EXHIBIT 10.3
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is entered into as of December
10, 1999 among U.S. Foodservice, Inc., a Delaware corporation, and JP
Foodservice Distributors, Inc., a Delaware corporation (collectively, the
"Borrowers"); U.S. Foodservice, a Delaware corporation (the "Parent") and those
subsidiaries of the Borrowers identified on the signature pages hereto (together
with each other subsidiary which may become a party hereto by execution of a
joinder agreement and the Parent, the "Guarantors"); and First Union National
Bank, a national banking association ("Lender").
BACKGROUND
WHEREAS, Borrowers and Lender desire to enter into a revolving credit
facility pursuant to which Lender will make credit available to Borrowers for
the purposes hereinafter set forth; and
WHEREAS, as a condition to making such revolving credit facility available
to Borrowers, Lender has required, among other things, the Guarantors to
guarantee all of the Borrowers' obligations arising under this Agreement and any
other instruments or agreements executed pursuant hereto (collectively, the
"Loan Documents").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS
1.1. Applicable Margin
"Applicable Margin" shall mean, for purposes of calculating (i) the
applicable interest rate for any day for any Eurodollar Loan or (ii) the
applicable rate for the Facility Fee for any day for purposes of Section 2.3
hereof, the applicable margin corresponding to the Total Debt Ratio described
below in effect as of the most recent Determination Date:
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Applicable Applicable
Margin Margin
Pricing Total Debt for for
Level Ratio Eurodollar Loans Facility Fee
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Equal to or less than
II 4.0 to 1.0 but greater 112.5 bps 25.0 bps
than 3.5 to 1.0
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I Equal to or less than 102.5 bps 25.0 bps
3.5 to 1.0
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Determination of the appropriate Applicable Margins based on the Total Debt
Ratio shall be made as of each Determination Date. The Total Debt Ratio in
effect as of a Determination Date shall establish the Applicable Margins that
shall be effective as of the date designated by Lender as the Applicable Margin
Change Date. Lender shall determine the Applicable Margins as of each
Determination Date occurring after the Facility Closing Date and shall promptly
notify Borrowers of the Applicable Margins so determined and of the related
Applicable Margin Change Date. Such determinations by Lender of the Applicable
Margins shall be rebuttably presumptive evidence thereof. As of the Facility
Closing Date and until the first Applicable Margin Change Date, (a) the
Applicable Margin for purposes of calculating the applicable interest rate for
any Eurodollar Loan shall be 112.5 bps and (b) the Applicable Margin for
purposes of calculating the Facility Fee shall be 25 bps. All of the terms in
this Section 1.1 shall have the meanings set forth in the Existing Credit
Agreement (as defined below), except for the terms Applicable Margin and
Facility Fee, which shall have the meanings set forth in this Agreement.
1.2. Existing Credit Agreement
"Existing Credit Agreement" shall mean that certain 364-Day Credit
Agreement dated as of December 23, 1997 among Borrowers, the lenders that are
parties thereto from time to time and Bank of America, N.A., as Administrative
Agent, Bank of America, LLC (formerly NationsBanc Xxxxxxxxxx Securities LLC and
NationsBank Xxxxxxxxxx Securities, Inc.) and Chase Securities, Inc., as Co-
Arrangers, The Chase Manhattan Bank, as Syndication Agent, and Bank of America,
NT & SA, as Documentation Agent.
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1.3. Existing Guaranty Agreement
"Existing Guaranty Agreement" shall mean that certain 364-Day Guaranty
Agreement dated as of December 23, 1997 among the Guarantors and Bank of
America, N.A., as agent.
1.4. Incorporated Definitions
The defined terms contained in Article I of the Existing Credit
Agreement (hereinafter referred to collectively as the "Incorporated
Definitions") which are used in the Incorporated Loan Provisions, the
Incorporated Representations and Warranties, the Incorporated Covenants, the
Incorporated Events of Default, the Incorporated Guaranty and the Incorporated
Miscellaneous Provisions (all as defined below, collectively, the "Incorporated
Terms") are hereby incorporated by reference into this Agreement to the same
extent and with the same effect as if set forth fully herein; provided, however,
that all references to the Administrative Agent, the Required Lenders and the
Lenders in the Incorporated Terms shall be deemed to be references to Lender,
and, provided further, that all other terms used but not otherwise defined in
this Agreement shall have the meanings set forth in the Existing Credit
Agreement.
2. LOANS
2.1. Revolving Credit Loan
Subject to the terms and conditions hereof, during the period
beginning on the date hereof (the "Facility Closing Date") and ending on the
Revolving Period Termination Date, Lender shall make advances (all such
advances, collectively, the "Revolving Credit Loan") to Borrowers in such
amounts as Borrowers shall request from time to time, provided that the maximum
aggregate outstanding principal amount of the Revolving Credit Loan shall at no
time exceed $25,000,000 (the "Commitment"). Each such advance hereunder may
consist of Base Rate Loans or Eurodollar Loans (or a combination thereof), as
Borrowers may request. Each such advance shall be made upon written or e-mail
notice of Borrowers received by the Lender not later than 1:00 PM Eastern Time
three (3) Business Days prior to the date of the proposed advance, and the
amount of such proposed advance shall not be in an amount of less than $100,000.
Each such notice shall specify whether such advance shall consist of Base Rate
Loans, Eurodollar Loans or a combination thereof, and for each Eurodollar Loan
that is requested, the Interest Period with respect thereto. If Borrowers shall
fail to specify in any such notice (i) an applicable Interest Period in the case
of a Eurodollar Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (ii) the type of Revolving Credit Loan
requested, then such notice shall be deemed to be a request for a Base Rate Loan
hereunder. Borrowers may borrow, repay and reborrow, subject to the limitations
set forth above. The aggregate outstanding
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principal amount of the Revolving Credit Loan as of the Revolving Period
Termination Date, together with all accrued and unpaid interest thereon, shall
be due and payable in full on the Revolving Period Termination Date. For
purposes of this Agreement, the "Revolving Period Termination Date" shall mean
the date which is 364 days after the Facility Closing Date.
2.2. Interest and Additional Provisions
Reference is made to the provisions contained in Section 2.01(d),
Section 2.03, Section 3.01, Section 3.02(a), Sections 3.03 through 3.09 and
Sections 4.04 through 4.06 of the Existing Credit Agreement (hereinafter
referred to as the "Incorporated Loan Provisions"). The Incorporated Loan
Provisions are hereby incorporated by reference into this Agreement to the same
extent and with the same effect as if set forth fully herein and shall inure to
the benefit of Lender, without giving effect to any waiver, amendment,
modification or replacement of the Existing Credit Agreement or any term or
provision thereof occurring subsequent to the date of this Agreement, except to
the extent otherwise specifically provided in Section 7 hereof; provided,
however, that (a) all references in the Existing Credit Agreement to the
Applicable Margin shall be deemed to be references to the Applicable Margin as
defined in Section 1.1 hereof; (b) the reference to the Closing Date (as used in
Section 3.09(g) of the Existing Credit Agreement) shall be deemed to be a
reference to the Facility Closing Date; (c) the references to Loans and
Revolving Loans in the Existing Credit Agreement shall be deemed to be
references to the Revolving Credit Loan as defined herein; (d) the Prime Rate
shall be Lender's prime rate in effect at its principal office; (e) the Federal
Funds Effective Rate shall be, for any day, the interest rate reported on
Telerate page 5 as the opening federal funds rate; if, for any reason, such rate
is not then available, then the Federal Funds Effective Rate shall mean a daily
rate which is determined by Lender to be the rate at which federal funds are
being offered for sale in the national federal funds market at opening; and the
Federal Funds Effective Rate for holidays or weekends shall be the same as the
rate for the most immediate preceding Business Day; (f) the Eurodollar Rate
shall mean for the Interest Period for each Eurodollar Loan comprising part of
the same borrowing (including conversions, extensions and renewals), the per
annum rate for U.S. dollar deposits with a maturity equal to the number of
months corresponding to such Interest Period, as reported on Telerate page 3750
as of 11:00 a.m., London time, on the second London business day before the
relevant Interest Period begins (or if not so reported, then as determined by
the Lender from another recognized source or interbank quotation); (g) the
references to the Credit Documents (within the definition of Credit Obligations
and in Sections 3.01 and 3.09(f) of the Existing Credit Agreement) shall be
deemed to be a reference to the Loan Documents hereunder; (h) the reference to
"this Agreement" in Section 3.09(a) of the Existing Credit Agreement shall be
deemed to be a reference to this Agreement; (i) the reference in Section 3.03 of
the Existing Credit Agreement to Section 5.02(d) of the Existing Credit
Agreement shall be deemed deleted; (j) the
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reference in Section 3.04 of the Existing Credit Agreement to Section 2.01(b) of
the Existing Credit Agreement and the reference in Section 3.07 of the Existing
Credit Agreement to Section 2.01 of the Existing Credit Agreement shall each be
deemed to be a reference to Section 2.1 of this Agreement; (k) the references to
the Revolving Committed Amount (as used in Section 2.03 of the Existing Credit
Agreement) shall be deemed to be references to the Commitment as defined in
Section 1.1 hereof; and (l) the references to Competitive Loans and the
conversion or prepayment thereof in Sections 2.03 and 3.02(a) of the Existing
Credit Agreement shall be deemed deleted.
2.3. Facility Fee
In consideration of the Commitment, Borrowers agree to pay to Lender
a facility fee (the "Facility Fee") for the period from the Facility Closing
Date to the Revolving Period Termination Date, on the aggregate Commitment,
computed at a per annum rate equal to the Applicable Margin for each day during
the applicable period. The Facility Fee shall be payable quarterly in arrears on
the fifteenth (15th) day of each January, April, July and October and on the
Revolving Period Termination Date for the immediately preceding fiscal quarter
(or portion thereof).
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS
3.1. Incorporation by Reference
Reference is made to the Existing Credit Agreement and the
representations and warranties of Borrowers contained in Article IX of the
Existing Credit Agreement (hereinafter referred to as the "Incorporated
Representations and Warranties") and the covenants contained in Articles VI, VII
and VIII of the Existing Credit Agreement (hereinafter referred to as the
"Incorporated Covenants"). The Incorporated Representations and Warranties and
the Incorporated Covenants are hereby incorporated by reference into this
Agreement to the same extent and with the same effect as if set forth fully
herein and shall inure to the benefit of Lender, without giving effect to any
waiver, amendment, modification or replacement of the Existing Credit Agreement
or any term or provision thereof occurring subsequent to the date of this
Agreement, except to the extent otherwise specifically provided in Section 7
hereof; provided, however, that, except as set forth in Section 3.2 hereof, in
Articles VI, VII, VIII and IX of the Existing Credit Agreement, (a) the
reference to "this Agreement" and the Credit Documents (and the references to
the preceding two terms in the definition of Material Adverse Effect) in the
Existing Credit Agreement shall be deemed to be references to this Agreement and
the Loan Documents, respectively; (b) the references to Default and Event of
Default shall be modified as provided in
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Section 5 hereof; (c) the references to the Closing Date shall be deemed to be
references to the Facility Closing Date; and (d) the references to the Guaranty
Agreement shall be deemed to be references to the Incorporated Guaranty; and (e)
the references to the Commitments shall be deemed to be references to the
Commitment.
3.2. Exceptions to Section 3.1 Proviso
The proviso set forth in Section 3.1 hereof shall not be applicable
to (a) the Schedules to the Existing Credit Agreement and the representations,
warranties and/or covenants concerning such Schedules, which shall continue to
set forth information and be provided as of December 23, 1997, respectively; (b)
the phrases "as of the date of this Agreement" or "on the date hereof" or words
of similar import in Articles VI, VII, VIII and IX of the Existing Credit
Agreement, which shall continue to be references to December 23, 1997; (c) the
references to the Closing Date in Sections 8.01(a) and 8.01(c) of the Existing
Credit Agreement, which shall continue to be references to December 23, 1997;
(d) the representation and warranty regarding Unrestricted Subsidiaries in
Section 9.02 of the Existing Credit Agreement, which shall continue to be
provided as of December 23, 1997; (e) the representation and warranty set forth
in the last sentence of Section 9.08 of the Existing Credit Agreement, which
shall continue to be provided as of December 23, 1997 and to refer to the
Existing Credit Agreement and the Credit Documents thereunder; (f) the Existing
Affiliate Agreements delivered to the Lender pursuant to Section 9.09(c) of the
Existing Credit Agreement, which shall be those agreements as in existence on
December 23, 1997; (g) the representation and warranty set forth in the last
sentence of Section 9.12(a) of the Existing Credit Agreement, which shall
continue to be provided as of the most recent valuation date prior to December
23, 1997; and (h) the representation and warranty set forth in the fourth
sentence of Section 9.13 and in Section 9.19 of the Existing Credit Agreement,
which shall continue to be provided as of December 23, 1997.
4. CONDITIONS PRECEDENT
4.1. Conditions Precedent to First Advance of the Revolving Credit Loan on
or after the Date Hereof
The obligation of Lender to make the first advance of the Revolving
Credit Loan on or after the date hereof is subject to the satisfaction (in the
reasonable judgment of Lender), at or before the date of such advance, of the
following conditions precedent:
4.1.1. Representations and Warranties; Compliance
All representations and warranties made by Borrowers in this
Agreement (including the Incorporated Representations and Warranties) or any of
the other Loan Documents and by the Guarantors in the Incorporated Guaranty
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shall be true and correct in all material respects on and as of the date of such
advance with the same force and effect as though such representations and
warranties had been made on and as of the date of such advance. All of the
agreements, terms, covenants, and conditions required by this Agreement to be
complied with and performed by Borrowers prior to the date of such advance shall
have been complied with and performed.
4.1.2. Documents
Borrowers shall deliver to Lender copies of all documents and other
items reasonably requested by Lender evidencing Borrowers' and the Guarantors'
authority to enter into and perform this Agreement and the other Loan Documents.
4.1.3. Executed Loan Documents
Borrowers shall deliver to Lender fully executed copies of all the
Loan Documents.
4.2. Conditions Precedent to the Second and Each Subsequent Advance of the
Revolving Credit Loan
The obligation of Lender to make the second and each subsequent
advance of the Revolving Credit Loan is subject to the satisfaction (in the
reasonable judgment of Lender), as of the date of each such advance, of the
conditions precedent specified in Section 4.1.1 hereof.
5. EVENTS OF DEFAULT AND REMEDIES
Reference is made to the Existing Credit Agreement and the events of
default and remedies set forth in Article X of the Existing Credit Agreement
(hereinafter referred to as the "Incorporated Events of Default"). The
Incorporated Events of Default are hereby incorporated by reference into this
Agreement to the same extent and with the same effect as if set forth fully
herein and shall inure to the benefit of Lender, without giving effect to any
waiver, amendment, modification or replacement of the Existing Credit Agreement
or any term or provision thereof occurring subsequent to the date of this
Agreement, except to the extent otherwise specifically provided in Section 7
hereof; provided, however, that all references to "Loans," "this Agreement," the
"Guaranty Agreement," the "Credit Documents" or the "Commitments" in Article X
of the Existing Credit Agreement shall be deemed to be references to the
Revolving Credit Loan, this Agreement, the Incorporated Guaranty, the Loan
Documents, and the Commitment, respectively, and provided further, that the
reference in Section 10.02 of the Existing Credit Agreement to the "voting
procedures in Section 12.07" shall be deemed deleted. In addition, any Event of
Default under the Existing Credit Agreement shall be an Event of Default
hereunder.
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6. GUARANTY
Reference is made to the Existing Guaranty Agreement and the
agreements of the Guarantors contained in Section 1 through Section 11 and
Section 13 through Section 21 of the Existing Guaranty Agreement (hereinafter
referred to as the "Incorporated Guaranty"). The Incorporated Guaranty is
hereby incorporated by reference into this Agreement to the same extent and with
the same effect as if set forth fully herein and shall inure to the benefit of
Lender, without giving effect to any waiver, amendment, modification or
replacement of the Existing Guaranty Agreement or any term or provision thereof
occurring subsequent to the date of this Agreement, except to the extent
otherwise specifically provided in Section 7 hereof; provided, however, that (a)
the references to the Credit Agreement, the Credit Documents, the Loan, the
Commitments and to "this Guaranty Agreement" thereunder shall be deemed to be
references to this Agreement, the Loan Documents, the Revolving Credit Loan, the
Commitment and this Section 6, respectively (except that any cross-references in
the Existing Guaranty Agreement to Sections and definitions in the Existing
Credit Agreement shall not be modified by the foregoing proviso), (b) the notice
address set forth in Section 17(a) of the Existing Guaranty Agreement shall be
deemed to be 0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention of
Treasurer (Facsimile No. 410-309-6296), and (c) the notice address set forth in
Section 17(b) of the Existing Guaranty Agreement shall be deemed to be First
Union National Bank, Attn: Portfolio Management, 0000 Xxxxx Xxxxxx Xxxx, 0
Xxxxx, XxXxxx, XX 00000 (Facsimile: 703/760-6300).
7. MISCELLANEOUS PROVISIONS
Reference is made to the Existing Credit Agreement and the
miscellaneous provisions contained in Article XII of the Existing Credit
Agreement (hereinafter referred to as the "Incorporated Miscellaneous
Provisions"). The Incorporated Miscellaneous Provisions (and all other relevant
provisions of the Existing Credit Agreement related thereto) are hereby
incorporated by reference into this Agreement to the same extent and with the
same effect as if set forth fully herein and shall inure to the benefit of
Lender, without giving effect to any waiver, amendment, modification or
replacement of the Existing Credit Agreement or any term or provision thereof
occurring subsequent to the date of this Agreement, except to the extent
otherwise specifically provided in the following provisions of this Section 7;
provided, however, that (a) the references to the Credit Documents, "this
Agreement," the Loans and the Commitments in Article XII of the Existing Credit
Agreement shall be deemed to be references to the Loan Documents, this
Agreement, the Revolving Credit Loan and the Commitment, respectively; (b) the
notice address set forth in Section 12.01(a) of the Existing Credit Agreement
shall be deemed to be 0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attention of Treasurer (Facsimile No. 410-309-6296); and (c) the notice address
set forth in Section 12.01(b) of the Existing Credit Agreement shall be deemed
to be First Union
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National Bank, Attn: Portfolio Management, 0000 Xxxxx Xxxxxx Xxxx, 0 Xxxxx,
XxXxxx, XX 00000 (Facsimile: 703/760-6300).
In the event a waiver is granted under the Existing Credit Agreement
or the existing Guaranty Agreement or an amendment or modification is executed
with respect to the Existing Credit Agreement or the Existing Guaranty
Agreement, and such waiver, amendment and/or modification affects the
Incorporated Terms, then such waiver, amendment or modification shall be
effective with respect to the Incorporated Terms as incorporated by reference
into this Agreement only if consented to in writing by Lender. In the event of
any replacement of the Existing Credit Agreement or the Existing Guaranty
Agreement with a similar credit facility or guaranty agreement, as applicable
(in either case, the "New Facility"), the provisions contained in the New
Facility which correspond to the Incorporated Terms shall be deemed to be the
"Incorporated Terms" hereunder only if consented to in writing by Lender and, if
such consent is not granted or if the Existing Credit Agreement or the Existing
Guaranty Agreement is terminated and not replaced, then the definitions,
representations and warranties, covenants, events of default and miscellaneous
provisions contained in Articles I, IX, VI, VII, VIII, X and XII, the loan
provisions contained in Section 2.01(d), Section 2.03, Section 3.01, Section
3.02(a), Sections 3.03 through 3.09 and Sections 4.04 through 4.06 of the
Existing Credit Agreement, and the guaranty provisions contained in Sections 1
through Section 11 and Section 13 through Section 21 of the Existing Guaranty
Agreement (together with any waivers, modifications or amendments set forth
herein or approved in accordance with this Section 7) shall continue to be the
Incorporated Terms hereunder.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove set forth.
BORROWERS:
U.S. FOODSERVICE, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxx
Title:Treasurer
JP FOODSERVICE DISTRIBUTORS, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxx
Title:Treasurer
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GUARANTORS:
U.S. FOODSERVICE
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Name: Xxxxxx Xxxxxxxx
Title:Treasurer
XXXXXXXXXXXX SALES CO. LIMITED
PARTNERSHIP
By: USF/Xxxxxxxxxxxx Sales GP
Holdings, LLC
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Name: Xxxxxx Xxxxxxxx
Title: Treasurer
SUPERIOR PRODUCTS MFG. CO.
LIMITED PARTNERSHIP
By: USF/Superior Products GP
Holdings, LLC
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Name: Xxxxxx Xxxxxxxx
Title:Treasurer
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E&H DISTRIBUTING CO.
XXXXXXXX'X PRIME MEATS &
PROVISIONS, INC.
ILLINOIS FRUIT & PRODUCE CORP.
TRANS-PORTE, INC.
EL PASADO, INC.
RITUALS COFFEE COMPANY
ROSELI PRODUCTS CORPORATION
XXXXXX FOOD SERVICE, INC.
NEVADA BAKING COMPANY, INC.
OUTWEST MEAT COMPANY
HILLTOP HEARTH BAKERIES, INC.
CROSS VALLEY FARMS, INC.
XXXXXXX BROTHERS, INC.
BRB HOLDINGS, INC.
X.X. XXXXXXXX & COMPANY, INC.
FOOD DISTRIBUTION CONCEPTS, INC.
XXXX XXXXXX & CO.
KING'S FOODSERVICE, INC.
ROANOKE RESTAURANT SERVICE, INC.
TARGETED SPECIALTY SERVICES, INC.
U.S. FOODSERVICE OF ATLANTA, INC.
U.S. FOODSERVICE OF ILLINOIS, INC.
U.S. SYSTEMS DISTRIBUTION, INC.
WHITE SWAN, INC.
X.X. XXXX & SONS, L.L.C.
U.S. FOODSERVICE OF BUFFALO, INC.
SOUTHTOWNS SEAFOOD, INC.
SOFCO, INC.
S.&O. PROPERTY CORPORATION
SQP, INC.
USF/XXXXXXXXXXXX SALES GP
HOLDINGS, LLC
USF/XXXXXXXXXXXX SALES LP
HOLDINGS, LLC
NEXT DAY GOURMET, INC.
USF/SUPERIOR PRODUCTS GP
HOLDINGS, LLC
USF/SUPERIOR PRODUCTS LP
HOLDINGS, LLC
XXXXXX XXXX FOODS, INC.
PACIFIC JADE, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxx
Title:Treasurer
for each of the foregoing
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LENDER:
FIRST UNION NATIONAL BANK
By:/s/ Xxxxxxx Xxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxx Xxxxxxx
Title:Senior Vice President
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