Exhibit 10.77
as of October 15, 2002
Workflow Management, Inc.
240 Royal Palm Way
Palm Beach, Florida 33480
Attention: Michael L. Schmickle, Chief Financial Officer
Re: Limited Waiver and Amendment
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Credit Agreement,
dated as of March 10, 2000 (as heretofore amended and in effect on the date
hereof, the "Credit Agreement"), by and among WORKFLOW MANAGEMENT, INC., a
Delaware corporation, and DATA BUSINESS FORMS LIMITED, a corporation organized
and existing under the laws of Ontario (the "Borrowers"), the lending
institutions from time to time party thereto (the "Lenders"), FLEET NATIONAL
BANK, as administrative agent for itself and the other Lenders (the "Agent"),
BANK ONE, N.A., as syndication agent, and BANK OF AMERICA, COMERICA BANK and
UNION BANK OF CALIFORNIA, N.A., as co-agents for the Lenders. Capitalized terms
used herein without definition shall have the meanings assigned to such terms in
the Credit Agreement.
Reference is further made to a certain Limited Waiver and Amendment dated
as of July 16, 2002, as amended by a certain Amendment No. 1 to Limited Waiver
and Amendment dated as of August 15, 2002 (collectively, the "July 16 Limited
Waiver"), by and among the Borrowers, the Agent, and the Lenders. The agreement
of the Agent and the Lenders to waive the Specified Defaults (as defined in the
July 16 Limited Waiver) expires on October 15, 2002. The Borrowers have
requested that the Lenders continue to waive each of the Specified Defaults and
also any Events of Defaults under Section 8.09(b) (Senior Leverage Ratio) of the
Credit Agreement through January 15, 2003 (the "Senior Leverage Defaults") and
amend certain provisions of the Credit Agreement, and the Agent and the Lenders
have agreed to do so, but only upon the terms and conditions set forth herein.
1. Waivers. Subject to the satisfaction of the conditions set forth below,
for the period commencing on October 15, 2002 (the "Closing Date") and ending on
the Waiver Termination Date (as defined below) only (the "Limited Waiver
Period"), the Agent and the Required Lenders hereby agree to waive each of the
Specified Defaults and the Senior Leverage Defaults.
2. Amendments. Subject to the satisfaction of the conditions set forth
below, from and after the date of this letter agreement, the Credit Agreement is
hereby amended as follows:
(a) The following paragraphs are inserted into the Credit Agreement as
Section 3.03(i) and 3.03(j):
"(i) On the Business Day following the date of receipt by
Workflow and/or any of its Subsidiaries of any payment of
principal and/or interest received in respect of the Insider
Notes, the Dollar Term Loans shall be prepaid on such date by an
amount equal to 100% of such payments. Such prepayment shall be
applied to the scheduled installments of principal due on the
Dollar Term Loans in the inverse order of maturity.
(j) On the Business Day following the date of receipt by Workflow
and/or any of its Subsidiaries of the proceeds of any state or
federal tax refund or any other extraordinary proceeds outside
the ordinary course of business, the Dollar Term Loans shall be
prepaid on such date by an amount equal to 100% of such proceeds.
Such prepayment shall be applied to the scheduled installments of
principal due on the Dollar Term Loans in the inverse order of
maturity.
(b) The following paragraphs are inserted into the Credit Agreement as
Section 7.01(j) and (k):
"(j) No later than Thursday of each calendar week, a rolling
13-week cash flow forecast with a comparison of actual to
projected cash flows for the previous week and an explanation of
any material variances between actual and projected items and
otherwise in form and substance reasonably satisfactory to the
Agent and the Lenders.
(k) As soon as practicable, but not later than November 30, 2002,
Workflow shall deliver to the Agent and the Lenders its annual
business plan reflecting the decision of the Board of Directors
of Workflow after giving due consideration to the results of the
findings of Borrowers' Advisors (i.e. cost reductions and
enhanced EBITDA), which shall be comprised of integrated
financial statements (balance sheet, income statement, statement
of cash flows), covenant calculations, two year projections and
an action plan as to treatment of the remaining earn out
payments, a detailed discussion of the differences between the
business plan and the findings and recommendations of the
Borrowers' Advisors and the reasons therefor, and otherwise in
form and substance reasonably satisfactory to the Agent and the
Lenders.
(c) The following sections are hereby inserted into the Credit
Agreement at the end of Section 7:
7.20 Special Committee. Through January 15, 2003, Workflow shall
maintain a Special Committee of its Board of Directors which
shall supervise the Borrowers' Advisors in developing
recommendations to Workflow's Board of Directors regarding
various restructuring and other strategies and financial
alternatives. Through January 15, 2003, representatives of the
Special Committee shall update the Agent and the Lenders and/or
their consultants telephonically on a bi-weekly basis with
respect to the status of the diligence process being performed by
the Borrowers' Advisors, the restructuring and other strategies
and financial alternatives being considered, and such other
matters as the Agent and the Lenders and/or their consultants may
reasonably request.
7.21 Advisors Report. On or before November 15, 2002, the
Borrowers' Advisors shall have each completed their diligence and
issued a final recommendation to the Special Committee and the
Special Committee shall have informed the Agent and the Lenders
of such recommendation.
(d) The table set forth in Section 8.09(a) of the Credit Agreement is
hereby amended by deleting the last row of the table containing the Period
"October 31, 2002 and thereafter" and the Leverage Ratio "3.75 : 1.00" and
substituting the following in its place:
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October 31, 2002 through 4.60:1.00
January 30, 2003
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January 31, 2003 and thereafter 3.75:1.00
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(e) The table set forth in Section 8.14 is hereby deleted, and the
following table inserted in its place:
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Month Minimum Consolidated EBITDA
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May, 2002 $2,507,000
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June, 2002 $4,745,000
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July, 2002 $8,953,000
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August, 2002 $12,076,000
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September, 2002 $14,796,000
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October, 2002 $19,027,000
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November, 2002 $22,079,000
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December, 2002 $24,836,000
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For purposes of this Section 8.14, Consolidated EBITDA shall be
calculated without giving effect to professional fees (including,
without limitation, those of the Borrowers' Advisors) incurred in
connection with the restructuring of the Obligations.
(f) The following section is hereby inserted into the Credit
Agreement at the end of Section 8:
8.15 Insider Notes. Workflow and its Subsidiaries shall not
waive, amend, extend, renew, or otherwise modify the terms
and conditions of the Insider Notes without the written
consent of the Agent.
(g) The provisions of Section 9.03(a) are hereby deleted in their
entirety and the following substituted in their stead:
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(a) default in the due performance or observance by it of
any term, covenant or agreement contained in Section
7.01(f)(x), 7.01(j), 7.01(k), 7.11, 7.18, 7.19, 7.20, 7.21
or 8,
(h) The following new section is hereby added after Section 9.11:
9.12 Business Consultants. The termination of engagement of
the Borrowers' Advisors or the modification of the scope of
their duties, in each case on or before January 15, 2003,
without the prior written consent of the Required Lenders.
(i) The following definition is inserted into Section 10 of the
Credit Agreement after the definition of "Borrower" and before the
definition of "Borrowing":
"Borrowers' Advisors" shall have the meaning set forth in
Section 7.19 hereof.
(j) The following definition is inserted into Section 10 of the
Credit Agreement after the definition of "Interest Rate Protection
Agreement" and before the definition of "Investment":
"Insider Notes" means those certain promissory notes payable
to Workflow or its Subsidiaries listed on Schedule 3.03(i)
hereto.
(k) Exhibit "A" attached to this letter agreement shall be
inserted into the Credit Agreement as Schedule 3.03(i).
3. Waiver Termination Date, etc. The foregoing waivers and amendments shall
not apply to any other provision of the Credit Agreement, shall be limited
precisely as written and shall terminate on the earlier to occur of the
following (the "Waiver Termination Date"): (a) January 15, 2003, (b) the failure
of the Borrowers to comply with the terms of this letter agreement, and (c) the
occurrence of a Default or an Event of Default (other than the Specified
Defaults or the Senior Leverage Defaults) under the Credit Agreement. From and
after the Waiver Termination Date, the Specified Defaults and Senior Leverage
Defaults shall be Events of Default for all purposes of the Credit Agreement and
the other Credit Documents unless such Events of Default are waived in writing
by the Required Lenders, or the Credit Agreement is amended to provide
otherwise, in each case, effective on or prior to the Waiver Termination Date.
The Agent and the Lenders expressly reserve all rights and remedies available to
them from and after the Waiver Termination Date as a result of the Specified
Defaults, the Senior Leverage Defaults, and as a result of any Defaults or
Events of Default other than the Specified Defaults and the Senior Leverage
Defaults.
4. Condition to Effectiveness. The limited waivers and amendments set forth
in this letter agreement shall become effective upon the satisfaction of the
following conditions:
(a) The Borrowers and the Guarantors shall have executed and delivered
to the Agent account control agreements with Bank of America and Fleet
National Bank in form and substance satisfactory to the Agent, with respect
to each of the bank accounts maintained by the Borrowers and the
Guarantors, and such agreements shall be in full force and effect.
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(b) The Agent and the Lenders shall have received a 13-week cash flow
forecast for the Borrowers in form and substance reasonably satisfactory to
the Agent and the Lenders.
(c) All promissory notes payable to the Borrowers and their respective
Subsidiaries, including the several promissory notes evidencing loans made
to members of management and directors of Workflow and all intercompany
promissory notes, shall have been delivered to the Agent as collateral
security for the Obligations pursuant to the terms of the applicable
Security Documents.
(d) The Borrowers shall have paid all reasonable expenses of the
Agent, the Agent's counsel and their respective professional advisors for
which invoices have been issued as of the Closing Date.
(e) The Agent shall have received a copy of this letter agreement,
duly executed by each of the Borrowers, the Agent and the Required Lenders.
(f) The Agent shall have received evidence of appropriate corporate or
other entity approvals and other evidence of the enforceability of this
letter agreement, in each case satisfactory to the Agent in form and
substance (provided that the Agent shall not require legal opinions in
connection with the same).
5. Waiver Fee. The Borrowers shall pay a waiver fee (the "Waiver Fee") to
the Agent for the pro-rata accounts of the Lenders in an amount of 0.15% of the
sum of (i) the Total Revolving Commitment as of the Closing Date, and (ii)
aggregate amount of Dollar Term Loans outstanding as of the Closing Date. The
Waiver Fee shall be fully earned and non-refundable as of the Closing Date, and
shall be paid to the Agent on or before the Waiver Termination Date.
6. No Present Claims. The Borrowers and the Guarantors acknowledge and
agree that, based upon the facts and circumstances existing as of the date
hereof: (i) the Borrowers and Guarantors have no claim or cause of action
against any of the Lenders or the Agent (or any of their directors, officers,
employees, agents or affiliates); (ii) the Borrowers and the Guarantors have no
offset right, counterclaim or defense of any kind against any of the
Obligations, indebtedness or liabilities to the Lenders and the Agent; and (iii)
each of the Lenders and the Agent has heretofore performed and satisfied in a
timely manner all of its obligations to the Borrowers, and the Guarantors, if
any. The Lenders and the Agent wish (and the Borrowers and Guarantors agree) to
eliminate any possibility that any past conditions, acts, omissions, events,
circumstances or matters would impair or otherwise adversely affect any of their
rights, interests, contracts, collateral security or remedies. Therefore, the
Borrowers and the Guarantors unconditionally release, waive and forever
discharge (a) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of any of the Lenders or the Agent to the Borrowers and
the Guarantors, except the obligations to be performed by the Lenders or the
Agent hereafter as expressly stated in this Agreement and the other Credit
Documents, and (b) all claims, offsets, causes of action, suits or defenses of
any kind whatsoever (if any), whether known or unknown, which the Borrowers
and/or Guarantors might otherwise have against any of the Lenders or the Agent
or any of their directors, officers, employees, agents or affiliates for their
respective
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actions or omissions occurring prior to the date hereof, in either case (a) or
(b) above, on account of any condition, act, omission, event, contract,
liability, obligation, indebtedness, claim, cause of action, defense,
circumstance or matter of any kind whatsoever which existed, arose or occurred
at any time prior to the date hereof.
7. Miscellaneous. No waiver herein granted or agreement herein made shall
extend beyond the Limited Waiver Period, nor shall anything contained herein be
deemed to imply any willingness of the Agent or the Lenders to agree to, or
otherwise prejudice any rights of the Agent or the Lenders with respect to, any
similar waivers, amendments or agreements that may be requested for any future
period. This agreement shall constitute a "Credit Document". Except as
specifically waived or amended hereby, each of the terms and conditions of the
Credit Agreement and the other Credit Documents are hereby ratified and
confirmed and shall remain in full force and effect. Nothing contained herein
shall in any way prejudice, impair or effect any rights or remedies of the
Lenders or the Agent under the Credit Agreement and the other Credit Documents.
This letter agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
counterparts taken together shall be deemed to constitute one and the same
instrument.
THIS LETTER AGREEMENT SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICTS OF LAW).
Please acknowledge your acceptance of the foregoing by executing and
returning this letter agreement to the attention of Brian Valenti, Vice
President, at Fleet National Bank, 100 Federal Street, Boston, Massachusetts
02110.
Very truly yours,
FLEET NATIONAL BANK, as Agent and as a Lender
By: /s/ Fleet National Bank
-----------------------------------------------
Name:
Title:
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BANK ONE, N.A.
By /s/ Bank One, N.A.
-----------------------------------------------
Name:
Title:
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COMERICA BANK
By /s/ Comercia Bank
-----------------------------------------------
Name:
Title:
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BANK OF AMERICA
By /s/ Bank of America
-----------------------------------------------
Name:
Title:
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UNION BANK OF CALIFORNIA, N.A.
By /s/ Union Bank of California, N.A.
-----------------------------------------------
Name:
Title:
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NATIONAL CITY BANK
By /s/ National City Bank
-----------------------------------------------
Name:
Title:
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LASALLE BANK NATIONAL ASSOCIATION
By: /s/ LaSalle Bank National Association
-----------------------------------------------
Name:
Title:
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CHEVY CHASE BANK, F.S.B.
By /s/ Chevy Chase Bank, F.S.B.
-----------------------------------------------
Name:
Title:
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ACCEPTED, AGREED AND ACKNOWLEDGED:
WORKFLOW MANAGEMENT, INC.
By /s/ Michael L. Schmickle
---------------------------------------------------------
Name: Michael L. Schmickle
Title: Executive Vice President & Chief Financial Officer
DATA BUSINESS FORMS LIMITED
By /s/ D.M. Odell
----------------------------------------
Name: D.M. Odell
Title: President
By /s/ Paul O'Shea
----------------------------------------
Name: Paul O'Shea
Title: Secretary and Treasurer
IGETSMART.COM, INC.
By /s/ Michael L. Schmickle
----------------------------------------
Name: Michael L. Schmickle
Title: Vice President
PSE DATA PRODUCTS, INC.
By /s/ Michael L. Schmickle
----------------------------------------
Name: Michael L. Schmickle
Title: Vice President
DOCUMENT OPTIONS COMPANY
By /s/ Michael L. Schmickle
----------------------------------------
Name: Michael L. Schmickle
Title: Vice President
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WORKFLOW DIRECT, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
SFI OF DELAWARE, LLC
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
SFI OF ILLINOIS, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
SFI OF PUERTO RICO, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
WORKFLOW MANAGEMENT
ACQUISITION II CORP.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: President
OEI PROPERTIES, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
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WFMI, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: President
WORKFLOW OF FLORIDA, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: President
DIRECTPRO LLC
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
DIRECTPRO WEST, LLC
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
UNITED ENVELOPE, LLC
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
POCONO ENVELOPE CORP.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
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WORKFLOW MANAGEMENT ACQUISITION
CORPORATION
By /s/ James E. Hurley
-----------------------------------------
Name: James E. Hurley
Title: Vice President
UNIVERSAL FOLDING BOX CO., INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
PREMIER GRAPHICS, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
FREEDOM GRAPHIC SERVICES, INC.
By /s/ Michael L. Schmickle
------------------------------------------
Name: Michael L. Schmickle
Title: Vice President
#809938
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Schedule 3.03(i)
Schedule of Insider Notes
- -----------------------------------------------------------------------------------------------------------------
Name of Date of Face Amount of Outstanding Due Date
Officer/Director Promissory Note Note Principal Balance
(Excluding
Accrued Interest,
If Any)
- ----------------------- ----------------------------------------------------------------------------------------
Gus J. James, II May 25, 2001 $200,000.00 $199,992.17 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
F. Craig Wilson* May 25, 2001 $200,000.00 $199,992.17 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Thomas A. Brown, Sr.* May 25, 2001 $200,000.00 $199,992.17 January 2, 2003
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Peter J. Pakuris** May 25, 2001 $200,000.00 $186,059.66 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Claudia S. Amlie** May 25, 2001 $165,716.53 $165,716.53 February 1, 2003
- -----------------------------------------------------------------------------------------------------------------
Claudia S. Amlie** May 25, 2002 $299,951.37 $299,951.37 February 1, 2003
- -----------------------------------------------------------------------------------------------------------------
Steve R. Gibson May 25, 2001 $500,000.00 $414,322.10 January 2, 2003
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Steve R. Gibson September 2, 2000 $400,000.00 $399,934.69 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Thomas B. D'Agostino, Jr. May 25, 2001 $500,000.00 $414,322.10 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Thomas B. D'Agostino, Jr. September 1, 2000 $50,000.00 $49,995.00 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Michael L. Schmickle May 25, 2001 $200,000.00 $165,716.53 January 2, 2003
- -----------------------------------------------------------------------------------------------------------------
Michael L. Schmickle September 1, 2000 $20,000.00 $19,998.00 January 2, 2003
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Thomas B. D'Agostino, Sr. May 25, 2001 $1,000,000.00 $828,662.79 January 2, 2003
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Thomas B. D'Agostino, Sr. September 1, 2000 $1,000,000.00 $999,814.32 January 2, 2003
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John Conway** September 1, 1999 $50,000.00 $49,995.00 August 31, 2000
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Richard M. Schlanger** January 16, 2001 $53,359.90 $53,359.90 January 16, 2003
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Michael Mento September 1, 2000 $20,000.00 $11,998.57 January 2, 2003
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*Member of the Special Committee
** Former Officer, Director or Employee
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