-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O2QM5SLEzoAh2a3BuKJcgOyEoqUwoOCpd2guJBz5AF73DEJGBu13aSqeImvOfOGW IIdcHB5qI3VopU7CQr43Lg== /in/edgar/work/20000809/0000950144-00-009678/0000950144-00-009678.txt : 20000921 0000950144-00-009678.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950144-00-009678 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000809 GROUP MEMBERS: HARLAND JOHN H CO GROUP MEMBERS: JH ACQUISITION CORP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CFI PROSERVICES INC CENTRAL INDEX KEY: 0000908180 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 930704365 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A SEC ACT: SEC FILE NUMBER: 005-45577 FILM NUMBER: 689764 BUSINESS ADDRESS: STREET 1: 400 S W SIXTH AVE STREET 2: SUITE 200 CITY: PORTLAND STATE: OR ZIP: 97204 BUSINESS PHONE: 5032747280 MAIL ADDRESS: STREET 1: 400 S W SIXTH AVE STREET 2: STE 200 CITY: PORTLAND STATE: OR ZIP: 97204 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARLAND JOHN H CO CENTRAL INDEX KEY: 0000045599 STANDARD INDUSTRIAL CLASSIFICATION: [2780 ] IRS NUMBER: 580278260 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A BUSINESS ADDRESS: STREET 1: 2939 MILLER RD CITY: DECATUR STATE: GA ZIP: 30035 BUSINESS PHONE: 7709819460 MAIL ADDRESS: STREET 1: 2939 MILLER RD CITY: DECATUR STATE: GA ZIP: 30039 SC TO-T/A 1 scto-ta.txt CONCENTREX INCORPORATED / JOHN H. HARLAND COMPANY 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- SCHEDULE TO (RULE 14D-100) TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1) --------------------- CONCENTREX INCORPORATED (Name of Subject Company) JH ACQUISITION CORP. and JOHN H. HARLAND COMPANY (Offerors) (Names of Filing Persons (identifying status as offeror, issuer or other person)) COMMON STOCK, NO PAR VALUE PER SHARE (Title of Class of Securities) 20589S105 (Cusip Number of Class of Securities) JH ACQUISITION CORP. C/O JOHN H. HARLAND COMPANY 2939 MILLER ROAD DECATUR, GEORGIA 30035 ATTN: JOHN C. WALTERS TELEPHONE: (770) 593-5617 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Offerors) --------------------- Copy To: ALAN J. PRINCE, ESQ. MARK E. THOMPSON, ESQ. KING & SPALDING 191 PEACHTREE STREET ATLANTA, GEORGIA 30303-1763 TELEPHONE: (404) 572-4600 --------------------- CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- TRANSACTION VALUATION AMOUNT OF FILING FEE* - -------------------------------------------------------------------------------- $41,968,619 $8,394 - -------------------------------------------------------------------------------- * For the purpose of calculating the fee only, this amount assumes the purchase 2 of 5,995,517 shares of common stock, no par value per share, of Concentrex Incorporated at $7.00 per share. Such number includes all outstanding shares as of July 17, 2000, and assumes the exercise of all in-the-money stock options to purchase shares of Common Stock which are outstanding as of such date. [X] Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $8,394 Filing Party: John H. Harland Company JH Acquisition Corp. Form or Registration No.: Schedule TO Date Filed: July 21, 2000 [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [ ] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 Page 2 of 13 This Amendment No. 1 amends and supplements the Tender Offer Statement on Schedule TO (the "Schedule TO") filed with the Securities and Exchange Commission on July 21, 2000, by John H. Harland Company, a Georgia corporation ("Harland"), and JH Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of Harland (the "Offeror"). The Schedule TO relates to the offer by the Offeror to purchase all the outstanding shares of common stock, no par value (the "Shares"), of Concentrex Incorporated, an Oregon corporation ("Concentrex"), at a purchase price of $7.00 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the related offer to purchase dated July 21, 2000 (the "Offer to Purchase"), and in the related letter of transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). ITEMS 1 THROUGH 9, 11 and 12 Items 1 through 9, 11 and 12 of the Schedule TO which incorporate by reference the information contained in the Offer to Purchase are hereby amended as follows: 1. The first full paragraph on the cover page of the Offer to Purchase is hereby amended and restated to read in its entirety as follows: "THE OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT"), DATED AS OF JULY 17, 2000, BY AND AMONG JOHN H. HARLAND COMPANY ("HARLAND"), JH ACQUISITION CORP. (THE "OFFEROR") AND CONCENTREX INCORPORATED ("CONCENTREX"). THE BOARD OF DIRECTORS OF CONCENTREX HAS APPROVED AND ADOPTED THE MERGER AGREEMENT REFERRED TO HEREIN AND THE TRANSACTIONS CONTEMPLATED THEREBY, APPROVED THE OFFER AND THE MERGER (AS DEFINED HEREIN) AND DETERMINED THAT THE TERMS OF THE OFFER AND MERGER ARE, IN ITS OPINION, FAIR TO AND IN THE BEST INTERESTS OF CONCENTREX'S STOCKHOLDERS AND RECOMMENDS THAT ALL STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) TO THE OFFEROR. FOR A DISCUSSION OF THE REASONS FOR THE RECOMMENDATION BY THE BOARD OF CONCENTREX, SEE ITEM 4 OF THE SCHEDULE 14D-9 DELIVERED BY CONCENTREX." 2. The first paragraph of the section of the Offer to Purchase entitled "Summary Term Sheet -- What are the Most Significant Conditions to the Offer?" on page 1 is hereby amended and restated to read in its entirety as follows: "We are not obligated to purchase any shares that you validly tender unless the number of shares validly tendered and not withdrawn before the expiration date of the offer represents, in the aggregate, at least a majority of the shares of Concentrex's common stock on a fully diluted basis. This amount is equal to approximately 54.12% of the shares issued and outstanding as of July 17, 2000." 3. The section of the Offer to Purchase entitled "Summary Term Sheet -- What is the Total Amount of Funds that will be Required to Consummate the Proposed Transaction?" on page 3 is hereby amended and supplemented by adding the following: "Of this amount, we expect approximately $45 million to be used to purchase outstanding shares pursuant to the offer and to cash out in-the-money options and convertible notes, approximately $83 million to be used to repay outstanding indebtedness and approximately $12 million to be used to pay fees, expenses and other obligations related to the offer and the merger." 4 Page 3 of 13 4. The section of the Offer to Purchase entitled "Summary Term Sheet -- What does Concentrex's board of directors think of the tender offer and merger?" on page 3 is hereby amended and supplemented by adding the following: "On July 14, 2000 the board of directors of Concentrex determined that, in its opinion, the offer and the merger were fair to you and in your best interests. Concentrex's board of directors recommends that you accept the offer and tender your shares and/or vote to approve the merger. See "Introduction" and Section 12 ("Purpose of the Offer; the Merger; Plans for Concentrex"). For a discussion of the reasons for the recommendation by the board of Concentrex, see Item 4 of the Schedule 14d-9 delivered by Concentrex." 5. The first paragraph of the section of the Offer to Purchase entitled "Introduction" on page 5 is hereby amended and supplemented by adding the following: ""Net to the seller in cash, less any required withholding taxes" means that the only deduction from the Offer Price actually paid by the Offeror to the seller is for withholding taxes. Sellers, however, may be subject to additional taxes. See Section 5." 6. The third paragraph of the section of the Offer to Purchase entitled "Introduction" on page 5 is hereby amended and supplemented by adding the following: "THE BOARD OF DIRECTORS OF CONCENTREX (THE "BOARD OF DIRECTORS") HAS APPROVED AND ADOPTED THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED HEREIN), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE, IN ITS OPINION, FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF CONCENTREX, AND RECOMMENDS THAT ALL HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. FOR A DISCUSSION OF THE REASONS FOR THE RECOMMENDATION BY THE BOARD OF DIRECTORS, SEE ITEM 4 OF THE SCHEDULE 14D-9 DELIVERED BY CONCENTREX." 7. The section of the Offer to Purchase entitled "Introduction" on page 5 is hereby amended and supplemented by adding the following as a new sixth paragraph: "Subject to applicable rules of the Commission (as hereinafter defined), the Offeror expressly reserves the right, in its sole discretion, to delay acceptance for payment of or payment for Shares pending receipt of regulatory approvals specified in Section 16 or to comply in whole or in part with applicable law. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act (as hereinafter defined). The Offeror will only accept for payment the Shares tendered pursuant to the Offer if all of the other conditions have been satisfied or waived prior to the expiration or termination of the Offer." 8. The second full paragraph of the section of the Offer to Purchase entitled "Introduction" on page 6 is hereby amended and restated to read in its entirety as follows: "In connection with the Merger Agreement, the Offeror and Harland entered into Tender Agreements dated as of July 17, 2000 5 Page 4 of 13 (the "Tender Agreements"), with each of the following stockholders: Matthew W. Chapman, Chairman and Chief Executive Officer of Concentrex; Robert P. Chamness, Director, President and Chief Operating Officer of Concentrex; and Robert T. Jett, Director, Executive Vice President and Secretary of Concentrex (together, the "Tendering Stockholders"). Pursuant to the Tender Agreements, the Tendering Stockholders have agreed to tender an aggregate of 457,952 Shares owned by the Tendering Stockholders (the "Committed Shares") and have agreed to vote the Committed Shares in favor of the Merger and otherwise in the manner directed by the Offeror. The Committed Shares represent approximately 7.64% of the Shares that as of July 17, 2000 were issued and outstanding on a fully diluted basis (assuming the exercise of all "in-the-money" stock options). The Merger Agreement and the Tender Agreements are more fully described in Section 11." 9. The fourth full paragraph of the section of the Offer to Purchase entitled "Introduction" on page 6 is hereby amended and restated to read in its entirety as follows: "Concentrex has represented to Harland that, as of July 17, 2000, there were (i) 5,538,661 Shares issued and outstanding and (ii) an estimated 456,856 Shares reserved for issuance upon the exercise of outstanding "in-the-money" stock options. Based upon the foregoing, the Offeror believes that approximately 2,997,759 Shares constitute a majority of the outstanding Shares on a fully diluted basis. This represents approximately 54.12% of the Shares issued and outstanding as of July 17, 2000." 10. The second full paragraph of the section of the Offer to Purchase entitled "Terms of the Offer; Expiration Date" on page 7 is hereby amended and supplemented by adding the following: "Subject to applicable rules of the Commission, the Offeror expressly reserves the right, in its sole discretion, to delay acceptance for payment of or payment for Shares pending receipt of regulatory approvals specified in Section 16 or to comply in whole or in part with applicable law. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act. The Offeror will only accept for payment the Shares tendered pursuant to the Offer if all of the other conditions have been satisfied or waived prior to the expiration or termination of the Offer." 11. The second full paragraph of the section of the Offer to Purchase entitled "Certain Information Concerning Concentrex" on pages 14 and 15 is hereby amended and restated to read in its entirety as follows: "Certain Financial Projections for Concentrex. Prior to entering into the Merger Agreement, Harland conducted a due diligence review of Concentrex and in connection with such review received certain non-public information provided by Concentrex, including certain projected financial information (the "Projections") for the years ended December 31, 2000 through 2002 and preliminary results for the three and six months ended June 30, 2000, each as set forth below. Concentrex does not in the ordinary course publicly disclose projections and the Projections were not prepared with a view to public disclosure. Accordingly, none of Concentrex, Harland or the Offeror intends to, and specifically declines any obligation to, update or otherwise revise the Projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even if any or all of the Projections are shown to be in 6 Page 5 of 13 error. Also, none of Concentrex, Harland or the Offeror intends to, and specifically declines any obligation to, update or revise the Projections to reflect changes in general economic or industry conditions. Concentrex has advised Harland and the Offeror that the Projections represent what Concentrex believes to be a reasonable estimate of Concentrex's future financial performance and reflect significant assumptions and subjective judgments by Concentrex's management regarding industry performance and general business and economic conditions. In particular, Concentrex assumed (a) a dramatic acceleration of product sales growth in excess of historical results, (b) that Concentrex would have sufficient cash flow to fund its operations and (c) that Concentrex's rate of profitability would increase in a manner consistent with revenue growth. The Projections do not give effect to the Offer or the potential combined operations of Harland and Concentrex. The Projections are set forth below in this Offer to Purchase for the limited purpose of giving the holders of the Shares access to the material financial projections prepared by Concentrex's management that were made available to Harland and the Offeror in connection with the Merger Agreement and the Offer. HARLAND AND THE OFFEROR, AFTER DISCUSSIONS WITH CONCENTREX, BELIEVE THAT THE PROJECTIONS WOULD NOT BE ATTAINABLE FOR CONCENTREX ON A STAND-ALONE BASIS. Based on the year-to-date results of Concentrex which were reviewed by Harland, as well as Harland's assessment of the sustainability of the growth rates of Concentrex, Harland concluded that the Projections would not be attainable." 12. The first sentence of the first full paragraph of the section of the Offer to Purchase entitled "Certain Information Concerning Concentrex -- Cautionary Statements Concerning Forward-Looking Statements" on page 16 is hereby amended and restated to read in its entirety as follows: "Certain matters discussed and statements made herein may constitute forward looking statements." 13. The third full paragraph of the section of the Offer to Purchase entitled "Certain Information Concerning Concentrex -- Cautionary Statement Concerning Forward-Looking Statements" on page 16 is hereby amended by deleting the last sentence of such paragraph. 14. The sixth full paragraph of the section of the Offer to Purchase entitled "Certain Information Concerning the Offeror and Harland" on page 17 is hereby amended and restated to read in its entirety as follows: "In June 2000, a wholly owned subsidiary of Harland purchased 100 Shares at a purchase price of $4.375 per Share on the open market using funds from working capital." 15. The section of the Offer to Purchase entitled "Source and Amount of Funds" on page 18 is hereby amended and restated to read in its entirety as follows: "The Offer is not conditioned upon any financing arrangements. The Offeror estimates that the total amount of funds required to purchase all of the outstanding Shares (on a fully diluted basis) pursuant to the Offer, to repay outstanding indebtedness and to pay fees, expenses and other obligations related to the Offer and the Merger will be approximately $140 7 Page 6 of 13 million. Of this amount, the Offeror expects approximately $45 million to be used to purchase outstanding shares pursuant to the Offer and to cash out in-the-money options and convertible notes, approximately $83 million to be used to repay outstanding indebtedness and approximately $12 million to be used to pay fees, expenses and other obligations related to the Offer and the Merger. The Offeror plans to obtain all funds needed for the Offer and the Merger through capital contributions or advances made by Harland. Harland currently plans to obtain approximately $40 million of the funds for such capital contributions or advances from cash on hand and the remainder from a new credit facility. SunTrust Bank ("SunTrust") and SunTrust Equitable Securities Corporation ("SunTrust Equitable") have issued to Harland, and Harland has accepted and agreed to, a commitment letter dated July 26, 2000 (the "Commitment Letter") with respect to a $325,000,000 senior revolving credit facility (the "Credit Facility"). Pursuant to the terms of the Commitment Letter, SunTrust has committed to provide financing up to $225,000,000 in the Credit Facility, and SunTrust, together with SunTrust Equitable, have agreed to use their commercially reasonable efforts to arrange a syndicate of lenders prior to and following the initial closing of the Credit Facility to issue commitments to Harland to fund the remaining portion of the Credit Facility. SunTrust Equitable shall manage all aspects of the syndication, in consultation with SunTrust and Harland where commercially reasonable, including the timing of all offers to potential lenders, the allocation of commitments and the determination of compensation and titles given, if any, to such lenders. SunTrust shall be the sole agent with respect to the Credit Facility, and SunTrust shall be the sole arranger with respect to the remaining syndicate. The commitments of SunTrust and SunTrust Equitable are subject to: (i) the preparation, execution and delivery of mutually acceptable loan documentation; (ii) the absence of (A) a material adverse change in the business, condition (financial or otherwise), operations or properties of Harland and its subsidiaries, or affiliates, or (B) any change after July 26, 2000 in loan syndication, financial or capital market conditions generally that in SunTrust Equitable's judgment would materially impair syndication of the Credit Facility; (iii) the accuracy of all representations made by Harland to SunTrust and all information furnished by Harland to SunTrust and Harland's compliance with the terms of the Commitment Letter; (iv) the payment in full of all fees, expenses and other amounts payable in connection with the Credit Facility and (v) the closing of the Credit Facility on or prior to October 12, 2000. The Offer, however, is not conditioned on Harland's receipt of financing. All present and future direct and indirect wholly owned domestic subsidiaries of Harland (including, after consummation of the Merger, Concentrex) under the terms of the Commitment Letter will become guarantors under the Credit Facility. The proceeds from the Credit Facility are expected to be used to refinance existing debt, for the acquisition of Concentrex, for future permitted acquisitions and for working capital and general corporate purposes. The Credit Facility will terminate five years from the closing of the Credit Facility. Under the terms of the Commitment Letter, the Credit Facility will be unsecured, but Harland will agree that it will not pledge any of its assets to other creditors (subject to customary exceptions). 8 Page 7 of 13 Pursuant to the Commitment Letter, Harland will be entitled to select between the following interest rate options: (i) the base rate or (ii) a rate based on LIBOR. The base rate will be equal to the higher of (i) the rate which SunTrust announces from time to time as its prime lending rate or (ii) the federal funds rate plus one-half of one percent per annum. Harland expects the initial interest rate to be approximately 7.75% per annum. Pursuant to the terms of the Commitment Letter, Harland expects to make financial covenants in connection with the Credit Facility with respect to (i) maintenance of total debt to earnings before taxes, depreciation and amortization ("EBITDA") and fixed charge coverage ratios and (ii) maintenance of minimum net worth. Harland will also comply with customary financial reporting requirements. Harland also expects to make affirmative comments, subject to normal exceptions and qualifications, with respect to (i) maintenance of corporate existence, and material patents, trademarks, franchises, and other intellectual property rights; (ii) compliance with laws and regulations; (iii) payment of tax obligations and similar claims; (iv) maintenance of proper books and records; (v) permitting visitation and inspection of properties, examination of books and records, and discussion with officers and accountants; (vi) maintenance of property and insurance; (vii) use of proceeds and compliance with margin regulations; and (viii) notification of creation or acquisition of new subsidiaries and providing of subsidiary guarantees from new wholly owned domestic subsidiaries. In addition, Harland expects to make negative covenants, subject to normal exceptions and qualifications, with respect to (i) restrictions on incurring or permitting to exist indebtedness; (ii) restrictions on granting or permitting to exist liens and security interests; (iii) restrictions on mergers, consolidations, sale of all or substantially all assets of Harland or any subsidiary or the stock of any subsidiary and restrictions on engaging in business other than businesses of the type conducted by Harland and its subsidiaries and businesses reasonably related thereto; (iv) restrictions on investments and acquisitions; (v) restrictions on dividends and other distributions related to common stock and on any repurchase, redemption or defeasance of any common stock of Harland or any options, warrants, or other rights to purchase such common stock, to the extent that a default or event of default exists or would be caused thereby; (vi) restrictions on dispositions of assets; (vii) restrictions on affiliate transactions; (viii) restrictions on agreements that prohibit or limit (A) the amount of dividends or loans that may be paid or made to Harland by any of its wholly owned subsidiaries or (B) the ability of Harland or any of its wholly owned subsidiaries to grant any liens on any of its property; (ix) restrictions on sale/leaseback transactions; (x) restrictions on amendments or modifications to Harland's or any guarantor's organizational documents; (xi) restrictions on change in fiscal year or significant change in accounting practices; and (xii) restrictions against entering into speculative hedging agreements. The definitive documentation is expected to contain conditions precedent, representations and warranties, covenants, events of default and other provisions customary for such 9 Page 8 of 13 financings. Harland expects the financing to close immediately prior to the purchase of the Shares pursuant to the Offer. While the foregoing represents the current intention of Harland and the Offeror with respect to such funds, such financial arrangements may change depending on such factors as Harland and the Offeror may deem appropriate." 16. The Commitment Letter, a copy of which is attached to this Amendment No. 1 to Schedule TO as Exhibit (b), is incorporated into the Schedule TO by reference. 17. The first full paragraph of the section of the Offer to Purchase entitled "Background of the Offer; Contacts with Concentrex" on page 19 is hereby amended and restated to read in its entirety as follows: "In late January, 2000, Harland's Chief Executive Officer, Timothy C. Tuff, had a conversation with Concentrex's Chairman and Chief Executive Officer, Matthew W. Chapman. They discussed the business direction of the two companies, potential synergies, and the possibility of a transaction between Harland and Concentrex. The potential synergies discussed included improved financial flexibility, operating synergies in branch automation, cross-selling opportunities from a combined customer base, the creation of a leading integrated financial institution software provider and improved visibility in the investment community. At the conclusion of the conversation, Mr. Chapman stated that Concentrex was committed to an independent path but that he would consider the discussion." 18. The ninth full paragraph of the section of the Offer to Purchase entitled "Background of the Offer; Contacts with Concentrex" on page 19 is hereby amended and restated to read in its entirety as follows: "On June 5, 2000, Mr. Tuff sent Mr. Chapman a letter expressing Harland's interest in a potential transaction with Concentrex. The letter stated that Mr. Tuff believed that a combination of the software businesses of Harland and Concentrex could significantly benefit both companies. The letter proposed either a transaction whereby Harland would acquire a majority interest in Concentrex in exchange for Harland's software business and an unspecified amount of cash or a transaction whereby Harland acquired all of the outstanding shares of Concentrex at an unspecified premium to the market price. No specific terms or conditions were proposed in the letter. Mr. Tuff proposed a meeting with Mr. Chapman and stated in the letter that Mr. Tuff would contact Mr. Chapman to establish a mutually convenient meeting time and location." 19. The first full paragraph of the section of the Offer to Purchase entitled "Background of the Offer; Contacts with Concentrex" on page 20 is hereby amended and restated to read in its entirety as follows: "On July 10, 2000, Harland's board of directors discussed the potential acquisition of Concentrex with management team members and approved the negotiation of a definitive agreement, subject to final board approval." 20. The second full paragraph of the section of the Offer to Purchase entitled "Background of the Offer; Contacts with Concentrex" on 10 Page 9 of 13 page 20 is hereby amended and restated to read in its entirety as follows: "On July 12 through July 14, representatives of Harland and Concentrex met to negotiate the definitive terms of the transaction, including the purchase price. On July 14, 2000, Harland's board of directors formally approved the proposed acquisition, at a tender offer price of $7.00 per Share, subject to finalization of the definitive agreement. Also on July 14, 2000, the board of directors of Concentrex met and (i) determined that the Merger Agreement, the Tender Agreements and the transactions contemplated thereby, including the Offer and the Merger, are, in its opinion, advisable and are fair to, and in the best interests of, the stockholders of Concentrex, (ii) approved the Offer and the Merger and (iii) recommended that stockholders of Concentrex accept the Offer and tender their Shares to the Offeror. On the evening of July 16, 2000, Harland and Concentrex signed a definitive agreement for the purchase by Harland of Concentrex at a tender price of $7.00 per share. 21. The second full paragraph of the section of the Offer to Purchase entitled "The Merger Agreement and Tender Agreements -- Tender Agreements" on page 28 is hereby amended and supplemented by adding the following: "The Tender Agreements provide that the Tendering Stockholders (i) except as consented to in writing by Harland in its sole discretion, will not, directly or indirectly, sell, transfer, assign, pledge, hypothecate or otherwise dispose of or limit their right to vote in any manner any of the Committed Shares, or agree to do any of the foregoing, and (ii) will not take any action which would have the effect of preventing or disabling the Tendering Stockholders from performing their obligations under the Tender Agreement. In addition, during the term of the Tender Agreements, neither the Tendering Stockholders nor any person acting as an agent of the Tendering Stockholders or otherwise on the Tendering Stockholders' behalf shall, directly or indirectly, solicit, encourage or initiate negotiations with, or provide any information to (except as permitted under the Merger Agreement), any corporation, partnership, person or other entity or group (other than Harland or an affiliate or an associate of Harland) concerning any sale, transfer, pledge or other disposition or conversion of the Committed Shares. The Tendering Stockholders agreed to immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties with respect to any of the foregoing. The Tendering Stockholders also agreed to notify the Offeror immediately if any party contacts the Tendering Stockholders following the date of the Tender Agreements (other than the Offeror or an affiliate or associate of the Offeror) concerning any sale, transfer, pledge or other disposition or conversion of the Committed Shares." 22. The first paragraph of the section of the Offer to Purchase entitled "Certain Conditions of the Offer" on page 31 is hereby amended and restated to read in its entirety as follows: "Notwithstanding any other term of the Offer or the Merger Agreement, the Offeror shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Offeror's obligation to pay for or return tendered 11 Page 10 of 13 Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer, and may terminate the Offer, if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which would represent a number greater than fifty percent (50%) of the fully diluted Shares (the "Minimum Condition"), (ii) any waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall not have expired or been terminated, (iii) Tonkon Torp LLP, legal counsel for Concentrex, does not deliver an opinion substantially in the form of Exhibit A to the Merger Agreement or (iv) at any time after the date of the Merger Agreement and prior to the acceptance for payment of the Shares, any of the following conditions exists:" 23. The first full paragraph of the section of the Offer to Purchase entitled "Certain Conditions of the Offer" on page 32 is hereby amended and supplemented by adding the following as a new first sentence: "The Offeror is not required to pay for, or accept for payment, any of the Shares that have been tendered if any of the conditions listed above are not either satisfied or waived by Harland or the Offeror." 24. The first full paragraph of the section of the Offer to Purchase entitled "Certain Conditions of the Offer" on page 32 is hereby amended and supplemented by adding the following as a new last sentence: "Subject to applicable rules of the Commission, the Offeror expressly reserves the right, in its sole discretion, to delay acceptance for payment of or payment for Shares pending receipt of regulatory approvals specified in Section 16 or to comply in whole or in part with applicable law. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act. The Offeror will only accept for payment the Shares tendered pursuant to the Offer if all of the other conditions have been satisfied or waived prior to the expiration or termination of the Offer." 25. The section of the Offer to Purchase entitled "Certain Legal Matters and Regulatory Approvals -- Antitrust" on page 33 is hereby amended and supplemented by adding the following as a new fourth paragraph: "On August 2, 2000, early termination of the 15 day waiting period applicable to the Offer under the HSR Act, was granted by the Federal Trade Commission. The early termination or the expiration of the waiting period under the HSR Act was a condition of the Offer, and such condition has now been satisfied." 26. The last two sentences of the fourth paragraph of the section of the Offer to Purchase entitled "Certain Legal Matters and Regulatory Approvals" on page 33 are hereby amended and restated to read in their entirety as follows: "On July 14, 2000, prior to the execution of the Merger Agreement, the Board of Directors of Concentrex, approved the Merger Agreement and determined that, in its opinion, each of the Offer and the Merger is advisable and fair to, and in the best interests of, the stockholders of Concentrex. Accordingly, Section 60.825 et seq. are inapplicable to the Offer and the Merger. For a discussion of the reasons for the recommendation by the Board of Directors of Concentrex, see Item 4 of the Schedule 12 Page 11 of 13 14d-9 delivered by Concentrex." 27. On August 7, 2000, Harland issued a press release, a copy of which is attached to this Amendment No. 1 to Schedule TO as Exhibit (a)(10) and is incorporated into the Schedule TO by reference. 28. Item 12 of the Schedule TO is hereby amended and supplemented to add subparagraph (a)(10) as follows: "(a)(10) Press Release issued by Harland on August 7, 2000. (a)(11) Transcript from Harland analyst conference call on July 17, 2000. (a)(12) Excerpts from the transcript from Harland analyst conference call on July 24, 2000 relating to the Concentrex transaction." 29. Item 12 of the Schedule TO is hereby amended to restate subparagraph (b) in its entirety as follows: "(b) Commitment Letter dated July 26, 2000 from SunTrust Bank and SunTrust Equitable Securities Corporation, together with the related Summary of Terms and Conditions" 13 Page 12 of 13 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. JOHN H. HARLAND COMPANY By: /s/ JOHN C. WALTERS -------------------------- Name: John C. Walters Title: Vice President JH ACQUISITION CORP. By: /s/ JOHN C. WALTERS -------------------------- Name: John C. Walters Title: Vice President Date: August 9, 2000 14 Page 13 of 13 EXHIBIT INDEX Exhibit No. Exhibit Name - ----------- ------------ *(a)(1) Offer to Purchase dated July 21, 2000. *(a)(2) Form of Letter of Transmittal. *(a)(3) Form of Notice of Guaranteed Delivery. *(a)(4) Form of Letter from the Information Agent to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. *(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. *(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. *(a)(7) Summary Advertisement as published on July 21, 2000. *(a)(8) Press Release issued by Harland on July 17, 2000. *(a)(9) Press Release issued by Harland on July 21, 2000. (a)(10) Press Release issued by Harland on August 7, 2000. (a)(11) Transcript from Harland analyst conference call on July 17, 2000. (a)(12) Excerpts from the transcript from Harland analyst conference call on July 24, 2000 relating to the Concentrex transaction. (b) Commitment Letter dated July 26, 2000 from SunTrust Bank and SunTrust Equitable Securities, together with the related Summary of Terms and Conditions *(d)(1) Agreement and Plan of Merger, dated as of July 17, 2000, by and among John H. Harland Company, JH Acquisition Corp. and Concentrex Incorporated. (Incorporated by reference from Appendix A to the Offer to Purchase filed as Exhibit (a)(1) hereto.) *(d)(2) Form of Tender Agreement, dated July 17, 2000, by and among the Tendering Stockholders, John H. Harland Company and JH Acquisition Corp. (Incorporated by reference from Appendix B to the Offer to Purchase filed as Exhibit (a)(1) hereto.) - ------------------------------------ * Previously filed. EX-99.(A)(10) 2 ex99-a10.txt PRESS RELEASE ISSUED ON AUGUST 7, 2000 1 EXHIBIT (A)(10) NEWS RELEASE H PO Box 105250, Atlanta, GA 3034 (770) 981-9460 www.harland.net FOR MORE INFORMATION, CONTACT: Victoria P. Weyand, Vice President of Communications 770-593-5127 vweyand@harland.net HARLAND GRANTED EARLY TERMINATION OF HART-SCOTT-RODINO WAITING PERIOD FOR CONCENTREX ACQUISITION ATLANTA (August 7, 2000) - John H. Harland Company (NYSE: JH) said today that it received early termination of the 15-day waiting period for its acquisition of Concentrex Incorporated (Nasdaq: CCTX) under the Hart-Scott-Rodino Antitrust Improvements Act, which was confirmed by letter dated August 2, 2000. As previously announced, Harland has commenced a tender offer for all of the outstanding shares of Concentrex pursuant to an Agreement and Plan of Merger, dated as of July 17, 2000 for $7.00 per share, net to seller, in cash. The tender offer will expire at 12:00 midnight, New York City time, on Friday, August 18, 2000, unless extended. The tender offer is subject to certain conditions, including at least a majority of Concentrex's outstanding shares, on a fully diluted basis, being tendered without withdrawal prior to the expiration of Harland's offer. This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Concentrex Incorporated. Harland has filed a tender offer statement with the Securities and Exchange Commission (SEC) and Concentrex has filed a solicitation/recommendation statement with respect to the offer. Concentrex shareholders are advised to read the tender offer statement regarding the acquisition of Concentrex referenced in this press release, and the related solicitation/recommendation statement, including the amendments to these documents which are expected to be filed with the SEC later this week. The tender offer statement (including an offer to purchase, letter of transmittal and related tender documents) and the solicitation/recommendation statement contain important information which should be read carefully before any decision is made with respect to the offer. These documents will be made available to all stockholders of Concentrex at no expense to them. These documents will also be available at no charge on the SEC's web site at www.sec.gov. ### 2 HARLAND GRANTED EARLY TERMINATION OF HART-SCOTT-RODINO WAITING PERIOD FOR CONCENTREX ACQUISITION AUGUST 7, 2000 PAGE TWO ABOUT HARLAND Atlanta-based John H. Harland Company (www.harland.net) is listed on the New York Stock Exchange under the symbol "JH." Harland is a leading provider of checks, financial software and direct marketing to the financial institution market. Scantron Corporation (www.scantron.com), a wholly owned subsidiary, is a leading provider of software services and systems for the collection, management and interpretation of data to the financial, commercial and educational markets. ABOUT CONCENTREX INCORPORATED Concentrex Incorporated, based in Portland, Oregon, is a leading provider of technology-powered solutions to deliver financial services, including a broad range of traditional software and services integrated with leading e-commerce solutions that already enable its customers to serve more than 1 million home banking customers. Concentrex serves over 5,500 financial institutions of all types and sizes in the United States. Concentrex has major offices in 11 additional cities across the country. Its World Wide Web site is www.concentrex.com. This press release contains statements which may constitute "forward-looking statements." These statements include statements regarding the intent, belief or current expectations of John H. Harland Company, Concentrex Incorporated and members of their respective management, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. Reference is made to the Risk Factors and Cautionary Statements of Harland's Form 10-K and Form 10-Q and to Concentrex's Securities and Exchange Commission reports filed under the Securities Exchange Act. EX-99.(A)(11) 3 ex99-a11.txt TRANSCRIPTS FROM CONFERENCE CALL ON JULY 17, 2000 1 EXHIBIT (A)(11) TRANSCRIPT FROM JULY 17, 2000 CONFERENCE CALL JOHN HARLAND COMPANY MODERATOR: VICKIE WEYAND JULY 17, 2000 9:00 AM CT Operator: Good day, everyone, and welcome to John Harland's Special Announcement conference call. Just a reminder, today's call is being recorded. A this time for opening remarks and introductions, I would like to turn the conference over to Ms. Vickie Weyand, Vice President of Investor Relations. Ms. Weyand, please go ahead. Vickie Weyand: Thank you. Good morning. We're pleased that you were able to join us this morning as we discuss our acquisition of Concentrex. But before we begin our review, I would like to make a brief cautionary statement that certain words and phrases such as should result or will continue, estimated, projected and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities and Litigation Reform Act of 1995. These statements are necessarily subject to certain risk and uncertainties that could actually cause the results to differ materially from the company's historic experiences, present expectations or projections. Caution should be taken not to place undue reliance on any such forward-looking statements which speak only as of this date. Various factions that affect the company's financial performance could cause actual results for future periods to differ from any opinions or projections. These factors are discussed in some detail in our 10K and 10Q and I would like to direct you to these documents for further clarification. I would like to introduce the people who will be participating in today's call, first Tim Tuff, Chairman and CEO, Charlie Carden, VP and CFO, Henry Bond, VP Planning, and John O'Malley, Vice President and General Manager Software. And with that I will turn the call over to Tim. 2 Tim Tuff: Thank you, Vickie, and good morning everybody. We've said all along that Harland is a turnaround and growth scenario. And we'll be covering our progress on the turnaround next week when we discuss second quarter earnings. Today however, we've taken a major step forward on our growth strategy. Harland has signed a definitive agreement to acquire Concentrex Incorporated in a tender offer for $7 a share. This announcement speaks directly to the establishment of a growth platform for the company and to our mission to achieve superior returns for our shareholders by being the leading provider of products and services to our chosen segments of the financial and educational markets. Concentrex will help us produce superior returns for our shareholders by giving us the opportunity to increase revenue growth. This will be accomplished by increasing our products and service offerings and by significantly increasing our software customer base. Concentrex will also give us leading positions in key market segments. We also anticipate this transaction to be accretive to cash flow by the end of the year. Concentrex serves more than 5000 financial institutions in the US. Thirteen of the country's 20 largest financial institutions use mission critical systems designed by Concentrex. And more than half of all banks and about 1000 credit unions use Concentrex's products. With this acquisition Harland will be one of the larger providers of software to the financial institution markets. The company's combined software revenues for 2000 are projected to be $150 million on an annualized basis. We'll also achieve our goal of being number 1 or number 2 in a number of key market segments, including number 1 in lending, number 1 in MCIF, number 1 or number 2 in datamarts, number 2 in mortgage and number 2 or 3 in core applications for credit unions. With Concentrex's e-commerce products we also gain a starting position to deliver internet solutions for financial institutions like bill payment, online banking and the business-to-business portal offering additional products and services to financial institutions. Concentrex's highly respected Laser Pro Lending Suite complements our own product, financial.center, which we recently introduced. We'll now be able to provide a full range of lending products and services tailored to the specific technology needs of customers, whether they need a Windows or a browser-based solution. 3 We believe that the acquisition of Concentrex will give us critical mass in this industry, a clear growth platform, strong complementary products that can be tightly integrated and a significantly expanded customer base and excellent employee talent. Having said that, we view this as a turnaround situation. Well we've done those before. Our approach will be to focus on Concentrex's core businesses, restore customer focus and introduce clear bottom line accountability. We'll articulate more details once the deal is closed. Harland's combined software businesses will report to John O'Malley. John joined Harland in 1999 with more than 20 years experience in the financial services markets, including executive positions with Hogan Systems and Fiserv. We expect to finalize the acquisition in late August. With that I'd like to turn it over to Charlie Carden. Charlie Carden: Thank you, Tim. I'd like to go over some of the financial parameters of the transaction for you. As Tim said earlier, the total transaction value is approximately $140 million, of which $46 million represents the purchase of equity and about $94 million represents the assumption of debt and other liabilities and certain transaction related costs. The goodwill to be reflected is expected to be approximately $106 million after a write-off of $10 million of in-process R&D. Excluding the impact of the write-off of the acquired in-process research and development costs, the transaction will be dilutive to earnings by about 15 cents in 2000 and 11 cents in 2001. It will be accretive thereafter. On a cash basis, however, we expect it to be accretive by the fourth quarter of this year. The acquisition will be financed by cash on hand and a new senior revolving credit facility. We have asked SunTrust to act as the arranging agent and First Union and Wachovia to act as co-agents. Harland's existing Senior A notes of $85 million and term loan of $15 million will be refinanced in this transaction. Harland's second quarter earnings will be announced on July 24. A conference call has been scheduled at 10:00 am on that date. We look forward to talking to you then. At this point I'll turn the call back to Vickie Weyand. Vickie Weyand: Thank you very much, Charlie. We'd now like to open the call up to any questions you may have. 4 Operator: Thank you. Our question and answer session will be conducted electronically. If you would like to ask a question, please press the star key followed by the digit 1 on your telephone. We do ask that you please initially limit yourselves to one question and one follow up. Once again, if you would like to ask a question, please press star, 1. And we'll pause for just one moment. Our first question comes from Edward Okine with AIG Asset Management. Edward Okine: Yes. Hi guys. If you would just brief us on how you would treat the 10% convertible subordinated discount notes for Concentrex? You did not address that issue. Charlie Carden: If the convertible debt were to convert into shares, that would be essentially at the current share price. And that would be equivalent to paying off the debt at par. If it is not tendered, it would continue to accrete through maturity. Edward Okine: Okay, but it does have a tender control clause in it, right? And are you saying that we have the option to tender that to you due to a change of control? And how would that be addressed? That's what I'm trying to find out. Man: Could you restate the question, please? Edward Okine: It has a change of control put clause in the document ((inaudible)). And if you would - I mean, if there's someone I can speak to, that I can call off line to ((inaudible)). Charlie Carden: This is Charlie Carden. Call me off line. Edward Okine: Charlie? And what's the last name? Charlie: C-A-R-D-E-N. Edward Okine: Okay if you could give me the number to call please? Charlie Carden: 770-593-5610. Edward Okine: Okay, thank you. Operator: And our next question now comes from Gerald Lewis with Stephens Incorporated. 5 Gerald Lewis: Well congratulations on the acquisition. Could you describe - what do you think the biggest synergy comes from? Is it from their large customer base or kind of integrating some of your MCIF software with their software or a little bit of both? Tim Tuff: We believe that there is clear (complementarity) in the lending area. They have moved from DOS products to Window products. We've moved from DOS products to browser-based. We believe that some of our customers would like Windows product. We believe that some of their customers would like a browser based product. And we will now be able to offer the full range to both customer bases. We believe there is good synergy with our MCIF and you should anticipate that there will be tightly integrated solutions that flow from the combination of the two businesses. Gerald Lewis: Okay. I'll wait for a follow-up. Operator: Once again, as a reminder, if you would like to ask a question, please press the star key followed by the digit 1. And we'll pause again for just one moment. Our next question now comes from Daniel Barach with MLT Capital. Daniel Barach: How will this acquisition affect your share buyback plans? Tim Tuff: We have said all along that we will look at share buyback as well as acquisition opportunities in order to determine the best method of creating shareholder value. And we do have authorization for a 10% share buyback and that continues to stay out there. Daniel Barach: Is it less likely, at least the magnitude, given this acquisition or is it not less likely? Tim Tuff: We look at this at all times. Clearly we will look to get a clear handle on our cash flows following on from this acquisition. And we'll be making decisions down the road on the buyback. Operator: Mr. Barach, did you have anything further, sir? Daniel Barach: No. Just that answer seems to imply a reasonable pause in the share buyback is what you seem to be hinting at. 6 Tim Tuff: Well in terms of deployment of cash, we evaluate buyback against acquisition opportunities. We are today announcing a significant acquisition. And that does not mean that we rule out further buybacks down the road. Daniel Barach: Thank you. Operator: There is one name remaining in our queue. Once again, if you would like to ask a question, please press the star key followed by the digit 1. And we'll now go to Gerald Lewis for a follow up. Gerald Lewis: How many people are employed by Concentrex? Tim Tuff: It is just over 1000. Gerald Lewis: And what's kind of the breakdown between, I guess, like sales force, overhead and maybe programmers? Tim Tuff: I'm not sure I have the breakdown quite in that format. But their sales force is over 100 people. Gerald Lewis: Okay. And what is your sales force right now on the software side? Tim Tuff: On software it's about 30. Gerald Lewis: Right. And what is the integration plan as far as the location of the personnel? Tim Tuff: They have people in multiple locations across the country. And we will be reviewing exactly where this business should be headquartered during the course of the tender period. Gerald Lewis: I guess, lastly, are there any particular difficulties that you see, maybe what is the time horizon as far as the integration of your products and their products? Tim Tuff: I think that the initial integration will be very rapid. And then as we look to develop new products, that will take a little bit more time to see the integration of the different technologies. But we're very confident that it can be done. Gerald Lewis: Great. Thank you very much. Operator: And we'll now move on to Steven Gray with Windward Capital. 7 Steven Gray: Good morning and congratulations. I just had a follow-up question on a statement you mad earlier. The transaction is going to be financed through cash on hand and at the senior revolving facility. Does that mean that financing is not a condition of the deal going forward? Charlie Carden: It is not a condition of the deal going forward. Steven Gray: That's it. Thank you very much, gentlemen. Operator: One final reminder, if you would like to ask a question, please press star, 1. John Lammers with Bear Stearns has our next question. John Lammers: Good morning. I have two questions. I'm sorry, I missed when you gave out the goodwill and in-process R&D number. Cold you go over that again? Charlie Carden: Yes the goodwill will be about $106 million. The amount that will have been written-off on in process R&D is $10 million. John Lammers: Okay and also when will the tender commence? Charlie Carden: The documents will be filed about Friday of this week, which would be the expectation for the commencement of the tender. John Lammers: Thank you. Operator: And there are no further questions in our queue at this time. Before I turn the call back to Ms. Weyand, I'd like to remind everyone that there will be rebroadcast of today's conference. And it will be available starting today at 1:00 pm Eastern Time and will run until July 20 at 1 am Eastern Time. You may access that rebroadcast by dialing 719-457-0820. Once again, that dial in number 719-457-0820 and you may reference confirmation code 790956. And at this time I'll turn the conference over to Ms. Weyand for any additional or closing remarks. Vickie Weyand: Thank you. We appreciate you being with us this morning on our conference call. And I will be available to answer any questions that you may have later in the day. Again, thank you very much. Operator: That does conclude today's conference. Thank you, everyone, for your participation. 8 END EX-99.(A)(12) 4 ex99-a12.txt EXCERPTS FROM TRANSCRIPTS ON JULY 24, 2000 1 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 1 EXHIBIT (A)(12) EXCERPTS FROM TRANSCRIPT FROM JULY 24, 2000 CONFERENCE CALL JOHN HARLAND COMPANY MODERATOR: VICKIE WEYAND JULY 24, 2000 9:00 AM CT Operator: Good day, everyone, and welcome to John Harland's second quarter earnings release conference call. Just as a reminder, today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to Ms. Vickie Weyand, Vice President of Investor Relations. Please go ahead, ma'am. Vickie Weyand: Thank you. Thank you and good morning. We're pleased that you're able to join us this morning as we discuss our second quarter results, as well as our recently announced acquisition of Concentrex. [MATERIAL NOT RELEVANT] Charlie Carden: [MATERIAL NOT RELEVANT] Software sales were also down year-over-year. Our new loan and deposit origination product will be in general release late this month, which will help grow revenue for the remainder of 2000. As we announced last week, the acquisition of Concentrex will also boost revenue growth in this area significantly for the remainder of the year. [MATERIAL NOT RELEVANT] 2 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 2 With respect to the outlook, our financial performance through the first half of the year was strong. We expect the second half of the year to be slightly lower than the first half, reflecting normal seasonal patterns in the check business and continuing softness in Direct Marketing. However we do expect the second half of 2000 to be better than the second half of 1999. This outlook excludes the impact of the previously announced dilution of 15 cents per share associated with the acquisition of Concentrex, and the anticipated writeoff of $10 million of acquired research and development at the time of the transaction. Now this concludes the financial discussion. At this point, I'll turn the call over to Tim Tuff. Tim Tuff: Thanks, Charlie. And thank you - all of you, for joining us this morning. We're pleased that we could follow-up last week's important news about the acquisition of Concentrex by reporting strong second quarter earnings. It was our sixth consecutive quarter of year-over-year improved earnings. [MATERIAL NOT RELEVANT] Now let me comment a little further on the Concentrex acquisition. Harland's mission is to produce superior returns for our shareholders by being the leading provider of products and services to chosen segments of the financial and educational markets. Our proposed acquisition of Concentrex fits right in to this mission. It will expand our customer base, allow us to offer a greater number of products and services, and give us the leading position in key market segments. More importantly from your perspective, it will allow us to produce superior returns for our shareholders. 3 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 3 Concentrex had been on our radar screen for a number of months. And we pursued this opportunity when the timing was right. We believe there is real value for us in Concentrex, especially when combined with our existing software business. From a market leadership perspective, Concentrex is Number 1 in loan origination and account opening, with approximately 50% market share. Harland is currently Number 3, with approximately 10% market share. Concentrex is also Number 2 in mortgages and Number 2 or Number 3 in core applications for credit unions. Add Harland to the mix, with our Number 1 position in MCIF and our Number 1 or Number 2 position in data-marts, and we believe that we'll be a strong player in the financial software arena. From a financial perspective, Concentrex has approximately $120 million in projected revenues for 2000, almost 1/2 of which is a recurring revenue stream from service and maintenance. In terms of EBITDA, 3/4 of Concentrex' revenue base historically produce margins of almost 20%. The remainder of the business has been a major cash drain. We believe there are key synergies between the two companies. We will have a much larger customer base, and gain critical mass in software from financial institutions. Harland currently has approximately 1100 software customers. And Concentrex reports over 5000. We'll have one of the strongest sales forces in the financial software industry. And we believe that our sales force on the check side can generate leads for our Software group too. 4 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 4 Our products complement each other. In lending and account opening, the combined organization will offer financial institutions a choice of products, depending on their technology needs, Windows or browser-based. MCIF and business intelligence solutions enable financial institutions to more effectively analyze customer profitability, devise market strategies, and can identify the next most likely products to be purchased by a customer. Our ChannelExpert product writes customized messages to branch call centers for online banking. We see potential synergies between these solutions and Concentrex' online banking offerings. We also believe there are significant opportunities for the Ultradata business. And it fits well with our credit union strategy of offering a complete range of products and services that are tightly integrated. Clearly there will be opportunities for cost reductions from the efficiencies gained by combining two public companies. We recognize there are turnaround aspects to this acquisition. Financial institutions' concerns about Concentrex' liquidity have contributed to a wait-and-see attitude, which has delayed sales. Harland's strong balance sheet should alleviate that concern. And Concentrex has been highly focused on its e-commerce solutions. And this may have negatively impacted its traditional businesses. We believe restoring customer focus and instituting clear bottom-line accountability will address this issue. We believe that this acquisition creates substantial value. When combined with Harland's existing operations, we believe this acquisition can generate incremental EBITDA of about $20 million per annum. 5 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 5 Let's put the price of this acquisition into perspective. The largest companies in this sector are Fiserv and Jack Henry, which trade at EBITDA multiples of 19 and 36, respectively. In summary, we're pleased with the progress in our traditional businesses. This was a good quarter. But we're confident there are further improvements we can and will make. At the same time, we recognize that while there is still opportunity for margin improvement, there are limited opportunities for growth in our traditional Printed Products business. We see the Concentrex acquisition providing a growth platform from which Harland can grow further, as well as becoming in its own right a good contributor to Harland's cash flow. With that, I would like to open it up to questions. Operator: Thank you, sir. Today's question and answer session will be conducted electronically. Anyone wishing to ask a question, please press star 1 on your touch-tone telephone. Again, that's star 1 to ask a question. [MATERIAL NOT RELEVANT] Gerald Lewis: Yes. As far as financial.center, you're close to rolling that out. Do you have - what is kind of the initial demand - outlook there for the product? Tim Tuff: I think there's a lot of interest in the product because it is the first browser-based product. So that generates a lot of interest. I think people want to see the full results of the beta before they jump into a new technology. 6 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 6 We're seeing a lot of interest. And as I said, the pipeline is growing encouragingly. And I think we'll have a much better handle on that in - when we announce the results for the next quarter. Gerald Lewis: Okay. Based upon your comments, is it fair to say that - looking at Concentrex, that their kind of e-commerce revenue is $20 to $30 million? Is that about right for kind of the Internet-based stuff? Tim Tuff: I don't think it's as high as that. Gerald Lewis: Oh okay. Tim Tuff: But I'd refer you to the public documents of Concentrex. Gerald Lewis: Okay, okay. I mean, how are - I mean, what is the thought of kind of balancing maybe the kind of large opportunities in that space? And it would seem - does it seem like maybe there's maybe some significant investment up-front to kind of seize those opportunities? Or is that something you're interested in doing? Tim Tuff: Well they have been, you know, investing quite significantly in that area. And I think they have a number of interesting initiatives underway. And we'll be reviewing them to determine the real profit opportunities in that area. Gerald Lewis: Okay. Thank you. [MATERIAL NOT RELEVANT] Operator: And there are no further questions at this time. I'll turn the back - the call back over to you, Ms. Weyand. Please go ahead. 7 JOHN HARLAND COMPANY Moderator: Vickie Weyand 07-24-00/9:00 am CT Confirmation # 421623 Page 7 Vickie Weyand: Thank you very much. We appreciate you being on our call this morning as we talked about second quarter earnings and the acquisition of Concentrex. I'll certainly be around all day, as well as the rest of the week, to answer any further questions that you might have. Thank you. Operator: And that concludes today's conference. We thank you for your participation. And have a nice day. END EX-99.(B) 5 ex99-b.txt COMMITMENT LETTER, DATED JULY 26, 2000 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 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 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. 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. 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 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 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"). 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 27 John H. Harland Company - -------------------------------------------------------------------------------- EXHIBIT B PRICING GRID
FIVE-YEAR REVOLVING CREDIT FACILITY ----------------------------------------------------------- (Basis Points Per Annum) TOTAL DEBT TO EBITDA ----------------------------------------------------------- Level I Level II Level III Level IV Level V ----------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------
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