<PAGE> 1
EXHIBIT (B)
[SUNTRUST EQUITABLE SECURITIES LETTERHEAD]
July 26, 2000
John H. Harland Company
2939 Miller Road
Decatur, GA 30035
Attention: John Stakel
Treasurer
RE: $325,000,000 CREDIT FACILITY TO JOHN H. HARLAND COMPANY
Ladies and Gentlemen:
SunTrust Bank ("SunTrust Bank") is pleased to confirm to you that
SunTrust Bank, subject to the terms and conditions set forth in this letter and
the terms attached hereto as Annex 1 (collectively, this "Commitment Letter),
commits to provide financing of up to $225,000,000 in the $325,000,000 Senior
Revolving Credit Facility (the "Credit Facility") to John H. Harland Company, a
Georgia corporation (the "Company").
SunTrust Bank reserves the right, with the assistance of its affiliate
SunTrust Equitable Securities Corporation ("SunTrust Equitable Securities", and
together with SunTrust Bank, "SunTrust"), to use its commercially reasonable
efforts to arrange a syndicate of lenders (collectively, including SunTrust
Bank, the "Lenders") prior to and following the closing of the Credit Facility
to issue commitments to the Company to fund the Credit Facility, on the terms
and conditions set forth in this Commitment Letter, with SunTrust Bank acting as
sole agent for such Lenders in connection with the Credit Facility. It is the
current intent of SunTrust Bank to hold or retain a commitment of $50,000,000 in
the Credit Facility following syndication. This Commitment Letter assumes that
such a syndicate of Lenders shall be arranged by SunTrust Equitable Securities,
and as part of its syndication effort, SunTrust Equitable Securities reserves
the right to appoint co-agents or to offer any other titles or fees with such
other Lenders as deemed appropriate by SunTrust.
A. TERMS AND CONDITIONS OF THE CREDIT FACILITY
The Credit Facility shall consist of a $325,000,000 Senior Revolving
Credit Facility. The principal terms and conditions of the Credit Facility shall
include those set forth in the term sheet attached hereto as Annex 1 (the "Term
Sheet"). In addition, SunTrust Bank and the Lenders may require certain other
customary terms and conditions found in a credit facility of this type, which
may not be specifically listed on the Term Sheet.
B. SYNDICATION
As set forth above, while SunTrust Bank is providing a commitment of up
to $225,000,000 in the Credit Facility, subject to the terms and conditions
herein, SunTrust Equitable Securities shall undertake to syndicate the portion
which SunTrust Bank does not intend to hold or retain of the Credit Facility
(SunTrust Bank's intended hold amount is referenced on page 1 of this Commitment
Letter); and as a material inducement to SunTrust Bank issuing the commitment
set forth herein, you agree to cooperate in such syndication process. You
understand that the Credit Facility will likely be closed with SunTrust as the
only Lender (so that the committed amount at closing will be limited to
$225,000,000) and that the syndication will take place after the closing.
SunTrust Equitable
<PAGE> 2
JOHN H. HARLAND COMPANY
July 26, 2000
Page 2
Securities shall manage all aspects of the syndication, in consultation with
SunTrust Bank and the Company where commercially reasonable, including the
timing of all offers to potential Lenders, the allocation of commitments, and
the determination of compensation and titles (such as co-agent, managing agent,
etc.) given, if any, to such Lenders. As consideration for this undertaking and
the obligations of SunTrust hereunder, the Company agrees that SunTrust Bank
shall be the sole agent with respect to the Credit Facility and that SunTrust
Equitable Securities shall act as sole arranger with respect to the remaining
syndicate, and that no additional agents, co-agents or arrangers shall be
appointed, or other titles conferred, without the prior written consent of
SunTrust. The Company also agrees that no Lender shall receive any compensation
for its commitment to, or participation in, the Credit Facility, except as
expressly set forth in the Term Sheet or the Fee Letter (as defined below).
The Company agrees to take all action as SunTrust may reasonably
request to assist SunTrust Equitable Securities in forming a syndicate of
Lenders. The Company's assistance shall include but not be limited to: (i)
making senior management and representatives of the Company and its affiliates
available to participate in meetings and to provide information to potential
Lenders and participants at such times and places as SunTrust may reasonably
request; (ii) using the Company's existing banking relationships to assist in
the syndication process; and (iii) providing to SunTrust all information
reasonably deemed necessary by SunTrust Equitable Securities to complete the
syndication, including an information memorandum to be prepared by SunTrust with
respect to the Credit Facility and the Company. In addition, SunTrust shall be
entitled, after consultation with the Company, to change the structure, terms or
pricing of the Credit Facility if the syndication has not been completed (such
syndication to include reducing SunTrust Bank's commitment to $50,000,000), and
if SunTrust Equitable Securities determines that such changes are advisable in
order to ensure a successful syndication of the Credit Facility; provided that
the amount of the Credit Facility shall remain unchanged. You agree that you
will execute and deliver any appropriate amendments to the loan documents to
effectuate such changes.
To ensure an orderly and effective syndication of the Credit Facility,
the Company further agrees that until the successful syndication of the Credit
Facility, the Company shall not, and shall not permit any of its affiliates or
agents to, syndicate or issue, attempt to syndicate or issue, announce or
authorize the announcement of the syndication or issuance of, or engage in
discussions concerning the syndication or issuance of, any debt facility or debt
security (including any renewals thereof), except with the prior written consent
of SunTrust, other than (i) the issuance of commercial paper or other short term
debt under programs currently in place, or (ii) the issuance of any equity.
C. FEES
The fees payable to SunTrust Bank, as agent, and SunTrust Equitable
Securities, as arranger, are set forth in that certain fee letter between the
Company and SunTrust dated as of even date herewith (the "Fee Letter"). The
obligations of SunTrust pursuant to this Commitment Letter are subject to the
execution and return of the Fee Letter by the Company, which Fee Letter
constitutes an integral part of this Commitment Letter.
D. CONDITIONS PRECEDENT
The commitments and undertakings of SunTrust Bank and SunTrust
Equitable Securities are subject to: (i) the preparation, execution and delivery
of mutually acceptable loan documentation, including a credit agreement
incorporating substantially the terms and conditions outlined in this Commitment
Letter; (ii) the absence of (A) a material adverse change in the business,
condition (financial or otherwise), operations or properties of the Company and
its subsidiaries, or affiliates, as reflected in its consolidated financial
statements as of March 31, 2000, (B) any change after the date hereof in loan
syndication, financial or capital market conditions generally that, in SunTrust
Equitable Securities' judgment, would materially impair syndication of the
Credit Facility; (iii) the accuracy of all representations which you make to us
and all information which you furnish us and your compliance
<PAGE> 3
JOHN H. HARLAND COMPANY
July 26, 2000
Page 3
with the terms of this Commitment Letter; (iv) the payment in full of all fees,
expenses and other amounts payable hereunder and under the Fee Letter; and (v) a
closing of the Credit Facility on or prior to October 12, 2000.
E. REPRESENTATIONS
You represent and warrant that information made available to SunTrust
by you or any of your representatives in connection with the transactions
contemplated hereby is complete and correct in all material respects and does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were made.
You agree to supplement the information provided to SunTrust from time to time
so that the representation and warranty contained in this paragraph remains
correct.
In issuing the commitments and undertakings hereunder and in arranging
and syndicating the Credit Facility, SunTrust Bank and SunTrust Equitable
Securities are relying on the accuracy of such information furnished to them by
you without independent verification thereof.
F. INDEMNITIES, EXPENSES, ETC.
1. Indemnification. You further agree to indemnify and hold harmless
SunTrust Equitable Securities and each Lender (including SunTrust Bank) and each
director, officer, employee, affiliate, and agent thereof (each, an "Indemnified
Person") against, and to reimburse each Indemnified Person, upon its demand, for
any losses, claims, damages, liabilities or other expenses ("Losses") incurred
by such Indemnified Person insofar as such Losses arise out of or in any way
relate to or result from this Commitment Letter, the Fee Letter or the financing
contemplated hereby, including, without limitation, Losses participating in any
legal proceeding relating to any of the foregoing (whether or not such
Indemnified Person is a party thereto); provided that the foregoing shall not
apply to any Losses to the extent that such losses result from the gross
negligence or willful misconduct of such Indemnified Person. Your obligations
under this paragraph shall remain effective whether or not definitive financing
documentation is executed and notwithstanding any termination of this Commitment
Letter.
2. CONSEQUENTIAL DAMAGES. NEITHER SUNTRUST BANK NOR SUNTRUST EQUITABLE
SECURITIES SHALL BE RESPONSIBLE OR LIABLE TO THE COMPANY OR ANY OTHER PERSON OR
ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED
AS A RESULT OF THIS COMMITMENT LETTER, THE FEE LETTER, THE LOAN DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
3. Expenses. In further consideration of the commitments and
undertakings of SunTrust hereunder, and recognizing that in connection herewith
SunTrust will be incurring certain out-of-pocket costs and expenses (including,
without limitation, fees and disbursements of counsel, and costs and expenses
for syndication, due diligence, transportation, duplication, mailings, messenger
services, computer, appraisal, audit, and insurance), you hereby agree to pay,
or reimburse SunTrust on demand for, all such reasonable costs and expenses
(whether incurred before or after the date hereof), regardless of whether any of
the transactions contemplated hereby are consummated. You also agree to pay all
reasonable costs and expenses of SunTrust (including, without limitation, fees
and disbursements of counsel) incurred in connection with the enforcement of any
of their rights and remedies hereunder. Your obligation in respect of costs and
expenses shall survive the expiration or termination of this Commitment Letter.
<PAGE> 4
JOHN H. HARLAND COMPANY
July 26, 2000
Page 4
G. SPECIAL DISCLOSURE
SunTrust Equitable Securities is a wholly-owned subsidiary of SunTrust
Banks, Inc. and an affiliate of SunTrust Bank. SunTrust Equitable Securities is
a broker/dealer registered with the Securities and Exchange Commission (SEC) and
a member of the National Association of Securities Dealers, Inc. (NASD), the New
York Stock Exchange (NYSE), and the Securities Investor Protection Corporation
(SIPC). Although it is a subsidiary of SunTrust Banks, Inc., SunTrust Equitable
Securities is not a bank and is separate from any affiliated SunTrust Bank.
SunTrust Equitable Securities is solely responsible for its contractual
obligations and commitments.
Securities and financial instruments sold, offered, or recommended by
SunTrust Equitable Securities are not bank deposits, are not insured by the
Federal Deposit Insurance Corporation (FDIC), or the SIPC, or any governmental
agency and are not obligations of or endorsed or guaranteed in any way by any
bank affiliated with SunTrust Equitable Securities or any other bank unless
otherwise stated.
You authorize SunTrust Equitable Securities and its affiliates,
including SunTrust Bank and any other SunTrust affiliated bank, to share with
each other credit and other confidential or non-public information regarding you
and your accounts. It is the policy of SunTrust Bank, SunTrust Equitable
Securities, and all other SunTrust affiliates to strictly protect confidential
client information. Therefore, any information shared by us will be on a limited
basis and only to people within our organization who are part of our
relationship team, except as otherwise provided in this letter.
H. MISCELLANEOUS
1. Effectiveness. This Commitment Letter shall constitute a
binding obligation of SunTrust for all purposes immediately upon the acceptance
hereof by the Company in the manner provided herein. Notwithstanding any other
provision of this Commitment Letter, SunTrust's commitments and undertakings as
set forth herein shall not be or become effective for any purpose unless and
until this Commitment Letter shall have been accepted by the Company in the
manner specified below.
2. Acceptance by the Company. If you are in agreement with the
foregoing, please sign and return the enclosed copy of this Commitment Letter by
fax and overnight mail to:
SunTrust Equitable Securities
303 Peachtree Street, 24th Floor
Atlanta, GA 30308
Attention: Jenna Kelly
Fax: (404) 827-6514
3. Termination. Unless you have signed and returned the enclosed
copy of this Commitment Letter prior to 5:00 p.m., Atlanta, Georgia time, on
July 28, 2000, SunTrust's obligations hereunder shall terminate on such date. In
no event shall SunTrust Bank or any other Lender have any obligation to make the
Credit Facility available unless the related credit agreement and other binding
legal documents have been executed on or prior to October 12, 2000 (the "Closing
Date"). In addition to the foregoing, this Commitment Letter may be terminated
at any time by mutual agreement.
4. No Third-Party Beneficiaries. This Commitment Letter is solely
for the benefit of the Company and SunTrust; no provision hereof shall be deemed
to confer rights on any other person or entity.
<PAGE> 5
JOHN H. HARLAND COMPANY
July 26, 2000
Page 5
5. No Assignment. This Commitment Letter may not be assigned by
the Company to any other person or entity, but all of the obligations of the
Company hereunder shall be binding upon the successors and assigns of the
Company.
6. GOVERNING LAW. THIS COMMITMENT LETTER WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
7. WAIVERS OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AND SUNTRUST EACH HEREBY WAIVES JURY TRIAL IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS COMMITMENT LETTER OR ANY OTHER
DOCUMENTS CONTEMPLATED HEREBY.
8. Counterparts. This Commitment Letter may be executed in any
number of separate counterparts, each of which shall collectively and
separately, constitute one agreement.
9. Entire Agreement. Upon acceptance by you as provided herein,
this Commitment Letter and the Term Sheet attached hereto and the Fee Letter
referenced herein shall supersede all understandings and agreements between the
parties to this Commitment Letter in respect of the transactions contemplated
hereby.
10. Loan Document. This letter shall be considered a "Loan
Document" under the Credit Facility until a successful syndication shall occur.
We look forward to working with you on this transaction.
Very truly yours,
SUNTRUST BANK
By: /S/ Brian K. Peters
----------------------
Name: Brian K. Peters
Title: Managing Director
SUNTRUST EQUITABLE SECURITIES
CORPORATION
By: /s/ Peter C. Vaky
----------------------
Name: Peter C. Vaky
Title: Managing Director
<PAGE> 6
JOHN H. HARLAND COMPANY
July 26, 2000
Page 6
ACCEPTED AND AGREED
this 28 day of July, 2000:
JOHN H. HARLAND COMPANY
By: /s/ John Stakel
----------------------
Name: John Stakel
Title: VP/Treasurer
<PAGE> 7
ANNEX I
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF
$325,000,000 SENIOR REVOLVING CREDIT FACILITY
I. DESCRIPTION OF THE FACILITY
CREDIT FACILITY: $325,000,000 Senior Revolving Credit Facility with a
$20,000,000 Letter of Credit subfacility and a $20,000,000
Swingline subfacility ("Revolver"); provided, however, that
until a successful syndication occurs and additional
commitments are received such that SunTrust's commitment is
reduced to $50,000,000, the Revolver will be limited to
$225,000,000.
BORROWER: John H. Harland Company (the "Borrower").
GUARANTORS: All present and future direct and indirect wholly-owned
domestic subsidiaries of the Borrower (including JH
Acquisition Corp.). Concentrex Incorporated and its
subsidiaries (collectively, "Concentrex") shall become
guarantors immediately upon consummation of the merger between
JH Acquisition Corp. and Concentrex Incorporated.
ADMINISTRATIVE
AGENT: SunTrust Bank ("SunTrust" or the "Agent").
LEAD ARRANGER: SunTrust Equitable Securities Corporation (the "Arranger").
SUNTRUST
COMMITMENT: $225,000,000 of the $325,000,000 Revolver
LENDERS: SunTrust and a syndicate of financial institutions acceptable
to the Borrower, the Arranger and SunTrust, as Agent
(together, the "Lenders").
SWINGLINE LENDER: SunTrust Bank
ISSUING BANK: SunTrust Bank
PURPOSE: Proceeds shall be used to refinance existing debt, for the
proposed acquisition, for future permitted acquisitions, and
for working capital and general corporate purposes.
MATURITY: Revolver shall terminate 5 years from Closing.
COLLATERAL: Unsecured (other than a stock pledge of material wholly-owned
non-domestic subsidiaries described below), with a negative
pledge on all present and future assets with certain
exceptions set forth herein. 65% of the stock of any
wholly-owned non-domestic subsidiary which at any
Note: Italicized terms are defined in the attached Exhibit A ("Selected
Definitions").
<PAGE> 8
John H. Harland Company
--------------------------------------------------------------------------------
time accounts for more than 5% of Total Revenue (a "Material
Foreign Subsidiary") shall be pledged to the Lenders.
II. PRICING AND PAYMENT TERMS FOR THE FACILITIES
INTEREST RATE
OPTIONS: The Borrower shall be entitled to select between the following
interest rate options for syndicated advances:
(i) Base Rate, or (ii) LIBOR plus the Applicable Margin for
Revolving Loans; provided, however, that loans under the
Swingline subfacility shall bear interest at the Swingline
Rate.
INTEREST; INTEREST
PAYMENTS: Interest shall be calculated on all obligations on the basis
of a 360-day year other than interest accruing at the Prime
Rate which shall be calculated on the basis of a 365 day year.
Interest shall be payable on outstanding advances as follows:
(i) Base Rate advances- On the last day of each fiscal
quarter, in arrears.
(ii) LIBOR advances - At the expiration of each Interest
Period, and with respect to loans made for an
Interest Period longer than three months, on the last
day of each three-month period prior to the
expiration of the Interest Period.
(iii) Swing Line advances - At the expiration of each
Interest Period.
DEFAULT RATE: If any event of default has occurred and is continuing, at the
option of the Required Lenders, the otherwise then applicable
rates shall be increased by 2% per annum; provided that, for
any LIBOR advances, at the end of the applicable Interest
Period, interest shall accrue at the Base Rate plus the
Applicable Margin plus 2% per annum. Default interest shall be
payable on demand.
COMMITMENT FEE: A Commitment Fee shall be payable quarterly in arrears on the
average daily unused portion of the Credit Facility, in an
amount equal to the percentage designated in Exhibit B for
Commitment Fee based on the ratio of Borrower's Total Debt to
EBITDA. The Commitment Fee percentage shall initially be
0.225%, provided, however, that upon delivery to the Agent of
Borrower's financial statements for the fiscal quarter ending
September 30, 2000, the Commitment Fee percentage shall be
reset to the percentage designated in Exhibit B for Commitment
Fee based on the Borrower's ratio of Total Debt to EBITDA for
the preceding four fiscal quarter period then ending, measured
quarterly, such new Commitment Fee percentage being effective
as of the second business day following the date that the
Agent receives the Borrower's applicable financial statements.
--------------------------------------------------------------------------------
Confidential 2 SunTrust Equitable Securities
<PAGE> 9
John H. Harland Company
--------------------------------------------------------------------------------
Outstanding letters of credit under the Revolver will be
deemed usage of the Credit Facility, but loans under the
Swingline shall not be deemed usage of the Revolver. Both
outstanding letters of credit and loans under the Swingline
shall be included in Total Debt.
LETTER OF CREDIT
FEE: A letter of credit fee shall be payable quarterly in arrears
at a rate equal to the Applicable Margin on the average
outstanding letters of credit issued under the Credit
Facility, to be shared proportionately by lenders in
accordance with their participation in the respective letters
of credit. In addition, a facing fee of 0.125% and other
customary administrative charges shall be paid to the Issuing
Bank for its own account. In each case, fees shall be
calculated on the aggregate amount available to be drawn under
the Letter of Credit.
FUNDING: The Borrower shall provide prior written notice (or telephonic
notice promptly confirmed in writing) of funding requests and
interest rate conversions to the Agent (i) by 11:00 a.m. at
least one business day in advance of borrowing with respect to
Base Rate advances; and, (ii) by 11:00 a.m. at least three
business days in advance with respect to LIBOR advances. LIBOR
advances shall be in minimum amounts of $5,000,000 and in
integral multiples of $1,000,000 and Base Rate advances shall
be in minimum amounts of $1,000,000 and in integral multiples
of $100,000. Each Lender shall make its funds available to the
Agent not later than 11:00 a.m. (Atlanta, Georgia time) on the
funding date for Base Rate and LIBOR advances. No more than a
total of ten advances subject to LIBOR pricing may be in
effect at any time under the Credit Facility.
REPAYMENTS: All principal and unpaid accrued interest on all loans under
the Revolver shall be due and payable on the Maturity Date of
the Revolver unless earlier accelerated after the occurrence
of an Event of Default.
VOLUNTARY
PREPAYMENTS: Prepayments may be made without premium or penalty, provided
that LIBOR advances may be prepaid only on the expiration of
the current Interest Period applicable thereto to avoid any
penalty. Otherwise, with respect to a LIBOR or Base Rate
advance, the Borrower must give the Agent at least three
business days and one business day, respectively, prior
written notice of the amount and time of any prepayment.
Prepayments of any Libor advances shall be in minimum amounts
of $5,000,000 and in integral multiples of $1,000,000 and
prepayments of any Base Rate advances shall be in minimum
amounts of $1,000,000 and in integral multiples of $100,000.
PAYMENTS: All payments by the Borrower shall be made not later than
12:00 noon (Atlanta, Georgia time) to the Agent in immediately
available funds, free and clear of any defenses, set-offs,
counterclaims, or withholdings or deductions for taxes. Any
Lender not organized under the laws of
--------------------------------------------------------------------------------
Confidential 3 SunTrust Equitable Securities
<PAGE> 10
John H. Harland Company
--------------------------------------------------------------------------------
the United States or any state thereof must, prior to the time
it becomes a Lender, furnish Borrower and Agent with forms or
certificates as may be appropriate to verify that such Lender
is exempt from U.S. tax withholding requirements.
PRICING/YIELD
PROTECTION
PROVISIONS: Customary provisions with respect to: payment of withholding
tax "gross-up" amounts; suspension of LIBOR pricing options
due to illegality or inability to ascertain funding costs;
payment of reserve requirements, increased funding costs and
capital adequacy compensation; and payment of breakage and
redeployment costs in connection with fundings and repayments
of LIBOR advances.
III. CONDITIONS TO FUNDINGS
Funding will be subject to conditions customary in financings of this nature,
including, but not limited to, the following:
CONDITIONS TO
INITIAL
BORROWING: (1) Execution and delivery of credit agreement,
promissory notes, guaranty agreements, and other loan
documents.
(2) Delivery of duly executed payoff letters, in form and
substance satisfactory to Agent, executed by each
lender holding Indebtedness to be refinanced at
closing (which shall include all obligations under
Borrower's $85,000,000 private placement, Borrower's
$15,000,000 term loan facility and all other
Indebtedness for borrowed money of Concentrex other
than purchase money debt, capital leases and
obligations under the Note Agreement), together with
all documents reasonably required by Agent to
evidence the payoff of such Indebtedness.
(3) Delivery of certified articles of incorporation, good
standing certificates Receipt and certified copies of
other organizational documents, including bylaws, of
authorizing resolutions of board of directors, and
incumbency certificates for the Borrower and all
guarantors.
(4) Delivery of favorable opinion of counsel for the
Borrower and all guarantors.
(5) Delivery of a duly executed closing certificate,
notice of initial borrowing and funds disbursement
instructions.
(6) Delivery of certified copies of all consents,
approvals, authorizations, registrations, or filings
required to be made or obtained by the Borrower and
all guarantors in connection with the Credit Facility
and any transaction being financed with the proceeds
of the Credit Facility.
--------------------------------------------------------------------------------
Confidential 4 SunTrust Equitable Securities
<PAGE> 11
John H. Harland Company
--------------------------------------------------------------------------------
(7) Receipt and satisfactory review by the Agent of the
consolidated financial statements of Borrower and its
subsidiaries for the fiscal quarter ending 6/30/00,
and such other financial information as the Agent may
request.
(8) Payment in full of all fees and expenses related to
the Credit Facility.
(9) Satisfactory lien searches received on Concentrex.
(10) Agent shall have received such other documents,
certificates and other information in connection with
the tender offer and acquisition of Concentrex as it
may reasonably request.
(11) Agent shall have received such other documents,
certificates, information or legal opinions as it or
the Required Lenders may reasonably request.
CONDITIONS TO ALL
BORROWINGS: (1) No default or event of default shall then exist or
would result from such borrowing.
(2) All representations and warranties shall continue to
be true and correct in all material respects on and
as of the date of each borrowing and the issuance of
each letter of credit.
(3) Since the date of the most recent financial
statements, there shall have been no change that has
had or could be reasonably expected to have a
Material Adverse Effect.
IV. REPRESENTATIONS AND WARRANTIES
Representations and warranties as to the following matters, together with other
customary representations and warranties:
(1) Due organization, valid existence and good standing
of the Borrower and all subsidiaries; power and
authority to conduct their business; and
qualification to conduct business in each
jurisdiction in which the failure to conduct business
would have a Material Adverse Effect.
--------------------------------------------------------------------------------
Confidential 5 SunTrust Equitable Securities
<PAGE> 12
John H. Harland Company
--------------------------------------------------------------------------------
(2) Corporate power to execute, deliver and perform all
loan documentation; due authorization of all loan
documentation; execution, delivery and enforceability
of all loan documentation.
(3) No consent, approval, registration or filing with any
governmental authority, other than those that have
been obtained or where the failure to obtain would
not reasonably be expected to have a Material Adverse
Effect; no violation of any law, rule, regulation,
judgment, order, or ruling applicable to Borrower or
any subsidiary; no violation of organization
documents or any indenture or material agreement to
which Borrower or any subsidiary is a party; no
creation of a lien on the assets of Borrower or any
subsidiary as a result of execution, delivery or
performance of the loan documentation.
(4) Accuracy of the most recent annual audited financial
statements and quarterly financial statements
submitted to the Lenders and absence of any material
adverse change in the financial condition of the
Borrower and its subsidiaries on a consolidated basis
as reflected in such financial statements.
(5) Absence of pending or threatened litigation that
could reasonably be expected to have a Material
Adverse Effect; absence of environmental liability or
notice of any claim for such liability that could
reasonably be expected to have a Material Adverse
Effect.
(6) Compliance with all applicable laws and material
indentures and agreements.
(7) Not an investment company or a company controlled by
an investment company (Investment Company Act of
1940).
(8) Filing of all tax returns (except where failure to
file is not reasonably expected to have a Material
Adverse Effect) and payment of all taxes (except
where being contested in good faith by appropriate
proceedings and subject to maintenance of adequate
reserves and is not reasonably expected to have a
Material Adverse Effect).
(9) Compliance with margin regulations
(10) Absence of transactions that would violate ERISA and
that would reasonably be expected to have a Material
Adverse Effect; no underfunded ERISA plans.
(11) Possession by the Borrower and all subsidiaries of
good and marketable title to and ownership of all the
assets described in the Borrower's most recent
financial statements, except where
--------------------------------------------------------------------------------
Confidential 6 SunTrust Equitable Securities
<PAGE> 13
John H. Harland Company
--------------------------------------------------------------------------------
failure to hold such title would not have a Material
Adverse Effect.
(12) Possession and maintenance of all material rights,
franchises, licenses, patents, copyrights,
trademarks, trade names or other intellectual
property rights, free from burdensome restrictions
and infringements, where such non-possession or
infringement could have a Material Adverse Effect.
(13) No information or statement contains any untrue
statement of a material fact or omits to state a
material fact necessary to make the statement not
misleading.
(14) Absence of strikes, lockouts or other material labor
disputes, and absence of significant unfair labor
practice, charges or grievances pending or, to
Borrower's knowledge, threatened against Borrower or
any subsidiary that could reasonably be expected to
have a Material Adverse Effect.
(15) Identification of all subsidiaries of the Borrower
and its subsidiaries.
(16) Identification of all Indebtedness and Liens of the
Borrower, its subsidiaries and Concentrex as of the
Closing Date other than Indebtedness and Liens which
are being satisfied on the Closing Date.
V. COVENANTS
FINANCIAL COVENANTS: The following financial covenants shall be measured
on a consolidated basis in accordance with GAAP,
including all majority-owned subsidiaries, at the end
of each fiscal quarter:
TOTAL DEBT TO EBITDA
The Borrower and its subsidiaries shall maintain on a
consolidated basis a ratio of Total Debt to EBITDA of
no greater than 3.00:1.00. The Borrower's compliance
with this requirement shall be calculated on a
rolling four-quarter basis, measured on the last day
of each fiscal quarter.
FIXED CHARGE COVERAGE RATIO
The Borrower and its subsidiaries shall maintain on a
consolidated basis a ratio of (a) EBITDAR to (b)
Fixed Charges of at least 2.50:1.00. The Borrower's
compliance with this requirement shall be calculated
on a rolling four-quarter basis, measured on the last
day of each fiscal quarter.
--------------------------------------------------------------------------------
Confidential 7 SunTrust Equitable Securities
<PAGE> 14
John H. Harland Company
--------------------------------------------------------------------------------
MINIMUM NET WORTH
The Borrower and its subsidiaries shall maintain a
Consolidated Net Worth of an amount at least equal to
the sum of (i) $141,000,000, plus (ii) 50% of
cumulative positive Net Income accrued since the end
of the fiscal quarter ending June 30, 2000, plus
(iii) 100% of the net proceeds from any equity
offering, calculated quarterly on the last day of
each fiscal quarter plus (iv) any non-cash charges
actually taken which are associated with the
accelerated write-off of any tangible or intangible
assets related to the acquisition of Concentrex or to
the Software Business provided that such amounts do
not exceed $15,000,000 in the aggregate through the
Maturity Date.
--------------------------------------------------------------------------------
Confidential 8 SunTrust Equitable Securities
<PAGE> 15
John H. Harland Company
--------------------------------------------------------------------------------
REPORTING
REQUIREMENTS: The Borrower shall deliver the following financial statements:
(1) its annual unqualified audited financial statements within
90 days after the end of each fiscal year, accompanied by a
certificate from its certified public accountant along with a
certificate from the Borrower's chief financial officer or
treasurer stating that they have no knowledge of any Default
or Event of Default and that the financial statements are true
and correct to the best of their knowledge; (2) its quarterly
unaudited financial statements within 45 days after the end of
each fiscal quarter that is not the end of a fiscal year,
along with a certificate from the chief financial officer or
treasurer stating that such officer has no knowledge of any
Default or Event of Default and that the financial statements
are true and correct to the best of his or her knowledge; and
(3) a certificate from the chief financial officer or
treasurer (i) certifying as to whether there exists a Default
or Event of Default on the date of such certificate, and if a
Default or an Event of Default, specifying the details thereof
and the action which the Borrower has taken or proposes to
take with respect thereto, (ii) setting forth in reasonable
detail calculations demonstrating compliance with the
financial covenants and (iii) stating whether any change in
GAAP or the application thereof has occurred since the date of
the Borrower's audited financial statements delivered in
connection with the closing, and, if any change has occurred,
specifying the effect of such change on the financial
statements accompanying such certificate. In each case, such
financial statements shall include a balance sheet, income
statement, statement of cash flows, and statement of
stockholders' equity for the Borrower and its subsidiaries on
a consolidated basis.
In addition, within 90 days after the end of each fiscal year
and 45 days after the end of each fiscal quarter that is not
the end of a fiscal year, the Borrower shall provide the
calculations with supporting details of the financial
covenants. The Borrower shall also provide other customary
notification, including, without limitation, notice of any
Default or of any Material Adverse Effect (collectively, the
"Other Notices").
AFFIRMATIVE
COVENANTS: Affirmative covenants as to the following matters and other
customary covenants applicable to the Borrower and its
subsidiaries subject to normal qualifications and exceptions:
(1) Maintenance of corporate existence, and all material
patents, trademarks, franchises, and other
intellectual property rights.
(2) Compliance with all laws and regulations, except
where the failure to comply would not have a Material
Adverse Effect.
--------------------------------------------------------------------------------
Confidential 9 SunTrust Equitable Securities
<PAGE> 16
John H. Harland Company
--------------------------------------------------------------------------------
(3) Payment of all obligations and claims (including all
taxes), except where being contested in good faith by
appropriate proceedings and subject to maintenance of
adequate reserves and the failure to make such
payment would not have a Material Adverse Effect.
(4) Maintenance of proper books and records.
(5) Visitation and inspection of properties, examination
of books and records, and discussion with officers
and accountants.
(6) Maintenance of property; maintenance of insurance of
types and in amounts customary in Borrower's
industry.
(7) Use of proceeds; compliance with margin regulations.
(8) Notification of creation or acquisition of new
subsidiaries. Receipt of a subsidiary guaranty from
(i) Concentrex immediately upon consummation of the
merger between JH Acquisition Corp. and Concentrex
Incorporated (provided that an assumption of the
subsidiary guaranty of JH Acquisition Corp. may be
delivered by Concentrex Incorporated in lieu of a new
subsidiary guaranty) and (ii) future wholly-owned
domestic subsidiaries. Receipt of stock pledge on 65%
of stock of any Material Foreign Subsidiary.
NEGATIVE
COVENANTS: Negative covenants as to the following matters and other
customary covenants applicable to the Borrower and its
subsidiaries subject to normal qualifications and exceptions:
(1) Restrictions on incurring or permitting to exist any
Indebtedness other than Permitted Indebtedness.
(2) Restrictions on granting or permitting to exist any
liens and security interest except for certain
customary exceptions.
(3) Restrictions on mergers, consolidations, sale of all
or substantially all assets of Borrower or any
subsidiary or the stock of any subsidiary, with
certain customary exceptions; restrictions on
engaging in business other than businesses of the
type conducted by the Borrower and its subsidiaries
on the date hereof and businesses reasonably related
thereto.
(4) Restrictions on investments (which includes, without
limitation, making loans, guarantees for the benefit
of another Person) or acquisitions other than
Permitted Investments and Permitted Acquisitions.
(5) Prohibition against dividends and other distributions
related to
--------------------------------------------------------------------------------
Confidential 10 SunTrust Equitable Securities
<PAGE> 17
John H. Harland Company
--------------------------------------------------------------------------------
common stock and on any repurchase, redemption or
defeasance of any common stock of the Borrower or any
options, warrants, or other rights to purchase such
common stock other than dividends and distributions
paid in kind (a "Restricted Payment"), if a Default
or Event of Default has occurred and is continuing or
would be caused by the making of such Restricted
Payment.
(6) Restrictions on dispositions of assets other than
Permitted Asset Sales provided that no Permitted
Asset Sale of the types described in clauses (d) -
(f) of the definition of Permitted Asset Sales shall
be permitted if a Default or Event of Default has
occurred and is continuing or would be caused by such
Permitted Asset Sale. To the extent any guarantor or
Material Foreign Subsidiary is sold pursuant to a
Permitted Asset Sale, such guarantor shall be
released from its guaranty and, in the case of a
Material Foreign Subsidiary, its stock shall be
released from the pledge.
(7) Restrictions on affiliate transactions, except (a) in
the ordinary course of business at prices and on
terms and conditions not less favorable to the
Borrower or such subsidiary than could be obtained on
an arm's-length basis from unrelated third parties,
(b) transactions between or among the Borrower and
any guarantors not involving any other Affiliates,
(c) transactions between or among the Borrower, any
of its subsidiaries and any Minority Investment or
subsidiary that is not a guarantor subject to the
limitations set forth in the Investment covenant or
(d) any Restricted Payment permitted above.
(8) Restrictions on agreements that prohibit or limit (i)
the amount of dividends or loans that may be paid or
made to the Borrower by any of its wholly-owned
subsidiaries other than limitations on Concentrex
Incorporated in the Note Agreement or (ii) the
ability of Borrower or any of its wholly-owned
subsidiaries to grant any liens in any of its
property.
(9) Restrictions on sale/leaseback transactions other
than a $25,000,000 aggregate basket for digital
printing equipment or other property.
(10) Restrictions on amendments or modifications to the
Borrower's or any guarantor's organizational
documents which would have a material adverse effect
on the Lenders.
(11) Restrictions on change in fiscal year or significant
change in accounting practices except as may be
required by GAAP.
(12) Restrictions against entering into any speculative
hedging
--------------------------------------------------------------------------------
Confidential 11 SunTrust Equitable Securities
<PAGE> 18
agreements. Borrower shall be permitted to enter into
any hedging agreement entered into in the ordinary
course of business which is designed to protect the
Borrower against fluctuations in interest rates,
exchange rates or fluctuations in commodity prices.
VI. EVENTS OF DEFAULT
Customary in credit agreements of this nature including, but not limited to, the
following subject to normal and customary cure periods:
(1) Non-payment of any principal amounts of the loans
when due; and nonpayment of any interest, fees or
other amounts within three Business Days of the due
date thereof.
(2) Any representation, warranty, or statement shall be
untrue or incorrect in any material respect.
(3) Breach of any financial covenant, negative covenant,
requirement to report any Other Notices or the
covenant to maintain existence.
(4) Breach of any other covenant or obligation which
remains uncured for 30 days after the earlier of (i)
any officer of Borrower becomes aware thereof, or
(ii) written notice thereof having been given to the
Borrower.
(5) Failure of the Borrower or any guarantor or Material
Foreign Subsidiary to make payments on any debt which
individually or in the aggregate exceeds $5,000,000,
or breach of any covenant or other term or condition
contained in any agreement relating to such
Indebtedness, in either case, causing or permitting
the acceleration of such Indebtedness or requiring
such Indebtedness to be prepaid or redeemed prior to
its scheduled maturity; provided, however, no event
of default shall occur as a result of any default or
breach of covenant or condition in the Note Agreement
unless such Indebtedness is accelerated and not
satisfied in full within 30 days of such
acceleration.
(6) (i) Voluntary commencement of a bankruptcy proceeding
by Borrower or any guarantor or Material Foreign
Subsidiary, (ii) an involuntary commencement of a
bankruptcy proceeding which remains undismissed for
60 days or (iii) failure to pay its debts as they
become due.
--------------------------------------------------------------------------------
Confidential 12 SunTrust Equitable Securities
<PAGE> 19
John H. Harland Company
--------------------------------------------------------------------------------
(7) Occurrence of an ERISA event with respect to the
Borrower or any subsidiary which could result in
liability in an aggregate amount exceeding
$5,000,000.
(8) Any final judgment or order where the amount not
covered by insurance (or the amount as to which the
insurer denies liability) is in excess of $5,000,000,
or otherwise has a Material Adverse Effect, shall be
rendered against the Borrower or any guarantor or
Material Foreign Subsidiary, which judgment remains
in effect for 30 days without being paid, stayed or
dismissed.
(9) A Change in Control shall occur.
(10) Termination or invalidity of guaranty agreement or
the Borrower or any guarantor shall challenge the
validity of any loan document.
(11) Any event of default shall occur under, or the
Borrower or any subsidiary shall breach any term or
condition of, any loan document (after giving effect
to any cure or grace periods therein).
PARTICIPATIONS AND
ASSIGNMENTS: Assignments to other banks and financial institutions of the
Credit Facility will be permitted by any Lender with the
written approval of the Borrower and the Agent (such approval
not to be unreasonably withheld or delayed, and such approval
not required by Borrower if an Event of Default has occurred)
in minimum increments of $5,000,000, provided, however, that
(I) no such consent of the Borrower or the Agent shall be
required to any assignment by a Lender to an affiliate of such
Lender and (ii) the minimum increment requirement shall not
apply if a Lender is assigning its entire commitment. An
administrative fee of $1,000 shall be due and payable by such
assigning Lender to the Agent upon the occurrence of any
assignment. Participations to other banks and financial
institutions will be permitted without restriction. Such
participation will not release the selling Lender from its
obligations with respect to the Credit Facility and each
lender will retain the sole right to consent, modify or waive
any provisions of the loan documents (except that each such
participant shall have the right to approve any amendments,
modifications, or waivers decreasing the amount of principal
of or the rate at which interest is payable on such loans,
extending any scheduled principal payment date or date fixed
for the payment of interest on any loans, or increasing its
Revolving Credit Commitment, or releasing all or any material
portion of the Collateral or releasing any guarantor other
than as permitted under the loan documents).
REQUIRED LENDERS: Lenders holding more than 50% of the outstanding commitments
for the Credit Facility.
--------------------------------------------------------------------------------
Confidential 13 SunTrust Equitable Securities
<PAGE> 20
John H. Harland Company
--------------------------------------------------------------------------------
INDEMNIFICATION: The Borrower shall pay (I) all reasonable, out-of-pocket costs
and expenses of the Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the
Agent and its Affiliates, in connection with the syndication
of the credit facility provided for herein, the preparation
and administration of the loan documents and any amendments,
modifications or waivers thereof (whether or not the
transactions contemplated herein shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket costs and expenses
(including, without limitation, the reasonable fees, charges
and disbursements of outside counsel) incurred by the Agent,
the Issuing Bank or any Lender in connection with the
enforcement of its rights in connection with the loan
documentation or the loans made thereunder or letters of
credit issued thereunder. The Borrower shall indemnify the
Agent and each Lender against all reasonable costs, losses,
liabilities, damages, and expenses incurred by them in
connection with any investigation, litigation, or other
proceedings relating to the Credit Facility, except for
instances of gross negligence or willful misconduct on the
part of the indemnified party.
GOVERNING LAW: State of Georgia
--------------------------------------------------------------------------------
Confidential 14 SunTrust Equitable Securities
<PAGE> 21
John H. Harland Company
--------------------------------------------------------------------------------
EXHIBIT A
SELECTED DEFINITIONS
APPLICABLE MARGIN shall mean the percentage designated in the "Pricing
Grid" attached hereto as Exhibit B based on the Borrower's ratio of Total Debt
to EBITDA. The Applicable Margin shall initially be 1.00%, provided, however,
that upon delivery to the Agent of Borrower's financial statements for the
fiscal quarter ending September 30, 2000, the Applicable Margin shall be reset
to the percentage designated in Exhibit B based on the Borrower's ratio of Total
Debt to EBITDA for the preceding four fiscal quarter period then ending,
measured quarterly, such Applicable Margin being effective as of the second
business day following the date that the Agent receives the Borrower's
applicable financial statements.
BASE RATE shall mean the higher of (i) the rate which SunTrust
announces from time to time as its prime lending rate, as in effect from time to
time, or (ii) the Federal Funds rate, as in effect from time to time, plus
one-half of one percent (1/2%) per annum (any changes in such rates to be
effective as of the date of any change in such rate). The SunTrust prime lending
rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. SunTrust may make commercial loans or
other loans at rates of interest at, above, or below the SunTrust prime lending
rate.
CHANGE IN CONTROL shall mean the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of the Borrower to any Person or "group" (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder in effect on the date hereof), (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof) of 30% or more of the outstanding shares of the voting stock of the
Borrower; or (c) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Borrower by Persons who were neither (i)
nominated by the current board of directors or (ii) appointed by directors so
nominated.
CONSOLIDATED NET WORTH shall mean, as of any date, (i) the total
assets of the Borrower and its subsidiaries that would be reflected on the
Borrower's consolidated balance sheet as of such date prepared in accordance
with GAAP, after eliminating all amounts properly attributable to minority
interests, if any, in the stock and surplus of subsidiaries, minus the sum of
(i) the total liabilities of the Borrower and its subsidiaries that would be
reflected on the Borrower's consolidated balance sheet as of such date prepared
in accordance with GAAP and (ii) the amount of any write-up in the book value of
any assets resulting from a revaluation thereof or any write-up in excess of the
cost of such assets acquired reflected on the consolidated balance sheet of the
Borrower as of such date prepared in accordance with GAAP.
EBITDA shall mean, for the Borrower and its subsidiaries for any
period, an amount equal to the sum of (a) Net Income for such period plus (b) to
the extent deducted in determining Net Income for such period, (i) Interest
Expense, (ii) income tax expense, (iii) depreciation and amortization and (iv)
all other non-cash charges, determined on a consolidated basis in accordance
with GAAP in each case for such period.
--------------------------------------------------------------------------------
Confidential 15 SunTrust Equitable Securities
<PAGE> 22
John H. Harland Company
--------------------------------------------------------------------------------
EBITDAR shall mean, for the Borrower and its subsidiaries for any
period, an amount equal to the sum of (a) Net Income for such period plus (b) to
the extent deducted in determining Net Income for such period, (i) Interest
Expense, (ii) income tax expense, (iii) depreciation and amortization, (iv)
Lease Expense, and (v) all other non-cash charges, determined on a consolidated
basis in accordance with GAAP in each case for such period.
FIXED CHARGES shall mean, for the Borrower and its subsidiaries for any
period, the sum (without duplication) of (a) Interest Expense, net of interest
income, for such period and (b) Lease Expense for such period.
INDEBTEDNESS of any person shall mean, without duplication, such
person's (i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of property or services (other than accounts payable
arising in the ordinary course of such Person's business), (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or
production from property or asset now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by bonds, notes, acceptances or
other instruments, (v) capitalized lease obligations, (vi) guaranties, letter of
credit reimbursement obligations and other contingent obligations in respect of
other types of Indebtedness, (vii) Off-Balance Sheet Liabilities, and (viii)
obligations under any interest rate hedge agreement, foreign exchange agreement
or commodity hedging agreement. For purposes of determining Indebtedness under
clause (viii) the "principal amount" of the obligations of the Borrower or any
subsidiary in respect to any hedge agreement or foreign exchange agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such subsidiary would be required to pay if
such hedging agreement were terminated at such time. The Indebtedness of any
Person shall include the Indebtedness of any partnership in which such Person is
a general partner, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor.
INTANGIBLE ASSETS shall mean assets which are classified as intangible
assets in accordance with GAAP.
INTEREST EXPENSE shall mean, for the Borrower and its subsidiaries for
any period determined on a consolidated basis in accordance with GAAP, the sum
of (i) total cash interest expense, including without limitation the interest
component of any payments in respect of capital leases capitalized or expensed
during such period (whether or not actually paid during such period) plus (ii)
the net amount payable (or minus the net amount receivable) under hedging
agreements during such period (whether or not actually paid or received during
such period).
INTEREST PERIOD shall mean with respect to LIBOR loans, the period of
1, 2, 3 or 6 months selected by the Borrower pursuant to the terms of the Credit
Facility and subject to customary adjustments in duration. With respect to any
Swingline loan, the Interest Period shall not exceed 7 days.
LEASE EXPENSE shall mean, for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrower and its subsidiaries with
respect to leases of real and personal property (excluding capital leases)
determined on a consolidated basis in accordance with GAAP for such period.
--------------------------------------------------------------------------------
Confidential 16 SunTrust Equitable Securities
<PAGE> 23
John H. Harland Company
--------------------------------------------------------------------------------
LIBOR shall mean, for any Interest Period, the British Bankers'
Association Interest Settlement Rate for deposits in U.S. dollars for a period
comparable to the Interest Period appearing on Telerate Screen Page 3750, as of
11:00 a.m. London time, on the day that is two business days prior to the
Interest Period. Such rates may be adjusted for any applicable reserve
requirements.
MATERIAL ADVERSE EFFECT shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not related, a
material adverse change in, or a material adverse effect on, (i) the business,
results of operations, financial condition, assets or liabilities of the
Borrower and its subsidiaries taken as a whole, (ii) the ability of the Borrower
or any subsidiary to perform any of their respective obligations under the loan
documents, (iii) the rights and remedies of the Agent, the Issuing Bank and the
Lenders under any of the Loan Documents or (iv) the legality, validity or
enforceability of any of the loan documents.
MINORITY INVESTMENT shall mean with respect to any Person, any
corporation or other entity (including, without limitation, limited liability
companies, partnerships, joint ventures, and associations) regardless of its
jurisdiction of organization or formation, of which some but not more than 50%
of the total combined voting power of all classes of voting stock or other
ownership interests, at the time as of which any determination is being made, is
owned by such Person, either directly or indirectly through one or more other
Subsidiaries.
NET INCOME shall mean, for any period, the net income (or loss) of the
Borrower and its subsidiaries for such period determined on a consolidated basis
in accordance with GAAP, but excluding therefrom (to the extent otherwise
included therein) (i) any extraordinary gains or losses, (ii) any gains
attributable to write-ups of assets, (iii) any equity interest of the Borrower
or any subsidiary of the Borrower in the unremitted earnings of any Person that
is not a subsidiary, (iv) any income (or loss) of any Person accrued prior to
the date it becomes a subsidiary or is merged into or consolidated with the
Borrower or any subsidiary on the date that such Person's assets are acquired by
the Borrower or any subsidiary and (v) any income (or loss) of any subsidiary
which is not a guarantor to the extent the payment of such income in the form of
dividends or other distributions to the Borrower or any subsidiary is currently
prohibited whether on account of restrictions in organizational documents or
restrictions in any agreement, document, contract, deed or other instrument
applicable to such subsidiary.
NOTE AGREEMENT shall mean that certain Note Purchase Agreement dated as
of August 13, 1999 among Concentrex Incorporated (as successor to CFI
ProServices, Inc.), Ultradata Corporation, Meca Software, LLC, Moneyscape
Holdings, Inc. and the Purchasers listed on Exhibit A thereto pursuant to which,
as of the Closing Date, not more than $7,500,000 in principal amount is
outstanding.
OFF-BALANCE SHEET LIABILITIES of any Person shall mean (i) any
repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person, (ii) any liability of such Person under
any sale and leaseback transactions which do not create a liability on the
balance sheet of such Person, (iii) any liability (i.e., the portion guaranteed)
of such Person under any Synthetic Lease or (iv) any obligation arising with
respect to any other
--------------------------------------------------------------------------------
Confidential 17 SunTrust Equitable Securities
<PAGE> 24
John H. Harland Company
--------------------------------------------------------------------------------
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person.
PERMITTED ACQUISITIONS shall mean (i) the acquisition of Concentrex and
(ii) any other acquisition so long as (a) at the time of such acquisition, no
Default or Event of Default is in existence, (b) such acquisition has been
approved by the board of directors of the Person being acquired prior to any
public announcement thereof, and (c) the total consideration (including all
cash, debt, stock and other property, and assumption of obligations for borrowed
money) of any single acquisition or series of related acquisitions does not
exceed $50,000,000. As used herein, acquisitions will be considered related
acquisitions if the sellers under such acquisitions are the same Person or any
affiliate thereof.
PERMITTED ASSET SALES shall mean:
(a) the sale or other disposition for fair market value of
obsolete or worn out property or other property not necessary for operations
disposed of in the ordinary course of business (including any dispositions
associated with a closed plant);
(b) the sale of inventory in the ordinary course of business;
(c) the sale of any asset pursuant to any permitted sale-leaseback
transaction;
(d) any other sale or other disposition of assets unrelated to the
Software Business provided that the aggregate book value of all assets sold or
disposed (excluding assets sold under clauses (a), (b), (c), (e) and (f) hereof)
from the Closing Date through the Maturity Date shall not exceed 10% of the book
value of Total Tangible Assets calculated at the time immediately prior to the
proposed sale or disposition;
(e) any other sale or other disposition of Intangible Assets
related to the Borrower's Software Business provided that the aggregate book
value of all such Intangible Assets sold or disposed under this clause (e) from
the Closing Date through the Maturity Date shall not exceed $126,000,000; and
(f) any other sale or other disposition of Tangible Assets related
to the Borrower's Software Business provided that the aggregate book value of
all such Tangible Assets sold or disposed under this clause (f) from the Closing
Date through the Maturity Date shall not exceed $76,000,000.
PERMITTED INDEBTEDNESS shall mean:
(a) Indebtedness created pursuant to the Credit Facility;
(b) Indebtedness existing on the Closing Date (other than
obligations under the Note Agreement which shall be subject to clause (g)
hereof) which is disclosed and acceptable to the Agent and extensions, renewals
and replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof unless permitted hereunder) (immediately prior to
giving effect to such extension, renewal or replacement);
--------------------------------------------------------------------------------
Confidential 18 SunTrust Equitable Securities
<PAGE> 25
John H. Harland Company
--------------------------------------------------------------------------------
(c) Indebtedness of the Borrower or any subsidiary other than any
Indebtedness under any Synthetic Lease incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including capital
lease obligations and any Indebtedness assumed in connection with the
acquisition of any such assets secured by a Lien on any such assets prior to the
acquisition thereof; provided, that such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvements; provided, further, that the aggregate principal amount of such
Indebtedness does not exceed $10,000,000 at any time outstanding;
(d) Indebtedness of the Borrower owing to any subsidiary and of
any subsidiary owing to the Borrower or any other subsidiary; provided, that any
such Indebtedness that is owed to a subsidiary that is not a guarantor shall be
subject to the Investment covenant;
(e) Guaranties by the Borrower of Indebtedness of any subsidiary
or Minority Investment and by any subsidiary of Indebtedness of the Borrower or
any other subsidiary or Minority Investment; provided, that guaranties by the
Borrower or any guarantor of Indebtedness of any subsidiary or Minority
Investment that is not a guarantor shall be subject to the Investment covenant;
(f) Indebtedness in respect of obligations under permitted hedging
agreements; and
(g) Indebtedness under Synthetic Leases and other unsecured
Indebtedness in an aggregate principal amount not to exceed $50,000,000 at any
time outstanding.
PERMITTED INVESTMENTS shall mean:
(a) Investments existing on the Closing Date which are disclosed
and acceptable to the Agent;
(b) cash and cash equivalents;
(c) Guaranties constituting Permitted Indebtedness; provided, that
the aggregate principal amount of Indebtedness of subsidiaries that are not
guarantors shall be subject to the limitations set forth in clause (d) below;
(d) Investments made by the Borrower in or to any subsidiary or
any Minority Investment and by any subsidiary to the Borrower or in or to
another subsidiary or Minority Investment; provided, that the aggregate amount
of Investments by the Borrower or any guarantor in or to, and Guarantees by the
Borrower or any guarantor of any subsidiary or Minority Investment that is not a
guarantor (excluding all Investments and Guarantees permitted under clause (a)
above) shall not exceed $25,000,000 at any time outstanding;
(e) initial Investments made by the Borrower in Concentrex prior
to Concentrex becoming a guarantor in an amount not to exceed $125,000,000 the
proceeds of which are used to purchase common stock of Concentrex Incorporated
and to satisfy certain Indebtedness of Concentrex;
(f) loans or advances to employees, officers or directors of the
Borrower or any subsidiary in the ordinary course of business; and
--------------------------------------------------------------------------------
Confidential 19 SunTrust Equitable Securities
<PAGE> 26
John H. Harland Company
--------------------------------------------------------------------------------
(g) permitted hedging agreements.
SOFTWARE BUSINESS shall mean the operations of the Borrower and its
subsidiaries which relate to software and technology applications provided
primarily to financial institutions.
SWINGLINE RATE shall mean, for any Interest Period, either the Base
Rate or the rate as offered by the Agent and accepted by the Borrower. The
Borrower is under no obligation to accept this offered rate and the Agent is
under no obligation to provide it.
SYNTHETIC LEASE shall mean any synthetic lease, tax retention operating
lease or similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease under GAAP.
TANGIBLE ASSETS shall mean assets which are not Intangible Assets.
TOTAL TANGIBLE ASSETS shall mean all of the Tangible Assets of the
Borrower and its subsidiaries on a consolidated basis.
TOTAL REVENUE shall mean all of the revenue of the Borrower and its
subsidiaries on a consolidated basis.
TOTAL DEBT shall mean, at any time, all then currently outstanding
obligations, liabilities and indebtedness of the Borrower and its subsidiaries
on a consolidated basis of the types described in the definition of Indebtedness
(other than as described in subsection (viii) thereof), including, but not
limited to, all obligations under the loan documents.
--------------------------------------------------------------------------------
Confidential 20 SunTrust Equitable Securities
<PAGE> 27
John H. Harland Company
--------------------------------------------------------------------------------
EXHIBIT B
PRICING GRID
<TABLE>
<CAPTION>
FIVE-YEAR REVOLVING CREDIT FACILITY
-----------------------------------------------------------
(Basis Points Per Annum) TOTAL DEBT TO EBITDA
-----------------------------------------------------------
Level I Level II Level III Level IV Level V
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FACILITY PRICING < 1.00 > 1.00 & > 1.50 & > 2.00 & > 2.50
- - - -
< 1.50 < 2.00 < 2.50
-------------------------------------------------------------------------------------------
APPLICABLE MARGIN 75.0 87.5 100.0 112.5 125.0
-------------------------------------------------------------------------------------------
COMMITMENT FEE 17.5 20.0 22.5 25.0 30.0
-------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Confidential 21 SunTrust Equitable Securities
