deducted in determining Consolidated Net Income)
(i) all provisions for any federal, state, or other income taxes
made by the Company and its Subsidiaries during such period and
(ii) Fixed Charges for such period.
"Indebtedness" of any Person shall mean (i) obligations of
such Person for borrowed money or which has been incurred in
connection with the acquisition of Property, (ii) obligations
secured by any lien or other charge to Property owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (iii) obligations created
or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of such Property,
(iv) Guaranties, (v) Capitalized Lease Obligations under any
Capitalized Lease and (vi) any recourse obligations arising upon
a sale of assets.
"Institutional Holder" shall mean any bank, trust company,
insurance company, pension fund, investment company or other
financial institution, including without limiting the foregoing
any "qualified institutional buyer" within the meaning of
Rule 144A, which is or becomes a holder of any Note.
"Investment" shall mean any purchase of capital stock,
obligations or other securities of any Person, any contribution
of capital to any Person, any loan, advance or extension of
-36-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
credit to any Person or other investment or acquisition of any
interest in any Person.
"Lien" shall mean (i) any interest in Property, whether
real, personal or mixed, or tangible or intangible, which
secures the payment of Indebtedness or any obligation owed to,
or a claim by, a Person other than the owner of such Property,
whether such interest is based on common law, statute or
contract, including, without limitation, any such interest
arising from a mortgage, charge, pledge, security agreement,
conditional sale, Capitalized Lease or trust receipt, or arising
from a lease, consignment or bailment given for security
purposes, (ii) any encumbrance upon such Property which does not
secure such an obligation, and (iii) any exception to or defect
in the title to or ownership interest in such Property,
including, without limitation, reservations, right of entry,
possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and licenses. For purposes
of this Agreement, a Person shall be deemed to be the owner of
any Property which it has acquired or holds subject to a
conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security
purposes.
"Make-Whole Amount" shall mean at any Determination Date
with respect to Notes being prepaid pursuant to Section 2.2 or
paid as a result of the existence of an Event of Default, to the
extent that the Reinvestment Yield on such Determination Date is
lower than the interest rate payable on or in respect of the
Notes, the excess of (a) the aggregate present value as of such
date of each dollar of principal being redeemed and the amount
of interest (exclusive of accrued interest on the Notes to be
prepaid through the date of prepayment) that would have been
payable in respect of such dollar if such prepayment had not
been made, determined by discounting such amounts at a rate that
is equal to the Reinvestment Yield from the respective dates on
which they would have been payable, over (b) the aggregate
principal amount of the Notes then to be paid or prepaid. To
the extent that the Reinvestment Yield on any Determination Date
is equal to or higher than the interest rate payable on or in
respect of the Notes, the Make-Whole Amount is zero.
"Material Adverse Change" shall mean any change or event
that has produced or is reasonably likely to produce a Material
Adverse Effect.
"Material Adverse Effect" shall mean (i) a material adverse
effect on the business, operations, Properties, prospects,
profits or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole, (ii) the incurrence of
liabilities or obligations of the Company and its Subsidiaries
(other than current liabilities incurred in the ordinary course
of business and Indebtedness incurred in accordance with the
-37-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
provisions of this Agreement) in an aggregate amount in excess
of 7.5% of Consolidated Net Worth, (iii) an impairment of the
ability of the Company to perform its obligations under this
Agreement or the Notes or (iv) an impairment of the ability of
the holders of the Notes to enforce such obligations.
"Person" shall mean an individual, partnership,
corporation, trust, estate or unincorporated organization, and a
government or agency or political subdivision thereof.
"Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible, whether now owned or hereafter acquired.
"Reinvestment Yield" shall mean (a) 0.50%, plus (b)(i) the
yield as set forth on page "USD" of the Bloomberg Financial
Markets Service (or other "on-the-run" service acceptable to the
holders of not less than 66-2/3% of the principal amount of the
Notes at the time outstanding) at 10:00 A.M. (New York City
time) on the Determination Date for actively traded U.S.
Treasury securities having a maturity equal to the Weighted
Average Life to Maturity of the Notes to be prepaid or paid, or
(ii) if such yields shall not be reported as of such time or the
yields reported as of such time are not ascertainable in
accordance with the preceding clause, then the arithmetic mean
of the rates, published for the five business days preceding the
applicable Determination Date, in the weekly statistical release
designated H.15(519) (or any successor publication) of the Board
of Governors of the Federal Reserve System under the caption
"U.S. Government Securities--Treasury Constant Maturities"
opposite the maturity corresponding to the Weighted Average Life
to Maturity of the principal amount of the Notes to be prepaid
or prepaid. If no maturity exactly corresponding to such
rounded Weighted Average Life to Maturity shall appear therein,
yields for the two most closely corresponding published
maturities shall be calculated pursuant to the foregoing
sentence and the Reinvestment Yield shall be interpolated from
such yields on a straight-line basis (rounding in each of such
relevant periods, to the nearest month).
"Rentals" shall mean and include all rents (including as
such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property)
payable by the Company or a Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes, and
similar charges.
"Rule 144A" shall mean Rule 144A promulgated pursuant to
the Securities Act, as it may be amended from time to time.
-38-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
"Securities Act" shall mean the Securities Act of 1933, as
amended, and as it may be further amended from time to time.
"Senior Management" shall mean and include any one or more
of the President, any Senior Vice President and the chief
financial officer of the Company.
"Subsidiary" shall mean a subsidiary of the Company;
"subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number
of votes) of the Voting Stock shall be owned or controlled by
such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation.
"Total Capitalization" shall mean the sum of (i) the
aggregate unpaid principal amount of Consolidated Funded Debt
and (ii) Consolidated Net Worth.
"Voting Stock" shall mean the capital stock of any class or
classes of a corporation, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the
election of the members of the board of directors of such
corporation, or Persons performing similar functions
(irrespective of whether or not at the time stock of any class
shall have or might have special voting power or rights by
reason of the happening of any contingency). Reference to a
percentage of Voting Stock shall mean a percentage of the votes
represented by such Voting Stock and not to the number of shares
if there are classes of Voting Stock possessing different voting
rights.
"Weighted Average Life to Maturity" shall mean, at any
date, the number of years obtained by dividing (a) the then
outstanding principal amount of the Notes to be prepaid into
(b) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial
maturity or other required payment, including payment at final
maturity, foregone by such prepayment of the Notes, calculated
prior to the making of any such prepayment of the Notes by
(ii) the number of years (calculated to the nearest 1/12th)
which will elapse between such date and the making of such
payment.
"Wholly-Owned" when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as
directors' qualifying shares) shall be owned by the Company
and/or one or more of its Wholly-Owned Subsidiaries.
Terms which are defined in other Sections of this Agreement
shall have the meanings specified therein.
-39-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
8.2. Accounting Principles.
Where the character or amount
of any asset or liability or item of income or expense is
required to be determined or any consolidation or other
accounting computation is required to be made for the purposes
of this Agreement, the same shall be done in accordance with
GAAP, except where such principles are inconsistent with the
requirements of this Agreement.
8.3. Directly or Indirectly.
Where any provision in this
Agreement refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be
applicable whether the action in question is taken directly or
indirectly by such Person.
8.4. Valuation Principles.
Except when indicated expressly
to the contrary by the use of terms such as "fair value," "fair
market value" or "market value," each asset, each liability and
each capital item of any Person, and any quantity derivable by a
computation involving any of such assets, liabilities or capital
items, shall be taken at the net book value thereof for all
purposes of this Agreement. "Net book value" with respect to
any asset, liability or capital item of any Person shall mean
the amount at which the same is recorded or, in accordance with
GAAP, should have been recorded in the books of account of such
Person, as reduced by any reserves which have been or, in
accordance with GAAP, should have been set aside with respect
thereto, but in every case (whether or not permitted in
accordance with GAAP) without giving effect to any write-up,
write-down or write-off (other than any write-down or write-off
the entire amount of which was charged to Consolidated Net
Income or to a reserve which was a charge to Consolidated Net
Income) relating thereto which was made after the date of this
Agreement.
SECTION 9. REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF
NOTES.
9.1. Registered Notes.
The Company shall cause to be kept
at its principal office a register for the registration and
transfer of the Notes (hereinafter called the "Note Register").
The names and addresses of the holders of the Notes, the
transfer of Notes and the names and addresses of the transferees
of the Notes shall be registered in the Note Register.
The Person in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder
thereof for all purposes of this Agreement and the Company shall
not be affected by any notice to the contrary, until due
presentment of such Note for registration of transfer so
provided in this Section 9. Payment of or on account of the
-40-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
principal, Make-Whole Amount, if any, and interest on any
registered Note shall be made to or upon the written order of
such registered holder.
9.2. Exchange of Notes.
(a) At any time, and from time to
time, upon surrender for exchange or registration of transfer of
any Note at the office of the Company designated for notices in
accordance with Section 10.3, the Company shall execute and
deliver in exchange therefor, without expense to the holder,
except as set forth below, one or more new Notes for the same
aggregate principal amount as the then unpaid principal amount
of the Note so surrendered, dated as of the date to which
interest has been paid on the Note so surrendered (or, if no
interest has been paid, the date of such surrendered Note),
registered in the name of such Person or Persons, as may be
designated by such holder in writing, and otherwise of the same
form and tenor as the Notes so surrendered for exchange. Every
Note surrendered for transfer of registration shall be duly
endorsed, or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its
attorney duly authorized in writing. The Company may require
the payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
(b) Upon any partial transfer or partial exchange of a
Note pursuant to this Section 9.2, such Note shall be
surrendered to the Company in exchange for one or more new Notes
in an aggregate principal amount equal to the principal amount
remaining unpaid on the surrendered Note. In case the entire
principal amount of any Note is prepaid or exchanged, such Note
shall be surrendered to the Company for cancellation and shall
not be reissued, and no Note shall be issued in lieu of such
Note.
(c) Each transferee of a Note shall upon receipt of any
transferred Note be deemed to have represented to the Company
that either: (1) no part of the funds to be used by it to
purchase the Notes constitutes assets allocated to any separate
account maintained by it; or (2) no part of the funds to be used
by it to purchase the Notes constitutes assets allocated to any
separate account maintained by it such that the application of
such funds constitutes a prohibited transaction under Section
406 of ERISA or Section 4975 of the Code; or (3) all or a part
of such funds constitute assets of one or more separate accounts
maintained by it and it has disclosed to the Company the names
of such employee benefit plans whose assets in such separate
account or accounts exceed 10% of the total assets thereof as of
the date of such purchase and the Company has advised such
transferee in writing (and in making the representations set
forth in this clause (3) such transferee is relying on such
advice) that the Company is not a party-in-interest nor are the
Notes employer securities with respect to the particular
employee benefit plan disclosed to the Company by such
-41-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
transferee as aforesaid (for the purpose of this clause (3), all
employee benefit plans maintained by the same employer or
employee organizations are deemed to be a single plan). As used
in this Section, the terms "separate account", "party-in-
interest", "employer securities" and "employee benefit plan"
shall have the respective meanings assigned to them in ERISA.
9.3. Loss, Theft, etc.
of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or
destruction of any Note, and in the case of any such loss, theft
or destruction upon delivery of a bond of indemnity in such form
and amount as shall be reasonably satisfactory to the Company,
or in the event of such mutilation upon surrender and
cancellation of the Note, the Company will make and deliver,
without expense to the holder thereof, a new Note, of like
tenor, in lieu of such lost, stolen, destroyed or mutilated
Note. If any Purchaser or any other Institutional Holder is the
owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth
the fact of loss, theft or destruction and of its ownership of
the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and
delivery of a new Note other than the unsecured written
agreement of such owner to indemnify the Company.
SECTION 10. MISCELLANEOUS.
10.1. Expenses, Stamp Tax Indemnity.
Whether or not
the transactions herein contemplated shall be consummated, the
Company agrees to pay directly all out-of-pocket expenses of the
Purchasers in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated
hereby, including but not limited to S&P filing fees in
connection with obtaining a "private placement number," the
reasonable charges and disbursements of Gardner, Carton &
Douglas, special counsel to the Purchasers, duplicating and
printing costs and charges for shipping the Notes, adequately
insured to each of the Purchasers at its home office or at such
other place as it may designate, and all similar expenses of the
Purchasers or any subsequent holders of the Notes relating to
any amendments, waivers or consents pursuant to the provisions
hereof requested by the Company (whether or not adopted)
pursuant to the provisions hereof or relating to any work-out or
restructuring relating to the Company (including, without
limitation, the fees and expenses of any financial consultant
engaged by such holders in connection therewith). The Company
also agrees that it will pay and save each of the Purchasers and
each subsequent holder of any Notes harmless from and against
any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this
-42-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Agreement or the Notes (but not in connection with a transfer of
any Note), whether or not any Notes are then outstanding. The
Company agrees to protect and indemnify each of the Purchasers
and each subsequent holder of any Notes against any liability
for any and all brokerage fees and commissions payable or
claimed to be payable to any Person in connection with the
transactions contemplated by this Agreement. The obligations of
the Company under this Section 10.1 and the obligations of the
Company to pay costs and expenses under Sections 5.16, 6.2 and
6.5 shall survive the retirement of the Notes.
10.2. Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of
any Note in the exercise of any power or right shall operate as
a waiver thereof; nor shall any single or partial exercise of
the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and
remedies of the holder of any Note are cumulative to and are not
exclusive of any rights or remedies any such holder would
otherwise have, and no waiver or consent, given or extended
pursuant to Section 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
10.3. Notices.
Except as otherwise expressly provided
herein, all communications provided for hereunder shall be in
writing and sent by facsimile transmission, confirmed by
delivery of a written copy thereof sent by overnight courier
(for which a signed receipt is obtained) on the same day as such
notice is given, addressed (i) if to any of the Purchasers, to
its address appearing on Schedule I to this Agreement or such
other address as it or the subsequent holder of any Note may
designate to the Company in writing, and (ii) if to the Company,
to John H. Harland Company, 2939 Miller Road, Decatur, Georgia
30038, Attention: Treasurer, Facsimile Number: (404) 593-5201,
or to such other address as the Company may in writing designate
to the Purchasers or the holders of the Notes. In addition, any
party giving notice to the Company hereunder agrees to use
reasonable efforts to provide a copy of such notice to King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303,
Attention: G. Lemuel Hewes, Facsimile Number: (404) 572-5149;
provided, however, that failure to provide such copy of any
notice shall in no way affect any rights hereunder or under any
Note.
10.4 Reproduction of Documents.
This Agreement and all
documents relating hereto, including without limitation
(a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Purchasers at the
closing of the purchase of the Notes (except the Notes
themselves), and (c) financial statements, certificates and
-43-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
other information previously or hereafter furnished to the
Purchasers or any holder of the Notes, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such Purchaser or
holder may destroy any original document so reproduced. The
Company agrees and stipulates that any such reproduction which
is legible shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by such Purchaser or holder in the regular
course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be
admissible in evidence; provided that nothing herein contained
shall preclude the Company from objecting to the admission of
any reproduction on the basis that such reproduction is not
accurate, has been altered or is otherwise incomplete.
10.5. Successors and Assigns.
This Agreement shall be
binding upon the Company and its successors and assigns and
shall inure to the benefit of the Purchasers and to the benefit
of their successors and assigns, including each successive
holder or holders of any Notes.
10.6. Survival of Covenants and Representations.
All
covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant hereto,
whether or not in connection with the Closing Date, (i) shall be
deemed to have been relied upon by the Purchasers,
notwithstanding any investigation heretofore or hereafter made
by any of the Purchasers or on their behalf, and (ii) shall
survive the closing and the delivery of this Agreement and the
Notes.
10.7. Integration; Severability.
This Agreement
embodies the entire agreement and understanding between the
Purchasers and the Company, and supersedes all prior agreements
and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this
Agreement or in any Note, or application thereof, shall be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions
contained herein and therein, and any other application thereof,
shall not in any way be affected or impaired thereby and it is
hereby declared the intention of the parties that they would
have executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for
any reason, be hereafter declared invalid, illegal or
unenforceable.
-44-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
10.8. Governing Law.
This Agreement and the Notes
issued and sold hereunder shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
10.9. Headings.
The descriptive headings of the
various Sections or parts of this Agreement are for convenience
only and do not constitute a part of this Agreement and shall
not affect the meaning or construction of any of the provisions
hereof.
10.10. Counterparts.
This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
10.11. Agent's Fees.
The Company agrees to pay, and
agrees the Purchasers shall have no obligation to pay, any fees
and expenses due and owing to any person, firm or corporation
for services of such person, firm or corporation as agent,
broker or dealer for the Company with respect to the offer and
sale of the Notes.
10.12. CONSENT TO JURISDICTION.
THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY ILLINOIS STATE OR
FEDERAL COURT SITTING IN THE CITY OF CHICAGO, ILLINOIS OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES, OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH, AND THE COMPANY HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT.
THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE COMPANY
IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING BY UNITED STATES CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OF COPIES OF SUCH PROCESS TO THE
COMPANY'S ADDRESS SPECIFIED IN SECTION 10.3. THE COMPANY AGREES
THAT A JUDGMENT, FINAL BY APPEAL OR EXPIRATION OF TIME TO APPEAL
WITHOUT AN APPEAL BEING TAKEN, IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS SECTION 10.12 SHALL AFFECT THE RIGHT OF THE
HOLDERS OF NOTES TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY HOLDER OR HOLDERS OF
NOTES TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR
ITS PROPERTY IN THE COURTS OF ANY JURISDICTION.
-45-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
10.13. Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in this
Agreement, it is expressly provided that in no case or event
shall the aggregate of any amounts accrued or paid pursuant to
this Agreement which under applicable laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable laws. In this connection,
the Company and the Purchasers stipulate and agree that it is
their common and overriding intent to contract in strict
compliance with applicable usury laws. In furtherance thereof,
none of the terms of this Agreement shall ever be construed to
create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess
of the maximum rate permitted by applicable laws. The Company
shall never be liable for interest in excess of the maximum rate
permitted by applicable laws. If, for any reason whatever, such
interest paid or received on the Notes produces a rate which
exceeds the maximum rate permitted by applicable laws, the
holders of the Notes shall credit against the principal of the
Notes (or, if the Notes shall have been paid in full, shall
refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid to
produce a rate equal to the maximum rate permitted by applicable
laws. All sums paid or agreed to be paid to the holders of the
Notes for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of
the Notes, so that the interest rate is uniform throughout the
full term of the Notes. The provisions of this Section 10.13
shall control all agreements, whether now or hereafter existing
and whether written or oral, between the Company, the Purchasers
and each other holder of the Notes.
[The rest of this page intentionally left blank.]
-46-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
IN WITNESS WHEREOF, the Company and the Purchasers have
caused this Agreement to be executed and delivered by their
respective officer or officers thereunto duly authorized.
COMPANY: JOHN H. HARLAND COMPANY
By: ______________
/s/ William M. Dollar
Title: Vice President, Treasurer &
CFO
PURCHASERS: AMERICAN GENERAL LIFE AND ACCIDENT
INSURANCE COMPANY
By: ____________
/s/ Julia S. Tucker
Title: Investment Officer
CENTURY LIFE OF AMERICA
By: Century Investment Management
Company
By: __________
/s/ Donald Heltner
Title: Vice President
CONNECTICUT MUTUAL LIFE INSURANCE
COMPANY
By: _______________
/s/ Lawrence D. Stillman
Title: Senior Investment Officer
CUNA MUTUAL INSURANCE SOCIETY
By: Century Investment Management
Company
-47-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
By: __________
/s/ Donald Heltner
Title: Vice President
-48-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By: ____________
/s/ H. Lusby Brown
Title: Second Vice President
FEDERATED LIFE INSURANCE COMPANY
By: MIMLIC Asset Management
Company
By: ____________
/s/ Lynne M. Mills
Title: Vice President
FEDERATED MUTUAL INSURANCE COMPANY
By: MIMLIC Asset Management
Company
By: ____________
/s/ Lynne M. Mills
Title: Vice President
GULF LIFE INSURANCE COMPANY
By: ____________
/s/ Julia S. Tucker
Title: Investment Officer
MIMLIC FUNDING, INC.
By: MIMLIC Asset Management
Company
By: ____________
/s/ Lynne M. Mills
Title: Vice President
-49-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
-50-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
By: MIMLIC Asset Management
Company
By: ________
/s/ Alan Notvik
Title: Vice President
MUTUAL TRUST LIFE INSURANCE
COMPANY
By: MIMLIC Asset Management
Company
By: ________
/s/ Alan Notvik
Title: Vice President
NATIONAL TRAVELERS LIFE COMPANY
By: MIMLIC Asset Management
Company
By: ________
/s/ Alan Notvik
Title: Vice President
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By: ____________
/s/ James T. Rogers
Title: Vice President
THE RELIABLE LIFE INSURANCE
COMPANY
By: MIMLIC Asset Management
Company
-51-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
By: ________
/s/ Alan Notvik
Title: Vice President
-52-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
SCHEDULE I
__________
Principal Amount of Notes to Be Purchased
_________________________________________
AMERICAN GENERAL LIFE AND ACCIDENT $7,500,000
INSURANCE COMPANY
All payments to be by wire transfer of immediately available
funds, with sufficient information (including interest rate,
maturity date, interest amount, principal amount and Make-Whole
Amount, if applicable) to identify the source and application of
such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life and Accident Insurance Company
AC-0125-934-0
OBI=Description of payment
Fund Number PA 10
Payment notices to:
American General Life and Accident Insurance Company
and PA 10
c/o State Street Bank and Trust Company
State Street South
108 Myrtle Street
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other correspondences to:
American General Life and Accident Insurance Company
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attn: Private Placements, A37-01
Facsimile Number: (713) 831-1366
Tax Identification Number: 62-0306330
-53-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
CENTURY LIFE OF AMERICA $4,300,000
Name of nominee in which Notes are to be issued: Atwell &
Company
All payments by wire transfer of immediately available federal
funds to:
USTRUST NYC
ABA 021001318
ACCT # 473633
FBO Century Life of America
Income Collections Dept.
with sufficient information to identify the source and
application of such funds; with reference to PPN # 412693 A# 0,
payment date, and par value of security on wire.
All notices of payments and written confirmations of such wire
transfers:
CUNA Mutual Insurance Group
Cash Management Department
P.O. Box 391
Madison, WI 53701
Attn: Kris Conway
All other communications:
CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, WI 53705
Attn: Private Placements
Facsimile Number: (608) 238-2316
Tax Identification Number: 13-6065575
-54-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY $20,000,000
To be registered to: Connecticut Mutual Life Insurance Co.
To be issued as four separate Notes of $5,000,000 each.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
The Bank of New York
ABA #021000018 BNF:IOC566
Attn: P & I Department
FOR: Connecticut Mutual Life
Insurance Co.
with sufficient information (including issuer, interest
rate, private placement number, maturity, and whether
payment is of principal, interest, and/or premium) to
identify the source and application of funds.
All notices of payment on or in respect of the Notes and written
confirmation of each such payment shall be sent to:
Connecticut Mutual Life Insurance
Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
with a copy to:
Connecticut Mutual Life Insurance
Co.
140 Garden Street
Hartford, CT 06154
Attn: Securities Accounting/Carol
Vojtila
All other communication (such as annual reports, statements,
waivers, amendments) should be mailed to:
Connecticut Mutual Life Insurance
Company
140 Garden Street
Hartford, CT 06154
Attn: Private Placements, MS 272
-55-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
with a copy to:
Connecticut Mutual Life Insurance
Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
Tax Identification Number: 06-0304620
-56-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
CUNA MUTUAL INSURANCE SOCIETY $4,000,000
Name of nominee in which Notes are to be issued: Atwell &
Company
All payments by wire transfer of immediately available federal
funds to:
USTRUST NYC
ABA 021001318
ACCT # 473633
FBO CUNA Mutual Insurance Group
Income Collections Dept.
with sufficient information to identify the source and
application of such funds; with reference to PPN # 412693 A# 0,
payment date, and par value of security on wire.
All notices of payments and written confirmations of such wire
transfers:
CUNA Mutual Insurance Group
Cash Management Department
P.O. Box 391
Madison, WI 53701
Attn: Kris Conway
All other communications:
CUNA Mutual Insurance Group
Securities Management Department
5910 Mineral Point Road
Madison, WI 53705
Attn: Private Placements
Facsimile Number: (608) 238-2316
Tax Identification Number: 13-6065575
-57-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
JEFFERSON-PILOT LIFE INSURANCE COMPANY $8,400,000
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
NationsBank of North Carolina
ABA #053-000-196
Charlotte, NC
Account of: Jefferson-Pilot Life
Insurance Co.
Account No.: 020 000 014
Attn: Cathy Crisson, (919) 691-
3133
With sufficient information to identify the issue to which the
payment relates and the amount of principal, interest and
premium.
All notices and communication should be
addressed to:
Jefferson-Pilot Life Insurance
Company
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Service Division
3630
Tax Identification Number: 56-0359860
-58-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
FEDERATED LIFE INSURANCE COMPANY $1,000,000
Name of nominee in which Notes are to be issued: Tour & Co.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
Trust Department, Norwest Bank,
ACCT # 0840-245,
Attn: Terri Burks,
for credit to Federated Life Insurance Company,
Account #12364500, ABA # 091000019
With sufficient information to identify the source and
application of funds.
All notices and communication should be addressed to:
Federated Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 41-6022443
-59-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
FEDERATED MUTUAL INSURANCE COMPANY $2,000,000
Name of nominee in which Notes are to be issued: Tour & Co.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
Trust Department, Norwest Bank,
Account # 0840-245, Attn: Terri Burks,
for credit to Federated Mutual Insurance Company,
Account # 12364600, ABA# 091000019
With sufficient information to identify the source and
application of funds.
All notices and communications should be addressed to:
Federated Mutual Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 41-0417460
-60-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
GULF LIFE INSURANCE COMPANY $7,500,000
All payments to be by wire transfer of immediately available
funds, with sufficient information (including interest rate,
maturity date, interest amount, principal amount and Make-Whole
Amount, if applicable) to identify the source and application of
such funds, to:
ABA# 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: Gulf Life Insurance Company
AC-2908-362-3
OBI=Description of payment
Fund Number PA 25
Payment notices to:
Gulf Life Insurance Company and PA 25
c/o State Street Bank and Trust Company
State Street South
108 Myrtle Street
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other correspondences to:
Gulf Life Insurance Company
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attn: Private Placements, A37-01
Facsimile Number: (713) 831-1366
Tax Identification Number: 59-0276160
-61-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
MIMLIC FUNDING, INC. $2,400,000
Name of nominee in which Notes are to be issued: VAR & Co.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
First Bank N.A., Minneapolis, MN,
ABA # 091-0000-22,
for further credit to First Trust, N.A.,
Acct # 180121167365, TSU: 020,
for credit to Account # 12603650 (MIMLIC Funding, Inc.)
Attn: Peggy Sime, # (612) 244-0647
With sufficient information to identify the source and
application of funds.
All notices and communication should be addressed to:
MIMLIC Funding, Inc.
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 41-1630884
-62-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY $16,100,000
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
The Federal Reserve Bank of Minneapolis,
For the Account of The First Bank National Association,
Minneapolis, Minnesota
ABA # 091-0000-22,
BNF The Minnesota Mutual Life Insurance Company,
Account # 801-10-00600
With sufficient information to identify the source and
application of funds.
All notices and communication should be addressed to:
The Minnesota Mutual Life Insurance Company
400 North Robert Street
St. Paul, Minnesota 55101
Attn: Investment Department
Facsimile Number: (612) 223-5959
Tax Identification Number: 41-0417830
-63-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
MUTUAL TRUST LIFE INSURANCE COMPANY $1,000,000
Name of nominee in which Notes are to be issued: ELL & Co.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
The Northern Trust Company, Chicago, Illinois,
ABA # 071000152,
for credit to wire Account # 5186041000,
for further credit to Mutual Trust Life Insurance Company,
Account # 26-00621, Attn: MBS Department
With sufficient information to identify the source and
application of funds.
All notices and communication should be addressed to:
Mutual Trust Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 36-1516780
-64-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
NATIONAL TRAVELERS LIFE COMPANY $1,500,000
Name of nominee in which Notes are to be issued: VAR & Co.
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
First Bank N.A., Minneapolis, MN,
ABA # 091-0000-22,
for further credit to First Trust N.A.,
Account # 180121167365, TSU: 020,
for credit to National Travelers Life Company,
Account # 12609110, Attn: Sheldon Sobro, # (612) 244-0648
With sufficient information to identify the source and
application of funds.
All notices and communication should be addressed to:
National Travelers Life Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 42-0432940
-65-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY $8,300,000
Name of nominee in which Notes are to be issued: PEPA & CO.
In case of payment on account of the
Notes:
By bank wire transfer of Federal funds together with an advice
setting forth (a) the full name, interest rate and maturity date
of the Note; (b) allocation of payment between principal and
interest; (c) name of Issuer; and (d) confirmation of principal
balance to:
PEPA & CO.
c/o BT CO.
ABA #021 001 033
PVT PLACEMENT PROC #99 911 145
FOR CREDIT A/C #99296
PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY
with sufficient information to identify the source and
application of funds
In the case of all communications with respect to payments and
all other communications to:
Provident Life and Accident
Insurance Company
Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Attention: Private Placements
Tax Identification Number: 13-2895637
-66-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Principal Amount
of Notes
Purchaser ________
_________
THE RELIABLE LIFE INSURANCE COMPANY $1,000,000
All payments on or in respect of the Notes are to be by bank
wire transfer of immediately available funds to:
Mercantile Bank St. Louis,
ABA # 08-1000-210,
for the account of Reliable Life Insurance Company,
Account # 1000602969
With sufficient information to identify the source and
application of funds.
All notices and communication should be
addressed to:
The Reliable Life Insurance
Company
c/o MIMLIC Asset Management
Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
Facsimile Number: (612) 223-5959
Tax Identification Number: 43-0476110
-67-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
ANNEX I
List of Subsidiaries and Jurisdictions
in Which the Company and Its Subsidiaries
Are Qualified as Foreign Corporations
_______________________
John H. Harland Company
Alabama* Arkansas* Arizona
California* Colorado* Connecticut
Delaware Florida* Georgia
Idaho Illinois Indiana
Iowa* Louisiana* Maryland*
Massachusetts* Michigan* Minnesota*
Mississippi* Missouri New Jersey*
New Mexico* New York* North
Carolina*
Ohio* Oklahoma* Oregon*
Pennsylvania* Rhode Island South
Carolina*
Tennessee* Texas* Utah*
Virginia* Washington* Wisconsin
__________________________________________________________
J. William Company (subsidiary of John H. Harland Company)
Georgia* South Carolina
_______________________________________________________________
Centralia Holding Corp. (subsidiary of John H. Harland Company)
Georgia Washington
_________________________________________________________
Harland ATM Services, Inc. (subsidiary of John H. Harland
___________________________
Company - sold during 1993)
Georgia
_____________________________________________________________
John H. Harland Company of Puerto Rico (subsidiary of John H.
________________
Harland Company)
Georgia*
_____________________________________________________________
The Check Store, Inc. (subsidiary of John H. Harland Company)
Georgia
__________________________________________________
P.P., Inc. (subsidiary of John H. Harland Company)
Indiana
-68-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
______________________________________________________________
Scantron Holding Corp. (subsidiary of John H. Harland Company)
Delaware
-69-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
ANNEX I (continued)
List of Subsidiaries and Jurisdictions
in Which the Company and Its Subsidiaries
Are Qualified as Foreign Corporations
____________________________________________________________
Scantron Corporation (subsidiary of John H. Harland Company)
Alabama* Arkansas* California*
Colorado* Delaware District of
Columbia
Florida* Georgia Kansas
Kentucky Iowa* Louisiana*
Maryland* Massachusetts* Michigan*
Minnesota* Mississippi* New Mexico*
New York* North Carolina* Ohio*
Oklahoma* Oregon* Pennsylvania*
South Carolina* Tennessee* Texas*
Utah* Virginia* Washington*
West Virginia
___________________________________________________________
Scan-tron Caribe, Inc. (subsidiary of Scantron Corporation)
Delaware*
-70-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
ANNEX II
Description of Liens
___________
Description ______________________
Face Value Outstanding
Industrial Revenue Bond (John H. Harland Company
Project) Series 1984 issued by the Newton County
Industrial Development Authority,secured by plant located
in Newport County, Georgia - Due on Demand$4,000,000
Capitalized Lease Obligations - Scantron $1,095,609
Automobiles
Capitalized Lease Obligations - principally $152,060
printing equipment relating to Interchecks
acquisition
-71-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
ANNEX III
List of Indebtedness
___________
Description ______________________
Face Value Outstanding
Industrial Revenue Bond (John H. Harland Company
Project) Series 1984 issued by the Newton County
Industrial Development Authority- Due on Demand$4,000,000
Scantron Corporation 6 3/4% Convertible $10,957,000
Debentures Due 2011
Amounts Borrowed under Uncommitted $78,000,000(A)
Lines of Credit (to be repaid concurrently
with this financing)
Term Loan - Trust Company Bank 6.626% $15,000,000(B)
Due December 2003 (to be funded on or
before December 17, 1993)
Capitalized Lease Obligations - Scantron $1,095,609
Automobiles
Capitalized Lease Obligations - principally $152,060
printing equipment relating to Interchecks
acquisition
(A) As of December 15, 1993.
(B) Not presently outstanding. To be funded on or before
December 17, 1993.
-72-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
EXHIBIT A
_________
JOHN H. HARLAND COMPANY
6.60% SENIOR NOTE
Due December 30, 2008
_______________
Registered Note No. R-____
_________________
$_______________
JOHN H. HARLAND COMPANY, a Georgia corporation (the
"Company"), for value received, hereby promises to pay to
______________________________ or registered assigns, on the
thirtieth day of December, 2008, the principal amount of
____________________ Dollars ($_________) and to pay interest
(computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining
unpaid hereon at the rate of six and sixty one-hundredths
percent (6.60%) per annum from the date hereof until maturity,
payable on June 30 and December 30 in each year, commencing
June 30, 1994, and at maturity, and to pay interest on overdue
principal, Make-Whole Amount (as defined in the hereinafter
defined Note Agreement) and (to the extent legally enforceable)
on any overdue installment of interest at a rate equal to the
greater of (i) a rate per annum equal to the prime rate of
interest publicly announced from time to time by Morgan Guaranty
Trust Company, changing as and when said prime rate changes, and
(ii) eight and sixty one-hundredths percent (8.60%) per annum,
after maturity or the due date thereof, whether by acceleration
or otherwise, until paid. Payments of the principal of, the
Make-Whole Amount, if any, and interest on this Note shall be
made in lawful money of the United States of America in the
manner provided in the Note Agreement (hereinafter defined).
This Note is issued under and pursuant to the terms and
provisions of the Note Agreement, dated as of December 1, 1993,
entered into between the Company and the Purchasers listed on
Schedule I thereto (the "Note Agreement"), and this Note and any
holder hereof are entitled to all of the benefits provided for
by such Note Agreement or referred to therein. The provisions
of the Note Agreement are hereby incorporated in this Note to
the same extent as if set forth at length herein.
As provided in the Note Agreement, upon surrender of this
Note for registration of transfer, duly endorsed or accompanied
-73-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
by a written instrument of transfer duly executed by the
registered holder hereof or his attorney duly authorized in
writing, a new Note for a like unpaid principal amount will be
issued to, and registered in the name of, the transferee upon
the payment of the taxes or other governmental charges, if any,
that may be imposed in connection therewith. The Company may
treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any
notice to the contrary.
This Note may be declared due prior to its expressed
maturity date, voluntary prepayments may be made hereon and
certain prepayments are required to be made hereon, all in the
events, on the terms and in the manner as provided in the Note
Agreement. Such prepayments include certain required
prepayments on June 30 and December 30 of each year, commencing
June 30, 2004 and certain optional prepayments, which require
the payment of a Make-Whole Amount (as defined in the Note
Agreement), if any.
Should the indebtedness represented by this Note or any
part thereof be collected in any proceeding provided for in the
Note Agreement or be placed in the hands of attorneys for
collection, the Company agrees to pay, in addition to the
principal, Make-Whole Amount, if any, and interest due and
payable hereon, all costs of collecting this Note, including
reasonable attorneys' fees and expenses.
This Note and said Note Agreement are governed by and
construed in accordance with the laws of the State of Illinois.
JOHN H. HARLAND COMPANY
By:_______________________________
_______
Its:______________________________
________
-74-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
EXHIBIT B
_________
LEGAL OPINION OF SPECIAL
COUNSEL FOR THE PURCHASERS
The opinion of Gardner, Carton & Douglas, special counsel
for the Purchasers, shall be to the effect that:
1. The Company is a corporation organized and validly
existing in good standing under the laws of the State of
Georgia, with all requisite corporate power and authority to
enter into the Agreement and to issue and sell the Note.
2. The Agreement has been duly authorized by proper
corporate action on the part of the Company, has been duly
executed and delivered by an authorized officer of the Company
and constitutes the legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the
extent that enforcement of the Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
3. The Notes have been duly authorized by proper corporate
action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and
constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, except to
the extent that enforcement of the Notes may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
4. Based upon the representations set forth in the
Agreement, the offering, sale and delivery of the Notes do not
require the registration of the Note under the Securities Act of
1933, as amended, nor the qualification of an indenture under
the Trust Indenture Act of 1939, as amended.
5. The issuance and sale of the Notes and compliance with
the terms and provisions of the Notes and the Agreement will not
conflict with or result in any breach of any of the provisions
of the Articles of Incorporation or by-laws of the Company.
The legal opinion of King & Spalding, counsel for the
Company, delivered to the Purchasers pursuant to the Agreement,
is satisfactory in form and scope to counsel to the Purchasers,
-75-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
and, in such counsel's opinion, the Purchasers and they are
justified in relying thereon. With respect to matters of
Georgia law, Gardner, Carton & Douglas may rely, without
independent investigation, upon the opinion of King & Spalding.
-76-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
EXHIBIT C
_________
LEGAL OPINION OF COUNSEL
FOR THE COMPANY
The opinion of King & Spalding, counsel for the Company,
shall be to the effect that:
1. Each of the Company and the Subsidiaries of the Company
listed as such in Annex I to the Agreement is a corporation
organized and validly existing in good standing under the laws
of its jurisdiction of incorporation, and each has all requisite
corporate power and authority to carry on the business now being
conducted by it and to own its Property. The Company has no
Subsidiaries, other than the Subsidiaries listed on Annex I to
the Agreement.
2. Each of the Company and its Subsidiaries is duly
qualified and in good standing as foreign corporations in the
jurisdictions enumerated in Annex I to the Agreement and such
jurisdictions are all of the jurisdictions where the nature of
its business or the character of its Properties makes such
qualification or licensing necessary, except for such
jurisdictions where, individually or in the aggregate, failure
to so qualify would not have a Material Adverse Effect.
3. The Agreement has been duly authorized by proper
corporate action on the part of the Company, has been duly
executed and delivered by an authorized officer of the Company
and constitutes the legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the
extent that enforcement of the Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law)
4. The Notes have been duly authorized by proper corporate
action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company and constitute
the legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent
that enforcement of the Notes may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the
enforcement of the rights of creditors or by the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
-77-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
5. No authorization, approval or consent of any
governmental or regulatory body is necessary or required in
connection with the lawful execution and delivery by the Company
of the Agreement or the lawful offering, issuance and sale of
the Note, and no designation, filing, declaration, registration
and/or qualification with any governmental authority is required
by the Company in connection with such offer, issuance and sale.
6. The issuance and sale of the Notes and compliance with
the terms and provisions of the Notes and the Agreement will not
conflict with, or result in any breach of any of the provisions
of, or constitute a default (whether or not waived) under, or
result in the creation or imposition of any Lien or encumbrance
upon any of the Property of the Company or any Subsidiary
pursuant to, the provisions of the Certificate of Incorporation,
by-laws or other charter document of the Company or any
Subsidiary or any mortgage, indenture, loan agreement or other
agreement or instrument under which the Company or its Property
or any Subsidiary or its Property is bound.
7. There are no actions, suits or proceedings pending or,
to the best of such counsel's knowledge after due inquiry,
threatened against or affecting the Company or its Subsidiaries,
at law or in equity or before or by any Federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which
(i) would contest or affect the execution, validity or
performance of the Agreement or the Notes or restrain or enjoin
the issuance and delivery of the Notes or (ii) might result,
either individually or collectively, in any Material Adverse
Change.
8. All of the issued and outstanding shares of capital
stock of each Subsidiary have been duly and validly issued, are
fully paid and nonassessable and are owned by the Company or
such other Subsidiary identified on Annex I to the Agreement,
free and clear of any lien or encumbrance.
9. The issuance and sale of the Notes and compliance with
the terms and provisions of the Agreement and the Notes will not
result in a breach or violation of any of the terms, conditions,
or provisions of any law or regulation (including any usury
laws), order, writ, injunction or decree of any court or
governmental authority applicable to the Company.
10. Based upon the representations set forth in the
Agreement, the offering, sale and delivery of the Notes do not
require the registration of the Notes under the Securities Act
of 1933, as amended, nor the qualification of an indenture under
the Trust Indenture Act of 1939, as amended.
11. The issuance of the Notes and the use of the proceeds
of the sale of the Notes do not violate or conflict with
-78-
<PAGE>
<PAGE>
EXHIBIT 4.5 continued
Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System (12 C.F.R., Chapter II).
12. Neither the Company nor any Subsidiary is: (i) a
"public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or
an "affiliate" of such a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as
amended, or (ii) a "public utility" as defined in the Federal
Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any
such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
The opinion of King & Spalding shall cover such other
matters relating to the sale of the Notes as the Purchasers may
reasonably request. Such opinion shall also state that counsel
to the Purchasers and any successor or assign of a Purchaser may
rely on such opinion.
-79-
EXHIBIT - 10.1
FORM OF DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made and entered into as of this ____day of
_________, 19___, by and between JOHN H. HARLAND COMPANY, a Georgia
corporation (the "Company"), and _______________("Employee");
W I T N E S S E T H
-------------------
WHEREAS, Employee is _________________________ of the Company;
and
WHEREAS, the parties hereto desire to provide for the payment of
deferred compensation to Employee in the amount and at the time and on the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and services
rendered and to be rendered to the Company by Employee, the parties hereto
agree as follows:
1.
Deferred Compensation Benefit
The Company agrees to pay Employee the deferred compensation
benefits as set out below:
1.1. Normal Retirement Benefit. If Employee remains an active and
full-time employee of the Company until on or after the date he reaches age
65, the Company shall pay to his a Normal Retirement Benefit each month which
is equal to forty percent (40%) of his Average Monthly Salary. This monthly
Normal Retirement Benefit shall commence on the first day of the first
calendar year which coincides with, or next follows, the date Employee
reaches age 65, or the date his employment terminates, whichever occurs last,
and shall continue on the first day of each month thereafter during his
lifetime.
1.2. Early Retirement Benefit. If Employee remains an active and
full-time employee of the Company until on or after the date
-1-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
she reaches age 60, the Company shall pay to his a monthly Early Retirement
Benefit equal to his monthly Normal Retirement Benefit, reduced by a
fractional amount thereof, where the numerator of the fraction is the number
of full calendar months between the date of his termination of employment and
the month in which he will reach age 65, and the denominator is 180. This
monthly Early Retirement Benefit shall commence on the first day of the first
month which coincides with, or next follows, the date of his termination of
employment and shall continue on the first day of each month thereafter
during his lifetime.
1.3. Disability Retirement Benefit.
(a) If Employee at any time while an active and full-time
employee of the Company is determined to be disabled, the Company shall pay
to him a monthly Disability Retirement Benefit equal to forty percent (40%)
of his Average Monthly Salary which shall commence on the date specified by
the Disability Committee and shall continue on the first day of each month
thereafter during his lifetime.
(b) The term "disabled" for purposes of subparagraph (a) above
shall mean that Employee is physically or mentally unable to continue to
fulfill his duties as an active and full-time employee of the Company at his
assigned level of responsibility or competence, unless such physical or
mental impairment arises as a result of a deliberately self-inflicted injury.
A determination whether Employee is disabled shall be made by the Disability
Committee and shall be based on an examination of all the facts and
circumstances which the Disability Committee in its discretion deems to be
relevant, including a report from one or more licensed physicians or
psychiatrists selected by the Disability Committee.
(c) The Disability Committee may review its determination
that Employee was disabled at any time before he reaches age 65. If as a
result of such review the Disability Committee determines in its absolute
discretion that he has recovered to the extent that he is physically and
mentally able to resume his duties as an active and full-time employee at his
previously assigned level of responsibility or competence and, if the Company
under the circumstances would benefit from Employee resuming such duties, the
Disability Committee shall so notify his in writing. The payment of benefits
under subparagraph (a) herein shall terminate on the date of such notice. If
Employee resumes such duties as an active and full-time employee of the
Company within the six-month period immediately following the delivery of
such written notice, his future benefits shall be determined in accordance
with the provisions of this Agreement, as applicable, without regard to the
-2-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
number of Disability Retirement Benefit payments made prior to his
reemployment. Otherwise, his future benefits under this Agreement shall be
limited to those payable under Section 3, determined as of the date his
employment was terminated by reason of his disability.
(d) The Disability Committee shall consist of any three
employees of the Company who are so appointed in writing by the Board of
Directors of the Company.
1.4 Definition. The term Average Monthly Salary means Employee's
average stated annual salary, expressed as a monthly amount, for the year in
which his employment terminates for any reason, voluntarily or otherwise
(including death or disability), and for the two years which immediately
precede such year.
2.
2.1. Preretirement Death Benefit.
(a) If Employee dies while an active and full-time employee of
the Company and is survived by his wife or by a natural or adopted child who
is under the age of 21, the Company shall pay a monthly Preretirement Death
Benefit in accordance with subparagraph (b) herein which is equal to forty
percent (40%) of his Average Monthly Salary.
(b) If Employee is survived by his wife, the monthly
Preretirement Death Benefit shall be paid to him and shall commence on the
first day of the first month which follows his date of death and shall
continue on the first day of each month thereafter during his lifetime. If
Employee is not survived by his wife, or upon the death of his wife, such
monthly Preretirement Death Benefit shall be paid pro rata according to the
above monthly schedule to or on behalf of his surviving children, if any, who
have not reached age 21. No payment shall be made to or on behalf of any
surviving child after the date that child reaches age 21, and the portion of
the monthly Preretirement Death Benefit previously allocated to a child who
reaches age 21 shall be reallocated among those children, if any, who have
not reached age 21. Notwithstanding any of the foregoing, the total number
of monthly Preretirement Death Benefit payments made to Employee's surviving
wife and children shall not exceed 180.
2.2. Post-Retirement Death Benefit.
(a) If Employee's employment is terminated under circumstances
which qualify him for the payment of a benefit under Section 1 herein
(regardless of whether benefit payments in fact have commenced) and Employee
-3-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
dies and is survived by his wife or by a natural or adopted child who is
under age 21, the Company shall make, or continue to make, the monthly
benefit payment for which Employee had qualified as a monthly Post-Retirement
Death Benefit in accordance with subparagraph (b) herein.
(b) If Employee is survived by his wife, the monthly Post-
Retirement Death Benefit shall be paid to him and shall commence on the first
day of the first month which follows his date of death and shall continue on
the first day of each month thereafter during his lifetime. If he is not
survived by his wife, or upon the death of his wife, such monthly Post-
Retirement Death Benefit shall be paid pro rata in accordance with the above
monthly schedule to or on behalf of his surviving children, if any, who have
not reached age 21. No payment shall be made to or on behalf of any
surviving child after the date that child reaches age 21, and the portion of
the death benefit previously allocated to a child who reaches age 21 shall be
reallocated among those children, if any, who have not reached age 21.
Notwithstanding any of the foregoing, the total number of monthly Post-
Retirement Death Benefit payments made to Employee's surviving wife and
children and the number of monthly benefit payments made to Employee under
Section 1 herein shall not exceed 180.
2.3. Payments to Minor Children. The Company shall exercise its
best effort to make payments to any child who is under age 18 in accordance
with written instructions delivered by Employee to, and accepted by, the
Company but the Company shall have the absolute discretion to make payments
to the person having custody of such child, or to the child without
intervention of a guardian, or to the child's legal guardian if one has been
appointed, or to hold and use the payments for the benefit of the child until
the child reaches age 18.
3.
Vested Benefit
3.1. Vested Benefit. Subject to the provisions of Section 5.2
hereof, if Employee's employment is terminated for any reason voluntarily or
otherwise, and he does not otherwise qualify for the payment of any benefit
under Section 1 hereof, he shall be entitled to receive a monthly benefit
equal to his monthly Accrued Retirement Benefit under which payment shall
commence on the first day of the first month which coincides with, or next
follows, the date he reaches age 65, if he is then living, and shall continue
on the first day of each month thereafter during his lifetime. The term
-4-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
"monthly Accrued Retirement Benefit" for purposes of this section means a
monthly benefit which is the product of (A) and (B), where:
(A) is an amount equal to forty percent (40%) of his
Average Monthly Salary on the date of his termination
of employement; and
(B) is a fraction, the numerator of which is the number
of completed full years of service by Employee with the
Company on the date of his termination of employment, and
the denominator of which is the number of full years of
service with the Company which, absent such termination,
he would completed on the date he reaches age 65.
4.
Condition to Benefit Payment
Notwithstanding any other provision of this Agreement, the right to
any benefit whatsoever hereunder shall immediately and completely be
extinguished if at any time during the two year period following the date of
his termination of employment with the Company Employee engages in one or
more of the below-listed States in any activity on his own behalf or on
behalf of any organization of any kind or description as an employee,
consultant or otherwise, which involves any information about or transaction
with any person who is a customer of the Company on the date his employment
terminates or involves any competition, direct or indirect, with products or
services offered by the Company on the date his employment terminates:
Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois,
Kentucky, Louisiana, Maryland, Massachusetts, Missouri, New York, North
Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia; provided,
however, that the provisions of this Section 4 shall not apply if Employee's
employment with the Company is terminated for any reason (whether voluntary
or otherwise) within 180 days after a change in control of the Company (as
defined in Section 5.2 hereof) shall have occurred.
5.
Effect of Agreement
5.1. This Agreement shall not constitute a contract of employment
for any definite term and shall not affect or impair the right of either
party to terminate the employment relationship at any time. It is further
understood and agreed that this Agreement shall not deprive Employee of his
-5-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
right to participate in any other employee benefit plan now or hereafter
established or maintained by the Company in accordance with the provisions of
said plan or plans.
5.2. This Agreement shall be binding upon Employee, his surviving
wife, surviving children, heirs, executors and administrators and on the
Company and its successors or assigns. Furthermore, notwithstanding any
other provision of this Agreement to the contrary, in the event that, at any
time after a change in control of the Company (as hereinafter defined) or a
merger of the Company into another entity or a sale of all or substantially
all of the Company's assets, (i) Employee's employment is terminated by the
Company or (ii) Employee within 180 days after such change in control, merger
or sale, resigns as an employee of the Company for any reason whatsoever,
then (a) if Employee so elects within 10 days of such termination, by written
notice to the Company, to receive as of January 1 of the year following the
year in which said election is made to receive a lump sum payment in lieu of
all of his other benefits hereunder, the Company shall pay to Employee a lump
sum amount in cash on such January 1 which is equal to the aggregate deferred
compensation liability which, based on this Agreement, the Company had
accrued for financial accounting purposes (using generally accepted
accounting principles, consistently applied) to the date of the termination
of his employment, and (b) if Employee does not make such election, then
Employee shall have the right to receive his monthly Accrued Retirement
Benefit in accordance with Section 3.1, calculated for this purpose, however,
(1) without reference to Section 3.1(B) and (2) on the assumption that his
Average Monthly Salary was equal to one-twelfth (1/12) of his stated annual
salary as in effect on the date such change in control, merger or sale
occurs.
For purposes of this Section 5.2, "a change in control of the
Company" shall be deemed to have occurred at such time as the "beneficial
ownership" of more than fifty percent (50%) of the Common Stock of the
Company is held by any person; where any two or more persons act as a
partnership, limited partnership, syndicate or other group for purposes of
acquiring, holding, or disposing of the Company's Common Stock, such
syndicate or group shall be considered as a person for purposes hereof. The
term "beneficial ownership" as used above shall have the meaning contained in
Rule 13d-3 under the Securities Exchange Act of 1934.
-6-
<PAGE>
<PAGE>
EXHIBIT 10.1 continued
6.
No Assignment
The benefits provided under this Agreement may not be alienated,
encumbered or assigned in any manner whatsoever by Employee, his surviving
wife or any surviving child.
7.
Entire Agreement
This Agreement contains the entire understanding of the parties and
may be amended only by their mutual consent evidenced by a document executed
in the same formality as this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, under its seal, by a duly authorized officer, and Employee has
hereunto set his hand and seal as of the date first above written.
JOHN H. HARLAND COMPANY
By:_______________________
[CORPORATE SEAL]
EMPLOYEE
_________________________
Witness:
____________________________
-7-
EXHIBIT - 10.3
FORM OF DEFERRED COMPENSATION AGREEMENT
-1-
<PAGE>
<PAGE>
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made and entered into as of this ____day of
_________, 19___, by and between JOHN H. HARLAND COMPANY, a
Georgia corporation (the "Company"), and _______________("Employee");
W I T N E S S E T H
-------------------
WHEREAS, Employee is _________________________ of the Company;
and
WHEREAS, the parties hereto desire to provide for the payment of
deferred compensation to Employee in the amount and at the time and on
the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and services
rendered and to be rendered to the Company by Employee, the parties
hereto agree as follows:
1.
Deferred Compensation Benefit
The Company agrees to pay Employee the deferred compensation
benefits as set out below:
1.1. Normal Retirement Benefit. If Employee remains an
active and full-time employee of the Company until on or after the date he
reaches age 65, the Company shall pay to him a Normal Retirement Benefit each
month which is equal to $ ________ per month. This monthly Normal Re-
tirement Benefit shall commence on the first day of the first calendar year
which coincides with, or next follows, the date Employee reaches age 65, or
the date his employment terminates, whichever occurs last, and shall continue
on the first day of each month thereafter during his lifetime.
1.2. Early Retirement Benefit. If Employee remains an
active and full-time employee of the Company until on or after the date he
-2-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
reaches age 60, the Company shall pay to him a monthly Early Retirement
Benefit equal to his monthly Normal Retirement Benefit, reduced by a frac-
tional amount thereof, where the numerator of the fraction is the number of
full calendar months between the date of his termination of employment and
the month in which he will reach age 65, and the denominator is 180. This
monthly Early Retirement Benefit shall commence on the first day of the
first month which coincides with, or next follows, the date of his termina-
tion of employment and shall continue on the first day of each month there-
after during his lifetime.
1.3. Disability Retirement Benefit.
(a) If Employee at any time while an active and full-
time employee of the Company is determined to be disabled, the Company shall
pay to him a monthly Disability Retirement Benefit equal to __________ per
month which shall commence on the date specified by the Disability Committee
and shall continue on the first day of each month thereafter during his
lifetime.
(b) The term "disabled" for purposes of sub-
paragraph (a) above shall mean that Employee is physically or mentally
unable to continue to fulfill his duties as an active and full-time
employee of the Company at his assigned level of responsibility or
competence, unless such physical or mental impairment arises as a result
of a deliberately self-inflicted injury. A determination whether Employee
is disabled shall be made by the Disability Committee and shall be based
on an examination of all the facts and circumstances which the Disability
Committee in its discretion deems to be relevant, including a report from
one or more licensed physicians or psychiatrists selected by the
Disability Committee.
(c) The Disability Committee may
review its determination that Employee was disabled at any time before he
reaches age 65. If as a result of such review the Disability Committee
determines in its absolute discretion that he has recovered to the extent
that he is physically and mentally able to resume his duties as an active
and full-time employee at his previously assigned level of responsibility
or competence and, if the Company under the circumstances would benefit
from Employee resuming such duties, the
-3-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
Disability Committee shall so notify him in writing. The payment of benefits
under subparagraph (a) herein shall terminate on the date of such notice. If
Employee resumes such duties as an active and full-time employee of the Compa-
ny within the six-month period immediately following the delivery of such
written notice, his future benefits shall be determined in accordance with the
provisions of this Agreement, as applicable, without regard to the number of
Disability Retirement Benefit payments made prior to his reemployment. Other-
wise, his future benefits under this Agreement shall be limited to those
payable under Section 3, determined as of the date his employment was termi-
nated by reason of his disability.
(d) The Disability Committee shall consist of any
three employees of the Company who are so appointed in writing by the
Board of Directors of the Company.
2.
2.1. Preretirement Death Benefit.
(a) If Employee dies while an active and full-time em-
ployee of the Company and is survived by his wife or by a natural or adopted
child who is under the age of 21, the Company shall pay a monthly Preretire-
ment Death Benefit in accordance with subparagraph (b) herein which is equal
to _________ per month.
(b) If Employee is survived by his wife, the monthly
Preretirement Death Benefit shall be paid to her and shall commence on the
first day of the first month which follows his date of death and shall contin-
ue on the first day of each month thereafter during her lifetime. If Employee
is not survived by his wife, or upon the death of his wife, such monthly
Preretirement Death Benefit shall be paid pro rata according to the above
monthly schedule to or on behalf of his surviving children, if any, who have
not reached age 21. No payment shall be made to or on behalf of any surviving
child after the date that child reaches age 21, and the portion of the monthly
Preretirement Death Benefit previously allocated to a child who reaches age 21
shall be reallocated among those children, if any, who have not reached age
21. Notwithstanding any of the foregoing, the total number of monthly Prere-
-4-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
tirement Death Benefit payments made to Employee's surviving wife and children
shall not exceed 180.
2.2. Post-Retirement Death Benefit.
(a) If Employee's employment is terminated undercircum-
stances which qualify him for the payment of a benefit under Section 1 herein
(regardless of whether benefit payments in fact have commenced) and Employee
dies and is survived by his wife or by a natural or adopted child who is under
age 21, the Company shall make, or continue to make, the monthly benefit
payment for which Employee had qualified as a monthly Post-Retirement Death
Benefit in accordance with subparagraph (b) herein.
(b) If Employee is survived by his wife, the monthly
Post-Retirement Death Benefit shall be paid to her and shall commence on the
first day of the first month which follows his date of death and shall contin-
ue on the first day of each month thereafter during her lifetime. If he is
not survived by his wife, or upon the death of his wife, such monthly Post-
Retirement Death Benefit shall be paid pro rata in accordance with the above
monthly schedule to or on behalf of his surviving children, if any, who have
not reached age 21. No payment shall be made to or on behalf of any surviving
child after the date that child reaches age 21, and the portion of the death
benefit previously allocated to a child who reaches age 21 shall be reallocat-
ed among those children, if any, who have not reached age 21. Notwithstanding
any of the foregoing, the total number of monthly Post-Retirement Death Bene-
fit payments made to Employee's surviving wife and children and the number of
monthly benefit payments made to Employee under Section 1 herein shall not
exceed 180.
2.3. Payments to Minor Children. The Company shall exer-
cise its best effort to make payments to any child who is under age 18 in ac-
cordance with written instructions delivered by Employee to, and accepted by,
the Company but the Company shall have the absolute discretion to make pay-
ments to the person having custody of such child, or to the child without
intervention of a guardian, or to the child's legal guardian if one has been
appointed, or to hold and use the payments for the benefit of the child until
the child reaches age 18.
-5-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
3.
Vested Benefit
3.1. Vested Benefit. Subject to the
provisions of Section 5.2 hereof, if Employee's employment is terminated
for any reason voluntarily or otherwise, and (a) on the date his
employment is terminated he has completed since his most recent date of
employment _____ full years of continuous and uninterrupted service with
the Company, and (b) he does not otherwise qualify for the payment of any
benefit under Section 1 hereof, he shall be entitled to receive a monthly
benefit equal to his monthly Accrued Retirement Benefit under which
payment shall commence on the first day of the first month which coincides
with, or next follows, the date he reaches age 65, if he is then living,
and shall continue on the first day of each month thereafter during his
lifetime. The term "monthly Accrued Retirement Benefit" for purposes of
this section means a monthly benefit which is the product of (A) and (B),
where:
(A) is an amount equal to _________ per month.
(B) is a fraction, the numerator of which is the number
of completed full years of service by Employee with the Comp-
any on the date of his termination of employment, and the de-
nominator of which is the number of full years of service
with the Company which, absent such termination, he would
have completed on the date he reaches age 65.
4.
Condition to Benefit Payment
Notwithstanding any other provision of this Agreement, the right to any
benefit whatsoever hereunder shall immediately and completely be extinguished
if at any time during the two year period following the date of his termina-
tion of employment with the Company Employee engages in one or more of the
below-listed States in any activity on his own behalf or on behalf of any
organization of any kind or description as an employee, consultant or other-
wise, which involves any information about or transaction with any person who
-6-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
is a customer of the Company on the date his employment terminates or involves
any competition, direct or indirect, with products or services offered by the
Company on the date his employment terminates: Alabama, Arkansas, California,
Colorado, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Massachu-
setts, Missouri, New York, North Carolina, Ohio, South Carolina, Tennessee,
Texas and Virginia; provided, however, that the provisions of this Section 4
shall not apply if Employee's employment with the Company is terminated for
any reason (whether voluntary or otherwise) within 180 days after a change in
control of the Company (as defined in Section 5.2 hereof) shall have occurred.
5.
Effect of Agreement
5.1. This Agreement shall not constitute a contract of
employment for any definite term and shall not affect or impair the right of
either party to terminate the employment relationship at any time. It is
further understood and agreed that this Agreement shall not deprive Employee
of his right to participate in any other employee benefit plan now or hereaf-
ter established or maintained by the Company in accordance with the provisions
of said plan or plans.
5.2. This Agreement shall be binding upon Employee, his sur-
viving wife, surviving children, heirs, executors and administrators and on
the Company and its successors or assigns. Furthermore, notwithstanding any
other provision of this Agreement to the contrary, in the event that, at any
time after a change in control of the Company (as hereinafter defined) or a
merger of the Company into another entity or a sale of all or substantially
all of the Company's assets, (i) Employee's employment is terminated by the
Company or (ii) Employee within 180 days after such change in control, merger
or sale, resigns as an employee of the Company for any reason whatsoever, then
(a) if Employee so elects within 10 days of such termination, by written
notice to the Company, to receive as of January 1 of the year following the
-7-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
year in which said election is made to receive a lump sum payment in lieu of
all of his other benefits hereunder, the Company shall pay to Employee a lump
sum amount in cash on such January 1 which is equal to the aggregate deferred
compensation liability which, based on this Agreement, the Company had accrued
for financial accounting purposes (using generally accepted accounting princi-
ples, consistently applied) to the date of the termination of his employment,
and (b) if Employee does not make such election, then Employee shall have the
right to receive his monthly Accrued Retirement Benefit in accordance with
Section 3.1, calculated for this purpose, however, (1) without reference to
Section 3.1(B) and (2) on the assumption that his Average Monthly Salary was
equal to one-twelfth (1/12) of his stated annual salary as in effect on the
date such change in control, merger or sale occurs.
For purposes of this Section 5.2, "a change in control of the Company"
shall be deemed to have occurred at such time as the "beneficial ownership" of
more than fifty percent (50%) of the Common Stock of the Company is held by
any person; where any two or more persons act as a partnership, limited part-
nership, syndicate or other group for purposes of acquiring, holding, or
disposing of the Company's Common Stock, such syndicate or group shall be
considered as a person for purposes hereof. The term "beneficial ownership"
as used above shall have the meaning contained in Rule 13d-3 under the Securi-
ties Exchange Act of 1934.
6.
No Assignment
The benefits provided under this Agreement may not be alienated,
encumbered or assigned in any manner whatsoever by Employee, his surviving
wife or any surviving child.
7.
Entire Agreement
This Agreement contains the entire understanding of the parties and
may be amended only by their mutual consent evidenced by a document executed
in the same formality as this Agreement.
-8-
<PAGE>
<PAGE>
EXHIBIT - 10.3 continued
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed, under its seal, by a duly authorized officer, and Employee has
hereunto set his hand and seal as of the date first above written.
JOHN H. HARLAND COMPANY
By:_______________________
[CORPORATE SEAL]
EMPLOYEE
_________________________
Witness:
____________________________
-9-
<PAGE>
EXHIBIT - 10.4
FORM OF DEFERRED COMPENSATION AGREEMENT
-1-
<PAGE>
<PAGE>
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made and entered into as of this ____day of
_________, 19___, by and between JOHN H. HARLAND COMPANY, a
Georgia corporation (the "Company"), and _______________("Employee");
W I T N E S S E T H
-------------------
WHEREAS, Employee is _________________________ of the Company;
and
WHEREAS, the parties hereto desire to provide for the payment of
deferred compensation to Employee in the amount and at the time and on
the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and services
rendered and to be rendered to the Company by Employee, the parties
hereto agree as follows:
1.
Deferred Compensation Benefit
The Company agrees to pay Employee the deferred compensation
benefits as set out below:
1.1. Normal Retirement Benefit. If Employee remains an
active and full-time employee of the Company until on or after the date
she reaches age 65, the Company shall pay to her a Normal Retirement
Benefit each month which is equal to forty percent (40%) of her Average
Monthly Salary. This monthly Normal Retirement Benefit shall commence on
the first day of the first calendar year which coincides with, or next
follows, the date Employee reaches age 65, or the date her employment
terminates, whichever occurs last, and shall continue on the first day of
each month thereafter during her lifetime.
1.2. Early Retirement Benefit. If Employee remains an
active and full-time employee of the Company until on or after the date
she reaches age 60, the Company shall pay to her a monthly Early Retire-
ment Benefit equal to her monthly Normal Retirement Benefit, reduced
by a fractional amount thereof, where the numerator of the fraction is the
-2-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
number of full calendar months between the date of her termination of
employment and the month in which she will reach age 65, and the denomina-
tor is 180. This monthly Early Retirement Benefit shall commence on the
first day of the first month which coincides with, or next follows, the
date of her termination of employment and shall continue on the first day
of each month thereafter during her lifetime.
1.3. Disability Retirement Benefit.
(a) If Employee at any time while an active and full-
time employee of the Company is determined to be disabled, the Company
shall pay to her a monthly Disability Retirement Benefit equal to forty
percent (40%) of her Average Monthly Salary which shall commence on the
date specified by the Disability Committee and shall continue on the first
day of each month thereafter during her lifetime.
(b) The term "disabled" for purposes of
subparagraph (a) above shall mean that Employee is physically or mentally
unable to continue to fulfill her duties as an active and full-time
employee of the Company at her assigned level of responsibility or
competence, unless such physical or mental impairment arises as a result
of a deliberately self-inflicted injury. A determination whether Employee
is disabled shall be made by the Disability Committee and shall be based
on an examination of all the facts and circumstances which the Disability
Committee in its discretion deems to be relevant, including a report from
one or more licensed physicians or psychiatrists selected by the
Disability Committee.
(c) The Disability Committee may
review its determination that Employee was disabled at any time before she
reaches age 65. If as a result of such review the Disability Committee
determines in its absolute discretion that she has recovered to the extent
that she is physically and mentally able to resume her duties as an active
and full-time employee at her previously assigned level of responsibility
or competence and, if the Company under the circumstances would benefit
from Employee resuming such duties, the Disability Committee shall so
notify her in writing. The payment of benefits under subparagraph (a)
herein shall terminate on the date of such notice. If Employee resumes
such duties as an active and full-time employee of the Company within the
six-month period immediately following the delivery of such written
notice, her future benefits shall be determined in accordance with the
provisions of this Agreement, as applicable, without regard to the number
-3-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
of Disability Retirement Benefit payments made prior
to her reemployment. Otherwise, her future benefits under this Agreement
shall be limited to those payable under Section 3, determined as of the
date her employment was terminated by reason of her disability.
(d) The Disability Committee shall consist of any
three employees of the Company who are so appointed in writing by the
Board of Directors of the Company.
1.4 Definition. The term Average Monthly Salary means
Employee's average stated annual salary, expressed as a monthly amount,
for the year in which her employment terminates for any reason,
voluntarily or otherwise (including death or disability), and for the two
years which immediately precede such year.
2.
2.1. Preretirement Death Benefit.
(a) If Employee dies while an active and full-time em-
ployee of the Company and is survived by her husband or by a natural or adopted
child who is under the age of 21, the Company shall pay a monthly Preretire-
ment Death Benefit in accordance with subparagraph (b) herein which is
equal to forty percent (40%) of her Average Monthly Salary.
(b) If Employee is survived by her husband, the
monthly Preretirement Death Benefit shall be paid to him and shall
commence on the first day of the first month which follows her date of
death and shall continue on the first day of each month thereafter during
his lifetime. If Employee is not survived by her husband, or upon the
death of her husband, such monthly Preretirement Death Benefit shall be
paid pro rata according to the above monthly schedule to or on behalf of
her surviving children, if any, who have not reached age 21. No payment
shall be made to or on behalf of any surviving child after the date that
child reaches age 21, and the portion of the monthly Preretirement Death
Benefit previously allocated to a child who reaches age 21 shall be
reallocated among those children, if any, who have not reached age 21.
Notwithstanding any of the foregoing, the total number of monthly
Preretirement Death Benefit payments made to Employee's surviving husband
and children shall not exceed 180.
2.2. Post-Retirement Death Benefit.
(a) If Employee's employment is terminated under
-4-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
circumstances which qualify her for the payment of a benefit under Section
1 herein (regardless of whether benefit payments in fact have commenced)
and Employee dies and is survived by her husband or by a natural or
adopted child who is under age 21, the Company shall make, or continue to
make, the monthly benefit payment for which Employee had qualified as a
monthly Post-Retirement Death Benefit in accordance with subparagraph (b)
herein.
(b) If Employee is survived by her husband, the
monthly Post-Retirement Death Benefit shall be paid to him and shall
commence on the first day of the first month which follows her date of
death and shall continue on the first day of each month thereafter during
his lifetime. If she is not survived by her husband, or upon the death of
her husband, such monthly Post-Retirement Death Benefit shall be paid pro
rata in accordance with the above monthly schedule to or on behalf of her
surviving children, if any, who have not reached age 21. No payment shall
be made to or on behalf of any surviving child after the date that child
reaches age 21, and the portion of the death benefit previously allocated
to a child who reaches age 21 shall be reallocated among those children,
if any, who have not reached age 21. Notwithstanding any of the
foregoing, the total number of monthly Post-Retirement Death Benefit
payments made to Employee's surviving husband and children and the number
of monthly benefit payments made to Employee under Section 1 herein shall
not exceed 180.
2.3. Payments to Minor Children. The Company shall exer-
cise its best effort to make payments to any child who is under age 18 in ac-
cordance with written instructions delivered by Employee to, and accepted by,
the Company but the Company shall have the absolute discretion to make pay-
ments to the person having custody of such child, or to the child without
intervention of a guardian, or to the child's legal guardian if one has been
appointed, or to hold and use the payments for the benefit of the child until
the child reaches age 18.
-5-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
3.
Vested Benefit
3.1. Vested Benefit. Subject to the
provisions of Section 5.2 hereof, if Employee's employment is terminated
for any reason voluntarily or otherwise, and (a) on the date her
employment is terminated she has completed since her most recent date of
employment _____ full years of continuous and uninterrupted service with
the Company, and (b) she does not otherwise qualify for the payment of any
benefit under Section 1 hereof, she shall be entitled to receive a monthly
benefit equal to her monthly Accrued Retirement Benefit under which
payment shall commence on the first day of the first month which coincides
with, or next follows, the date she reaches age 65, if she is then living,
and shall continue on the first day of each month thereafter during her
lifetime. The term "monthly Accrued Retirement Benefit" for purposes of
this section means a monthly benefit which is the product of (A) and (B),
where:
(A) is an amount equal to forty percent (40%) of her
Average Monthly Salary on the date of her termination
of employement; and
(B) is a fraction, the numerator of which is the number
of completed full years of service by Employee with the Comp-
any on the date of her termination of employment, and the de-
nominator of which is the number of full years of service
with the Company which, absent such termination, she would
have completed on the date she reaches age 65.
4.
Condition to Benefit Payment
Notwithstanding any other provision of this
Agreement, the right to any benefit whatsoever hereunder shall immediately
and completely be extinguished if at any time during the two year period
following the date of her termination of employment with the Company
Employee engages in one or more of the below-listed States in any activity
on her own behalf or on behalf of any organization of any kind or
description as an employee, consultant or otherwise, which involves any
information about or transaction with any person who is a customer of the
Company on the date her employment terminates or involves any competition,
direct or indirect, with products or services offered by the Company on
-6-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
the date her employment terminates: Alabama, Arkansas, California,
Colorado, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland,
Massachusetts, Missouri, New York, North Carolina, Ohio, South Carolina,
Tennessee, Texas and Virginia; provided, however, that the provisions of
this Section 4 shall not apply if Employee's employment with the Company
is terminated for any reason (whether voluntary or otherwise) within 180
days after a change in control of the Company (as defined in Section 5.2
hereof) shall have occurred.
5.
Effect of Agreement
5.1. This Agreement shall not constitute a contract of
employment for any definite term and shall not affect or impair the right of
either party to terminate the employment relationship at any time. It is
further understood and agreed that this Agreement shall not deprive Employee
of her right to participate in any other employee benefit plan now or hereaf-
ter established or maintained by the Company in accordance with the provisions
of said plan or plans.
5.2. This Agreement shall be binding upon
Employee, her surviving husband, surviving children, heirs, executors and
administrators and on the Company and its successors or assigns.
Furthermore, notwithstanding any other provision of this Agreement to the
contrary, in the event that, at any time after a change in control of the
Company (as hereinafter defined) or a merger of the Company into another
entity or a sale of all or substantially all of the Company's assets, (i)
Employee's employment is terminated by the Company or (ii) Employee within
180 days after such change in control, merger or sale, resigns as an
employee of the Company for any reason whatsoever, then (a) if Employee so
elects within 10 days of such termination, by written notice to the
Company, to receive as of January 1 of the year following the year in
which said election is made to receive a lump sum payment in lieu of all
of her other benefits hereunder, the Company shall pay to Employee a lump
sum amount in cash on such January 1 which is equal to the aggregate
deferred compensation liability which, based on this Agreement, the
Company had accrued for financial accounting purposes (using generally
accepted accounting principles, consistently applied) to the date of the
termination of her employment, and (b) if Employee does not make such
election, then Employee shall have the right to receive her monthly
Accrued Retirement Benefit in accordance with Section 3.1, calculated for
this purpose, however, (1) without reference to Section 3.1(B) and (2) on
-7-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
the assumption that her Average Monthly Salary was equal to one-twelfth
(1/12) of her stated annual salary as in effect on the date such change in
control, merger or sale occurs.
For purposes of this Section 5.2, "a change in
control of the Company" shall be deemed to have occurred at such time as
the "beneficial ownership" of more than fifty percent (50%) of the Common
Stock of the Company is held by any person; where any two or more persons
act as a partnership, limited partnership, syndicate or other group for
purposes of acquiring, holding, or disposing of the Company's Common
Stock, such syndicate or group shall be considered as a person for
purposes hereof. The term "beneficial ownership" as used above shall have
the meaning contained in Rule 13d-3 under the Securities Exchange Act of
1934.
6.
No Assignment
The benefits provided under this Agreement may
not be alienated, encumbered or assigned in any manner whatsoever by
Employee, her surviving husband or any surviving child.
7.
Entire Agreement
This Agreement contains the entire
understanding of the parties and may be amended only by their mutual
consent evidenced by a document executed in the same formality as this
Agreement.
-8-
<PAGE>
<PAGE>
EXHIBIT 10.4 continued
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed, under its seal, by a duly authorized officer, and Employee has
hereunto set her hand and seal as of the date first above written.
JOHN H. HARLAND COMPANY
By:_______________________
[CORPORATE SEAL]
EMPLOYEE
_________________________
Witness:
____________________________
-9-
<PAGE>
EXHIBIT - 10.5
FORM OF
FROZEN BENEFIT AMENDMENT
TO
DEFERRED COMPENSATION AGREEMENT
-1-
<PAGE>
<PAGE>
DEFERRED COMPENSATION AGREEMENT
FROZEN BENEFIT AMENDMENT
THIS AGREEMENT, made and entered into as of this ____day of
_________, 19___, by and between JOHN H. HARLAND COMPANY, a
Georgia corporation (the "Company"), and _______________("Employee");
W I T N E S S E T H
-------------------
WHEREAS the Company and Employee entered into an unfunded Deferred
Compensation Agreement on ______________, 19__ ("Basic Agreement") which
the Company and Employee desire to amend;
NOW, THEREFORE, in consideration of the premises and services
rendered and to be rendered to the Company by Employee, the Company and
Employee hereby agree to amend the Basic Agreement as follows:
1.
By adding a new Section 8, Frozen Benefit, which reads as follows:
8.
Notwithstanding any other provision in this Agreement,
the maximum monthly benefit payable under this Agreement shall
be $__________ per month and further, if a monthly benefit is
payable under Section 1.2 (Early Retirement Benefit) or
Section 3 (Vested Benefit) of this Agreement, such maximum
monthly benefit figure shall be reduced in accordance with the
benefit reduction rules described in Section 1.2 or, if
applicable, Section 3.
-2-
<PAGE>
<PAGE>
2.
This amendment shall be referred to as the Frozen Benefit
Amendment, and this Agreement shall be effective as of the date set forth
in the preamble to this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, under its seal, by a duly authorized officer, and Employee has
hereunto set her hand and seal as of the date first above written.
JOHN H. HARLAND COMPANY
By:_______________________
[CORPORATE SEAL]
Attest:____________________
EMPLOYEE
_________________________
Witness:
____________________________
-3-
<PAGE>
EXHIBIT - 10.6
FORM OF
AMENDMENT TO
DEFERRED COMPENSATION AGREEMENT
-1-
<PAGE>
<PAGE>
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
THIS ADMENDMENT, made and entered into as of this ________ day of
__________, 1993 by and between JOHN H. HARLAND COMPANY, a Georgia
corporation (the "Company"), and ___________________ ("Employee");
W I T N E S S E T H:
WHEREAS, Company and Employee entered into a Deferred Compensation
Agreement on the ____ day of _____________, 19__, ("Agreement") which
provided for certain payments to be made to Employee upon the happening of
certain events; and
WHEREAS, Article 2 of the Agreement provides for the payment of certain
benefits to the Employee's spouse or children under the age of 21 years upon
the death of Employee; and
WHEREAS, Company and Employee now mutually with to amend the Agreement so
as to delete the provision of benefits to the Employee's spouse or children,
effective immediately;
NOW AND THEREFORE, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:
1.
Article 2 of the Agreement is hereby deleted in its entirety; therefor the
Agreement shall make no provision for any benefits being paid to the
Employee's spouse or children in the event of his death, regardless of
whether the death occurs "pre-retirement" or "post-retirement".
2.
All other provisions of the Agreement, not otherwise inconsistent with
this Amendment to Deferred Compensation Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the Company and Employee have caused this amendment of
Deferred Compensation Agreement to be excuted, as of this day, month and year
first written above.
JOHN H. HARLAND COMPANY
BY:________________________
EMPLOYEE:
___________________________
WITNESS:
___________________________
-2-
<PAGE>
EXHIBIT 10.7
FORM OF
NON-COMPETE AND TERMINATION AGREEMENT
-1-
<PAGE>
<PAGE>
NON-COMPETE AND TERMINATION AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into
this day of , 19 by and between JOHN H. HARLAND
COMPANY (the "Company") and ("Employee");
In consideration of the mutual promises and agreements
contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1. Noncompetition Undertakings.
1.1 Acknowledgement of Access to Confidential
Matters. Employee and the Company recognize and
acknowledge that as a result of his employment with the
Company:
(a) Employee has had and will continue to have
access to technology with regard to the production and
sale of checks and related stationery items, including
computer printed MICR documents, business forms, and
training materials, which technology is unique to the
Company, such as the Company's Manual on Production,
its production operations systems, its order entry
systems, its conveyor systems, its quality control
practices and other technology developed by the Company
for the efficient and economical production of checks
and related stationery items.
(b)Employee has had and will continue to have
access to and knowledge of all sales records, profit
records and related data for the Company and pricing
-2-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
manuals, sales manuals, training manuals and other
confidential materials utilized by the Company;
complete and detailed knowledge of all of the products
of the Company and their capacities and specifications;
and complete knowledge of all of the systems and
procedures of the Company with regard to selling,
pricing, and financing its products.
(c)Employee has had and will continue to have
knowledge of the Company's sources of supply for the
various raw materials used in production, packaging and
shipping including, with limitation, paper, inks and
machinery, and will be familiar with quality, price and
terms available to the Company in the purchase of these
items.
(d)Employee has had and will continue to have
specific knowledge regarding the Company's customers,
including their specific needs and current and
anticipated requirements for the Company's products.
Employee further recognizes, acknowledges and agrees,
that the confidential information and trade secrets
specified herein constitute valuable, special and unique
assets of the Company and that the improper use or
disclosure thereof would cause substantial loss of
competitive advantage and other injury to the Company.
Employee further agrees that the training and experience
gained while employed by the Company and the knowledge
-3-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
acquired during such employment regarding the aforesaid
information would enable him to injure and cause substantial
harm to the Company if he should compete with the Company in
its business before the expiration of a reasonable time
after termination of his employment with the Company.
1.2 Noncompetition. For the reasons recited
in subsection 1.1 above and except as set forth below,
Employee covenants and agrees that so long as he is an
employee of the Company and for a period of two (2) years
after termination of such employment, whether by Employee or
by the Company, Employee will not serve as an officer,
executive, employee in a managerial capacity, partner,
consultant or stockholder (other than as a stockholder of
the Company) of any entity (other than the Company) engaged
in competition with the Company as a manufacturer, seller or
distributor of checks, business forms, training materials or
other related items manufactured or sold by the Company in
any state, territory or other political subdivision
specified on Exhibit A attached hereto (the states,
territories and other political subdivisions so specified
being those areas in which the Company is, on the date
hereof, manufacturing, selling or distributing checks,
business forms, training materials or other related items).
The agreements of Employee contained herein shall not
prevent him from purchasing or owning an investment of not
more than 1% of the outstanding capital stock of a publicly
held company engaged in competition with the Company, so
-4-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
long as his only relationship with such company is as an
investor.
The covenant not to compete set forth in this
subsection 1.2 shall not apply to Employee in the event his
employment with the Company is terminated pursuant to either
Section 3.1 or Section 3.2 hereof.
The covenants on the part of Employee contained in this
Section 1.2, and in Section 1.3 and Section 1.4 hereof,
shall be construed as agreements independent of any other
provision in this Agreement, and the existence of any claim
or cause of action of Employee against the Company, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of
said covenants.
1.3 Nondisclosure. Employee further
covenants and agrees that neither during his employment by
the Company nor after termination of such employment,
whether by Employee or by the Company, will he, for any
reason or in any manner whatsoever,
(a) disclose any trade secrets belonging to the
Company, or
(b) For a period of two (2) years after such
termination, disclose any confidential information
belonging to the Company, including, but not limited to
the trade secrets and confidential information
described in subsection 1.1 above, of which he acquired
knowledge during and on account of his employment with
-5-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
the Company.
1.4 Company Materials. Employee further
covenants and agrees that, neither during his employment by
the Company nor after termination of his employment with the
Company for any reason whatsoever, will he take from the
Company or any of its offices any customer lists, manuals or
other records of the Company, regardless of whether he has
worked on such records, or any account to which they
pertain, during the period of his employment.
Section 2. Termination of Employment.
2.1 Termination. Except as provided in Section
2.2 hereof, nothing herein shall affect the rights of the
Company or Employee to terminate the Employee's employment
with the Company, with or without cause; provided, however,
that the covenants and agreements contained herein shall
survive any such termination of employment as provided for
herein.
2.2 Company Obligation. The Company agrees that
it will not terminate Employee's employment with the
Company, without good cause, for a period of six (6) months
from the date hereof.
Section 3. Effect of Certain Terminations of
Employment.
3.1 By the Company. In the event that, at any
time after a "change in control of the Company" (as
hereinafter defined), shall have occurred, Employee's
-6-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
employment with the Company is terminated by the Company for
an reason other than Employee having been convicted of, or
pleading guilty or confessing to, fraud, misappropriation,
embezzlement or any felony, then (i) the Company shall pay
to Employee, in a lump sum at the time of such termination,
his "Severance Pay" (as hereinafter defined) and (ii) the
covenant not to compete of Employee contained in Section 1.2
hereof shall no longer be applicable.
Any material reduction in Employee's compensation
package, duties and responsibilities, support staff or other
indicia of his executive status or any change in his work
which requires a change in his residence shall be treated as
a termination of his employment by the Company under this
Section 3.1 unless either (i) Employee consents in writing
to such reduction or change, (ii) the Company can
demonstrate by clear and convincing evidence that such
reduction or change was based primarily on Employee's
failure to reasonably perform his duties and
responsibilities under the circumstances and, further, that
such reduction or change was made only after the Company had
provided Employee with reasonable, written notice of such
failure and a reasonable period of time to correct such
failure or (ii) such reduction or change comes more than
years after such change in control of the Company.
3.2 By Employee.
In the event that, within 365 days after "change in
control of the Company" (as hereinafter defined) shall have
-7-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
occurred, Employee shall resign as an employee of the
Company for any reason whatsoever, then (i) the Company
shall pay to Employee, in a lump sum within ten (10)
business days after such termination, his Severance Pay, (as
hereinafter defined) and (ii) the covenant not to compete
of Employee contained in Section 1.2 hereof shall no longer
be applicable.
3.3 Change in Control of the Company. For
purposes of this Agreement "a change in control of the
Company" shall be deemed to have occurred at such time as
the beneficial ownership of more than 50% of the Common
Stock of the Company is held by any person or entity; when
any two or more persons or entities act as a partnership,
limited partnership, syndicated or other group for the
purposes of acquiring, holding or disposing of the Company's
Common Stock, such syndicate or group shall be considered as
a single person or entity for purposes hereof. "Beneficial
ownership" shall have the meaning provided in Rule 13d-3
under the Securities Exchange Act of 1934, as in effect at
the date hereof.
3.4 Severance Pay. For the purpose of this
Agreement, the Employee's Severance Pay shall equal the
lesser of
(a) three times Employee's average
compensation as reported by the Company to the Internal
Revenue Service on its form W-2 (or any successor to
-8-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
such form) for the five calendar year period which
immediately precedes the date his employment terminates
under either Section 3.1 or Section 3.2, or
(b) The maximum payment (computed to the
nearest whole dollar) which the Company can make to
employee as a result of a change in control of the
Company
(i) without the Company's federal income tax
deduction for any portion of such payment being
denied as an "excess parachute payment" under S
280G of the Internal Revenue Code of 1986, as
amended ("Code") or any successor to such
section or to such statute, and
(ii) without Employee being subject to a
federal excise tax on all or any part of such
payment under Code S 4999 or any successor to
such section or to such statue, where a public
accounting firm reasonably acceptable to
Employee shall (at the Company's expense)
calculate such payment, certify to Employee
that such payment satisfies the requirements of
this Section 3.4(b) and prepare and sign
Employee's federal income tax return for the
year for which such payment is reportable on
such return.
Section 4. Miscellaneous.
4.1 Binding Effect.
-9-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
(a) This Agreement shall inure to the benefit of
and shall be binding upon Employee, his executor,
administrator and heirs but may not be assigned by
him.
(b) (i)Prior to a change in control of the
Company (X) this Agreement may not be transferred
or assigned by the Company, either by voluntary
action or by operation of law, and (Y) any actual
transfer or assignment by the Company of this
Agreement in connection with a merger of the
Company into another entity or a sale of all or
substantially all of the Company's assets shall
render this Agreement null and void.
(ii) After a change in control of the
Company (as defined in Section 3.3), this Agreement
may be transferred or assigned by the Company;
provided, however, that Employee shall be given
written notice thereof at least twenty (20) days
prior to the proposed transfer or assignment.
4.2 Invalid Provisions. 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 such
invalid and unenforceable provision were omitted.
4.3 Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only
-10-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
and shall not affect in any way the meaning or
interpretation of this Agreement.
4.4. Entire Agreement. This Agreement is
intended by the parties hereto to be the final expression of
their agreement and is the complete and exclusive statement
thereof notwithstanding any representation or statements to
the contrary heretofore made. This Agreement may be
modified only by written instrument signed by each of the
parties hereto.
-11-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement under seal as of the date first above
written.
JOHN H. HARLAND COMPANY
(CORPORATE SEAL) BY:
_________________________
Attest:
_______________________________
I. Ward Lang, Secretary
EMPLOYEE
(SEAL)
WITNESS:
_______________________________
-12-
<PAGE>
<PAGE>
EXHIBIT 10.7 continued
EXHIBIT A
Alabama Maine Ohio
Arizona Maryland Oklahoma
Arkansas Massachusetts Oregon
California Michigan Pennsylvania
Colorado Minnesota Rhode Island
Connecticut Mississippi South Carolina
Delaware Missouri South Dakota
Florida Nebraska Tennessee
Georgia Nevada Texas
Illinois New Hampshire Utah
Indiana New Jersey Vermont
Iowa New Mexico Virginia
Kansas New York West Virginia
Kentucky North Carolina Wisconsin
Louisiana North Dakota
District of Columbia
Puerto Rico
Virgin Islands
________________________________
Acknowledged by:
________________________________
Date
-13-
EXHIBIT - 10.8
FORM OF EXECUTIVE LIFE INSURANCE PLAN
-1-
<PAGE>
<PAGE>
EXECUTIVE LIFE INSURANCE PLAN
THIS AGREEMENT is made the _________ day of ______________, 19__, by and
between JOHN H. HARLAND COMPANY ("Corporation") and __________________,
("Employee").
INTRODUCTION
Corporation has purchased a life insurance policy on the life of Employee.
As specified below, the ownership of the policy is vested entirely in
Corporation; however, the death proceeds are divided between Corporation and
Employee. Corporation does hereby retain all ownership rights to the policy,
but acknowledges that Employee has rights in the death proceeds as set forth
and delineated in this agreement.
AGREEMENT
NOW, THEREFORE, Corporation and Employee agree as follows:
ARTICLE I. POLICY
The life insurance policy with which this Agreement deals is Policy Number
5185846 ("Policy") issued by Confederation Life Insurance Company
("Insurer"), on the life of the Employee.
ARTICLE II. SPLIT DOLLAR VARIATION
With respect to the subject policy, the Corporation and the Employee agree
that each premium on the Policy shall be paid by the Corporation as it
becomes due; however, in the event of Employee's death, while employed by
Corporation or after retiring as an employee of Corporation following
Employee's vesting of benefits under the now deleted Article 2 of the
"Agreement" (as defined in Section 3.2(b)(ii), below), the death proceeds
shall be payable as set forth in Article III below.
ARTICLE III. OWNERSHIP OF LIFE INSURANCE POLICY and RIGHTS IN
DEATH PROCEEDS
The Corporation, or its transferee, owns the entire Policy and may exercise
all ownership rights granted to the owner of the Policy; provided however,
that the Corporation may not, during the employ of Employee, or following the
vesting of benefits by employee under the deleted Article 2 of the
"Agreement", cancel the policy or otherwise reduce the death proceeds below
Employee's portion as set forth in Article 3.2 below.
Notwithstanding and other provision hereof, it is the express intention of
-2-
<PAGE>
<PAGE>
EXHIBIT 10.8 continued
the parties to reserve to each of them all rights in and to the death
proceeds portion of the Policy in the following manner:
3.1 CORPORATION'S PORTION. The Corporations's portion of the death proceeds
of the Policy is that part not owned by the Employee pursuant to Article 3.2
below.
3.2 EMPLOYEE'S PORTION.
a. The Employee's shall own no portion of the cash surrender value of
the policy.
b. The Employee's portion of the death benefit of the Policy, which
portion shall, in no event, exceed the total death proceeds paid on the
Policy, is equal to the sum of
(i) the difference between (a) 1.5 times Employee's annual base
salary at the date of his death, minus (b) $50,000 (but in no event
shall said difference exceed $475,000), plus
(ii) the present value, computed using a six (6%) interest rate, of
the death benefits previously provided by Article 2 of the Deferred
Compensation Agreement (the "Agreement") attached hereto and made a
part hereof, which would have been unpaid as of the date of
Employee's death had the Agreement not been amended to delete
Article 2 in its entirety.
c. For purposes of this Article, if Employee terminates service as an
employee of Company for any reason or reasons other than his death
before reaching either his normal or early retirement date, as defined
in the Agreement, then for purposes of calculating the benefits to which
employee is entitled under sub-subsection 3.2(b)(i), above, his base
salary shall be deemed to be $0.00.
d. Notwithstanding any other provision of this Agreement to the
contrary, if Employee has retired as an employee of Company after
attaining his normal retirement age or his early retirement age, then
subparagraph (b) (i), above shall be read as follows:
(i) The difference between (a) .75 times Employee's annual base
salary at the date of his retirement, minus (b) $25,000 (but in no
event shall said difference exceed $237,500).
3.3 LIMITATION. Neither party shall have or exercise any right in and to
the portion of the death benefit of the Policy owned by and payable to the
other party, including the right to collect the proceeds of the other party's
portion of the Policy.
-3-
<PAGE>
<PAGE>
EXHIBIT 10.8 continued
3.4 ASSIGNMENT. In the event Corporation shall transfer all its interest in
the Policy, then all of Corporation's interest in the Policy and rights and
obligations under this Agreement shall be vested in its transferee, who shall
be substituted as a party hereunder, and Corporation shall have no further
interest in the Policy or in this Agreement.
ARTICLE IV. INSURER PROTECTION
4.1 INSURER PROTECTION. Insurer shall be bound only by the provisions of
any endorsements on the Policy, and any payments made or action taken by it
in accordance therewith shall fully discharge it from all claims, suits and
demands of all persons whatsoever. Except as specifically provided by
endorsement on the Policy, Insurer shall in no way be bound by the provisions
of this Agreement.
ARTICLE V. ERISA PROVISIONS
5.1 NAMED FIDUCIARY AND PLAN ADMINISTRATOR. Corporation is hereby designated
the "Named Fiduciary" and Plan Administrator.
5.2 FUNDING. The funding policy for the Split Dollar arrangement shall be to
maintain the Policy in force by paying, when due, all premiums required.
5.3 BASIS OF PREMIUM PAYMENTS AND BENEFITS. Payments to and from this Split
Dollar Plan shall be in accordance with the provisions of Article III
hereinabove.
CLAIMS PROCEDURE FOR LIFE INSURANCE AND SPLIT DOLLAR PLAN
A. Claims forms or claim information as to the Policy can be obtained
by contacting _____________________________ ("Agent").
When Corporation, in its capacity as named fiduciary, has a claim
which may be covered under the provisions described in the Policy, it
should contact the Agent who will either complete a claim form and
forward it to the Insurer or advise Corporation what further requirements
are necessary. The Insurer will evaluate the claim and make a decision
as to payment within 90 days of the date the claim is received by the
Insurer. If the claim is payable, a benefit check will be issued to the
named beneficiaries, as set forth in Article III, above, and forwarded
through the Agent named above.
If for any reason a claim for benefits under the Policy is denied by
the Insurer, the Insurer will notify Corporation, as named fiduciary, of
-4-
<PAGE>
<PAGE>
EXHIBIT 10.8 continued
the denial. Such notification will be made in writing, within 90 days of
the date the claim is received, and will be transmitted through the
Agent. The notification will include the specific reasons for the
denial, as well as specific reference to the Policy provisions upon which
the denial is based. Corporation will also be informed as to the steps
which may be taken to have the claim reviewed.
A decision as to the validity of a claim will ordinarily be made
within 10 working days of the date the claim is received by the insurer.
Occasionally, however, certain questions may prevent the Insurer from
rendering a decision on the validity of the claim within the specific 90-
day working period. If this occurs, Corporation, as named fiduciary,
will be notified of the reasons for the delay, as well as the anticipated
length of the delay, in writing and through the Agent. If further
information or other material is required, Corporation will be so
informed.
If Corporation is dissatisfied with the denial of the claim, or the
amount paid, it has 60 days from the date it receives notice of a claim
denial to file its objections to the action taken by the Insurer. If
Corporation wishes to contest a claim denial, it should notify the Agent,
which will assist in making inquiry to the Insurer. All objections to
the Insurer's actions should be in writing and submitted to the Agent for
transmittal to the Insurer.
The Insurer will review the claim denial and render a decision on
the claim denial. Corporation will be informed in writing of the
decision of the Insurer within 60 days following receipt of the review
request by the Insurer. This decision will be final.
B. Once a decision had been rendered as to the distribution of proceeds
under the claim procedure described above as to the Policy, claims for
any benefit due under the Plan or the surrender of the Policy may be made
in writing by Corporation or Corporation's designated beneficiary.
In the event a claim for benefits is wholly or partly denied or
disputed, Corporation shall, within a reasonable period of time after
receipt of the denial, notify the Employee's designated beneficiary of
such total or partial denial or dispute listing:
(a) The specific reason or reasons for the denial or dispute;
(b) Specific reference to pertinent plan provisions upon which the
denial or dispute is based;
(c) A description of any additional information necessary for the
claimant to perfect the claim, and an explanation of why such material of
information is necessary; and
-5-
<PAGE>
<PAGE>
EXHIBIT 10.8 continued
(d) An explanation of the plan's review procedure. Within 60 days of
denial or notice of claim under the plan, a claimant may request that the
claim be reviewed by Corporation in a full and fair hearing. A final
decision shall be rendered by Corporation within 60 days after receipt of
request for review.
ARTICLE VI. MISCELLANEOUS
6.1 AMENDMENT. This Split-Ownership Agreement may not be canceled, amended,
altered or modified, except by a written instrument signed by all of the
parties hereto.
6.2 NOTICE. Any notice, consent or demand required or permitted to be given
under the provisions of this Split-Ownership Agreement by one party to
another shall be in writing, shall be signed by the party giving or making
the same, and may be given either by delivering the same to such other part
personally, or by mailing the same, by United States Certified Mail, postage
prepaid, to such party at the following address:
If to Corporation: John H. Harland Company
2939 Miller Rd
Decatur, GA 30035
- -------------------------------------------------------------------------
If to Employee:
- -------------------------------------------------------------------------
The date of such mailing shall be deemed the date of such mailed notice,
consent or demand.
6.3 BINDING EFFECT. This Agreement shall bind the Employee, the Corporation
and their heirs, executors, administrators and transferees, and any Policy
beneficiary.
6.4 CONTROLLING LAW. This Split-Ownership Agreement, and the rights of the
parties hereunder, shall be governed by and construed pursuant to the laws of
the State of Georgia.
6.5 HEADING. The headings at the beginning of each paragraph are for ease
of reference only and are not to be resorted to in interpreting this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
-6-
<PAGE>
<PAGE>
EXHIBIT 10.8 continued
JOHN H. HARLAND COMPANY
By ___________________________
Witness
_______________________ EMPLOYEE ____________________________
<PAGE>
EXHIBIT - 10.10
Amendment to the
John H. Harland Company
Incentive Stock Option Plan
AMENDMENT NUMBER ONE
-1-
<PAGE>
<PAGE>
AMENDMENT NUMBER ONE
TO THE
JOHN H. HARLAND COMPANY
INCENTIVE STOCK OPTION PLAN
The John H. Harland Company hereby amends the John H.
Harland Incentive Stock Option Plan as adopted effective September 21,
1981 as follows:
1.
By amending the first paragraph in section 6, Grant of
Options, to read as follows:
"Incentive stock options shall be granted by the
Company acting through the Committee to key employees
pursuant to the terms of this Plan from time to time to
purchase shares of Stock; provided, however, that the
aggregate fair market value (as determined as of the date an
incentive stock option is granted) of the Stock covered by
incentive stock options granted on or after January 1, 1987
pursuant to this Plan and the stock covered by any other
incentive stock options granted on or after January 1, 1987
to such key employee (pursuant to any other plans of the
Company or its subsidiaries) which first become exercisable
in any calendar year which begins on or after January 1,
1987 shall not exceed $100,000. Such fair market value
figure shall be determined by the Committee on the date such
incentive stock options are granted, and the Committee shall
interpret and administer the limitation set forth in this
paragraph in accordance with section 422A(b)(7) of the
Internal Revenue Code of 1986, as amended."
2.
By deleting section 10, Other Outstanding Options, in its
entirety.
-2-
<PAGE>
<PAGE>
3.
The amendments made by this Amendment Number One to the Plan
shall be effective as of January 1, 1987.
JOHN H. HARLAND COMPANY
BY:
----------------------
-3-
<PAGE>
EXHIBIT - 10.14
TERM LOAN AGREEMENT
Dated as of October 25, 1993
By and Between
JOHN H. HARLAND COMPANY
AND
TRUST COMPANY BANK
-1-
<PAGE>
EXHIBIT 10.14 continued
TABLE OF CONTENTS
ARTICLE I AMOUNT AND TERM OF LOAN
1.01 The Loan
1.02 Funding the Loan
1.03 Repayment of the Principal of the Loan
1.04 Note
1.05 Interest on the Note
1.06 Commitment Fee
1.07 Prepayment of the Term Note
1.08 Increased Costs
1.09 Capital Adequacy
1.10 Survival
1.11 Making of Payments
1.12 Default Rate of Interest
1.13 Calculation of Interest
1.14 Agreement Regarding Interest and Charges
ARTICLE II CONDITIONS OF LENDING
2.01 Conditions Precedent to Loan
2.02 Conditions Precedent to Funding of the Term Loan
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.01 Corporate Existence
3.02 Authorization: No Conflict
3.03 Approvals
3.04 Binding Obligations
3.05 Litigation
3.06 No Defaults
3.07 No Material Restrictions
3.08 Information
3.09 Financial Statements
3.10 Federal Reserve Regulations
3.11 ERISA
3.12 Subsidiaries
3.13 Title to Properties
3.14 Compliance with Laws
3.15 Patents and Trademarks
3.16 Taxes.
3.17 Full Disclosure
ARTICLE IV AFFIRMATIVE COVENANTS
4.01 Preservation of Legal Existence; Maintenance of
Properties
4.02 Compliance with Laws
4.03 Maintenance of Insurance
4.04 Taxes
4.05 Further Assurances
4.06 Financial Reports and Rights of Inspection
4.07 Other Reports
4.08 Notice of Litigation
4.09 Use of Proceeds
-2-
<PAGE>
EXHIBIT 10.14 continued
ARTICLE V NEGATIVE COVENANTS
5.01 Total Debt to Cash Flow Ratio
5.02 Liens
5.03 Merger, Consolidation and Other Arrangements
5.04 Investments
5.05 Transactions With Affiliates
5.06 Nature of Business
5.07 Regulations G, T, U and X
5.08 ERISA Compliance
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES
6.01 Events of Default
6.02 Default Notice to the Bank
6.03 Acceleration of Maturities
ARTICLE VII DEFINITIONS
7.02 Accounting Terms
ARTICLE VIIIMISCELLANEOUS
8.01 Amendments
8.02 Survival of Representations and Warranties
8.03 Expenses
8.04 Intentionally Omitted
8.05 Notices
8.06 Satisfaction Requirement
8.07 Binding Effect; Assignment
8.08 Governing Law
8.09 Counterparts
8.10 Waiver of Jury Trial
List of Exhibits
Exhibit A Form of Term Note
Exhibit B Form of Notice of Requested Funding
Exhibit C Form of Legal Opinion
Exhibit D Form of Compliance Certificate
List of Schedules
Schedule I Borrower's Subsidiaries
-3-
<PAGE>
EXHIBIT 10.14 continued
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT dated as of October 25, 1993
(the "Agreement"), by and between JOHN H. HARLAND COMPANY, a
Georgia corporation (the "Borrower") and TRUST COMPANY BANK,
a Georgia banking corporation (the "Bank")
W I T N E S S E T H:
WHEREAS, the Bank desires to make available to the
Borrower a $15,000,000 term loan on the terms and conditions
contained herein;
NOW, THEREFORE, for and in consideration of the sum of
$10.00 in hand paid by the Bank to the Borrower, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
AMOUNT AND TERM OF LOAN
SECTION 1.01. The Loan. The Bank agrees, on the terms
and conditions set forth herein, to make a term loan (the
"Loan") to the Borrower in the principal amount of
$15,000,000 upon satisfaction of the applicable conditions
set forth in Article II hereof.
SECTION 1.02. Funding the Loan. On or after the
Closing Date, the Bank will make the proceeds of the Loan
available to the Borrower in immediately available funds at
the request of the Borrower pursuant to the Funding Request;
provided, however, that the Funding Date must occur on or
before December 17, 1993 and, provided, further, that the
Funding Request must be delivered to the Bank at least two
Business Days prior to the Funding Date.
SECTION 1.03. Repayment of the Principal of the Loan.
The Borrower shall repay the principal amount of the Loan in
one installment which shall be due and payable on December
17, 2003.
-4-
<PAGE>
EXHIBIT 10.14 continued
SECTION 1.04. Note. The obligation of the Borrower to
repay the Loan shall also be evidenced by a Note executed by
the Borrower in favor of the Bank in substantially the form
of Exhibit A hereto.
SECTION 1.05. Interest on the Note. Interest shall
accrue on the unpaid principal amount of the Loan at the
Base Rate and shall be payable quarterly in arrears on the
last day of each December, March, June and September
commencing on the last day of the first calendar quarter
after the Funding Date.
SECTION 1.06. Commitment Fee. As a fee for the credit
facility provided herein, the Borrower shall pay to the Bank
a commitment fee equal to $15,000 (the "Commitment Fee").
The Commitment Fee shall be payable by the Borrower on the
Closing Date.
SECTION 1.07. Prepayment of the Note.
(a) The Borrower shall have the right to prepay
indebtedness evidenced by the Note in whole at any time or
in part from time to time, (in multiples of $500,000), at
the option of the Borrower, at 100% of the Called Principal
plus interest thereon to the Settlement Date together with
the Yield-Maintenance Amount, if any, with respect thereto;
provided, that, Borrower shall give the Bank irrevocable
written notice of any prepayment hereunder not less than 10
Business Days prior to the Settlement Date, specifying such
Settlement Date and the amount of the Called Principal to be
repaid on such date and stating that such prepayment is to
be made pursuant to this Section 1.07(a). Notice of
prepayment having been given as aforesaid, the Called
Principal specified in such notice, together with interest
thereon to the Settlement Date and together with the
Yield-Maintenance Amount, if any, with respect thereto,
shall become due and payable on such Settlement Date.
(b) Notwithstanding the foregoing subsection (a), if
the Borrower is required to pay additional amounts to the
Bank under Sections 1.08 or 1.09 hereof, the Borrower shall
have the option to prepay the Note in whole at 100% of the
Called Principal plus interest thereon to the Settlement
Date by giving the Bank irrevocable written notice of the
prepayment within 10 Business Days of receiving demand from
the Bank under Sections 1.08 or 1.09. Such notice of
prepayment shall be given not less than 10 Business Days
prior to the Settlement Date, specifying such Settlement
Date, the amount of the Called Principal (which shall be the
entire principal balance outstanding under the Note) to be
repaid on such date and stating that such prepayment is to
be made pursuant to this Section 1.07(b). Notice of
prepayment having been given as aforesaid, the Called
Principal specified in such notice, together with interest
-5-
<PAGE>
EXHIBIT 10.14 continued
thereon to the Settlement Date, shall become due and payable
on such Settlement Date.
For purposes of this Section 1.07, the following terms shall
have meanings set forth below:
"Called Principal" shall mean the principal of the Note
that is to be prepaid pursuant to Section 1.07 or is
declared to be immediately due and payable pursuant to
Section 6.03, as the context requires.
"Discounted Value" shall mean, with respect to the
Called Principal, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that
on which interest on the Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the
Called Principal, (i) the yields reported, as of 10:00 A.M.
(Atlanta time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on
the display designated as "Page 678" on the Telerate (or
such other display as may replace Page 678 on the Telerate)
for actively traded U.S. Treasury securities scheduled to
mature on Maturity Date as of the Settlement Date plus .50%,
or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields
shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively
traded U.S. Treasury securities scheduled to mature on the
Maturity Date as of the Settlement Date plus .50%. Such
implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields
reported for various maturities.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal, all payments of such Called
Principal and interest thereon that would be due on or after
the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the
Called Principal, the date on which such Called Principal is
-6-
<PAGE>
EXHIBIT 10.14 continued
to be prepaid pursuant to Section 1.07 or is declared to be
immediately due and payable pursuant to Section 6.03 as the
context requires.
"Telerate" shall mean Telerate Services, Inc. or such
other service as the Bank may select as a substitute
therefor.
"Yield-Maintenance Amount" shall mean an amount equal
to the excess, if any, of the Discounted Value of the Called
Principal over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due
on) the Settlement Date with respect to such Called
Principal. The Yield-Maintenance Amount shall in no event
be less than zero.
SECTION 1.08. Increased Costs. In the event that any
change in any applicable law, treaty or governmental
regulation, or in the interpretation or application thereof,
or compliance by the Bank with any guideline, request or
directive (whether or not having the force of law) from any
central bank or other U.S. or foreign financial, monetary or
other governmental authority, shall: (a) subject the Bank to
any tax of any kind whatsoever with respect to this
Agreement, or the Loan or change the basis of taxation of
payments to the Bank of principal, interest, fees or any
other amount payable hereunder (except for changes in the
rate of tax on the overall net income of
the Bank); (b) impose, modify, or hold applicable any
reserve, special deposit, assessment or similar requirement
against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended by or
committed to be extended by any office of the Bank,
including, without limitation, pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or (c)
impose on the Bank any other condition with respect to this
Agreement or the Loan hereunder; and the result of any of
the foregoing is to increase the cost to the Bank of making
or committing to make, renewing or maintaining the Loan or
to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of the Loan, THEN, IN ANY
CASE, the Borrower shall promptly pay from time to time such
additional amounts as will compensate the Bank for such
additional cost or such reduction, as the case may be, upon
demand of the Bank and delivery to the Borrower of a
certificate explaining such change in law, treaty,
regulation, guideline, request, directive or interpretation
thereof, its impact on the Bank and the basis for
determining such increased costs. The Bank shall certify
the amount of such additional cost or reduced amount to the
Borrower, and such certification shall be conclusive absent
manifest error.
-7-
<PAGE>
EXHIBIT 10.14 continued
SECTION 1.09. Capital Adequacy. If, after the date of
this Agreement, the Bank shall have determined that the
adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable
agency relating generally to loans of the category
applicable to the Loan, has or would have the effect of
reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below
that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to
time, the Bank shall notify the Borrower of such adoption,
change or compliance and promptly upon demand by the Bank,
the Borrower shall pay the Bank such additional amount or
amounts as will compensate the Bank for such reduction. A
certificate of the Bank claiming compensation under this
Section and setting forth the additional amount or amounts
to be paid to it hereunder and the method of computation
thereof shall be conclusive absent manifest error. In
determining any such amount, the Bank may use any reasonable
averaging and attribution methods.
SECTION 1.10. Survival. The obligations of the
Borrower under Sections 1.08 and 1.09 shall survive for a
period of ninety (90) days following the termination of this
Agreement.
SECTION 1.11. Making of Payments. The Commitment Fee
and all payments of principal of, and interest on, the Note
shall be made in immediately available funds to the Bank at
its principal office in Atlanta, Georgia.
SECTION 1.12. Default Rate of Interest. Overdue
principal and, to the extent permitted by law, overdue
interest in respect of the Loan and all other overdue
amounts owing hereunder shall bear interest at a rate per
annum equal to 2% per annum in excess of the Base Rate.
SECTION 1.13. Calculation of Interest. Interest
payable on the Note shall be calculated on the basis of a
year of 365 days and paid for the actual number of days
elapsed.
SECTION 1.14. AGREEMENT REGARDING INTEREST AND
CHARGES. THE PARTIES HERETO HEREBY AGREE AND STIPULATE THAT
THE ONLY CHARGE IMPOSED UPON THE BORROWER FOR THE USE OF
MONEY IN CONNECTION WITH THIS AGREEMENT IS AND SHALL BE THE
-8-
<PAGE>
EXHIBIT 10.14 continued
INTEREST DESCRIBED IN SECTION 1.05. THE PARTIES HERETO
FURTHER AGREE AND STIPULATE THAT ALL OTHER CHARGES IMPOSED
BY THE BANK ON THE BORROWER IN CONNECTION WITH THIS
AGREEMENT, INCLUDING ALL FEES, FUNDING LOSSES, LATE CHARGES,
ATTORNEYS' FEES AND REIMBURSEMENT FOR COSTS AND EXPENSES
PAID BY THE BANK TO THIRD PARTIES OR FOR DAMAGES INCURRED BY
THE BANK, ARE CHARGES MADE TO COMPENSATE THE BANK FOR
UNDERWRITING OR ADMINISTRATIVE SERVICES AND COSTS OR LOSSES
PERFORMED OR INCURRED, AND TO BE PERFORMED OR INCURRED, BY
THE BANK IN CONNECTION WITH THIS AGREEMENT AND SHALL UNDER
NO CIRCUMSTANCES BE DEEMED TO BE CHARGES FOR THE USE OF
MONEY PURSUANT TO OFFICIAL CODE OF GEORGIA ANNOTATED
SECTIONS 7-4-2 AND 7-4-18.
ARTICLE II
CONDITIONS OF LENDING
The obligation of the Bank to make the Loan to the
Borrower hereunder is subject to the satisfaction of the
following conditions:
SECTION 2.01. Conditions Precedent to this Agreement.
At the Closing Date:
(a) The Bank shall have received the following, each
dated as of the Closing Date, in form and substance
satisfactory to the Bank:
(1) The Note duly executed and delivered by the
Borrower in favor of the Bank.
(2) Copies of the organizational papers of the
Borrower, certified as true and correct by the
Secretary of State of its jurisdiction of
incorporation, and certificates from the Secretaries of
State of its jurisdiction of incorporation and of those
States in which the Borrower's failure to qualify to
transact business as a foreign corporation would have a
Material Adverse Effect on business and operations of
the Borrower, taken as a whole, certifying the
Borrower's good standing as a corporation in such
States.
(3) Certified copies of the by-laws of the
Borrower, of resolutions of the Board of Directors of
the Borrower approving this Agreement and the Note and
the borrowings hereunder, and of all documents
evidencing other necessary corporate action and
governmental approvals, if any, with respect to this
-9-
<PAGE>
EXHIBIT 10.14 continued
Agreement and the Note.
(4) A certificate of the Secretary or Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized
to execute this Agreement and the Note and the other
documents to be delivered hereunder.
(5) A certificate from the Chief Financial
Officer of the Borrower stating that no Material
Adverse Effect in the financial conditions or business
operations of the Borrower has occurred since June 30,
1993.
(6) A favorable written opinion of counsel for
the Borrower, in form and substance satisfactory to the
Bank and substantially in the form of Exhibit C
hereto.
(b) All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated
hereby and all Loan Documents and other documents incident
thereto or delivered in connection therewith shall be
satisfactory in form and substance to Bank.
SECTION 2.02. Conditions Precedent to Funding of the
Loan. The obligation of the Bank to fund the Loan hereunder
is subject to the Borrower delivering a Funding Request to
the Bank at least two (2) Business Days prior to the Funding
Date.
-10-
<PAGE>
EXHIBIT 10.14 continued
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
SECTION 3.01. Corporate Existence. The Borrower and
each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of
its incorporation. The Borrower and each Subsidiary is duly
qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction (other than
the State of their respective incorporation) in which the
failure to so qualify would have a Material Adverse Effect
on their businesses or operations, taken as a whole.
SECTION 3.02. Authorization: No Conflict. The
execution, delivery and performance by the Borrower of this
Agreement and the Note are within the Borrower's corporate
powers, have been duly authorized by all necessary corporate
action, and do not and will not (i) violate any provision of
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to the Borrower or of the Articles of
Incorporation or by-laws of the Borrower or any of its
Subsidiaries, including all amendments thereto, which
violation would have a Material Adverse Effect on the
business or operations of the Borrower and its Subsidiaries,
taken as a whole, (ii) result in a breach of or constitute a
default under any material indenture or loan or credit
agreement or any other material agreement, lease or
instrument to which the Borrower or any Subsidiary is a
party or by which Borrower or any Subsidiary or any of their
respective properties may be bound or affected, or (iii)
except as provided in or contemplated by this Agreement,
result in or require the creation of any material Lien,
security interest or other charge or encumbrance upon or
with respect to any properties of the Borrower or any
Subsidiary.
SECTION 3.03. Approvals. No consent of any person and
no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the valid or due execution,
delivery and performance by the Borrower of any Loan
Document, other than such consents, authorizations,
approvals or actions as have been obtained. The Borrower is
in compliance with all of the terms and conditions of each
such consent, authorization, approval or action.
-11-
<PAGE>
EXHIBIT 10.14 continued
SECTION 3.04. Binding Obligations. Each of this
Agreement and the Note, upon execution and delivery will be,
a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws or equitable principles relating to or limiting
creditors' rights generally.
SECTION 3.05. Litigation. Except as disclosed to the
Bank in writing, there is no action, suit or proceeding
pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary or the
properties of the Borrower or any Subsidiary before any
court or governmental department, commission, board, bureau,
agency or instrumentality which, if determined adversely to
the Borrower or such Subsidiary would have a Material
Adverse Effect on the financial condition, business or
operations of the Borrower and its Subsidiaries, taken as a
whole, or which questions the validity of any Loan Document
or any action taken or to be taken pursuant thereto. The
Internal Revenue Service has not alleged any material
default by the Borrower or any Subsidiary in the payment of
any tax or threatened to make any material assessment in
respect thereof which would have a Material Adverse Effect
on the financial condition of the Borrower and its
Subsidiaries taken as a whole.
SECTION 3.06. No Defaults. Neither the Borrower nor
any Subsidiary is in violation of any statute or other law
or in default under any order, regulation or ruling of any
court or other tribunal or governmental or administrative
authority or agency, or in default under its Articles of
Incorporation or by-laws or under any material indenture,
agreement, lease, instrument or other undertaking to which
the Borrower or any Subsidiary is a party or by which the
Borrower or any Subsidiary or any of their respective
properties or assets may be bound or affected, which
violation or default would have a Material Adverse Effect on
the financial condition, business or operations of the
Borrower and its Subsidiaries, taken as a whole. No Default
or Event of Default exists hereunder, nor will any such
Default or Event of Default begin to exist as a result of
the execution and delivery of this Agreement and the Note
issued pursuant hereto.
SECTION 3.07. No Material Restrictions. Neither the
Borrower nor any Subsidiary is subject to any charter,
corporate or other legal restriction, or any contract, lease
or other agreement, or any judgment, decree, order, law,
rule or regulation which in the judgment of the Borrower has
or is expected in the future to have a Material Adverse
Effect on the business, operations or financial condition of
the Borrower and its Subsidiaries, taken as a whole, or on
-12-
<PAGE>
EXHIBIT 10.14 continued
the Borrower's ability to carry out its obligations under
the Loan Documents, except as to which adequate reserves are
maintained.
SECTION 3.08. Information. No certificate, report or
other paper furnished by the Borrower to the Bank or any
other Person in connection with the Loan Documents contains
as of its effective date any material misstatement of fact
or fails to state a material fact or any fact necessary to
make the statements contained therein not misleading in any
material respect as of such date, and all of the information
contained therein is true, accurate and complete in all
material respects as of such date.
SECTION 3.09. Financial Statements.
(a) The Financial Reports of the Borrower to be
furnished to the Bank from time to time pursuant to this
Agreement shall be true and complete, prepared in accordance
with Generally Accepted Accounting Principles except as
stated therein, and shall fairly present in all material
respects, on a consolidated basis, the Borrower's and its
Subsidiaries' financial condition and the results of
operations for the period encompassed by such Financial
Reports.
(b) The consolidated financial statements of the
Borrower and its Subsidiaries dated December 31, 1992,
(audited) and June 30, 1993, (unaudited) which have been
delivered to the Bank fairly present the financial condition
of the Borrower and its Subsidiaries as of such dates, all
in accordance with Generally Accepted Accounting Principles
and since June 30, 1993, no Material Adverse Effect in the
business, assets, liabilities, financial condition, results
of operations or business prospects of the Borrower has
occurred.
SECTION 3.10. Federal Reserve Regulations. Neither
the Borrower nor any Subsidiary is in the business of
extending credit for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U (12 C.F.R.
Part 221) of the Board of Governors of the Federal Reserve
System (hereinafter called "margin stock"). None of the
proceeds of the Loan will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin stock
or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any
margin stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of
Regulation U. Neither the Borrower nor any agent of the
Borrower acting on its behalf has taken or will take any
action which might cause this Agreement or the Note to
violate Regulations G, T, U, or X or (to the best knowledge
of the Borrower) any other regulation of the Board of
-13-
<PAGE>
EXHIBIT 10.14 continued
Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, as amended, in each case as
now in effect or as the same may hereafter be in effect.
SECTION 3.11. ERISA. No material accumulated funding
deficiency (as defined section 302(a)(2) of ERISA and
section 412(a) of the Code), whether or not waived, exists
with respect to any Single Employer Plan. No liability has
been or is expected by the Borrower to be incurred under
sections 4062, 4063, or 4064 of ERISA with respect to any
Single Employer Plan of the Borrower or any of its
Subsidiaries which is or would be materially adverse to the
Borrower and its Subsidiaries, taken as a whole. Neither
the Borrower nor any of its Subsidiaries has incurred or
presently expects to incur any Withdrawal Liability under
Title IV of ERISA with respect to any Multiemployer Plan
which is or would be materially adverse to the Borrower and
its Subsidiaries, taken as a whole. The execution and
delivery of this Agreement and the borrowing hereunder will
not involve any prohibited transaction within the meaning of
ERISA or in connection with which a tax could be imposed
pursuant to section 4975 of the Code or a violation of
section 406 or section 407 of ERISA.
SECTION 3.12. Subsidiaries. Schedule I attached
hereto, as such Schedule I may be updated by written notice
to the Bank on or before the Closing Date, states the name
of each of the Borrower's Subsidiaries and the jurisdiction
of incorporation of each such Subsidiary. The Borrower and
each Subsidiary have good and marketable title, beneficially
and of record, to all of the shares each of them purport to
own of the stock of each other Subsidiary, free and clear in
each case of any Lien. All such shares have been duly
authorized and issued and are fully paid and
non-assessable.
SECTION 3.13. Title to Properties. The Borrower and
each Subsidiary (i) have the requisite corporate power and
authority to own, pledge, mortgage and operate their
properties, to lease any properties they operate under lease
and to conduct their respective businesses; (ii) have all
licenses, permits consents or approvals from or by, have
made all filings with, and have given all notices to, all
governmental authorities having jurisdiction, which are
required for such ownership, operation and conduct of their
respective businesses as presently conducted and where a
failure to have such license, permit, consent or approval
would have a Material Adverse Effect on the financial
condition of the Borrower and its Subsidiaries taken as a
whole; and (iii) have good and marketable title in fee simple
(or its equivalent under applicable law) to all the real
property and have good title to all the other property that
-14-
<PAGE>
EXHIBIT 10.14 continued
each of them purports to own, including, without limitation,
any property reflected in the most recent balance sheet
referred to in Section 3.09(b) hereof, except any such
property which has been sold or otherwise disposed of in the
ordinary course of business, except for Liens disclosed in
notes to the Financial Reports referred to in Section
3.09(b) hereof or otherwise permitted by this Agreement and
except where the failure to hold such title would not have a
Material Adverse Effect on the financial condition of the
Borrower and its Subsidiaries taken as a whole.
SECTION 3.14. Compliance with Laws.
(a) To the knowledge of the Borrower, the Borrower and
each Subsidiary is in compliance with all applicable
existing statutes, laws, rules and regulations (other than
statutes, laws, rules and regulations the validity or
applicability of which is being contested by the Borrower in
good faith by appropriate proceedings diligently prosecuted)
including, without limitation, the Occupational Safety and
Health Act of 1970, as amended, and all rules, regulations
and applicable orders thereunder (other than rules,
regulations and orders the validity or applicability of
which is being contested by the Borrower in good faith by
appropriate proceedings diligently prosecuted), the
violation of which is reasonably likely to have a Material
Adverse Effect on the financial condition of the Borrower
and its Subsidiaries taken as a whole.
(b) Without limiting the foregoing, the Borrower
further represents and warrants that to the knowledge of the
Borrower, neither the Borrower nor any Subsidiary is in
violation of any applicable Federal, state or local laws,
statutes, rules, regulations or ordinances relating to the
environment, including, without limitation, such laws,
statutes, rules, regulations or ordinances relating (i) to
releases, discharges, emissions or disposals to air, water,
land or ground water, (ii) to withdrawal or use of ground
water, (iii) to the use, handling or disposal of
polychlorinated biphenyls (PCB's), asbestos or urea
formaldehyde, (iv) to the treatment, storage, disposal or
management of hazardous substances (including, without
limitation, petroleum, crude oil, or any fraction thereof,
or any hydrocarbons), pollutants or contaminants, or (v) to
exposure to toxic, hazardous or other controlled, prohibited
or regulated substances, which violation is reasonably
likely to have a material adverse impact on the financial
condition of the Borrower and its Subsidiaries taken as a
whole. The Borrower does not know of any liability or class
of liability of the Borrower or any Subsidiary under the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), or the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901 et seq.), which
-15-
<PAGE>
EXHIBIT 10.14 continued
liability is reasonably likely to have a Material Adverse
Effect on the financial condition of the Borrower and its
Subsidiaries taken as a whole.
SECTION 3.15. Patents and Trademarks. The Borrower
and each Subsidiary owns or possesses all the patents,
trademarks, trade names, service marks, copyrights, licenses
and rights with respect to the foregoing necessary for the
present and planned future conduct of their respective
businesses, without any known conflict with the rights of
others except such conflicts as will not have a Material
Adverse Effect on the financial condition of the Borrower
and its Subsidiaries taken as a whole.
SECTION 3.16. Taxes. The Borrower and its
Subsidiaries have filed all Federal tax returns and, to the
knowledge of the Borrower, the Borrower and its Subsidiaries
have filed all other tax returns which are required to have
been filed in any jurisdiction; the Borrower and its
Subsidiaries have paid all taxes shown to be due and payable
on such Federal returns and other returns and all other
taxes, assessments, fees and other charges payable by them,
in each case, to the extent the same have become due and
payable and before they have become delinquent, except for
the filing of any such returns or the payment of any taxes,
assessments, fees and other charges the amount,
applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with
respect to which the Borrower or a Subsidiary, as the case
may be, has set aside on its books reserves (segregated to
the extent required by Generally Accepted Accounting
Principles) deemed by it in good faith to be adequate. The
Borrower has not received written notice of any proposed
material tax assessment with respect to Federal income taxes
against the Borrower or any Subsidiary nor does the Borrower
know of any material Federal income tax liability on the
part of the Borrower or any Subsidiary other than any such
assessment or liability which was recorded as a liability on
the books of the Borrower as of the date of its most recent
Financial Reports, and all tax liabilities are adequately
provided for on the books of the Borrower and its
Subsidiaries.
SECTION 3.17. Full Disclosure. The Financial Reports
referred to in Section 3.09(b) hereof do not, nor does any
written statement furnished by the Borrower to the Bank in
connection with the transactions contemplated herein,
contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained
therein or herein not misleading.
-16-
<PAGE>
EXHIBIT 10.14 continued
ARTICLE IV
AFFIRMATIVE COVENANTS
So long as the Note remains unpaid, the Borrower will,
unless the Bank otherwise consents in writing, observe and
perform (and will cause its Subsidiaries, as specified
below, to perform and observe) all of the following
provisions:
SECTION 4.01. Preservation of Legal Existence;
Maintenance of Properties. The Borrower will preserve and
keep in full force and effect, and will cause each
Subsidiary to preserve and keep in full force and effect,
its corporate existence and all licenses and permits
necessary to the proper conduct of its business and preserve
and maintain its qualification and good standing in each
jurisdiction where the failure to so qualify would have a
Material Adverse Effect on their businesses and operations,
taken as a whole. The Borrower will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve
and keep, its properties (subject to normal wear and tear)
which are used in the conduct of its business (whether owned
in fee or a leasehold interest) in good repair and working
order and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times
the efficiency thereof shall be maintained.
SECTION 4.02. Compliance with Laws. The Borrower will
comply and will cause each Subsidiary to comply with all
statutes, laws, rules and regulations applicable to the
Borrower or any Subsidiary (other than statutes, laws, rules
and regulations the validity or applicability of which is
being contested by the Borrower or any Subsidiary, as the
case may be, in good faith by appropriate proceedings
diligently prosecuted but including without being limited to
so-called environmental laws) and any statutes, laws, rules
and regulations which may be legally imposed in the future
in jurisdictions in which the Borrower or any Subsidiary may
then be doing business, except where the failure to comply
would not have a Material Adverse Effect on the financial
condition of the Borrower and its Subsidiaries, taken as a
whole.
SECTION 4.03. Maintenance of Insurance. The Borrower
will, and will cause each Subsidiary to, (a) maintain
insurance with a financially sound and reputable insurer to
such extent and against such hazards and liabilities as is
commonly maintained by companies similarly situated and (b)
promptly upon the Bank's written request, furnish to the
-17-
<PAGE>
EXHIBIT 10.14 continued
Bank such information about the insurance of the Borrower
and its Subsidiaries that the Bank may from time to time
reasonably request, which information shall be prepared in
form and detail reasonably satisfactory to the Bank and
certified as true and correct by an officer of the
Borrower.
SECTION 4.04. Taxes. The Borrower will, and will
cause each Subsidiary to, file all Federal, state, local and
foreign tax returns that are required to be filed by each of
them and will pay or make provision for the payment of all
taxes that have become due pursuant to such returns or
pursuant to any assessment in respect thereof received by
the Borrower or any Subsidiary, and the Borrower and each
Subsidiary will pay or cause to be paid all other taxes,
assessments, fees and other governmental charges and levies
which, to the knowledge of the Borrower or any Subsidiary,
are due and payable before the same become delinquent,
except only such taxes and assessments as are being
contested in good faith by appropriate and timely
proceedings and as to which adequate reserves have been
established in accordance with Generally Accepted Accounting
Principles.
SECTION 4.05. Further Assurances. The Borrower shall
execute and deliver to the Bank such further instruments,
provide it with such further data and information and take
such further action as the Bank may reasonably request or as
may be necessary further to effect the purposes of the Loan
Documents.
SECTION 4.06. Financial Reports and Rights of
Inspection. The Borrower will keep proper books of record
and account in which full and correct entries will be made
of all dealings or transactions of or in relation to the
business and affairs of the Borrower and its Subsidiaries in
accordance with Generally Accepted Accounting Principles,
and the Borrower will furnish to the Bank:
(a) as soon as available and in any event within sixty
(60) days after the end of each of the first three quarters
of each fiscal year of the Borrower, the Financial Reports
for such period, prepared in a manner and format (including
comparisons with prior fiscal years) consistent with the
quarterly financial statements regularly delivered to the
Bank prior to the date hereof, all of which shall be
certified by the President, Chief Financial Officer or
Treasurer of the Borrower, in his or her opinion, to present
fairly, in accordance with generally accepted accounting
principles consistently applied (subject to changes
resulting from normal year-end adjustments), the financial
position of the Borrower and its consolidated Subsidiaries
as at the date thereof and the results of operations for
such period;
-18-
<PAGE>
EXHIBIT 10.14 continued
(b) within one hundred twenty (120) days after the end
of each fiscal year of the Borrower, the Financial Reports
for such fiscal year, prepared in a manner and format
(including comparisons with prior fiscal years) consistent
with the annual financial statements delivered to the Bank
in prior fiscal years, all of which shall be certified with
an unqualified opinion issued by a reputable independent
public accountant as is then employed by the Borrower and is
also reasonably acceptable to the Bank, to present fairly,
in accordance with generally accepted accounting principles
consistently applied, the consolidated financial position of
the Borrower and its consolidated Subsidiaries as at the
date thereof and the results of operations for such period;
(c) within sixty (60) days after the end of each of
its first three quarterly accounting periods and within one
hundred twenty (120) days after the end of its annual
accounting period, a statement certified as true and correct
by a financial officer of the Borrower, substantially in the
form of Exhibit D hereto, reflecting compliance with
Sections 5.01 and 5.02 hereof, with back-up material setting
forth in reasonable detail such calculations attached
thereto and stating whether any Event of Default has
occurred and is continuing;
(d) within sixty (60) days after the end of each of
its quarterly accounting periods, a statement certified as
true and correct by a financial officer of the Borrower
setting forth the Total Debt to Cash Flow Ratio of the
Borrower and its Subsidiaries on a consolidated basis as of
the last day of such quarterly accounting period and the
twelve (12) months then ended; and
(e) with reasonable promptness, such other information
relating to the Borrower's performance of this Agreement or
its financial condition as may reasonably be requested from
time to time by the Bank.
Without limiting the foregoing, the Borrower will permit the
Bank, or such Persons as the Bank may designate in writing,
to visit and inspect any of the properties of the Borrower
or its Subsidiaries, to examine all of their books of
account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective
appropriate officers, and when accompanied by a
representative of the Borrower, independent public
accountants (and by this provision the Borrower authorizes
said accountants to discuss with the Bank the finances and
affairs of the Borrower and its Subsidiaries when the Bank
is accompanied by a representative of the Borrower) all at
such reasonable times and as often as may be reasonably
requested by the Bank. Unless an Event of Default shall
-19-
<PAGE>
EXHIBIT 10.14 continued
have occurred and be continuing at the time, the Borrower
shall not be required to pay or reimburse the Bank for
expenses which the Bank may incur in connection with any
such visitation or inspection.
Any information contained in any document delivered by
the Borrower to, and any other information received by the
Bank pursuant to this Agreement or as a result of an
inspection as set forth above, shall be held in confidence
by the Bank in accordance with such internal procedures as
the Bank shall apply generally to confidential information;
provided, however, that the Bank may disclose any such
information (i) as has become generally available to public,
(ii) as may be required in any report, statement or
testimony required to be submitted to any municipal, state
or federal regulatory body having or claiming to have
jurisdiction over the Bank, including without limitation,
the Comptroller of the Currency or similar organizations or
their successors, (iii) as may be required in response to
any summons or subpoena in connection with any litigation,
and (iv) with the prior written consent of the Borrower (not
to be unreasonably withheld), to a prospective and permitted
transferee in connection with any contemplated transfer of
the Note by the Bank; provided, that unless specifically
prohibited by applicable law or court order, the Bank shall
notify the Borrower of any request for or planned disclosure
by the Bank pursuant to the exceptions set forth in (ii) and
(iii) above prior to such disclosure of such non-public
information so that either or both of them may seek
an appropriate protective order.
SECTION 4.07. Other Reports. The Borrower will
promptly furnish to the Bank copies of any financial
statement or report that the Borrower has furnished to the
Securities and Exchange Commission, any national securities
exchange or to any holder of the securities of the Borrower
pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished
to the Bank hereunder.
SECTION 4.08. Notice of Litigation. The Borrower
shall notify the Bank of any actions, suits or proceedings
instituted by any Person against it or any Subsidiary
claiming money damages in excess of $5,000,000 or which
otherwise might have a Material Adverse Effect on the assets
or business operations of Borrower and its Subsidiaries,
taken as a whole, and which are not fully covered by
insurance, said notice to be given along with the quarterly
and annual reports required by Section 4.06 hereof, and to
specify the amount of damages being claimed or other relief
being sought, the nature of the claim, the Person
instituting the action, suit or proceeding, and any other
significant features of the claim.
-20-
<PAGE>
EXHIBIT 10.14 continued
SECTION 4.09. Use of Proceeds. The Borrower shall use
the proceeds of the Loan solely to (i) finance the
repurchase of certain stock of the Borrower from the holders
thereof, (ii) finance certain acquisitions of Properties,
(iii) refinance short term Debt and (iv) for general
corporate purposes.
ARTICLE V
NEGATIVE COVENANTS
So long as the Note remains unpaid, the Borrower
covenants and agrees as follows:
SECTION 5.01. Total Debt to Cash Flow Ratio. The
Borrower shall not permit, as of the last day of any fiscal
quarter, its ratio of (a) Total Debt to (b) Cash Flow Ratio
to exceed 2.5:1.0, as calculated for a period consisting of
the four preceding fiscal quarters.
SECTION 5.02. Liens. The Borrower will not, and will
not permit any Subsidiary to, create, assume or suffer to
exist any Lien upon any of their respective properties or
assets (hereinafter "Properties") whether now owned or
hereafter acquired; provided, however, that this Section
5.02 shall not apply to the following:
(a) any Lien for taxes not yet due or taxes or
assessments or other governmental charges which are being
actively contested in good faith by appropriate
proceedings;
(b) any Liens, pledges or deposits in connection with
worker's compensation or social security, assessments or
other similar charges or deposits incidental to the conduct
of the business of the Borrower or any Subsidiary or the
ownership of any of their Properties which were not incurred
in connection with the borrowing of money or the obtaining
of advances or credit and which do not in the aggregate
materially detract from the value of their Properties or
materially impair the use thereof in the operation of their
businesses;
(c) any Lien existing on any properties of any
corporation at the time it becomes a Subsidiary, or existing
prior to the time of acquisition upon any Properties
acquired by the Borrower or any Subsidiary through purchase,
merger, consolidation or otherwise, whether or not assumed
by the Borrower or such Subsidiary;
(d) any Lien placed upon any asset other than real
property at the time of its acquisition by the Borrower or
any Subsidiary to secure all or a portion of (or to secure
indebtedness incurred prior to or at the time of the
-21-
<PAGE>
EXHIBIT 10.14 continued
acquisition of such asset for the purpose of financing all
or a portion of) the purchase price thereof; provided,
however, that any such Lien shall not encumber any other
properties of the Borrower or such Subsidiary;
(e) any Lien placed upon any real property at the time
of its acquisition by the Borrower or any of its
Subsidiaries in connection with such acquisition up to
eighty percent (80%) of the fair market value of such real
property (as determined in good faith by the board of
directors of the Borrower);
(f) statutory Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not
yet due or which are being contested in good faith by
appropriate proceedings;
(g) pledges or deposits for the purpose of securing a
stay or discharge in the course of any legal proceeding
provided that the aggregate amount of such pledges or
deposits outstanding at any one time does not exceed
$10,000,000, unless such excess amount is otherwise
permitted pursuant to this Section 5.02;
(h) Liens consisting of encumbrances in the nature of
zoning restrictions, easements, rights and restrictions of
record on the use of real property on the date of the
acquisition thereof and statutory Liens of landlords and
lessors which in any case do not materially detract from the
value of such property or impair the use thereof;
(i) any Lien in favor of the United States of America
or any department or agency thereof, or in favor of any
state government or political subdivision thereof, or in
favor of a prime contractor under a government contract of
the United States, or of any state government or any
political subdivision thereof, and, in each case, resulting
from acceptance of partial, progress, advance or other
payments in the ordinary course of business under government
contracts of the United States, or of any state government
or any political subdivision thereof, or subcontracts
thereunder;
(j) any Lien existing on the date hereof;
(k) any Lien securing Debt of a Subsidiary to the
Borrower;
(l) any Lien resulting from renewing, extending or
refunding any indebtedness secured by a Lien permitted by
-22-
<PAGE>
EXHIBIT 10.14 continued
clauses (c), (d), (e), (f), (g), (h), (i), (j) or (k)
above; provided, however, that the principal amount secured
is not increased, and the Lien is not extended to other
Properties; and
(m) any Lien other than those permitted by clauses (a)
through (l) above; provided, however, that the aggregate
amount of all outstanding obligations secured by Liens
permitted by this clause (m) shall not at any time exceed
ten percent (10%) of the Borrower's Adjusted Consolidated
Net Worth, and when combined with outstanding Debt of the
Subsidiaries, such total shall not exceed twenty percent
(20%) of Total Capitalization.
SECTION 5.03. Merger, Consolidation and Other
Arrangements. The Borrower shall not and shall not permit
any Subsidiary to enter into any transaction of merger,
consolidation, recapitalization, reorganization,
liquidation or dissolution other than (a) a merger in which
the Borrower is the surviving corporation or (b) a merger
of a Subsidiary into another Subsidiary, provided, however,
that no transaction described in clauses (a) and (b) shall
be permitted if a Default or Event of Default has occurred
or will occur as a result of the proposed transaction.
Further, the Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, sell, transfer or otherwise
dispose of shares of capital stock (or any options or
warrants to purchase, or securities convertible into,
capital stock) of any Subsidiary of the Borrower or such
Subsidiary. Further, and except for certain existing
arrangements previously disclosed to the Bank in writing,
the Borrower shall not, and shall not permit any Subsidiary
of the Borrower to, enter into any partnerships, joint
ventures or sale-leaseback transactions or purchase or
otherwise acquire (in one or a series of related
transactions) any part of the property or assets of any
Person without the prior written consent of Bank, such
consent not to be unreasonably withheld.
SECTION 5.04. Investments. The Borrower shall not and
shall not permit any Subsidiary to make or permit to remain
outstanding any investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether
by acquisition of shares of capital stock, indebtedness or
other obligations or securities or by loan, advance,
guaranty, capital contribution or otherwise, other than:
(a) receivables arising from the sale of goods and
services in the ordinary course of business of the Borrower
and its Subsidiaries;
(b) guarantees of any of its Subsidiary's obligations
provided, that, such guarantees are only permitted if, after
-23-
<PAGE>
EXHIBIT 10.14 continued
giving effect to the proposed guaranty, the Borrower would
be in compliance with its Total Debt to Cash Flow Ratio
requirements set forth in Section 5.01 hereof except that
for purposes of this section any and all obligations which
are guaranteed by the Borrower (without regard to the
maturity date thereof) shall be included in the calculation
of Total Debt for purposes of determining Borrower's
compliance;
(c) investments by the Borrower or its Subsidiaries in
and to Subsidiaries, including any investment in a
corporation which, after giving effect to such investment,
will become a Subsidiary;
(d) direct obligations of the United States of America
or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America or of
any agency thereof, in either case maturing not more than 90
days from the date of acquisition thereof by such Person;
(e) time deposits or certificates of deposit issued by
a bank or trust company organized under the laws of the
United States of America or any state thereof and having
capital, surplus and undivided profits of at least
$200,000,000;
(f) commercial paper or other short-term security
maturing in 90 days or less from the date of issuance, which
at the time of acquisition by the Borrower or its
Subsidiary, is accorded the highest rating from Standard &
Poor's Corporation or Moody's Investor's Service, Inc.; and
(g) any other investments by the Borrower and its
Subsidiaries which in the aggregate do not exceed 15% of the
Borrower's Consolidated Net Worth.
SECTION 5.05. Transactions with Affiliates. The
Borrower will not, and will not permit any Subsidiary to,
enter into or be a party to any transaction or arrangement
with any Affiliate (including without limitation, the
purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliates), except
in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than such party would obtain in
a comparable arm's-length transaction with a Person other
than an Affiliate.
SECTION 5.06. Nature of Business. Neither the
Borrower nor any Subsidiary will engage in any business if,
as a result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the
-24-
<PAGE>
EXHIBIT 10.14 continued
Borrower and its Subsidiaries would be fundamentally
changed from the general nature of the business engaged in
by the Borrower and its Subsidiaries on the date of this
Agreement.
SECTION 5.07. Regulations G, T, U and X. The Borrower
will not nor will it permit any Subsidiary to take any
action that would result in any non-compliance of the Loan
made hereunder with Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System.
SECTION 5.08. ERISA Compliance. Neither the Borrower
nor any Subsidiary will incur any material "accumulated
funding deficiency" within the meaning of Section 302(a)(2)
of ERISA, or any material liability under Section 4062 of
ERISA to the Pension Benefit Guaranty Corporation ("PBGC")
established thereunder in connection with any Plan. The
Borrower will furnish to the Bank as soon possible and in
any event within thirty (30) days after the Borrower or any
Subsidiary knows or has reason to know that any "Reportable
Event" (as defined in Section 4043(b) of ERISA) with respect
to any Plan has occurred (other than such a Reportable Event
for which the PBGC has waived the 30-day notice requirement
under Section 4043(a) of ERISA), a statement of the chief
financial officer of the Borrower or such Subsidiary setting
forth details as to such Reportable Event and the action
which the Borrower or such Subsidiary proposes to take with
respect thereto, together with a copy of the notice of such
Reportable Event given to the PBGC if a copy of such notice
is available to the Borrower or such Subsidiary.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. Any one or more of
the following shall constitute an Event of Default
hereunder:
(i) The Borrower shall fail to make any payment
of principal on the Note at the expressed or
accelerated maturity date or at any date fixed for
prepayment;
(ii)The Borrower shall fail to make any payment
of interest on any Note when the same shall become due
and payable and such failure shall continue for a
period of more than five (5) Business Days;
(iii) The Borrower shall fail to observe or
-25-
<PAGE>
EXHIBIT 10.14 continued
perform any other covenant, term, condition or
provision of this Agreement or the Note, which is not
remedied within thirty (30) Business Days of the
earlier of (i) receipt by the Borrower of written
notice of such failure, or (ii) the actual knowledge of
the Borrower of such failure;
(iv)Any representation or warranty made by the
Borrower herein, in the Note, or made by the Borrower
in any certificate or written statement of any kind
furnished by the Borrower in connection with the
consummation of the transactions contemplated hereby or
furnished by the Borrower pursuant hereto, is untrue or
misleading in any material respect as of the date
made;
(v) The Borrower or any Subsidiary shall fail to
pay (past any period of grace provided therein) any
principal or interest when due on any indebtedness (or
guaranty of indebtedness) of the Borrower or such
Subsidiary having an aggregate principal amount
outstanding in excess of $5,000,000 whether the same
shall be due and payable by lapse of time, by
declaration, by call for redemption or otherwise and
such failure is not waived or cured within ten (10)
Business Days after written notice is received by the
Borrower with respect thereto;
(vi)Any default or other event or condition shall
occur or exist under or in respect of any indebtedness
(including in connection with guarantees and
Capitalized Leases) of the Borrower or any Subsidiary
with a principal amount outstanding in excess of
$5,000,000 in the aggregate, or under any agreement
securing or relating to such indebtedness and such
default, event or condition (which is not cured within
any period of grace provided therein or waived in
writing) shall permit the holder or holders of such
indebtedness to accelerate the maturity of such
indebtedness or otherwise to demand immediate repayment
thereof;
(vii) Any final judgment or judgments for the
payment of money aggregating in excess of $5,000,000 is
or are outstanding against the Borrower or any
Subsidiary or against any property or assets of either,
and any one of such judgments had remained unpaid,
unvacated, unbonded or unstayed by appeal or otherwise
for a period of thirty (30) days from the date of its
entry;
(viii) The Borrower is adjudicated to be
insolvent or bankrupt, is generally not paying its
debts as they become due or makes an assignment for the
-26-
<PAGE>
EXHIBIT 10.14 continued
benefit of creditors, or applies for or consents to the
appointment of a trustee or receiver for the Borrower
or for the major part of its property;
(ix)A custodian, trustee or receiver is appointed
for the Borrower or any Subsidiary or for the major
part of the property of either and is not discharged
within thirty (30) days after such appointment; and
(x) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief
of debtors, are instituted by or against the Borrower
or any Subsidiary and, if instituted against the
Borrower or any Subsidiary, are consented to or are not
dismissed within ninety (90) days after such
institution;
SECTION 6.02. Default Notice to the Bank. When any
Event of Default described in Section 6.01 hereof has
occurred, the Borrower agrees to send notice thereof within
five (5) Business Days of the actual knowledge of the
Borrower of any such event (unless cured prior to such date)
to the Bank, such notice to be in writing and sent by
registered or certified mail, telegram, telecopy
(confirmed by telephone) or reputable overnight courier.
SECTION 6.03. Acceleration of Maturities. When
an Event of Default described in Section 6.01(i) through
(vii) hereof inclusive has occurred and is continuing, the
Bank may, in addition to any other rights and remedies
available at law or in equity, by notice in writing sent by
registered or certified mail to the Borrower, declare the
entire principal and all interest accrued on the Note then
outstanding hereunder to be, and such Note shall thereupon
become, forthwith due and payable without any presentment,
demand, protect or other notice of any kind, all of which
are hereby expressly waived by the Borrower. When any Event
of Default described in Sections 6.01(viii), (ix) or (x) has
occurred, then the Note then outstanding hereunder shall
immediately become due and payable without presentment,
demand or notice of any kind or any other action on the part
of the Bank. Upon a Note becoming due and payable as a
result of any Event of Default as aforesaid, the Borrower
will forthwith pay to the Bank the entire principal and
interest accrued on such Note. The Borrower further agrees,
to the extent permitted by law, to pay to the Bank all
reasonable costs and expenses incurred by it in the
collection of the Notes upon any default hereunder or
thereon, including reasonable compensation to the Bank's
attorneys for all services rendered in connection
-27-
<PAGE>
EXHIBIT 10.14 continued
ARTICLE VII
DEFINITIONS
SECTION 7.01. Definitions. In addition to the other
terms defined herein, the following terms used herein shall
have the meanings herein specified (such meanings to be
equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" shall mean any Person (other than a
Subsidiary) (a) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is
under common control with, the Borrower, (b) which
beneficially owns or holds 10% or more of any class of the
Voting Stock of the Borrower or (c) 10% or more of the
Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Borrower or any of its
Subsidiaries. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by
membership, contract or otherwise.
"Adjusted Consolidated Net Worth" means the
stockholders' equity of the Borrower and its Subsidiaries
minus (i) goodwill non-deductible for federal income tax
purposes minus (ii) Adjusted Net Worth Investments which
exceed in the aggregate ten percent (10%) of stockholders'
equity. For purposes of this definition, stockholders'
equity shall be determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles, as
applied on a consistent basis by the Borrower in the
calculation of such amounts in the Borrower's most recent
Financial Reports.
"Adjusted Net Worth Investments" means all investments,
in cash or by delivery of property made, directly or
indirectly in any Person, whether by acquisition of shares
of capital stock, indebtedness or other obligations or
securities or by loan, advance, guaranty, capital
contribution or otherwise; provided, however, that Adjusted
Net Worth Investments shall not mean or include: (i) routine
investments in property to be used or consumed in the
ordinary course of business, (ii) investments by the
Borrower or its Subsidiaries in and to Subsidiaries,
including any investment in a corporation which, after
giving effect to such investment, will become a Subsidiary,
(iii) investments in commercial paper or other short-term
-28-
<PAGE>
EXHIBIT 10.14 continued
security maturing in 270 days or less from the date of
issuance, which at the time of acquisition by the Borrower
or its Subsidiary, is accorded the rating of A-2 or better
by Standard & Poor's Corporation or P-2 or better by Moody's
Investor's Service, Inc., (iv) investments in direct
obligations of the United States of America or any agency or
instrumentality of the United States of America, the payment
or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case
maturing in three years or less from the date of acquisition
thereof, (v) loans or advances in the usual and ordinary
course of business to officers, directors and employees for
expenses (including moving expenses related to a transfer)
incidental to carrying on the business of the Borrower or
any Subsidiary, (vi) receivables arising from the sale of
goods and services in the ordinary course of business of the
Borrower and its Subsidiaries, (vii) municipal bonds
maturing in three (3) years or less from the date of
acquisition thereof and accorded either a long-term or
short-term rating no lower than the highest rating category
by Standard & Poor's Corporation or Moody's Investor's
Service, Inc., (viii) variable rate preferred stock issued
by United States or United Kingdom corporations which are
accorded a rating no lower than the third highest rating
category by Standard & Poor's Corporation or Moody's
Investor Services, Inc., and (ix) variable rate demand
obligations, tax-free preferred stock of United States
corporations and other tax exempt investments which mature
in three (3) years or less or have variable rate features
and are accorded a rating no lower than the third highest
rating category by Standard & Poor's Corporation or Moody's
Investor's Service, Inc.
"Agreement" shall mean this Term Loan Agreement, either
as originally executed or as it may be from time to time
supplemented, amended, renewed or extended.
"Bank" shall have the meaning set forth in the
introductory paragraph hereof and shall include all
successors and assigns thereof.
"Base Rate" shall mean 6.626% per annum.
"Borrower" shall have the meaning set forth in the
introductory paragraph hereof.
"Business Day" shall mean a day of the year on which
commercial banks are not required or authorized to close in
Atlanta, Georgia.
"Capitalized Lease" shall mean any lease which is
required to be capitalized on the balance sheet of the
lessee pursuant to Generally Accepted Accounting
Principles.
-29-
<PAGE>
EXHIBIT 10.14 continued
"Capitalized Lease Obligations" shall mean the amount
at which the aggregate rentals due and to become due under
all Capitalized Leases under which the Borrower or any
Subsidiary, as a lessee, would be required to be reflected
as a liability on the consolidated balance sheet of the
Borrower.
"Cash Flow" means, for any period, the sum of (i) the
Consolidated Net Income for such period plus (ii) the Income
Taxes for such period, plus (iii) the aggregate amount of
all Interest Expense of the Borrower during such period
plus (iv) depreciation expense incurred or accounted for by
the Borrower during such period plus (v) the aggregate
amount of all amortization of intangibles paid by the
Borrower during such period.
"Closing Date" shall mean the date listed on the cover
page of this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated
and the rulings issued thereunder.
"Commitment Fee" shall have the meaning set forth in
Section 1.06 hereof.
"Consolidated Net Income" shall mean the net income of
the Borrower and its Subsidiaries on a consolidated basis as
defined according to Generally Accepted Accounting
Principles after excluding the sum of (i) any net loss or
any undistributed net income of any non-majority owned
subsidiary, (ii) the net income or loss of any Subsidiary
for any period prior to the date it became a Subsidiary,
(iii) the gain or loss (net of any tax effect) resulting
from the sale of any capital assets other than in the
ordinary course of business of the Borrower and its
Subsidiaries, and (iv) other extraordinary items, as defined
by Generally Accepted Accounting Principles, of the Borrower
and its Subsidiaries.
"Consolidated Net Worth" means the stockholders' equity
of the Borrower and its Subsidiaries as determined on a
consolidated basis in accordance with Generally Accepted
Accounting Principles, as applied on a consistent basis by
the Borrower in the calculation of such amounts in the
Borrower's most recent Financial Reports.
"Debt" shall mean, with respect to any Person, without
duplication and excluding in the case of the Borrower and
its Subsidiaries intercorporate obligations solely among the
Borrower and its Subsidiaries, all (i) indebtedness of such
-30-
<PAGE>
EXHIBIT 10.14 continued
Person for borrowed money, (ii) Capital Lease Obligations of
such Person, and (iii) all obligations under direct or
indirect guaranties in respect of obligations of others
(except for Subsidiaries) of the kinds referred to in
clauses (i) and (ii) above; provided, however, that "Debt"
shall not include any obligations of the Borrower or its
Subsidiaries with respect to undrawn commercial letters of
credit used in the ordinary course of business or with
respect to interest rate protection agreements.
"Default" shall mean any event or condition the
occurrence of which constitutes or would, with the lapse of
time or the giving of notice, or both, constitute an Event
of Default.
"Depreciation" shall have the meaning given such term
by Generally Accepted Accounting Principles.
"Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall mean, as of any date, any trade
or business (whether or not incorporated) which (as of such
date) is a member of a group of which the Borrower is a
member and which, as of such date, is under common control
within the meaning of section 4001(b)(1) of ERISA.
"Event of Default" shall have the meaning set forth in
Article VI.
"FAS 106 Transition Obligation" shall mean the expense
of and reserve for the unfunded benefit obligation for
employee welfare benefits for all prior periods of employee
service computed in accordance with Financial Accounting
Statement 106 promulgated by the Financial Accounting
Standards Board.
"Financial Report" means at a specified date, the most
recent financial statements of the Borrower and its
Subsidiaries delivered pursuant to Section 4.06 of this
Agreement (which, in the case of financial statements
covering a fiscal year of the Borrower, shall be certified
by the Borrower's independent certified public
accountants).
"Funding Date" shall mean the date the Borrower
requests that the Loan be made; provided, that, such date
shall be on or before December 17, 1993.
"Funded Debt" shall mean (i) all Debt having a final
-31-
<PAGE>
EXHIBIT 10.14 continued
maturity of more than one year from the date of incurrence
thereof (or which is renewable or extendible at the option
of the obligor for a period or periods of more than one year
from the date of incurrence), including all payments in
respect thereof that are required to be made within one year
from the date of any determination of Funded Debt, whether
or not included in current liabilities, (ii) all Capitalized
Lease Obligations maturing more than one year after the date
as of which the computation was made, and (iii) all
guarantees, direct or indirect, of Debt of Subsidiaries or
other persons maturing more than one year after the date as
of which the computation was made to the extent not
previously included pursuant to (i) and (ii) above.
"Funding Request" shall mean a written request,
substantially in the form of Exhibit B hereto, pursuant to
which the Borrower requests that the Bank make the Loan on
the Funding Date.
"Generally Accepted Accounting Principles" means
generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or any successor
authority) that are applicable to the circumstances as of
the date of determination, consistently applied and
maintained throughout the periods indicated.
"Income Taxes" shall have the meaning given such term
by Generally Accepted Accounting Principles.
"Indebtedness for Money Borrowed" shall mean, with
respect to any Person, money borrowed and Debt represented
by notes payable and drafts accepted representing extensions
of credit, all obligations evidenced by bonds, debentures,
notes or other similar instruments, all Debt upon which
interest charges are customarily paid, and all Debt
(including Capitalized Lease Obligations, but excluding
trade debt and accrued expenses) issued, incurred or assumed
as full or partial payment for property or services, whether
or not any such Debt is evidenced by notes, drafts, bonds,
debentures or similar instruments.
"Interest Expense" shall mean interest expense of the
Borrower and its Subsidiaries determined on a consolidated
basis, according to Generally Accepted Accounting
Principles.
"Lien" means any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement,
lessor's interest under a Capitalized Lease or analogous
instrument, in, of or on any property.
-32-
<PAGE>
EXHIBIT 10.14 continued
"Loan" shall mean the term loan made by the Bank to the
Borrower pursuant to Section 1.01 evidenced by the Note.
"Loan Documents" shall mean and include, as the context
requires, this Agreement, the Note, and any and all other
instruments, agreements, documents and writings contemplated
hereby or executed in connection herewith.
"Material Adverse Effect" means, with respect to any
Person, a materially adverse effect upon such Person's
business, assets, liabilities, financial condition, results
of operations or business prospects.
"Maturity Date" shall mean the maturity date of the
Loan which shall be December 17, 2003.
"Multiemployer Plan" means, as of any date, a
"multiemployer plan" as defined in Section 4001(a)(3) of
ERISA that is subject to Title IV of ERISA to which the
Borrower or any ERISA Affiliate is making or accruing an
obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to
make contributions.
"Note" shall mean the term note substantially in the
form of Exhibit A hereto, delivered by the Borrower to the
Bank evidencing the Loan.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any successor thereto.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, and any
governmental agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained for
employees of the Borrower, of any Subsidiary, or any member
of a controlled group of corporations, as the term
"controlled group of corporations" is defined in Section
1563 of the Internal Revenue Code of 1986, as amended, of
which the Borrower or any Subsidiary is a part.
"Properties" has the meaning given to that term in
Section 5.02 hereof.
"Reserve Percentage" shall mean, for any day, the
stated maximum rate (expressed as a decimal) of all reserves
required to be maintained with respect to liabilities or
assets consisting of or including "Eurocurrency
liabilities," as prescribed by Regulation D of the Board of
Governors of the Federal Reserve System (or by any other
governmental body having jurisdiction with respect thereto),
including, without limitation, any basic, marginal,
-33-
<PAGE>
EXHIBIT 10.14 continued
emergency, supplemental, special, transitional or other
reserves, the rate so determined to be rounded upward to the
nearest whole multiple of 1/100 of 1%.
"Single Employer Plan" shall mean, as of any date, an
employee benefit plan (other than a Multiemployer Plan)
subject to Title IV of ERISA to which the Borrower or any
ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Subsidiary" means an existing or future corporation or
other entity, the
majority of the outstanding capital stock or voting power,
or both, of which is (or upon the exercise of all
outstanding warrants, options and other rights would be)
owned or controlled, directly or indirectly, at the time in
question by the Borrower.
"Total Capitalization" shall mean for the Borrower and
its Subsidiaries on a consolidated basis, the sum of their:
(i) Funded Debt; (ii) deferred Income Taxes (determined in
accordance with Generally Accepted Accounting Principles);
and (iii) Adjusted Consolidated Net Worth.
"Total Debt" shall mean, at any time, without
duplication the aggregate principal amount of Funded Debt of
the Borrower outstanding at such time plus the aggregate
principal amount of Indebtedness for Money Borrowed of the
Borrower outstanding at such time.
"Voting Stock" shall mean stock of a corporation of a
class or classes having general voting power under ordinary
circumstances to elect a majority of the board of directors,
managers or trustees of such corporation (irrespective of
whether or not at the time stock of any other class or
classes shall have or might have voting power by the reason
of the happening of any contingency).
"Withdrawal Liability" shall have the meaning given
such term under Part I of Subtitle E of Title IV of ERISA.
SECTION 7.02. Accounting Terms. All accounting terms
not specifically defined herein shall be construed as having
the respective meanings customary under Generally Accepted
Accounting Principles.
-34-
<PAGE>
EXHIBIT 10.14 continued
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. This Agreement may be
amended, and the Borrower may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, if, and only if, the Borrower shall obtain
the prior written consent of the Bank. No course of dealing
between the Borrower and the Bank, nor any delay in
exercising any rights hereunder, shall operate as a waiver
of any rights of the Bank hereunder or otherwise.
SECTION 8.02. Survival of Representations and
Warranties. All representations and warranties contained
herein or made in writing by the Borrower in connection
herewith shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Bank
or on its behalf.
SECTION 8.03. Expenses. The Borrower hereby agrees to
pay promptly all costs and expenses in connection with the
preparation, issuance, delivery and administration of this
Agreement, the other Loan Documents and any other documents
which may be delivered in connection with this Agreement,
including, without limitation, the fees and expenses of
Messrs. Alston & Bird, counsel for the Bank, and all costs
and expenses (including reasonable counsel fees and
expenses) in connection with (i) any and all amounts which
the Bank has paid relative to the Bank's curing of any Event
of Default resulting from the acts or omissions of the
Borrower under this Agreement or any other Loan Document, or
(ii) the enforcement of this Agreement or any other Loan
Document. In addition, the Borrower hereby agrees to pay
any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution
and delivery of this Agreement, any other Loan Document, or
any other documents which may be delivered in connection
with this Agreement, and agrees to save the Bank harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such
taxes and fees. Notwithstanding the foregoing, no payment
shall be required under this Section 8.03 in respect of any
cost or expense the Bank has incurred because of its gross
negligence or willful misconduct.
SECTION 8.04. [Intentionally Omitted]
SECTION 8.05. Notices. All communications provided
for hereunder shall be delivered as follows:
(1) If to the Bank:
Trust Company Bank
25 Park Place
Atlanta, Georgia 30303
Attention: Smith Brookhart
-35-
<PAGE>
EXHIBIT 10.14 continued
(2) If to the Borrower:
John H. Harland Company
P.O. Box 105250
Atlanta, Georgia 30348
Attention: Treasurer
SECTION 8.06. Satisfaction Requirement. If any
agreement, certificate or other writing, or any action taken
or to be taken, is by the terms of this Agreement required
to be satisfactory to the Bank, the determination of such
satisfaction shall be made by the Bank in its sole and
exclusive judgment exercised in good faith.
SECTION 8.07. Binding Effect; Assignment. This
Agreement is a continuing obligation and shall (i) be
binding upon the Borrower, and its successors, transferees
and assigns and (ii) inure to the benefit of and be
enforceable by the Bank and its successors, transferees and
assigns; provided, however, that the Borrower may not assign
all or any part of this Agreement without the prior written
consent of the Bank. The Bank may assign, negotiate, pledge
or otherwise hypothecate all or any portion of this
Agreement, or grant participations herein, in the Note or in
any of its rights hereunder. In connection with any
assignment or participation, the Bank may disclose to the
proposed assignee or participant any information that the
Borrower is required to deliver to the Bank pursuant to this
Agreement.
SECTION 8.08. Governing Law. This Agreement is being
delivered and is intended to be performed in the State of
Georgia, and shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by,
the laws of such State.
SECTION 8.09. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
SECTION 8.10. WAIVER OF JURY TRIAL. THE BORROWER AND
THE BANK HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY RIGHT TO TRIAL BY JURY FOR ANY TRIAL RESULTING
EITHER DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR THE NOTE. THE BORROWER FURTHER
AGREES THAT, IN THE EVENT OF LITIGATION, IT WILL NOT
PERSONALLY OR THROUGH ITS AGENTS OR ATTORNEYS SEEK TO
REPUDIATE THE VALIDITY OF THIS SECTION 8.10, AND IT
ACKNOWLEDGES THAT IT FREELY AND VOLUNTARILY ENTERED INTO
THIS AGREEMENT TO WAIVE TRIAL BY JURY IN ORDER TO INDUCE THE
BANK TO MAKE THE LOAN.
-36-
<PAGE>
EXHIBIT 10.14 continued
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their
respective duly authorized officers as of the day and year
first above written.
JOHN H. HARLAND COMPANY
(CORPORATE SEAL) By:
Title:
Attest:
By:
Title:
TRUST COMPANY BANK
By:
Title:
(BANK SEAL)
By:
Title:
EXHIBIT 21.1
Subsidiaries of Company
Subsidiaries (100% owned by Parent) State of Incorporation
___________________________________ ______________________
Centralia Holding Corp. Georgia
John H. Harland Company of Puerto Rico Georgia
J. William Company Georgia
Marketing Profiles, Inc. Florida
Scantron Corporation Delaware
The Check Store, Inc. Georgia
<PAGE>
EXHIBIT - 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 33-1402 and No. 33-26215 and in Post-
Effective Amendment No. 3 to Registration Statement No. 2-
64079 of John H. Harland Company on Forms S-8 of our report
dated January 28, 1994, appearing in this Annual Report on
Form 10-K of John H. Harland Company for the year ended
December 31, 1993.
DELOITTE & TOUCHE
Atlanta, Georgia
March 30, 1994
<PAGE>
