<PAGE>
As filed with the Securities and Exchange Commission on May 4, 1999
Registration No. 333-75627
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SMART & FINAL INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-4079584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
600 Citadel Drive, City of Commerce, California 90040
(323) 869-7500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Donald G. Alvarado, Esq.
Senior Vice President, Law/Development
Smart & Final Inc.
600 Citadel Drive, City of Commerce, California 90040
(323) 869-7500
(Name, address and telephone number, including area code, of agent for
service)
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Copies to:
<TABLE>
<S> <C>
Richard W. Lasater Daniel S. Sternberg
Crosby, Heafey, Roach & May Cleary, Gottlieb, Steen & Hamilton
Professional Corporation One Liberty Plaza
700 South Flower Street New York, New York 10006
Los Angeles, California 90017
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until this
registration statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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<PAGE>
Prospectus
[LOGO]
Smart & Final Inc.
Rights Offering of 6,486,406 Shares of Common Stock
at $9.25 per Share
If you held our common stock on May 12, 1999, Smart & Final has granted to
you rights to purchase additional shares of common stock for a subscription
price of $9.25 per share. You have been granted one right for each share of
common stock you held on that date. You may purchase one share of common stock
for every 3.4884 rights granted to you.
Our common stock is traded on the New York Stock Exchange under the symbol
"SMF". On May 3, 1999, the last reported sale price for the common stock was
$10.1875 per share. We anticipate that the rights will be eligible to trade on
the NYSE under the symbol "SMF Rt." We cannot assure you that there will be an
active trading market for the rights.
The rights expire at 5 p.m. New York City time, on June 3, 1999, if not
properly exercised before that date. If you fully exercise your rights, and
other stockholders do not fully exercise their rights, you may elect to
purchase additional shares on a pro rata basis. See "The Rights Offering" at
page 24.
Casino USA, Inc. owns approximately 55% of Smart & Final's outstanding
common stock. Casino USA has agreed to exercise all rights granted to it and to
purchase all shares offered that are not purchased by the other stockholders.
If no other stockholders exercise their rights under this offering, Casino
USA's ownership of Smart & Final will increase to approximately 64.9%.
Casino USA will pay for the shares it subscribes for by reducing a $55.4
million debt Smart & Final owes Casino USA by the total subscription price due
for those shares. If Casino USA's total subscription price exceeds $55.4
million, Casino USA will pay the excess in cash. Smart & Final will use all net
cash proceeds from the rights offering to prepay senior debt owed to its bank
lenders.
Neither the Smart & Final Board of Directors nor the Board's special
committee for the rights offering makes any recommendation to you about whether
you should exercise any rights.
Investing in Smart & Final common stock involves certain risks. See "Risk
Factors" beginning on page 12.
<TABLE>
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<CAPTION>
Subscription Discounts and Proceeds to the
Price Commissions Company
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<S> <C> <C> <C>
Per Share........................ $9.25 None $9.25
Total............................ $59,999,255.50 None $59,999,255.50
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</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is May 4, 1999.
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. This prospectus
is not an offer to sell or a solicitation of an offer to buy any securities in
any state or other jurisdiction in which the offer or solicitation is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date of this prospectus.
In this prospectus, "Smart & Final," "we," "us" and "our" refer to Smart &
Final Inc. and its consolidated subsidiaries, unless the context specifically
indicates otherwise.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information....................................................... 3
Forward Looking Statements.................................................. 3
Questions and Answers About the Rights Offering............................. 4
Prospectus Summary.......................................................... 6
Risk Factors................................................................ 12
Use of Proceeds............................................................. 17
Price Range of Common Stock and Dividend Policy............................. 17
Capitalization.............................................................. 18
Security Ownership of Certain Beneficial Owners and Management.............. 19
Relationship Between Smart & Final and Casino USA........................... 20
The Rights Offering......................................................... 24
Reasons for the Rights Offering........................................... 24
No Special Committee or Board Investment Recommendation to Stockholders... 24
General Terms and Assumptions............................................. 24
ChaseMellon Shareholder Services, L.L.C................................... 25
The Rights................................................................ 25
Basic and Oversubscription Privileges..................................... 26
Subscription Price........................................................ 26
Expiration Time and Date.................................................. 26
Casino USA Standby Purchase and Debt Reduction Agreement.................. 27
Conditions Relating to the Rights Offering................................ 27
Expenses of the Rights Offering........................................... 27
Exercise of Rights........................................................ 28
Required Forms of Payment................................................. 28
Special Procedure under "Notice of Guaranteed Delivery" Form.............. 28
Incomplete Forms; Insufficient or Excess Payment.......................... 29
Exercise of Less Than All Rights.......................................... 29
Instructions to Nominee Holders........................................... 29
Risk of Loss on Delivery of Subscription Warrant Forms and Payments....... 30
How Procedural and Other Questions Are Resolved........................... 30
Questions and Assistance Concerning the Rights............................ 30
No Revocation............................................................. 30
How to Transfer Rights.................................................... 30
Procedures for Nominees Who Are DTC Participants.......................... 32
Foreign and Unknown Addresses............................................. 32
Right to Block Exercise Due to Regulatory Issues.......................... 32
No Adjustment to Outstanding Stock Options or Other Stock Awards.......... 33
Amendment, Extension and Withdrawal....................................... 33
Issuance of Stock Certificates............................................ 33
Certain Federal Income Tax Consequences................................... 33
Legal Matters............................................................... 35
Experts..................................................................... 35
</TABLE>
2
<PAGE>
AVAILABLE INFORMATION
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission (the "SEC"). You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. You may call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our recent SEC filings
also are available to you at the SEC's web site at http://www.sec.gov.
This prospectus, which constitutes a part of a registration statement on
Form S-3 filed by us with the SEC under the Securities Act of 1933, omits
certain of the information set forth in the registration statement.
Accordingly, for further information, you should refer to the registration
statement and its exhibits on file with the SEC. Furthermore, statements
contained in this prospectus concerning any document filed as an exhibit are
not necessarily complete and, in each instance, we refer you to the copy of
such document filed as an exhibit to the registration statement.
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede the information in this
prospectus. Accordingly, we incorporate by reference the documents listed below
and, until this offering has been completed, any future filings made with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:
. Annual Report on Form 10-K for the year ended January 3, 1999, as amended
on Form 10-K/A filed on April 2, 1999.
. Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,
1999.
. Current Reports on Form 8-K filed February 25, 1999 and March 4, 1999.
. The description of the common stock contained in Smart & Final's
Registration Statement on Form 8-A filed with the SEC on July 19, 1991,
and any subsequent filing which updates the description.
We will provide each person to whom this prospectus is delivered, including
any beneficial owner of our shares, copies of these filings, upon request at no
cost, by writing or telephoning us at the address set forth below. You may also
obtain certain of these documents by accessing our web site at
http://www.smartandfinal.com.
Smart & Final Inc., 600 Citadel Drive, City of Commerce, California 90040
Attention: Corporate Communications (323) 869-7500
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended. Our statements of plans,
intentions, objectives and future economic or operating performance contained
in this prospectus are forward-looking statements. Forward-looking statements
include but are not limited to statements containing terms such as "believes,"
"does not believe," "no reason to believe," "expects," "plans," "intends,"
"estimates," "anticipated" or "anticipates."
Forward-looking statements involve known and unknown risks and uncertainties
which may cause our actual results in future periods to differ materially from
results anticipated in the forward-looking statements. We make cautionary
statements in certain sections of this prospectus, including under "Risk
Factors." You should read these cautionary statements as being applicable to
all related forward-looking statements wherever they appear in this prospectus,
the materials referred to in this prospectus, or the materials incorporated by
reference into this prospectus. No forward-looking statement is a guarantee or
promise of future performance.
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
What is a right?
By exercising rights, you have the privilege to purchase additional shares
of Smart & Final common stock for $9.25 per share. Smart & Final has
granted to its stockholders on May 12, 1999 one right for each outstanding
share of common stock. Each stockholder may purchase one newly-issued share
of common stock for every 3.4884 rights. This is the "basic subscription
privilege."
May stockholders purchase shares in addition to the basic subscription
privilege?
If other stockholders do not elect to purchase all of the shares offered
under their basic subscription privilege, and if you fully exercise your
basic subscription privilege, you may elect to purchase additional shares.
If there are not enough shares available to fill all subscriptions for
additional shares, the available shares will be allocated pro rata based on
the number of shares each subscriber for additional shares has purchased
under the basic subscription privilege. If Smart & Final receives a payment
which exceeds the shares available to allocate to a particular holder,
Smart & Final will refund any excess payment without interest as soon as
practicable. This is the "oversubscription privilege."
Why is Smart & Final offering the rights?
As part of Smart & Final's refinancing of its senior debt in November 1998,
Smart & Final agreed with its banks and Casino USA to restructure the then
existing intercompany notes and advances with Casino USA into a new,
subordinated note. We also determined that it would be advisable to
increase equity capital to provide greater financial flexibility. Smart &
Final and Casino USA also agreed that it would be in Smart & Final's best
interests to reduce the $55.4 million debt owed by Smart & Final to Casino
USA, through conversion to equity. After review by management and a special
committee of the Board of Directors, and following the advice of outside
financial advisors, Smart & Final determined that this rights offering was
the best approach to providing additional equity capital.
In this rights offering, Casino USA has agreed to convert up to all of the
$55.4 million debt into additional common stock. At the same time, other
stockholders have the opportunity to maintain their percentage ownership in
Smart & Final by exercising their rights. Net cash proceeds from the rights
offering will be used to prepay a portion of Smart & Final's senior
revolving credit facility.
How soon must stockholders act?
The rights expire at 5:00 p.m., New York City time, on June 3, 1999. The
subscription agent must actually receive all required documents and
payments before that time and date.
Has the Board of Directors made a recommendation regarding this offering?
Neither the Smart & Final Board of Directors nor the Board's special
committee for the rights offering makes any recommendation to you about
whether you should exercise any rights.
To whom do stockholders direct questions or send forms and payment?
Questions about the rights or additional copies of offering documents: call
ChaseMellon Shareholder Services, L.L.C. at the toll free number 1-888-224-
2745.
Subscription documents and payments: send to ChaseMellon Shareholder
Services, L.L.C., at the address indicated in the instructions forwarded
with this prospectus.
Other questions and copies of recent Smart & Final SEC filings: contact
Smart & Final through its internet site or telephone number, or refer to
other sources, described under "Available Information" above.
4
<PAGE>
How are stockholders affected if they do not exercise any rights?
You are not required to exercise any rights or otherwise take any action in
response to this rights offering. If you do not exercise any rights, the
number of shares which you own will not change, but your percentage
ownership of Smart & Final's total outstanding common stock will decline,
if the rights offering is completed.
What forms and payment are required to purchase shares?
As a record holder of Smart & Final common stock on May 12, 1999, you are
receiving with this prospectus a subscription warrant and instructions on
how to purchase shares. The subscription warrant must be properly filled
out and delivered with full payment to ChaseMellon Shareholder Services,
L.L.C. before expiration of the rights. The instructions also describe an
alternate procedure called "Notice of Guaranteed Delivery," which allows an
extra 3 days to deliver the subscription warrant if full payment is
received before the expiration date and a securities broker or qualified
financial institution signs the form to guaranty that the subscription
warrant will be timely delivered.
What if a broker, bank or other nominee is the record holder of my shares?
If you wish to purchase shares, please promptly contact the broker, bank or
other company holding your shares. Your broker or other nominee holder is
the record holder of the shares you own and must exercise the subscription
warrant on your behalf for shares you wish to purchase or arrange for a
subscription warrant issued in your name. The broker, bank or other nominee
has been requested to contact you for instructions on exercising your
rights.
May stockholders transfer rights?
The instructions which accompany this prospectus describe how to sell
rights through your broker or ChaseMellon Shareholder Services, L.L.C.
Smart & Final cannot ensure that any rights will have any value or can be
sold.
You may also wish to transfer rights to allow your broker or other person
to exercise your rights for you. The forms on the reverse side of the
subscription warrant contain instructions for these types of transfers.
Must all holders of rights pay the subscription price in cash?
All stockholders granted rights who wish to participate in the offering,
except Casino USA, must timely pay the subscription price by wire transfer,
certified or cashier's check drawn on a U.S. bank, or personal check that
clears before expiration of the rights. Casino USA will exchange up to
$55.4 million of debt owed by Smart & Final for shares it purchases and pay
cash for any balance of its total subscription price.
What if my rights result in fractional shares?
If your rights would allow you to purchase a fractional share, you may
exercise your rights only by rounding down to and paying for the nearest
whole share, or paying for any lesser number of whole shares. You may not
purchase fractional shares.
Will my money be returned if the rights offering is cancelled?
Yes, but without any payment of interest.
What fees or charges apply if I purchase shares or attempt to sell my rights?
Smart & Final is not charging any fee or sales commission to issue rights
to you or to issue shares to you if you exercise rights. If you exercise
rights through a broker or other holder of your shares, you are responsible
for paying any fees that person may charge. If you elect to sell your
rights, you are also responsible for any fees or sales commissions that may
apply to that transaction.
May I change or cancel my exercise of rights after I send in the required
forms?
No.
5
<PAGE>
PROSPECTUS SUMMARY
This summary highlights some of the information provided elsewhere in this
prospectus. The summary is not complete and may not provide all information you
should consider before deciding whether or not to exercise the rights. You
should read the entire prospectus carefully. Certain portions of this
prospectus, such as "Risk Factors," are not summarized below. See "Risk
Factors" at page 12.
Smart & Final also encourages you to review the financial statements and
other information provided in the reports and other documents it files under
the Securities Exchange Act of 1934, as described under "Available Information"
in this prospectus.
Smart & Final's Business
Smart & Final operates its business in two segments, stores and foodservice,
through a number of subsidiary corporations.
Smart & Final operated 209 non-membership warehouse grocery stores at the
end of fiscal 1998 in California, Oregon, Washington, Arizona, Nevada, Idaho,
and Florida. Smart & Final also operated 6 stores in Mexico through a joint
venture with a Mexican company. The stores offer a selection of approximately
10,000 food items, supplies and equipment, primarily in institutional sizes and
quantities targeted at small food service businesses and other customer groups.
Smart & Final also operates traditional foodservice distribution businesses
through several subsidiaries and divisions in northern California and Florida.
These businesses offer a broad assortment of fresh, frozen and dry foods along
with other consumable supplies, food related services, and restaurant
equipment. Customers include restaurants, coffee shops, institutions, hotels
and cruise ships.
In fiscal 1998, Smart & Final had sales of $1,662 million, and at the end of
fiscal 1998, had 5,447 employees. Smart & Final is a Delaware corporation whose
principal office is located at 600 Citadel Drive, City of Commerce, California
90040 (telephone: (323) 869-7500).
The Rights Offering
Further details concerning this part of the summary are set forth under "The
Rights Offering" beginning at page 24. The summary below is qualified by the
following: (1) Smart & Final will not issue fractional shares; (2) if exercise
of your rights would result in a fractional share, you must round down to
purchase the nearest whole share or any lesser number of whole shares; and (3)
only holders of record of common stock at the close of business on the record
date stated below, or those to whom rights have been validly transferred, may
exercise rights.
Securities Offered.......... Smart & Final is offering 6,486,406 shares of its
common stock to be issued upon exercise of the
rights.
Shares of Common Stock
Outstanding Prior to this
Offering................... 22,627,179 outstanding on May 3, 1999.
Shares of Common Stock
Outstanding After this
Offering................... 29,113,585, if this offering is completed.
Record Date................. May 12, 1999.
Expiration Date and Time.... The rights expire at 5:00 p.m., New York City
time, on June 3, 1999, unless properly
exercised before that time and date.
6
<PAGE>
Basic Subscription
Privilege.................. Smart & Final has granted each person who was a
record holder of common stock on the record date
one right for each share of common stock then
held. To exercise the basic subscription
privilege, you must deliver 3.4884 rights for
each share of common stock you subscribe for.
Oversubscription
Privilege.................. If you fully exercise the basic subscription
privilege, you may also purchase at the
subscription price additional shares of common
stock that are not purchased by other
stockholders. If there are not enough shares
available to fill all subscriptions for
additional shares, the available shares will be
allocated pro rata based on the number of shares
each subscriber for additional shares has
purchased under the basic subscription privilege.
Reasons for the Rights
Offering................... As part of our refinancing of our senior debt in
November 1998, we agreed with our banks and
Casino USA to restructure the then existing
intercompany notes and advances with Casino USA
into a new, subordinated note. We also determined
that it would be advisable to increase equity
capital to provide greater financial flexibility
for Smart & Final. We and Casino USA also agreed
that it would be in Smart & Final's best
interests to reduce our $55.4 million debt to
Casino USA through conversion to equity. After
review by management and a special committee of
the Board of Directors, and following the advice
of outside financial advisors, this rights
offering was determined to be the best approach
to providing additional equity capital.
In this rights offering, Casino USA has also
agreed to convert up to all of the $55.4 million
debt into additional common stock. At the same
time, other stockholders have the opportunity to
maintain their percentage ownership in our
company by exercising their rights. Stockholders
who do not exercise rights will continue to own
the same number of shares of our stock, but those
shares will represent a smaller percentage of the
outstanding common stock after completion of the
rights offering.
Net cash proceeds from the rights offering will
be used to prepay senior debt owed to our other
lenders.
No Board or Committee
Recommendation............. Neither the Smart & Final Board of Directors nor
any committee of the Board makes any
recommendation to stockholders regarding the
exercise of rights under this offering.
Stockholders who do exercise rights risk
investment loss on new money invested. Smart &
Final does not assure that the subscription price
will remain below the market price for the common
stock during the rights offering, or that anyone
purchasing shares at the subscription price will
be able to sell those shares in the future at a
higher price. See "Risk Factors."
7
<PAGE>
Casino Standby Purchase
Commitment................. Casino USA has agreed to acquire all of the
shares offered under the rights offering that are
not purchased by the other stockholders under the
basic and oversubscription privileges. Depending
on the number of rights exercised, Casino USA
will hold between approximately 55% and 64.9% of
the outstanding common stock after completion of
the rights offering.
Casino USA will pay for shares it subscribes for
by reducing a $55.4 million debt Smart & Final
owes Casino USA by the total subscription price
due for those shares. If Casino USA's total
subscription price exceeds $55.4 million, Casino
USA will pay the excess in cash.
Smart & Final has agreed to pay up to $450,000 in
expenses incurred by Casino USA relating to the
rights offering. Smart & Final will also issue
10,000 shares of common stock to Casino USA as a
fee for acting as a standby purchaser.
Conditions to the Rights
Offering................... The obligations of Casino USA to complete its
purchase of shares under its standby agreement
are subject to certain conditions described under
"Rights Offering--Conditions Relating to the
Rights Offering." If the standby agreement with
Casino USA is not consummated in accordance with
its terms for any reason, or if the other
conditions are not satisfied or waived, Smart &
Final will terminate the rights offering in its
entirety. In that event, Smart & Final will
refund without interest to those persons who
subscribed for shares in the rights offering all
payments received from those subscribers.
Subscription Price.......... $9.25 per share, payable in cash. Payment by
personal check must clear payment on or before
the expiration date and may require five or more
business days in which to clear payment. Smart &
Final recommends that stockholders pay the
subscription price by certified or cashier's
check drawn on a U.S. bank, U.S. postal money
order or wire transfer of funds.
Basis for Subscription
Price...................... A special committee of the Board of Directors and
the Board of Directors approved the subscription
price. This price is discounted from the closing
market price of the common stock stated on the
front cover page of this prospectus. The
subscription price is $0.75 less than that price,
rounded downward to the nearest multiple of
$0.25.
Transferability of Rights... The rights are transferable. Smart & Final
anticipates that the rights will be eligible for
trading on the NYSE under the symbol "SMF Rt"
until the close of business on the last trading
day prior to the expiration date. Smart & Final
cannot assure whether or how long a market for
the rights will exist.
The rights are issued in the form of subscription
warrants which accompany this prospectus sent to
the record holders. ChaseMellon
8
<PAGE>
Shareholder Services, L.L.C. will attempt to sell
rights by referring sell orders to a broker for
this purpose, for stockholders who deliver a
subscription warrant to ChaseMellon Shareholder
Services, L.L.C. with sale instructions properly
executed, no later than 11:00 a.m., New York City
time, on May 28, 1999. Smart & Final provides no
assurance that any rights will be sold or as to
the price that may be paid for any rights sold.
No Revocation............... If you exercise any rights, you are not allowed
to revoke or change the exercise or request a
refund of monies paid.
Subscription Agent.......... ChaseMellon Shareholder Services, L.L.C.
Information Agent........... ChaseMellon Shareholder Services, L.L.C.
Telephone: 1-888-224-2745.
Procedure for Exercising
Rights..................... To exercise rights, you must complete the
subscription warrant and deliver it to
ChaseMellon Shareholder Services, L.L.C. with
full payment under both the basic and
oversubscription privileges you elect to
exercise. ChaseMellon Shareholder Services,
L.L.C. must receive the proper forms and payments
on or before the expiration date.
You may deliver the documents and payments by
mail or commercial courier. If regular mail is
used for this purpose, we recommend using
insured, registered mail. You may use an
alternative "Guaranteed Delivery Procedure" if
you are unable to deliver the subscription
warrant before the expiration date, subject to
the requirements of this procedure described
under "The Rights Offering--Special Procedure
under "Notice of Guaranteed Delivery' Form."
Payment Adjustments......... If you send a payment that is insufficient to
purchase the number of shares requested, or if
the number of shares requested is not specified
in the forms, the payment received will be
applied to exercise the basic subscription
privilege to the extent of the payment. If the
payment exceeds the subscription price for the
full exercise of the basic subscription
privilege, the excess payment will be applied to
exercise the oversubscription privilege. If the
payment exceeds the amount required to exercise
both the basic and oversubscription privileges,
that excess will be refunded as soon as
practicable. Smart & Final will not pay interest
on any payments received under the rights
offering.
Nominee Accounts............ If you wish to purchase shares in this offering
and your shares are held by a securities broker,
bank, trust company or other nominee, you should
promptly contact those record holders and request
them to exercise rights on your behalf. You may
also contact the nominee and request the nominee
to send a separate subscription warrant to you.
If you are a record holder who wishes an
institution such as a broker or bank to exercise
your rights for you, you should contact
9
<PAGE>
that institution promptly to arrange that method
of exercise. If you are a nominee which desires
subscription warrants re-issued in smaller
denominations, you must act promptly under
special procedures described under "The Rights
Offering--How to Transfer Rights."
You are responsible for the payment of any fees
that brokers or other persons holding your shares
may charge.
Exercise by Foreign and
Certain Other
Stockholders............... ChaseMellon Shareholder Services, L.L.C. will
hold subscription warrants for stockholders
having addresses outside the United States. In
order to exercise rights, holders with addresses
outside the United States must notify ChaseMellon
Shareholder Services, L.L.C. and timely follow
other procedures on or before the expiration date
of the rights.
U.S. Income Tax
Consequences............... For United States federal income tax purposes,
Smart & Final believes that a stockholder will
not recognize taxable income upon the receipt or
exercise of rights. See "The Rights Offering--
Federal Income Tax Consequences." Each
stockholder should consult the holder's own tax
adviser concerning the tax consequences of this
offering under the holder's own tax situation.
This prospectus does not summarize tax
consequences arising under state tax laws, non-
U.S. tax laws, or any tax laws relating to
special tax circumstances or particular types of
taxpayers.
Stock Certificates.......... Smart & Final will deliver stock certificates
representing common stock purchased by the
exercise of rights as soon as practicable after
the expiration date and after all prorations
under the oversubscription privilege have been
made.
Amendment, Extension and
Termination................ Smart & Final has agreed with Casino USA that
Smart & Final will not withdraw this rights
offering once the offering has commenced. With
the prior consent of Casino USA, Smart & Final
may amend or extend the rights offering. Subject
to the foregoing, Smart & Final reserves the
right to withdraw the rights offering at any time
prior to the expiration date and for any reason,
in which event all funds received in the rights
offering will be returned without interest to
those persons who subscribed for shares in the
rights offering.
10
<PAGE>
SELECTED FINANCIAL DATA
(in thousands, except per share and statistical data)
<TABLE>
<CAPTION>
12 Weeks
Ended Fiscal Year (A)
--------- --------------------------------------------------------
March 28,
1999 1998 (D) 1997 (C) 1996 1995 1994 (B)
--------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Sales................. $398,337 $1,661,629 $1,453,020 $1,302,561 $1,173,325 $952,477
Income from
operations........... 3,976 1,151 15,930 42,588 32,465 28,511
Interest income
(expense), net....... (5,081) (13,304) (8,117) (3,373) (2,028) 521
Earnings (loss) per
common share,
assuming dilution.... (0.02) (0.38) 0.29 1.15 0.88 0.85
Dividend per share.... $ -- $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20
Weighted average
common shares
outstanding.......... 22,527 22,596 22,753 21,206 20,751 20,520
Financial Data (at
period-end):
Total assets.......... 576,625 582,264 488,145 441,424 314,656 267,813
Long-term debt and
capital leases....... 77,901 78,712 80,024 82,644 43,586 21,124
Current maturities on
long term debt....... 149,126 139,680 11,176 10,356 39 1,554
</TABLE>
- --------
(A) For all years, 52 weeks except fiscal year 1997, which had 53 weeks.
(B) Amounts include results of Henry Lee from the date of its acquisition in
November 1994.
(C) Amounts include results of Davis Lay division from May 1997. Amounts
include results of Orlando Foodservice Inc., Capricorn Foods of Central
Florida, Inc. and Southern Foods since their dates of asset acquisitions in
September 1997.
(D) Amounts include results of United Grocers Cash & Carry store operations
from the date of its acquisition in May 1998.
11
<PAGE>
RISK FACTORS
You should carefully consider the risks described below and the other
information in this prospectus before deciding to purchase shares in the rights
offering. Our shares are subject to significant investment risks. Many factors,
including the risks described below and other risks we have not recognized,
could cause Smart & Final's operating results to be different from our
expectations and plans.
Risks Relating to Our Operations
Smart & Final reported a consolidated net loss for the first quarter of
fiscal 1999. Smart & Final reported a net loss of $0.5 million, or $.02 per
diluted share, for its fiscal 1999 first quarter which ended on March 28,
compared with a net loss of $2.0 million, or $.09 cents per diluted share, for
the fiscal 1998 first quarter. Smart & Final's 1999 first quarter operating
earnings increased to $4.0 million from the 1998 first quarter operating
earnings of $0.3 million. Although the 1999 first quarter operating results
showed improvement over the 1998 first quarter results, Smart & Final reported
a net loss due to increased interest costs. Although we are encouraged by these
improved results, we cannot ensure that operating results will continue to
improve.
Consolidated operating results declined in 1997 and 1998, and Smart & Final
had a net loss in fiscal 1998. Smart & Final reported a fiscal 1998
consolidated net loss of $8.7 million, or $0.38 per diluted share, compared
with fiscal 1997 consolidated net income of $6.6 million, or $0.29 per diluted
share, and fiscal 1996 consolidated net income of $24.3 million, or $1.15 per
diluted share. The following table sets forth pre-tax profit or loss, in
millions, for each of Smart & Final's operating segments:
<TABLE>
<CAPTION>
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Stores................................................ $ 23.1 $21.9 $40.0
Foodservice........................................... (18.0) (8.6) 6.7
------ ----- -----
Segment totals........................................ 5.1 13.3 46.7
Interest and other corporate expenses................. (17.2) (5.5) (7.5)
------ ----- -----
Consolidated pre-tax (loss) profit.................... $(12.1) $ 7.8 $39.2
====== ===== =====
</TABLE>
Factors affecting 1998 results:
.Actions taken late in 1998 by new executive management:
. A decision to sell non-core properties resulted in a $3.4 million
pretax reduction to estimated realizable values.
. A pretax charge of $3.2 million was established to provide for
severance costs incurred in connection with the downsizing of
management.
. Certain activities in the Florida foodservice operations were
discontinued and administrative functions were consolidated,
resulting in a pretax charge of $3.0 million.
. In-store bakery operations were discontinued, causing a pretax write-
off of $1.5 million.
. Focus on Northern California foodservice changed from aggressive
sales growth to credit quality of customers and improved margins
resulting in related accounts receivable losses and inventory write-
downs of $3.7 million, pretax.
. Re-racking of the Northern California distribution center and other
charges resulted in write-downs of $1.6 million, pretax.
. Adoption of a new retirement program and other increased benefits at the
Northern California unit resulted in pretax charges of $1.4 million.
12
<PAGE>
. Florida food service results declined sharply as service levels
deteriorated due to inadequate distribution capacity starting in the
third quarter of 1997. The distribution inefficiencies continued into
1998. Service problems reduced sales as customers chose other
alternatives, reduced gross margins as prices were cut to retain
customers, and sharply increased distribution costs in both foodservice
and store operations. Distribution capacity was increased during 1998.
. 1998 results included a cumulative effect of accounting change, pretax
charge of $1.9 million, related to adoption of the American Institute of
Certified Public Accountants ("AICPA") Statement of Position 98-5, which
requires the write-off of start-up costs.
Factors affecting 1997 results:
. Florida distribution facility inefficiencies and related service level
problems commencing in the third quarter of the year reduced sales,
lowered gross margins, and increased expenses.
. A special pretax charge of $8.9 million was recorded in the fourth
quarter that included the cost of closing two Florida stores, write-off
of certain distribution software systems and expenses of a management
reorganization.
. Introduction of an inventory management program resulted in a $3.0
million pretax inventory write-down.
. Introduction of stringent credit controls in the Florida foodservice
export business resulted in an additional provision for doubtful accounts
of $3.0 million before taxes.
. A price reduction program introduced at Smart & Final stores early in
1997 reduced gross margin by $5.0 million, but failed to increase store
sales growth to the level that had been anticipated.
Smart & Final's store sales growth has slowed. The core strategy for Smart &
Final stores is to supply grocery products and related supplies to restaurants,
caterers, clubs, organizations and small and mid-sized businesses. The stores
also attract value-oriented retail consumers who prefer to purchase items in
large sizes or quantities.
In 1998, this store strategy did not produce the level of sales growth
achieved in prior years. Although overall sales in stores grew by 14.9% in 1998
due largely to the acquisition of the Cash and Carry Stores in May 1998, same
store sales declined 0.2% in 1998.
Florida stores continue to be unprofitable. Smart & Final has operated ten
stores in Florida since late 1996. We have experienced difficulty in achieving
profitable operations in this market. In 1998, we substantially revamped our
store operations and marketing in Florida. Although some progress has been
achieved, these stores remain unprofitable and we cannot ensure that our
efforts will result in future profitability.
Cash and Carry stores have not yet been integrated. Although the Cash &
Carry Stores acquired in 1998 contributed positively to operating results in
fiscal 1998, Smart & Final cannot predict the time ultimately needed to
integrate these new stores or whether we will be successful in this effort.
Foodservice integration strategy has not achieved desired results. Smart &
Final acquired several traditional foodservice distribution companies and
wholesale fresh meat and produce companies in recent years. To date these
operations have incurred significant operating losses.
Smart & Final has attempted in certain markets to use the same distribution
facility to handle products for both store and foodservice customers, because
this may reduce overall product costs and distribution expenses in new store
markets. Smart & Final has devoted significant resources to this "integration"
strategy, including constructing new facilities, increasing distribution
efficiencies, and management changes.
13
<PAGE>
We cannot predict when or whether this distribution integration strategy
will contribute to increased profitability. We have delayed a previously
announced plan to engage in the foodservice delivery business in our new
Southern California distribution facility.
Smart & Final faces intensified competition. Smart & Final historically
endeavored to differentiate its stores from the retail grocery supermarkets and
the warehouse club stores through competitive pricing on key items in local
markets and emphasizing customers such as restaurants and others in the food
service business.
The retail grocery industry in our markets is undergoing continued
consolidation with the mergers of such large chains as Fred Meyer and Kroger,
and American Stores and Albertson's. The number of warehouse and club stores in
our markets has also rapidly increased.
Recent covenant noncompliance and risks of default under senior debt. As a
result of Smart & Final's acquisition of the Cash and Carry stores in the
second fiscal quarter of 1998, and the decline in operating results during
1998, Smart & Final did not comply with financial covenants in certain of its
then existing loan agreements during a portion of fiscal 1998. The lenders
granted a waiver from compliance with these covenants until November 15, 1998.
Effective November 13, 1998, Smart & Final entered into senior secured
credit facilities with a group of banks totaling $240 million. These credit
facilities include a $150 million secured revolving credit facility and a $90
million secured lease facility. These facilities expire on November 13, 2001.
At Smart & Final's option, the revolving loan can be used to support up to $10
million of commercial letters of credit. The revolving loan replaced a $65
million bridge loan, $50 million revolving line of credit, and $50 million
short-term unsecured line of credit. The secured lease facility replaced Smart
& Final's three previously existing $30 million lease facilities.
Borrowings under the senior secured credit facilities are secured by
receivables, inventory and fixed assets. Interest for these facilities is at
LIBOR, or the lending agent's reference rate, plus designated amounts.
The senior secured credit facilities impose limitations on our payment of
dividends. Smart & Final announced in a press release dated February 17, 1999,
that, as part of a program to reduce debt levels and interest expense,
dividends on its common stock have been suspended indefinitely following
payment of the 1998 fourth quarter dividend.
The senior secured credit facilities, and the $55.4 million loan agreement
between Smart & Final and Casino USA, contain covenants requiring Smart & Final
to maintain certain financial ratios. As a result of the reported loss for the
fourth quarter and full year 1998, Smart & Final is not in compliance with
these covenants. Casino USA has agreed to waive compliance with these covenants
until Smart & Final reports its second quarter 1999 earnings or August 31,
1999, whichever comes first.
As of March 12, 1999, Smart & Final received a waiver of default of certain
financial covenants under the senior secured credit facilities, for a period
extending until June 30, 1999. Continuation of the waiver until such date
requires the performance by Smart & Final of certain operating earnings and
financial reporting requirements. The waiver also requires that Smart & Final
use its best efforts to complete this rights offering prior to June 30, 1999.
If the rights offering is completed, our overall debt will be reduced, by
reducing or eliminating the $55.4 million debt we owe to Casino USA and by
using all net cash proceeds of the offering to prepay revolving credit under
the senior secured credit facilities. We cannot ensure that we will avoid
further difficulties in complying with the obligations under the credit
facilities.
The credit facilities impose restrictions on incurring new debt, and Smart &
Final may not be able to re-borrow amounts equivalent to the debt reduced in
the rights offerings, if future borrowing becomes necessary or desirable.
14
<PAGE>
Unless Smart & Final is successful in reversing or otherwise compensating
for the trends in operating results noted above in this "Risk Factors" section,
it faces continued risks of violating one or more covenants in the senior
secured credit facilities. If Smart & Final violates these covenants, and is
not able to obtain satisfactory waivers or amendments from the lenders, the
lenders could accelerate the maturity of the obligations. If Smart & Final were
required to repay the credit facilities at one time, it cannot ensure that it
would be able to replace that debt on a timely basis or repay the accelerated
debt payment from cash flow or asset sales. Other risks of our leverage include
the need to use cash from operations to make scheduled debt repayments,
covenants which require lenders' consent for many types of material
transactions, and added risk to our business from possible economic downturns
or increased competitive pressures.
Recent Management Changes at Smart & Final. Smart & Final has recently
experienced significant turnover in senior management positions. Its current
chief executive officer Ross E. Roeder assumed that position in January 1999
following the retirement of Robert J. Emmons, who in turn assumed the chief
executive officer position in December 1997. In early 1999, Smart & Final
eliminated the positions of president and chief operating officer of store
operations, and executive vice president of buying, marketing and distribution
for store operations. In addition, 3 other executive officers have left Smart &
Final since early 1998.
Future results of operations depend in part on our ability to attract and
retain qualified personnel, including senior management and individual store
managers. We cannot ensure that Smart & Final will be able to attract or retain
the necessary personnel.
Status of Our Year 2000 Readiness. We, along with most businesses, face
possible risks concerning the ability of computer hardware and software and
embedded information technology systems to properly recognize dates and date-
related information as the year 2000 approaches and beyond. We estimate that
the total incremental cost of our Year 2000 compliance program will not exceed
$2.3 million. As of March 28, 1999, Smart & Final had incurred approximately
$1.5 million of these costs.
We have completed our analysis of our corporate and store information
systems, have completed a substantial portion of the needed modifications and
replacements, and anticipate that known remaining modifications and
replacements in our own systems will be completed by mid-1999. We are in the
process of reviewing Year 2000 compliance issues with third parties such as
vendors and service providers who are important to our business. Since we do
not control these third parties or have access to information beyond statements
they voluntarily provide, we have less ability to assess the Year 2000 issues
with third parties than we do with our own systems.
Although we do not believe that the actual impact of Year 2000 issues on our
business will be material to us based on what we know at this time, we cannot
ensure that we will complete our intended modifications or replacements on
schedule, that we have identified all Year 2000 issues material to our
business, or that any of our plans will be effective if problems in our own
systems or systems of third parties exceed our present expectations or
contingency plans.
Additional information concerning Year 2000 issues is provided under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in recent reports we have filed under the Securities Exchange Act
of 1934.
Control by Casino and Possible Conflicts of Interest. Conflicts of interest
between Smart & Final and Casino USA may arise as a result of past and possible
future transactions among Smart & Final, Casino USA and their affiliates.
Casino USA has controlled more than 50% of the voting power of our common stock
since 1984.
Since the common stock does not have cumulative voting rights, Casino USA
has the voting power to elect all members of Smart & Final's Board of
Directors. Although certain transactions may be subject to approval by
disinterested members of the Board of Directors, Casino USA acting as the
majority stockholder has the ability to approve any matter submitted to a vote
of stockholders, without the affirmative vote of any other stockholder.
15
<PAGE>
See "Relationship Between Smart & Final and Casino USA" for a description of
material transactions between Smart & Final and Casino USA.
Risks Relating to the Rights Offering
. Dilution: stockholders who do not exercise their rights will own a
smaller percentage of our outstanding stock.
. Stock Market Risks:
. The trading price of our stock has declined substantially since the
fourth quarter of fiscal 1997.
. Future prices of our stock may be affected positively or negatively
by our future revenues and earnings, changes in estimates by
analysts, our ability to meet analysts' estimates, speculation in the
trade or business press about our company, and overall conditions
affecting the retail grocery business, economic trends and the stock
market.
. We cannot assure you that the subscription price set by the rights
offering will remain below any trading prices, or that trading prices
will not decline during or after the rights offering.
. No Revocation: you are not allowed to revoke or change your exercise of
rights after you send in your subscription forms and payment. If certain
conditions to the rights offering are not met and the rights offering is
canceled, we are obligated only to refund payments actually received,
without interest.
. Need to Act Promptly and Follow Subscription Instructions: stockholders
who desire to purchase shares in the rights offering or to transfer or
sell their rights must act promptly to ensure that all required forms and
payments are actually received by ChaseMellon Shareholder Services,
L.L.C. prior to the expiration date. If you fail to complete and sign the
required subscription forms, send an incorrect payment amount, or
otherwise fail to follow the subscription procedures that apply to your
desired transaction, ChaseMellon Shareholder Services, L.L.C. may,
depending on the circumstances, reject your subscription or accept it to
the full extent of the payment received. Neither Smart & Final nor
ChaseMellon Shareholder Services, L.L.C. undertakes to contact you
concerning, or attempt to correct, an incomplete or incorrect
subscription form. Smart & Final has the sole discretion to determine
whether a subscription exercise properly follows the subscription
procedures.
. Risk of Personal Checks: any personal check used to pay for shares must
clear prior to the expiration date, and the clearing process may require
5 or more business days.
. Delay in Ability to Resell Shares: if you exercise rights, you may not be
able to resell the new shares purchased until you (or your broker or
other nominee) have received a stock certificate for the shares
purchased. Although we will endeavor to issue the appropriate
certificates as soon as practicable after completion of the rights
offering, there may be some delay between the expiration date and the
time we are able to issue the new stock certificates.
. Conditions to the Offering: if Casino USA's agreement to purchase shares
not subscribed by other holders is not closed because conditions are not
satisfied or otherwise, we will terminate the offering and refund all
payments received for the subscription price without interest. If this
agreement with Casino USA is closed, the rights offering will be
completed as described in this prospectus, and the senior debt and debt
we owe to Casino USA will be reduced accordingly. We cannot predict
whether and to what extent stockholders other than Casino USA will
exercise rights, or the relative reduction in this debt.
16
<PAGE>
USE OF PROCEEDS
Cash proceeds from the rights offering may be limited because Casino USA
will pay for shares it subscribes for by reducing a $55.4 million debt Smart &
Final owes Casino USA by the total subscription price due for those shares. If
Casino USA's total subscription price exceeds $55.4 million, Casino USA will
pay the excess in cash.
Smart & Final will use any net cash proceeds paid by stockholders to prepay
senior revolving debt owed to its nonaffiliated lenders. The terms of the
senior secured credit facilities require that we use net cash proceeds from the
sale of stock to make prepayments on the outstanding balance of the revolving
credit facility.
Smart & Final will pay from cash proceeds of the rights offering or
available cash estimated expenses of approximately $1,500,000 relating to the
offering of rights incurred by Smart & Final. Included within those expenses,
Smart & Final has agreed to pay up to $450,000 in expenses incurred by Casino
USA relating to the rights offering.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The common stock is listed on the NYSE under the symbol SMF. As of May 3,
1999, there were 235 registered holders of the common stock, and the closing
price per share of the common stock as listed on the NYSE composite tape was
$10.1875. The following table sets forth the high and low sales prices of the
common stock as reported on the NYSE composite tape, together with the amount
of cash dividends declared per share for each quarter of the two most recent
fiscal years.
<TABLE>
<CAPTION>
Dividend
High Low Declared
---- --- --------
<S> <C> <C> <C>
First Quarter of 1997............................ 23 3/4 20 7/8 $0.05
Second Quarter of 1997........................... 22 3/4 19 1/8 $0.05
Third Quarter of 1997............................ 25 3/4 22 11/16 $0.05
Fourth Quarter of 1997........................... 24 3/4 16 5/16 $0.05
First Quarter of 1998............................ 20 1/4 16 15/16 $0.05
Second Quarter of 1998........................... 19 3/16 17 $0.05
Third Quarter of 1998............................ 17 5/8 7 1/8 $0.05
Fourth Quarter of 1998........................... 11 1/8 8 1/8 $0.05
First Quarter of 1999............................ 10 8 1/16 -0-
</TABLE>
The declaration and payment of dividends is subject to the discretion of the
Smart & Final Board of Directors. Smart & Final cannot ensure whether or when
dividends will be paid in the future. Smart & Final announced in a press
release dated February 17, 1999 that, as part of a program to reduce debt
levels and interest expense, dividends on its common stock have been suspended
indefinitely following payment of the 1998 fourth quarter dividend.
Information concerning certain dividend restrictions under the senior
secured credit facilities is provided under "Risk Factors--Recent covenant
noncompliance and risks of default under senior debt."
17
<PAGE>
CAPITALIZATION
The following table shows our capitalization as of March 28, 1999, in the
column labeled "Actual".
The table also shows, in the column labeled "As Adjusted", our
capitalization as adjusted for the completion of the rights offering (including
the application of the net cash proceeds from the offering) at a subscription
price of $9.25 per share. An integral assumption in this column is the
percentage of the offering which is subscribed for by Casino USA, because
shares allocated to Casino USA are paid for by a reduction in the note payable
to Casino USA. All other stockholders must subscribe for their shares in cash.
The "As Adjusted" column illustrates the completion of the rights offering
assuming 70% of the shares are subscribed for by Casino USA and 30% of the
shares are subscribed for by other stockholders. If an alternative assumption
was utilized where no stockholders other than Casino USA participate in the
rights offering, our note payable to Casino USA would be extinguished and
Casino USA would pay the balance of the offering price in cash, which after the
deduction of offering expenses would be used to reduce senior debt.
CAPITALIZATION TABLE
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 28, 1999
------------------
As
Actual Adjusted
-------- --------
<S> <C> <C>
Debt:
Short term debt, excluding capital leases (average
interest rate 7.54%)............................... $148,424 $131,924 (1)
Notes Payable, net of current maturities (average
interest rate 6.50%)............................... 15,212 15,212
Notes Payable to affiliates (average interest rate
9.58%)............................................. 55,388 13,388 (1)
-------- --------
Total debt........................................ 219,024 160,524
-------- --------
Stockholder's equity:
Preferred stock, $1.00 par value
(authorized--10,000,000 shares; no shares issued).. -- --
Common stock, $0.01 par value
(authorized--100,000,000 shares; 22,527,179 shares
issued and outstanding; proforma 29,013,585 shares
issued and outstanding, as adjusted)............... 225 290 (2,3)
Additional paid-in capital.......................... 145,043 202,686 (2,3,4)
Cumulative translation loss......................... (835) (835)
Retained earnings................................... 44,435 44,345 (5)
-------- --------
Total stockholders' equity........................ 188,868 246,486
-------- --------
Total capitalization.............................. $407,892 $407,010
======== ========
</TABLE>
- --------
(1) Assumes that 70% of the equity issued as a result of this offering will be
acquired by Casino USA and will reduce the note payable to Casino USA, and
that the balance of the net proceeds of the offering will be used to reduce
the principal amount of outstanding senior debt.
(2) Upon completion of this offering, 6,486,406 shares will be issued, for net
proceeds of approximately $58,500,000 after the deduction of expenses
associated with this offering.
(3) Upon completion of this offering, 10,000 shares will be issued to Casino
USA pursuant to a standby purchase and debt reduction agreement.
(4) Structuring fees of $792,000 related to the note payable to Casino USA and
related to this rights offering will be charged to additional paid-in
capital following the conversion of this note.
(5) Reflects a write-off of a pro rata portion of unamortized fees and costs of
$90,000 (after tax) due to reduction of the senior debt facility.
18
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the ownership of Smart
& Final common stock as of May 3, 1999 by (1) each person known to Smart &
Final to be the beneficial owner of more than five percent of the outstanding
common stock; (2) each director; (3) each executive officer and former
executive officer named in the Summary Compensation Table in Smart & Final's
proxy statement for its 1999 annual meeting; and (4) all directors and
executive officers as a group. Unless otherwise indicated, each of the
stockholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name Beneficially Owned Class
---- ------------------ ----------
<S> <C> <C>
More Than 5% Beneficial Owners
Casino USA, Inc.(1).......................... 12,415,925 54.9%
Baron Capital Group, Inc.(2)................. 5,260,020 23.2%
Directors and Executive Officers
Martin A. Lynch.............................. 197,492 *
Executive Vice President and Chief Financial
Officer
Dennis L. Chiavelli.......................... 117,752 *
Executive Vice President
Ross E. Roeder............................... 34,014 *
Chairman of the Board and Chief Executive
Officer
David J. McLaughlin(4)....................... 32,407 *
Director
James S. Gold(3)............................. 28,007 *
Director
Timm F. Crull(3)(5).......................... 27,007 *
Director
Thomas G. Plaskett(3)........................ 26,007 *
Director
Pierre B. Bouchut(3)......................... 25,007 *
Director
Christian P. Couvreux(3)..................... 10,052 *
Director
Antoine Guichard............................. 2,507 *
Director
Jean-Louis Bourgier.......................... 1,552 *
Director
Etienne Snollaerts........................... 993 *
Director
Former Executive Officers
Robert J. Emmons(6).......................... 977,500 4.3%
Roger M. Laverty, III(7)..................... 297,420 1.3%
All directors and executive officers as a
group (19 persons).......................... 661,288 29.2%
</TABLE>
- --------
* Less than 1%.
(1) Casino Guichard-Perrachon, S.A., as the owner of approximately 99% of the
capital stock of Casino USA, may be deemed to beneficially own such shares.
The address of Casino USA is 524 Chapala Street, Santa Barbara, California
93101, and the address of its parent company is 24, rue de la Montat, 42008
St.-Etienne Cedex 2, France. Rallye, a publicly traded French joint stock
corporation, owns more than 50% of the voting interest in Casino Guichard-
Perrachon, S.A. Mr. Jean-Charles Naouri, through intermediary companies,
indirectly controls more than 50% of the voting interest in Rallye. This
note (1) is based solely on information obtained from a report on Form 13D
filed by Casino USA on July 22, 1998 and from information provided to Smart
& Final by Casino Guichard-Perrachon.
19
<PAGE>
(2) All information with respect to Baron Capital Group, Inc. ("BCG"), a
holding company controlled by Ronald Baron, is based solely on Amendment
No. 11 to Schedule 13D dated March 30, 1999, filed by BCG. Mr. Baron has
sole voting and dispositive power over 15,000 shares held by him personally
(or .06% of the outstanding shares) and shared voting and dispositive power
over 5,260,020 shares (or 23.2% of the outstanding shares). Of the
5,260,020 shares, 3,657,000 shares are held for the account of BAMCO, Inc.,
a registered investment advisor controlled by Mr. Baron, and of this amount
3,350,000 are held for the account of Baron Asset Fund, a registered
investment company advised by BAMCO, Inc. 1,603,020 shares are held for the
accounts of investment advisory clients of Baron Capital Management, Inc.
("BCM"), a registered investment company controlled by Mr. Baron. The
address of BCG is 767 Fifth Avenue, 24th Floor, New York, New York 10153.
(3) Includes shares which such persons have the right to acquire within 60 days
pursuant to the exercise of outstanding stock options of which 7,500 shares
each are attributable to Messrs. Bouchut, Crull, Gold and Plaskett.
(4) Includes shares held in profit sharing or IRA accounts for the benefit of
the named individual or members of his immediate family.
(5) Shares held in family trust.
(6) Mr. Emmons is no longer employed by Smart & Final, and no longer serves as
a director. Includes 6,000 shares held by the Institute for Management and
Marketing Studies Trust of which Mr. Emmons is a beneficiary, 671,500
shares held by the Robert & Christine Emmons Family Trust, of which Mr.
Emmons is the trustee and a beneficiary, and 100,000 shares which Mr.
Emmons acquired in April 1999 under a certain stock purchase agreement, and
options to purchase of 200,000 shares which Mr. Emmons is entitled to
exercise under Smart & Final's Long-Term Equity Compensation Plan.
(7) Mr. Laverty is no longer employed by Smart & Final. Includes 450 shares
held directly by Mr. Laverty's wife, which Mr. Laverty may be deemed to
beneficially own.
RELATIONSHIP BETWEEN SMART & FINAL AND CASINO USA
Casino USA's Majority Stock Ownership
Casino USA is a subsidiary of Casino Guichard-Perrachon, S.A., a business
organization which is publicly-traded in France and is engaged in the retail
grocery, restaurant, food production and other businesses in France and
elsewhere in the world. Casino USA and Casino Guichard-Perrachon, S.A. are
ultimately controlled by Mr. Jean-Charles Naouri, a French citizen whose
principal business is making and managing investments.
Casino USA acquired Smart & Final's then parent company in 1984 and
currently owns approximately 55% of Smart & Final's outstanding common stock.
Since the common stock does not have cumulative voting rights, holders of
shares having more than 50% of the voting power may elect all of the directors
of Smart & Final, and the holders of the remaining shares would not be able to
elect any directors.
There is no agreement between Casino USA and any other party that would
prevent Casino USA from acquiring additional shares of common stock or
disposing of shares owned by it.
Smart & Final's Board of Directors currently includes 10 members, 5 of whom,
Messrs. Bouchut, Bourgier, Couvreux, Guichard, and Snollaerts, also serve as
directors of Casino USA and/or are otherwise affiliated with Casino Guichard-
Perrachon, S.A. Mr. Bourgier does not intend to run for election at the May 11,
1999 annual meeting. The board of directors has nominated Joel-Andre Ornstein
for election at the annual meeting to replace Mr. Bourgier. Mr. Ornstein is
affiliated with several companies controlled by Mr. Naouri.
Prior to his retirement, Mr. Robert J. Emmons served as a director and
Chairman of the Board, and Chief Executive Officer, of Smart & Final, and also
served as a director and as Chairman, Chief Executive Officer
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and Chief Financial Officer of Casino USA. During fiscal 1998, Mr. Emmons
devoted the substantial portion of his efforts to Smart & Final's business. Mr.
Emmons retired or resigned from all of his positions with Smart & Final and
Casino USA in January 1999.
Decisions on compensation of executive officers are generally made by the
Compensation Committee of Smart & Final's Board of Directors, and decisions on
the compensation of the Chief Executive Officer are generally made by the
Compensation Committee and the Governance Committee. All of the decisions
relating to the compensation of executive officers are reviewed, and in fiscal
1998 were approved without change, by the full Board.
In fiscal 1998, the Compensation Committee consisted of Messrs. Crull,
McLaughlin, Plaskett, and until his appointment as Chief Executive Officer,
Roeder. In fiscal 1998, the Governance Committee consisted of Messrs. Guichard
and until his retirement, Mr. Emmons as Chairman. Mr. Emmons did not
participate in any decisions that affected him. Except for Mr. Emmons (who in
fiscal 1998 was Chairman of the Board and Chief Executive Officer of Smart &
Final), no other member of the Compensation Committee or the Governance
Committee is now or ever has been an employee of Smart & Final, its
subsidiaries, Casino USA or Casino Guichard-Perrachon, S.A.
Ross E. Roeder is Smart & Final's current chief executive officer and
Chairman of the Board. He has served as a Smart & Final director since 1984. He
is not now and has not ever been an employee or director of Casino USA or
Casino Guichard-Perrachon, S.A.
Certain Transactions between Smart & Final and Casino USA
Intercompany Services. Smart & Final, Casino USA and a former subsidiary of
Casino USA are parties to a 1991 intercompany agreement which provides for the
performance of administrative services among these parties. None of the parties
are obligated to use these services.
Intercompany services are provided at cost, including the estimated
allocable costs of (1) management and other employees performing the services,
(2) computer time, (3) allocable overhead and (4) out-of-pocket expenses. Cost,
for purposes of management and employees, is based on an estimated allocation
of their time, based on a study of the actual time spent in past periods. Any
fees for these services cannot exceed $100,000 in any three-month period
without the written consent of the user of the services.
Casino USA and its subsidiary also agreed that they and certain of their
affiliated companies will not engage in Smart & Final's business. The initial
term of the intercompany agreement was two years, and has been renewed from
time to time.
Since 1986, Smart & Final has performed a variety of services for Casino USA
and its former subsidiary, including accounting, human resources and systems
development work, the cost of which has been charged to the benefited
affiliated company. These charges amounted to $285,000 for fiscal 1998. It is
anticipated that Smart & Final will continue to provide these administrative
services to its affiliates at cost and that the levels of future services will
not vary significantly from prior levels.
Tax Sharing Agreement. Smart & Final and Casino USA are parties to a tax
sharing arrangement covering income tax obligations in the State of California.
Under this arrangement, Smart & Final has made tax sharing payments to or
received tax sharing benefits from Casino USA, based upon pre-tax income for
financial reporting purposes adjusted for certain agreed upon items. Smart &
Final received tax sharing benefits from Casino USA aggregating $705,000 in
fiscal 1998.
Smart & Final Purchase of 91 Properties from Casino USA. At a special
meeting of Smart & Final stockholders held on March 19, 1997, the stockholders
approved the acquisition by Smart & Final of 91 properties which were being
operated as Smart & Final stores, office and warehouse facilities, with a net
book value of
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$71,440,000 from Casino USA and its former subsidiary Casino Realty, Inc., for
a purchase price of approximately $76 million. Smart & Final paid the $76
million in the form of 1,625,000 shares of Smart & Final's common stock, then
valued at $23.375 per share, and $38,000,000 in two five-year unsecured notes.
As part of this transaction, Smart & Final agreed to sell certain Casino USA
properties by December 31, 1998 that were not being operated as stores for at
least $5.7 million. The first $500,000 of any excess proceeds would be paid to
Smart & Final and any remaining proceeds split 2/3 to Casino USA and 1/3 to
Smart & Final. As of October 1998, Smart & Final had sold 10 of the 12
properties for total gross sales proceeds of approximately $3.9 million. During
1998, Smart & Final fulfilled its remaining obligation to Casino USA and
purchased the remaining two properties. Casino USA also agreed to pay to Smart
& Final certain management and administrative fees in connection with the
properties.
Cash Advances. Smart & Final also has borrowed cash from Casino USA and a
former subsidiary of Casino USA and has made cash advances to those affiliates
in prior years.
November 1998 Consolidation of Amounts Owed to Casino USA
As of November 12, 1998, Smart & Final owed Casino USA or affiliates of
Casino USA total outstanding principal and unpaid interest of approximately
$24.0 million for prior cash advances to Smart & Final, and approximately $30.4
million under the unsecured notes issued as part of the price for the purchase
of real property described above, or approximately $54.4 million in total.
Effective November 13, 1998, Smart & Final consolidated and replaced these
prior cash advances and unsecured notes with a single $55.4 million loan
agreement with Casino USA. The principal amount of this loan also includes a
structuring fee of 1.75% of the consolidated debt, or approximately $953,000.
The loan matures on February 15, 2002 and bears interest at LIBOR plus 4.50%.
Payments are due on the last day of each calendar quarter and commenced
December 31, 1998.
Smart & Final may only prepay the Casino USA loan with the express consent
of Casino USA and provided that the prepayment is allowed under Smart & Final's
senior secured credit facilities. The Casino USA loan also contains financial
covenants similar to those contained in the senior secured credit facilities.
The loan agreement between Smart & Final and Casino USA also contemplated
that, by mutual agreement, the loan could be converted in whole or in part into
an equity investment in Smart & Final, if this does not violate the senior
secured credit facilities. Smart & Final is not required to obtain the consent
of the senior lenders to carry out this rights offering or the issuance of
shares to Casino USA as provided in this rights offering. Smart & Final has
separately agreed with its bank lenders to use its best efforts to complete
this rights offering before June 30, 1999.
Smart & Final and Casino USA agreed to the terms of the Casino USA loan as
part of the refinancing of Smart & Final's senior secured credit facilities in
November 1998. A principal purpose of the Casino USA loan was to extend the
maturity of Smart & Final's consolidated obligations to Casino USA beyond the
maturity of the senior secured credit facilities as part of the terms required
by the senior lenders.
The senior secured credit facilities, and the $55.4 million loan agreement
between Smart & Final and Casino USA, contain financial covenants requiring
Smart & Final to maintain certain financial ratios. As a result of the reported
loss for the fourth quarter and full year 1998, Smart & Final is not in
compliance with these covenants. Casino USA has agreed to waive compliance with
certain covenants under its loan agreement with Smart & Final until Smart &
Final reports its second quarter 1999 earnings or August 31, 1999, whichever
comes first. Smart & Final paid Casino USA $139,000 in connection with this
waiver.
See "Risk Factors--Recent covenant noncompliance and risks of default under
senior debt" for additional information about the senior secured credit
facilities.
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Standby Purchase Agreement with Casino USA in this Rights Offering
Pursuant to a Standby Purchase and Debt Reduction Agreement, Casino USA has
agreed to acquire all of the shares offered by this prospectus that are not
purchased by the other stockholders under the other stockholders' basic
subscription privilege and oversubscription privilege. Depending on the number
of shares purchased by others, Casino USA will hold between approximately 55%
and 64.9% of the outstanding common stock after completion of the rights
offering.
Casino USA will pay for shares it purchases in the rights offering by
reducing a $55.4 million debt Smart & Final owes Casino USA by the total
subscription price due for those shares. If Casino USA's total subscription
price exceeds $55.4 million, Casino USA will pay the excess in cash.
Smart & Final has agreed to pay up to $450,000 in expenses incurred by
Casino USA relating to the rights offering. Smart & Final will also issue to
Casino USA 10,000 shares of common stock as a standby purchaser fee.
Board and Special Committee Approval of the Rights Offering and Casino USA
Standby Agreement
As Smart & Final negotiated a refinancing of its senior debt in the fall of
1998, it agreed with its bank lenders to restructure the then existing
intercompany notes and advances with Casino USA into a new, subordinated note.
We also determined that it would be advisable to increase equity capital to
provide greater financial flexibility. Smart & Final and Casino USA also agreed
that it would be in Smart & Final's best interests to reduce the $55.4 million
debt owed by Smart & Final to Casino USA, through conversion to equity.
At meetings on November 9, 1998, and December 4, 1998, the Board of
Directors authorized Smart & Final to undertake a rights offering on terms
substantially as set forth in this prospectus and established a special
committee of the Board to review the terms of the rights offering. See "The
Rights Offering--Reasons for the Rights Offering."
The Board of Directors determined it prudent to appoint a committee of
outside directors to review any proposal to exchange or issue equity securities
in view of Casino USA's interest in any such proposal. The special committee
consisted of directors Plaskett, Crull and McLaughlin, none of whom had or have
any relationship with Casino USA or Smart & Final other than their status as
board members of Smart & Final. Smart & Final's senior management also actively
participated in considering and structuring the ultimate rights offering
proposal.
The special committee retained Merrill Lynch & Co. as its independent
financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as its
independent counsel. The special committee met twice in November 1998,
following which the special committee's financial advisor and a financial
advisor to Casino USA had further discussions concerning the proposed terms of
the rights offering, and the special committee proposed certain changes to the
rights offering term sheet. The special committee met again on December 3,
1998, and unanimously approved the rights offering, substantially as reflected
in this prospectus, as being in the best interests of Smart & Final.
The following were among the factors considered by the special committee in
support of its approval of the rights offering: the then current state of the
financial markets, the relatively small size of the rights offering, the term
sheet generally having customary parameters for a rights offering, the ability
of all stockholders to participate in the rights offering, Casino USA's
willingness to exchange its debt for additional equity, certain revisions in
the terms of the rights offering resulting from the discussions noted above
among the financial advisors, and the advice of the special committee's
financial advisor. The special committee also considered two other factors in
its decision to support of the rights offering: the possible increase in Casino
USA ownership from approximately 55% to 64.9%, and the standby purchaser fee of
10,000 shares of common stock to be paid to Casino USA.
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The Board of Directors and the special committee specifically approved a
formula for setting the subscription price so that the subscription price would
be fixed at $0.75 per share less than the closing price per share on the NYSE
on the day prior to the effective date of the registration statement to which
this prospectus relates, rounded downward to the nearest multiple of $0.25. The
subscription price has been determined by the special committee with the
approval of the Board of Directors, and represents a discount to the market
price of a share of the common stock on the date that the subscription price
was determined, in accordance with the previously approved formula for that
price referred to above.
Neither the Board of Directors nor the special committee makes any
recommendation to stockholders regarding the exercise of rights under this
offering.
THE RIGHTS OFFERING
Reasons for the Rights Offering
As part of Smart & Final's refinancing of its senior debt in November 1998,
Smart & Final agreed with its banks to restructure the then existing
intercompany notes and advances with Casino USA into a new, subordinated note.
We also determined that it would be advisable to also increase equity capital
to provide greater financial flexibility for Smart & Final. Smart & Final and
Casino USA also agreed that it would be in Smart & Final's best interests to
reduce our $55.4 million debt to Casino USA, through conversion to equity.
After review by management and a special committee of the Board of Directors,
and following the advice of outside financial advisors, this rights offering
was determined to be the best approach to providing additional equity capital.
In this rights offering, Casino USA has also agreed to convert up to all of
the $55.4 million debt Smart & Final owes Casino USA into additional common
stock. At the same time, other stockholders have the opportunity to maintain
their percentage ownership in our company by exercising their rights. Net cash
proceeds from the rights offering will be used to prepay senior debt owed to
our other lenders.
See "Relationship between Smart & Final and Casino USA" for more information
about the $55.4 million debt owed to Casino USA, and "Risk Factors--Recent
covenant noncompliance and risks of default under senior debt" for more
information about the senior debt.
No Special Committee or Board Investment Recommendation to Stockholders
Neither the Board of Directors nor the Board's special committee for the
rights offering makes any recommendation to you about whether you should
exercise any rights. If you do not exercise all of your rights, you will own a
smaller percentage of the total outstanding common stock after completion of
the rights offering. If you exercise rights, you risk investment loss on new
money invested. Smart & Final does not ensure that the subscription price will
remain below the market price for the common stock during the rights offering,
or that anyone purchasing shares will be able to sell those shares in the
future at a higher price. See "Risk Factors."
General Terms and Assumptions
. The record date is May 12, 1999.
. Only holders of record of common stock at the close of business on the
record date, or those to whom rights have been validly transferred, may
exercise rights. You are a record holder for this purpose only if your
name is registered as a stockholder with our transfer agent, ChaseMellon
Shareholder Services, L.L.C., as of the record date.
. The text below generally assumes that you are a record holder of shares,
unless otherwise noted.
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. If you own shares held in a brokerage, bank or other custodial or nominee
account, you should promptly send the proper instruction form to your
broker or other person holding your shares, in order to exercise rights.
Your broker or other person holding your shares is the record holder and
will have to act in order for you to exercise rights. We have asked the
securities brokers and other nominee holders of our stock to contact you
to obtain your instructions concerning rights you are entitled to
exercise.
. No interest will be paid on your funds delivered to exercise rights,
regardless of whether the funds are applied to the purchase of shares or
returned for any reason.
. Smart & Final will not issue fractional shares, and will eliminate
fractional shares in making any required allocations of shares under the
rights offering.
. If exercise of your rights would result in a fractional share, you must
round down to purchase the nearest whole share or any lesser number of
whole shares, at the subscription price per share.
ChaseMellon Shareholder Services, L.L.C.
ChaseMellon Shareholder Services, L.L.C. is acting as the subscription agent
for the rights offering under an agreement with Smart & Final.
All subscription warrants, payments of the subscription price, nominee
holder certifications, notices of guaranteed delivery, and DTC participant
oversubscription exercise forms, to the extent applicable to your exercise of
rights, must be delivered to ChaseMellon Shareholder Services, L.L.C. as
follows:
<TABLE>
<CAPTION>
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT COURIER:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road--Mail Drop--Reorg
South Hackensack, NJ 07606 New York, New York 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Attn: Reorganization Attn: Reorganization
Department Department Department
</TABLE>
ChaseMellon Shareholder Services, L.L.C.'s facsimile number is (201) 296-
4293.
The telephone number for confirmation of receipt of facsimiles is (201) 296-
4860.
Smart & Final will pay the fees and expenses of ChaseMellon Shareholder
Services, L.L.C., except for fees, applicable brokerage commissions, taxes and
other expenses relating to the sale of rights by ChaseMellon Shareholder
Services, L.L.C., which will be for the account of the seller of the rights.
Smart & Final has also agreed to indemnify ChaseMellon Shareholder Services,
L.L.C. against certain liabilities in connection with the rights offering.
The Rights
As soon as practicable after the date of this prospectus, Smart & Final is
distributing, at no charge, to holders of its common stock on the record date
transferable subscription rights to purchase additional shares of common stock.
We are distributing one right for each share of common stock held on the record
date.
Smart & Final is sending a subscription warrant to each record holder along
with this prospectus and related instructions to evidence the rights. In order
to exercise rights, you must fill out and sign the appropriate subscription
warrant and timely deliver it with full payment for the shares to be purchased.
A depository bank, trust company or securities broker or dealer which is a
record holder for more than one beneficial owner of shares may divide or
consolidate subscription warrants to represent shares held on the record date
by their beneficial owners, upon proper showing to ChaseMellon Shareholder
Services, L.L.C.
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Basic and Oversubscription Privileges
Basic Subscription Privilege. You are entitled to purchase one share of
common stock at the subscription price for every 3.4884 rights exercised. Smart
& Final has reserved a total of 6,486,406 shares of common stock for the
exercise of the rights.
Oversubscription Privilege. If you exercise your basic subscription
privilege in full, you may also subscribe for additional shares that other
stockholders may not purchase under their basic subscription privilege. If
there are not enough shares available to fill all subscriptions for additional
shares, the available shares will be allocated pro rata based on the number of
shares each subscriber for additional shares has purchased under the basic
subscription privilege. Smart & Final will not allocate to you more than the
number of shares you have actually subscribed and paid for.
You are not entitled to exercise the oversubscription privilege unless you
have fully exercised your basic subscription privilege. For this purpose, you
would only count the shares you own in your own name, and not other shares that
might, for example, be jointly held with a spouse, held as a custodian for
someone else, or held in an individual retirement account.
You may elect to exercise the oversubscription privilege only at the same
time you exercise your basic subscription privilege in full.
If Smart & Final does not allocate to you all shares you have subscribed for
under the oversubscription privilege, Smart & Final will refund by mail to you
any payment you have made for shares which are not available to issue to you,
as soon as practicable after completion of the rights offering.
Banks, brokers and other nominees who exercise the oversubscription
privilege on behalf of beneficial owners of shares must report certain
information to ChaseMellon Shareholder Services, L.L.C. and Smart & Final and
record certain other information received from each beneficial owner exercising
rights. Generally, banks, brokers and other nominees must report (1) the number
of shares held on the record date on behalf of each beneficial owner, (2) the
number of rights as to which the basic subscription privilege has been
exercised on behalf of each beneficial owner, (3) that each beneficial owner's
basic subscription privilege held in the same capacity has been exercised in
full, and (4) the number of shares subscribed for under the oversubscription
privilege by each beneficial owner.
If you complete the portion of the subscription warrant to exercise the
oversubscription privilege, Smart & Final will rely on this as your
certification that you have fully exercised your basic subscription privilege
as described above.
Subscription Price
The subscription price is $9.25 per share subscribed for, payable in cash.
This price applies to the exercise of the basic subscription privilege and the
oversubscription privilege.
Smart & Final will accept any inadvertent subscription indicating a purchase
of fractional shares by rounding downward to the nearest whole share and
refunding without interest any payment received for a fractional share as soon
as practicable.
Expiration Time and Date
The basic subscription privilege and the oversubscription privilege both
expire at 5:00 p.m., New York City time, on June 3, 1999. After the expiration
date, rights will no longer be exercisable by anyone.
In order to exercise rights in a timely manner, you must assure that
ChaseMellon Shareholder Services, L.L.C. actually receives, prior to expiration
of the rights, the properly executed and completed subscription warrant (or
form of "Notice of Guaranteed Delivery"), together with full payment for all
shares you wish to purchase.
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Casino USA Standby Purchase and Debt Reduction Agreement.
Casino USA holds 12,415,925 shares, or approximately 55%, of Smart & Final's
outstanding common stock. Casino USA therefore has the same percentage of
rights and shares available under the basic subscription privilege and
oversubscription privilege.
Pursuant to a Standby Purchase and Debt Reduction Agreement, Casino USA has
agreed to acquire all of the shares offered under the rights offering that are
not purchased by the other stockholders under the other stockholders' basic
subscription privilege and oversubscription privilege. Depending on the number
of shares purchased by others, Casino USA will hold between approximately 55%
and 64.9% of the outstanding common stock after completion of the rights
offering.
Casino USA will pay for the shares it purchases in the rights offering by
reducing a $55.4 million debt Smart & Final owes Casino USA by the total
subscription price due for those shares. If Casino USA's total subscription
price exceeds $55.4 million, Casino USA will pay the excess in cash.
See "Relationship Between Smart & Final and Casino USA" for additional
information concerning Casino USA and the standby agreement.
Conditions Relating to the Rights Offering
If the Standby Purchase and Debt Reduction Agreement with Casino USA is not
consummated in accordance with its terms for any reason, including the failure
to satisfy applicable conditions specified in the agreement, Smart & Final will
terminate the rights offering in its entirety. If the rights offering is
terminated for this or any other reason, Smart & Final will instruct
ChaseMellon Shareholder Services, L.L.C. to refund without interest to those
persons who subscribed for shares in the rights offering all payments received
by ChaseMellon Shareholder Services, L.L.C. from those subscribers.
The material conditions to the standby agreement include the following,
which must be satisfied or waived as of the date the rights expire:
. Smart & Final must not have experienced any material adverse change
affecting its business, prospects, financial position, stockholders'
equity or results of operations;
. the SEC must not have issued a stop order relating to the registration
statement filed with the SEC relating to this prospectus;
. representations made by the parties in the agreement must be true and
correct;
. Casino USA must have received an opinion of counsel and a letter from
Smart & Final's certified public accountants as described in the standby
agreement; and
. the rights offering must have been completed in the manner described in
this prospectus.
Expenses of the Rights Offering
Smart & Final will pay from cash proceeds of the rights offering or
available cash estimated expenses of approximately $1,500,000 relating to the
rights offering incurred by Smart & Final. Included within these expenses,
Smart & Final has agreed to pay up to $450,000 in expenses incurred by Casino
USA relating to the rights offering. Smart & Final will also issue to Casino
USA 10,000 shares of common stock as a standby purchaser fee.
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<PAGE>
Exercise of Rights
Please do not send subscription warrants or related forms to Smart & Final.
Please send the properly completed and executed form of subscription warrant
with full payment to ChaseMellon Shareholder Services, L.L.C.
You should read carefully the forms of subscription warrant and related
instructions and forms which accompany this prospectus. You should call
ChaseMellon Shareholder Services, L.L.C. (1-888-224-2745) promptly with any
questions you may have.
You may exercise your rights by delivering to ChaseMellon Shareholder
Services, L.L.C., at the address specified in the instructions accompanying
this prospectus, at or prior to expiration of the rights:
. the properly completed and executed subscription warrant(s) which
evidence your rights, and
. payment in full of the subscription price for each share you wish to
purchase under the basic subscription privilege and the oversubscription
privilege.
If you are not a broker, bank or other eligible institution, you must obtain
a signature guarantee on the subscription warrant from a broker, bank or other
institution eligible to guarantee signatures in order to transfer the
subscription warrant in whole or to transfer a portion of your rights.
Required Forms of Payment
If you exercise any rights, you must deliver full payment in the form of:
. a check or bank draft drawn upon a U.S. bank, or U.S. postal money order,
payable to ChaseMellon Shareholder Services, L.L.C. Subscription Agent,
or
. by wire transfer of funds to the account maintained by the ChaseMellon
Shareholder Services, L.L.C. for this rights offering at The Chase
Manhattan Bank, New York, NY, ABA No. 021 000 021, Attention: ChaseMellon
Shareholder Services Reorg. Account: 323-213057 (Smart & Final Inc.).
In order for you to timely exercise your rights, ChaseMellon Shareholder
Services, L.L.C. must actually receive the subscription price before expiration
of the rights in the form of:
. a personal check which must have timely cleared payment,
. a certified or cashier's check or bank draft drawn upon a U.S. bank or a
U.S. postal money order, or
. collected funds in ChaseMellon Shareholder Services, L.L.C.'s account
designated above.
Funds paid by uncertified personal check may take at least five business
days to clear. Accordingly, if you pay the subscription price by means of
uncertified personal check, you should make payment sufficiently in advance of
the expiration time to ensure that your check actually clears and the payment
is received before that time. Smart & Final is not responsible for any delay in
payment by you and suggests that you consider payment by means of certified or
cashier's check, money order or wire transfer of funds.
Special Procedure under "Notice of Guaranteed Delivery" Form
If you wish to exercise rights but cannot ensure that ChaseMellon
Shareholder Services, L.L.C. will actually receive the executed subscription
warrant before the expiration of the rights, you may alternatively exercise
rights by causing all of the following to occur within the time prescribed:
. Full payment must be received by ChaseMellon Shareholder Services, L.L.C.
prior to the expiration time for all shares you desire to purchase under
the basic and oversubscription privileges.
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<PAGE>
. A properly executed "Notice of Guaranteed Delivery" substantially in the
form distributed by Smart & Final with your subscription warrant must be
received by ChaseMellon Shareholder Services, L.L.C. at or prior to the
expiration time.
. The "Notice of Guaranteed Delivery" must be executed by both you and one
of the following: a member firm of a registered national securities
exchange, an NASD member, a commercial bank or trust company having an
office or correspondent in the United States, or other eligible guarantor
institution qualified under a guarantee program acceptable to ChaseMellon
Shareholder Services, L.L.C. The cosigning institution must guarantee in
the Notice of Guaranteed Delivery that the subscription warrant will be
delivered to ChaseMellon Shareholder Services, L.L.C. within three NYSE
trading days after the date of the form. You must also provide in that
form other relevant details concerning the intended exercise of rights.
. The properly completed subscription warrant(s) with any required
signature guarantee must be received by ChaseMellon Shareholder Services,
L.L.C. within three NYSE trading days following the date of the related
Notice of Guaranteed Delivery.
. If you are a nominee holder of rights, the "Nominee Holder Certification"
must also accompany the Notice of Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered to ChaseMellon Shareholder
Services, L.L.C. in the same manner as subscription warrants at the address set
forth above under "The Rights Offering--ChaseMellon Shareholder Services,
L.L.C.," or may be delivered by telegram or facsimile transmission (telecopier
no. (201) 296-4293). To confirm facsimile deliveries, please call (201) 296-
4860.
Additional copies of the form of Notice of Guaranteed Delivery are available
upon request from ChaseMellon Shareholder Services, L.L.C., whose address and
telephone numbers are set forth above.
Incomplete Forms; Insufficient or Excess Payment
If you do not indicate the number of rights being exercised, or do not
forward sufficient payment for the number of rights that you indicate are being
exercised, then Smart & Final is entitled to accept the subscription forms and
payment for the maximum number of rights that may be exercised based on the
actual payment delivered.
If your payment exceeds the amount required to pay for the shares you
indicate in your subscription warrant, then Smart & Final is entitled to accept
the excess payment as an exercise of the oversubscription privilege to the full
extent of your payment.
Smart & Final will return any payment not applied to the purchase of shares
under the rights offering procedures to those who made these payments as soon
as practicable by mail.
Exercise of Less Than All Rights
If you subscribe for fewer than all of the shares represented by your
subscription warrant, you may (1) direct ChaseMellon Shareholder Services,
L.L.C. to attempt to sell your remaining rights, or (2) receive from
ChaseMellon Shareholder Services, L.L.C. a new subscription warrant
representing the unused rights. See "The Rights Offering--How to Transfer
Rights" below.
Instructions to Nominee Holders
If you are a broker, trustee or depository for securities or other nominee
holder of common stock for beneficial owners of the stock, Smart & Final is
requesting you to contact the beneficial owners as soon as possible to obtain
instructions and related certifications concerning their rights. Our request to
you is further
29
<PAGE>
explained in the suggested form of letter of instructions from nominee holders
to beneficial owners accompanying this prospectus.
To the extent so instructed, nominee holders should complete appropriate
subscription warrants on behalf of beneficial owners and, in the case of any
exercise of the oversubscription privilege, the related form of "Nominee Holder
Certification," and submit them on a timely basis to ChaseMellon Shareholder
Services, L.L.C. with the proper payment.
Risk of Loss on Delivery of Subscription Warrant Forms and Payments
Each holder of rights bears all risk of the method of delivery to
ChaseMellon Shareholder Services, L.L.C. of subscription warrants and payments
of the subscription price.
If subscription warrants and payments are sent by mail, you are urged to
send these by registered mail, properly insured, with return receipt requested,
and to allow a sufficient number of days to ensure delivery to ChaseMellon
Shareholder Services, L.L.C. and clearance of payment prior to the expiration
time.
Because uncertified personal checks may take at least five business days to
clear, you are strongly urged to pay, or arrange for payment, by means of
certified or cashier's check, money order or wire transfer of funds.
How Procedural and Other Questions Are Resolved
Smart & Final is entitled to determine all questions concerning the
timeliness, validity, form and eligibility of any exercise of rights. This
determination will be final and binding. Smart & Final, in its sole discretion,
may waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as it may determine, or reject the purported
exercise or any right because of any defect or irregularity.
Subscription warrants will not be considered received or accepted until all
irregularities have been waived or cured within such time as Smart & Final
determines, in its sole discretion. Neither Smart & Final nor ChaseMellon
Shareholder Services, L.L.C. have any duty to give notification of any defect
or irregularity in connection with the submission of subscription warrants or
any other required document. They will not incur any liability for failure to
give such notification.
Smart & Final reserves the right to reject any exercise of rights if the
exercise does not comply with the terms of the rights offering or is not in
proper form or if the exercise of rights would be unlawful or materially
burdensome. See "The Rights Offering--Right to Block Exercise Due to Regulatory
Issues" below.
Questions and Assistance Concerning the Rights
You should direct any questions or requests for assistance concerning the
method of exercising rights or requests for additional copies of this
prospectus, forms of instructions or the Notice of Guaranteed Delivery to
ChaseMellon Shareholder Services, L.L.C., at 450 W. 33rd Street, 14th Floor,
New York, New York 10001 (telephone: banks and brokers (212) 273-8070, collect;
all others (888) 224-2745).
No Revocation
Once you have exercised the basic subscription privilege or the
oversubscription privilege, you may not revoke or change your exercise.
How to Transfer Rights
There has been no prior trading in the rights. Smart & Final provides no
assurance that a trading market will develop or, if a market develops, that the
market will remain available for a sufficient time to complete any transfer of
rights.
30
<PAGE>
You may transfer all of the rights evidenced by a single subscription
warrant by signing the subscription warrant for transfer in accordance with the
appropriate form printed on the subscription warrant.
You may transfer a portion of the rights evidenced by a single subscription
warrant by delivering to ChaseMellon Shareholder Services, L.L.C. the
subscription warrant properly signed for transfer, with separate written
instructions to register a portion of the rights in the name of your transferee
and to issue a new subscription warrant to the transferee covering the
transferred rights. In that event and by appropriate written instructions, you
may elect to receive a new subscription warrant covering the rights you did not
transfer, or may request ChaseMellon Shareholder Services, L.L.C. to sell your
retained rights in the manner described below.
Smart & Final anticipates that the rights will be eligible to trade on the
NYSE under the symbol "SMF Rt" until the close of business on the last trading
day prior to the expiration date. Smart & Final cannot ensure that there will
be a trading market for the rights, that any market that does develop will
continue through the rights offering, or that stockholders will be able to sell
rights.
You may elect to request ChaseMellon Shareholder Services, L.L.C. to sell
all or part of your rights by delivering to ChaseMellon Shareholder Services,
L.L.C. your subscription warrant properly executed for sale by ChaseMellon
Shareholder Services, L.L.C. If you request that only a portion of your rights
be sold, you should indicate in writing what action should be taken as to the
rights you are not selling.
If you request ChaseMellon Shareholder Services, L.L.C. to sell rights, your
subscription warrant signed as provided above must be received by ChaseMellon
Shareholder Services, L.L.C. at or prior to 11:00 a.m., New York City time, on
May 28, 1999.
Promptly following the expiration time, ChaseMellon Shareholder Services,
L.L.C. will send you a check for the net proceeds from the sale of any rights
sold on your behalf. To the extent rights have been sold, all of the sales for
those requesting this service shall be considered together and effected at the
weighted average sale price of all rights sold by the ChaseMellon Shareholder
Services, L.L.C. in this rights offering, less the pro rata portion of any
applicable brokerage commissions, taxes and other expenses.
Smart & Final cannot ensure that a market will develop for the rights or
that ChaseMellon Shareholder Services, L.L.C. will be able to sell any rights.
ChaseMellon Shareholder Services, L.L.C.'s obligation to execute orders is
subject to its ability to find buyers. If less than all sales orders received
by ChaseMellon Shareholder Services, L.L.C. can be filled, sales proceeds will
be prorated among those requesting the sales based upon the number of rights
each holder of rights has requested ChaseMellon Shareholder Services, L.L.C. to
sell. All sale orders properly received by the above deadline will be treated
on a pro rata basis without regard to the actual date of delivery.
If rights cannot be sold by ChaseMellon Shareholder Services, L.L.C. by 5:00
p.m. New York City time, on May 28, 1999, they will be returned promptly by
mail to the holders who delivered them.
If you wish to transfer all or a portion of your rights, you should allow a
sufficient amount of time prior to the expiration time for (1) the transfer
instructions to be received and processed by ChaseMellon Shareholder Services,
L.L.C., (2) new subscription warrants to be issued and transmitted and (3) the
rights evidenced by the new subscription warrants to be exercised or sold by
the intended recipients.
It may require from two to ten business days, or more, to complete transfers
of rights, depending upon how you deliver the subscription warrant and payment
and the number of transactions you request. Neither Smart & Final nor
ChaseMellon Shareholder Services, L.L.C. will be liable to you or any
transferee of rights if subscription warrants or any other required documents
are not received in time for exercise or sale prior to the expiration time.
31
<PAGE>
If you exercise or sell rights in part, a new subscription warrant for the
remaining rights will be issued to you only if ChaseMellon Shareholder
Services, L.L.C. receives a properly endorsed subscription warrant from you no
later than 5:00 p.m., New York City time, on the fifth business day prior to
the expiration date. It will not issue new subscription warrants for partially
exercised or sold warrants submitted after that time and date. If you do
submit a partial exercise or sale after that time and date, you will not be
able to exercise the unexercised or unsold rights.
Unless you make other arrangements with ChaseMellon Shareholder Services,
L.L.C., a new subscription warrant issued after 5:00 p.m., New York City time,
on the fifth business day before the expiration date will be held for pick-up
by you at the ChaseMellon Shareholder Services, L.L.C.'s hand delivery address
provided above.
If you request a reissuance of a subscription warrant, the delivery of that
document will be at your risk.
You, and not Smart & Final or ChaseMellon Shareholder Services, L.L.C.,
will be responsible for paying any commissions, fees and other expenses
(including brokerage commissions and transfer taxes) you may incur for a
purchase, sale or exercise of rights.
If you do not exercise your rights prior to the expiration time, those
rights will expire and will no longer be exercisable.
Procedures for Nominees Who Are DTC Participants
Smart & Final anticipates that you may transfer rights, or exercise the
basic subscription privilege (but not the oversubscription privilege) through,
the facilities of the Depository Trust Company, generally known as "DTC." If
you exercise the basic subscription privilege through DTC, you may exercise
your oversubscription privilege by properly executing and delivering to
ChaseMellon Shareholder Services, L.L.C., at or prior to the time the rights
expire, a "DTC Participant Oversubscription Exercise Form" and a related
"Nominee Holder Certification," together with payment of the appropriate
subscription price for the number of shares for which the oversubscription
privilege is to be exercised. You may obtain copies of these forms from
ChaseMellon Shareholder Services, L.L.C. at the telephone numbers listed
above.
Foreign and Unknown Addresses
Smart & Final is not mailing subscription warrants to stockholders whose
addresses are outside the United States or who have an APO or FPO address. In
those cases, the subscription warrants will be held by ChaseMellon Shareholder
Services, L.L.C. for those stockholders. To exercise their rights, these
stockholders must notify ChaseMellon Shareholder Services, L.L.C. prior to
11:00 a.m., New York City time, on June 1, 1999. At that time, if a foreign
holder has not given any other instructions, these rights will be sold,
subject to availability of buyers. If the rights can be sold, a check for the
proceeds from the sale of these rights, less a pro rata portion of any
applicable brokerage commissions, taxes and other expenses, will be sent by
mail to the foreign holders. These sales for foreign holders will be
aggregated so that each foreign holder will receive a weighted average price
for the sales, if any.
If you have sold rights through ChaseMellon Shareholder Services, L.L.C.
but it does not know your address or cannot otherwise make delivery of sale
proceeds to you, your sale proceeds will be held in a special account. These
proceeds will be delivered to Smart & Final if you do not claim them within
two years after the expiration date of the rights offering.
Right to Block Exercise Due to Regulatory Issues
Smart & Final reserves the right to refuse the exercise of rights by any
holder of rights who would, in our opinion, be required to obtain prior
clearance or approval from any state, federal or foreign regulatory
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<PAGE>
authorities for the exercise of rights or ownership of additional shares if, at
the expiration date, this clearance or approval has not been obtained. Smart &
Final is not undertaking to pay for any expenses incurred in seeking that
clearance or approval.
Smart & Final is not offering or selling, or soliciting any purchase of,
rights or underlying shares in any state or other jurisdiction in which this is
not permitted. Smart & Final reserves the right to delay the commencement of
the rights offering in certain states or other jurisdictions if necessary to
comply with local laws. However, Smart & Final may elect not to offer rights to
residents of any state or other jurisdiction whose law would require a change
in the rights offering in order to carry out the rights offering in that state
or jursidiction.
No Adjustment to Outstanding Stock Options or Other Stock Awards
Smart & Final will not, solely as a result of the rights offering, adjust
the number of shares of common stock reserved for issuance under its stock
award plans for employees and other eligible participants or the number of
shares subject to outstanding awards of stock options or awards of restricted
stock.
Amendment, Extension and Withdrawal
If the standby agreement with Casino USA is not consummated, Smart & Final
will terminate the rights offering in its entirety and refund all funds
received from the exercise of rights, as described under "The Rights Offering--
Conditions Relating to the Rights Offering." Smart & Final has agreed with
Casino USA not to withdraw the rights offering once the offering has commenced.
With the prior consent of Casino USA, Smart & Final may withdraw, amend or
extend this rights offering.
Subject to the foregoing, Smart & Final reserves the right to withdraw the
rights offering at any time prior to the expiration date and for any reason, in
which event all funds received in the rights offering will be returned to those
persons who subscribed for shares in the rights offering.
Issuance of Stock Certificates
Stock certificates for shares purchased in the rights offering will be
issued as soon as practicable after the expiration date. ChaseMellon
Shareholder Services, L.L.C. will deliver subscription payments to Smart &
Final only after consummation of the rights offering and the issuance of stock
certificates to those exercising rights. If you exercise the oversubscription
privilege but are not allocated all of the shares you asked to purchase, the
excess funds you paid will be returned to you as soon as practicable after the
expiration date.
If you exercise rights, you will have no rights as a stockholder until
certificates representing shares you purchased are issued. Unless otherwise
instructed in your subscription warrant form, shares purchased by the exercise
of rights will be registered in the name of the person exercising the rights.
Certain Federal Income Tax Consequences
General. This section discusses certain federal income tax consequences of
the rights offering to (1) beneficial owners of common stock upon distribution
of the rights, and (2) holders of rights upon the exercise and disposition of
the rights. The discussion is based on the Internal Revenue Code of 1986, as
amended, the Treasury regulations thereunder, judicial authority, and current
administrative rulings and practice, all of which are subject to change
prospectively or retroactively.
The discussion is limited to U.S. taxpayers who hold common stock, and will
hold the rights and any shares acquired upon the exercise of rights, as capital
assets (generally, property held for investment). The discussion does not
include any tax consequences under state, local and foreign law. Financial
institutions, broker-dealers, nominee holders of common stock or rights, life
insurance companies, tax-exempt organizations and possibly other types of
taxpayers may be subject to special provisions of the tax law or subject to
other tax considerations not discussed below.
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<PAGE>
Holders should consult their own tax advisors concerning their own
respective tax situations or special tax considerations that may apply to them,
including without limitation foreign, state and local laws that may apply.
Distribution of Rights. Owners of common stock will not recognize taxable
income solely as a result of the distribution of the rights.
Exercise of the Rights and Basis and Holding Period of the Common
Stock. Holders of rights will not recognize any gain or loss upon the exercise
of rights. The basis of the shares acquired through exercise of the rights will
be equal to the sum of the subscription price for rights exercised and the
holder's basis in such rights (if any).
The holding period for the shares acquired through exercise of the rights
will begin on the date the rights are exercised.
Sale of Shares. An owner of shares will recognize gain or loss upon the sale
of shares acquired by exercise of rights in an amount equal to the difference
between the amount realized and the stockholder's basis in the shares. The gain
or loss so recognized will be long-term or short-term capital gain or loss,
depending on whether the shares have been held for more than one year, assuming
the stockholder holds the shares as a capital asset.
Basis and Holding Period of the Rights. The tax basis of the rights for an
owner of common stock who receives a distribution of rights will be zero,
assuming the following exceptions do not apply. If, however, either (1) the
fair market value of the rights on the date of distribution is 15% or more of
the fair market value (on the date of distribution) of the common stock held,
or (2) the stockholder elects to allocate the basis of common stock to the
rights in the holder's federal income tax return for the taxable year in which
the rights are received, then upon exercise or transfer of the rights, the
stockholder's basis in such common stock will be allocated between the common
stock and the rights in proportion to the fair market values of each on the
date of distribution.
The holding period of a stockholder with respect to the rights received as a
distribution on such stockholder's common stock will include the stockholder's
holding period for the common stock with respect to which the rights were
distributed.
In the case of a purchaser of rights, the tax basis of such rights will be
equal to the purchase price paid therefor, and the holding period for such
rights will commence on the day following the date of the purchase.
Transfer of the Rights. A holder or purchaser of rights who sells the rights
prior to exercise will recognize capital gain or loss equal to the difference
between the sale proceeds and the basis (if any) in the rights sold, if the
common stock would be a capital asset in the hands of such purchaser.
Lapse of the Rights. If rights expire prior to sale or other disposition of
the rights, the holders of those rights will not recognize any gain or loss,
and no adjustment will be made to the basis of the common stock, if any, owned
by such holders.
Purchasers of the rights will recognize a loss equal to their tax basis in
the rights, if such rights expire unexercised. Any loss recognized on the
expiration of the rights acquired by a purchaser will be a capital loss if the
common stock would be a capital asset in the hands of the purchaser.
Information Reporting and Backup Withholding. Holders who sell rights and
receive payments may be subject to backup withholding at the rate of 31% on the
payments unless the holder (1) is a corporation or is otherwise exempt and
demonstrates the basis for the exemption if so required, or (2) provides a
correct taxpayer identification number and certifies under penalties of perjury
that the taxpayer identification number is
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<PAGE>
correct and that the holder is not subject to backup withholding. Any amount
withheld under these rules will be credited against such holder's federal
income tax liability. Smart & Final may require holders to establish their
exemptions from backup withholding or to arrange for payment of backup
withholding.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for Smart & Final by Donald G. Alvarado, Esq., Senior Vice President,
Law/Development of Smart & Final.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
35
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth expenses in connection with the issuance and
distribution of the securities being registered. All amounts shown are
estimated, except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 16,680
Subscription Agent fees and expenses............................ 70,000
Information Agent fees and expenses............................. 25,000
Registration Agent fees and expenses............................ 55,000
Legal fees and expenses (including blue sky fees and expenses).. 340,000
Accounting fees................................................. 40,000
Printing and mailing expenses................................... 200,000
Special Committee Financial Advisor fees and expenses........... 110,000
Special Committee legal counsel fees and expenses............... 95,000
Special Committee expenses...................................... 20,000
NYSE listing fees............................................... 45,000
Fees and expenses incurred by Casino USA and reimbursed by the
registrant..................................................... 450,000
Miscellaneous................................................... 30,000
----------
Total......................................................... $1,496,680
==========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), the Certificate of Incorporation of the Registrant contains provisions
which eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty other than liability for
breaches of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, violations under
Section 174 of the DGCL or any transaction from which the director derived an
improper personal benefit.
Section 145 of the DGCL permits, and under certain circumstances requires,
the Registrant to indemnify its directors, officers, employees, and agents
subject to certain conditions and limitations. The Registrant's Bylaws contain
provisions to indemnify its directors and officers to the fullest extent
permitted by Section 145 of the DGCL, including circumstances in which
indemnification is otherwise discretionary. In addition, the Registrant
maintains officers' and directors' liability insurance which insures against
liabilities that its officers and directors may incur in such capacities. A
Registration Rights Agreement dated as of August 6, 1991, among the Registrant,
Casino USA, Inc. and Robert J. Emmons, provides for indemnification by Casino
USA, Inc. and Mr. Emmons of the directors and officers of Smart & Final signing
a statement filed pursuant to such agreement and certain controlling persons of
Smart & Final against certain liabilities, including those arising under the
Securities Act.
Item 16. Exhibits.
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index that immediately precedes such exhibits and is
incorporated herein by this reference.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
they are inapplicable or the required information has otherwise been omitted.
II-1
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1) (i) and (ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(5) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Commerce, State of California, on May
3, 1999.
SMART & FINAL INC.
By: /s/ Martin A. Lynch
-----------------------------------
Martin A. Lynch
Executive Vice President,
Principal Financial Officer, and
Principal Accounting Officer of
Smart & Final Inc.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, May 3, 1999
______________________________________ Chief Executive Officer,
Ross E. Roeder and Director
(Principal Executive Officer)
/s/ Martin A. Lynch Executive Vice President and May 3, 1999
______________________________________ Chief Financial Officer
Martin A. Lynch (Principal Financial Officer
and Principal Accounting Officer)
______________________________________ Director
Jean-Louis Bourgier
______________________________________ Director
Pierre Bouchut
*
______________________________________ Director May 3, 1999
Christian P. Couvreux
*
______________________________________ Director May 3, 1999
Timm F. Crull
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
______________________________________ Director
James S. Gold
______________________________________ Director
Antoine Guichard
*
______________________________________ Director May 3, 1999
David J. McLaughlin
*
______________________________________ Director May 3, 1999
Thomas G. Plaskett
*
______________________________________ Director May 3, 1999
Etienne Snollaerts
</TABLE>
*By: /s/ Martin A. Lynch
________________________________
Martin A. Lynch, as attorney-in-fact
pursuant to power of attorney
previously filed with this
registration statement
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
4.1 Form of Subscription Warrant
5.1 Opinion of Donald G. Alvarado, Esq., Senior Vice President,
Law/Development of
Smart & Final Inc.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Donald G. Alvarado, Esq. (included in Exhibit 5.1)
99.1 Form of Subscription Agent Agreement between Smart & Final Inc. and
ChaseMellon Shareholder Services, L.L.C.
99.2 Form of Information Agent Agreement between Smart & Final Inc. and
ChaseMellon Shareholder Services, L.L.C.
99.3 Form of Standby Stock Purchase and Debt Reduction Agreement between
Smart & Final Inc. and Casino USA, Inc.
99.4 Form of Instructions as to Use of Subscription Warrant
99.5 Form of Notice of Guaranteed Delivery
99.6 Form of Letter to Stockholders of Record
99.7 Form of Letter from Brokers or other Nominees to Beneficial Owners of
Common Stock
99.8 Form of Instructions by Beneficial Owners to Brokers or Other Nominees
99.9 Form of Announcement of Filing Registration Statement
99.10 Form of Letter to Dealers and Other Nominees
99.11 Consent from Merrill Lynch & Co.
99.12 Form of Letter Agreement between Smart & Final Inc. and Merrill Lynch
& Co. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated
</TABLE>
<PAGE>
EXHIBIT 4.1 - FORM OF SUBSCRIPTION WARRANT
SMART & FINAL INC.
SUBSCRIPTION WARRANT FOR RIGHTS OFFERING
FOR HOLDERS OF RECORD ON MAY 12, 1999
831683 11 5
- --------------------------------- ----------------------------
SUBSCRIPTION WARRANT NUMBER CUSIP NUMBER
- --------------------------------- ------------------- ------------------
SHARES ELIGIBLE TO SUBSCRIBE RIGHTS RECORD DATE SHARES
Smart & Final Inc. (the "Company") is conducting a rights offering
(the "Rights Offering") which entitles the holders of shares of the Company's
common stock (the "Common Stock"), as of the close of business on May 12,
1999 (the "Record Date") to receive one transferable right (each, a "Right") for
each share of Common Stock held of record on the Record Date. Holders of Rights
are entitled to subscribe for and purchase one share of Common Stock for every
3.4884 Rights (the "Basic Subscription Privilege") at a subscription price of
$9.25 per share. If any shares of Common Stock are not purchased by holders of
Rights pursuant to the Basic Subscription Privilege (the "Excess Shares"), any
holder purchasing all of the shares of Common Stock available to that holder may
purchase an additional number of the Excess Shares, if so specified in the
subscription documents, subject to proration. No fractional shares or cash in
lieu thereof will be issued or paid. Set forth above is the number of shares of
Common Stock held by such holder, and the number of whole shares to which each
holder is entitled to subscribe pursuant to the Basic Subscription Privilege
(rounded down, if applicable, to the nearest whole share).
For a more complete description of the terms and conditions of the
Rights Offering, please refer to the Prospectus dated May 4, 1999 (the
"Prospectus"), which is incorporated herein by reference. Copies of the
Prospectus are available upon request from ChaseMellon Shareholder Services,
L.L.C. (toll free (888) 224-2745).
This Subscription Warrant (or a Notice of Guaranteed Delivery) must be
received by ChaseMellon Shareholder Services, L.L.C. together with payment in
full of the subscription price by 5:00 p.m. New York City time, on June 3,
1999 (unless extended in the sole discretion of the Company) (as it may be
extended, the "Expiration Date"). Any Rights not exercised prior to the
Expiration Date will be null and void. Any subscription for shares of Common
Stock in the Rights Offering made hereby is irrevocable.
The Rights represented by this Subscription Warrant may be exercised
by duly completing Form 1; may be transferred, assigned, exercised or sold
through a bank or broker by duly completing Form 2; and may be sold through
ChaseMellon Shareholder Services, L.L.C. by duly completing Form 3. Rights
holders are advised to review the Prospectus and instructions, copies of which
are available from ChaseMellon Shareholder Services, L.L.C., before exercising
or selling their Rights.
SUBSCRIPTION PRICE: $9.25 PER SHARE
The registered owner whose name is inscribed hereon, or its assigns,
is entitled to subscribe for shares of Common Stock of the Company upon the
terms and subject to the conditions set forth in the Prospectus and the
instructions relating to the use hereof.
The Subscription Warrant is transferable, and may be combined or
divided at the office of ChaseMellon Shareholder Services, L.L.C. If the number
of transferred Rights would otherwise allow the purchase of a fractional share,
the number of shares which may be purchased must be rounded down to the nearest
whole share (or any lesser number of whole shares) that may be purchased with
that number of Rights.
Rights holders should be aware that if they choose to exercise or
transfer only part of their Rights, they may not receive a new Subscription
Warrant in sufficient time to exercise the remaining Rights evidenced thereby.
<PAGE>
FORM 1 (on reverse of Subscription Warrant)
EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises one or
more Rights to subscribe for shares of Common Stock as indicated below, on the
terms and subject to the conditions specified in the Prospectus, receipt of
which is hereby acknowledged.
(a) Number of whole shares subscribed for pursuant to the Basic Subscription
Privilege ____ X $_____ = $_____ payment. (3.4884 Rights needed to subscribe
for one share.)
(b) Number of whole shares subscribed for pursuant to the Oversubscription
Privilege ____ X $_____ = $_____ payment.
(c) Total Subscription (sum of payment amounts on lines (a) and (b)) =
$________ payment.*
METHOD OF PAYMENT (CHECK AND COMPLETE APPROPRIATE BOX(ES)):
[_] Check, bank draft, or U.S. postal money order payable to "ChaseMellon
Shareholder Services, L.L.C., as Subscription Agent" or
[_] Wire transfer directed to The Chase Manhattan Bank, New York, NY, ABA
No. 021000021-Attention: ChaseMellon Shareholder Services Reorg.
Account 323-213057-(Smart & Final Inc.).
(d) If the Rights being exercised pursuant to the Basic Subscription Privilege
do not constitute all of the Rights represented by the Subscription Warrants
(check only one):
[_] Deliver to the undersigned a new Subscription Warrant evidencing the
remaining Rights to which the undersigned is entitled.
[_] Deliver a new Subscription Warrant in accordance with the
undersigned's Form 2 instructions (which include any required signature
guarantees).
[_] Sell the remaining unexercised Rights in accordance with the
undersigned's Form 3 instructions.
[_] Do not deliver any new Subscription Warrants to me.
(e) [_] Check here if Rights are being exercised pursuant to the Notice of
Guaranteed Delivery delivered to the Subscription Agent prior to the date
hereof and complete the following:
Name(s) of Registered Holder(s) ___________________________________
Window Ticket Number (if any) ___________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________
Name of Institution Which Guaranteed Delivery ______________________
* If the aggregate Subscription Price enclosed or transmitted is insufficient to
purchase the total number of shares included in lines (a) and (b), or if the
number of shares being subscribed for is not specified, the Rights holder
exercising this Subscription Warrant shall be deemed to have subscribed for the
maximum amount of shares that could be subscribed for upon payment of such
amount. If the number of shares to be subscribed for pursuant to the
Oversubscription Privilege is not specified and the amount enclosed or
transmitted exceeds in aggregate Subscription Price for all shares represented
by this Subscription Warrant (the "Subscription Excess"), the Rights holder
exercising this Subscription Warrant shall be deemed to have exercised the
Oversubscription Privilege to purchase, to the extent available, that number of
whole shares of Common Stock equal to the quotient obtained by dividing the
Subscription Excess by the Subscription Price, subject to proration as
described in the Prospectus. To the extent any portion of the aggregate
Subscription Price enclosed or transmitted remains after the foregoing
procedures, such funds shall be mailed to the subscriber without interest or
deduction as soon as practicable.
Subscriber's Signature __________________ Telephone No. (___)________________
<PAGE>
FORM 2 (on reverse of Subscription Warrant)
TO TRANSFER YOUR SUBSCRIPTION WARRANT OR SOME OR ALL OF YOUR RIGHTS, OR TO
EXERCISE OR SELL RIGHTS THROUGH YOUR BANK OR BROKER: For value received, Rights
represented by this Subscription Warrant are hereby assigned to (please print in
full name and address and Taxpayer Identification Number or Social Security
Number of transferee):
Name: ______________________________________________________________
Address: ____________________________________________________________
___________________________________________________________________
Signature(s) of Transferee(s)
Signatures Guaranteed by: _____________________________________________
Proceeds from the sale of Rights may be subject to withholding of U.S. taxes
unless the Seller's certified U.S. taxpayer identification number (or
certificate regarding foreign status) is on file with the Subscription Agent and
the seller is not otherwise subject to U.S. backup withholding.
<PAGE>
FORM 3 (on reverse of Subscription Warrant)
TO SELL SOME OR ALL OF YOUR UNEXERCISED RIGHTS THROUGH THE SUBSCRIPTION AGENT:
The undersigned hereby authorizes the Subscription Agent to sell _______________
Rights represented by this Subscription Warrant but not exercised hereby and to
deliver to the undersigned a check for the proceeds, if any, from the sale
thereof, less any applicable brokerage commissions, taxes or other direct
expenses of sale. The Subscription Agent's obligation to execute orders is
subject to its ability to find buyers for the Rights.
______________________________________________________________
Subscriber's Signature
In order to sell Rights through the Subscription Agent, you must complete and
sign the substitute Form W-9 as provided in Section 8 of the instructions.
<PAGE>
FORM 4 (on reverse of Subscription Warrant)
DELIVERY INSTRUCTIONS: Address for mailing of stock or new Subscription Warrant
or any cash payment in accordance with the Prospectus, if different from the
address shown on the face of this Subscription Warrant:
Name: ______________________________________________________________
Address: ______________________________________________________________
<PAGE>
EXHIBIT 5.1
Opinion of Donald G. Alvarado, Esq., Senior Vice President,
Law/Development of Smart & Final Inc.
[SMART & FINAL LOGO]
Food . Supplies . Business . Home
Donald G. Alvarado 600 Citadel Drive
Senior Vice President Commerce, California 90040
Law/Development 323.869.7697 voice
323.869.7862
[email protected]
May 3, 1999
Board of Directors
Smart & Final Inc.
600 Citadel Drive
City of Commerce, California 90040
Re: Smart & Final Inc. Registration Statement on Form S-3
(File No. 333-75627)
Gentlemen:
I am Senior Vice President, Law/Development, of Smart & Final Inc., a Delaware
corporation (the "Company"), and have acted as such in connection with its
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), on April 2,
1999, as amended on May 4, 1999 (File No. 333-75627) (the "Registration
Statement"). This opinion is delivered in accordance with the requirements of
Item 601(5) of Regulation S-K promulgated under the Act.
The Registration Statement covers the registration of up to $60,000,000 of
shares of the Company's common stock (the "Shares"), and of transferable rights
which are exercisable for the Common Stock (the "Rights"). The Company proposes
to issue the Shares upon the exercise of the Rights, which Rights will be
distributed pro rata to eligible holders of record of the Company's common
stock, or, to the extent the Shares are not purchased upon exercise of Rights,
in accordance with the form, filed as an exhibit to the Registration Statement,
of Standby Purchase and Debt Reduction Agreement between the Company and its
majority stockholder Casino USA, Inc. (the "Rights Offering").
In connection herewith, I have examined and relied without independent
investigation as to matters of fact upon the Registration Statement and its
exhibits, the certificate of incorporation and bylaws of the Company (in each
case as amended or restated to the date hereof), resolutions relating to the
Rights Offering of the Company's Board of Directors and its Special Committee
referred to in the Prospectus included in the Registration Statement, such
certificates of public
<PAGE>
officials, such statements and certificates of officers of the Company and such
other corporate records, documents, certificates and instruments as I have
deemed necessary or appropriate in order to enable me to render the opinions
expressed herein. I have assumed the legal capacity of natural persons,
genuineness of all signatures on all documents examined by me, the authenticity
of all documents submitted to me as originals and the conformity to authentic
originals of all documents submitted to me as certified or photostatic copies. I
have further assumed as to documents executed by parties other than the Company,
that such other parties had the power and authority to execute, deliver and
perform those documents and that such documents are valid and binding
obligations of such other parties.
Based upon the foregoing and in reliance thereon and subject to the
effectiveness of the Registration Statement, I am of the opinion that:
(i) Upon distribution of the Rights pursuant to the Rights Offering,
as described in the Registration Statement and the Prospectus constituting a
part of the Registration Statement (the "Prospectus"), the Rights will be duly
authorized and validly issued;
(ii) The Rights are valid and binding obligations of the Company; and
(iii) Upon issuance and sale against payment therefor pursuant to the
Rights Offering, as described in the Registration Statement and the Prospectus,
the Shares will be duly authorized, validly issued, fully paid and non-
assessable.
I am admitted to the bar of the State of California. I express no opinion as to
the laws of any jurisdiction other than the laws of California, the General
Corporation Law of the State of Delaware, and the federal laws of the United
States of America. I hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to me under the caption
"Legal Matters" in the Prospectus filed as a part of the Registration Statement.
I also consent to your filing copies of this opinion as an exhibit to the
Registration Statement with agencies of such states as you deem necessary in the
course of complying with the laws of such states regarding the offering and sale
of such shares of Common Stock and the issuance of such Rights. In giving this
consent, I do not admit that I am in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Donald G. Alvarado, Esq.
Donald G. Alvarado, Esq.
Senior Vice President, Law/Development
<PAGE>
EXHIBIT 23.1--CONSENT OF ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 12, 1999
included in Smart and Final Inc.'s Form 10-K for the year ended January 3, 1999
and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Los Angeles, California
May 3, 1999
<PAGE>
EXHIBIT 99.1 - FORM OF SUBSCRIPTION AGENT AGREEMENT BETWEEN SMART & FINAL INC.
AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
[LETTERHEAD OF SMART & FINAL]
[Date _____, 1999]
ChaseMellon Shareholder Services, LLC
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Reorganization Department
Gentlemen:
Smart & Final Inc., a Delaware corporation (the "Company") is making
an offer to issue (the "Subscription Offer") to the holders of record of its
outstanding shares of Common Stock par value $0.01 per share (the "Common
Stock"), at the close of business on May 12, 1999 (the "Record Date"), the right
to subscribe for and purchase (each a "Right") shares of Common Stock (the
"Additional Common Stock") at a purchase price of $9.25 per share of Additional
Common Stock (the "Subscription Price"), payable by cashier's or certified check
or other acceptable methods as may be specified in the Registration Statement
referenced below, upon the terms and conditions set forth herein. The term
"Subscribed" shall mean submitted for purchase from the Company by a stockholder
in accordance with the terms of the Subscription Offer, and the term
"Subscription" shall mean any such submission. The Subscription Offer will
expire at 5:00 p.m. New York City Time, on June 3, 1999 (the "Expiration Time"),
unless the Company shall have extended the period of time for which the
Subscription Offer is open, in which event the term "Expiration Time" shall mean
the latest time and date at which the Subscription Offer, as so extended by the
Company from time to time, shall expire.
This Subscription Agent Agreement ("Agreement") will define the
activities and related compensation which ChaseMellon Shareholder Services LLC
("ChaseMellon") will provide to the Company in conjunction with the Subscription
Offer.
The Company filed a Registration Statement relating to the Additional
Common Stock with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, on April 2, 1999, and an amendment thereto on May 4,
1999. Said Registration Statement was declared effective on
May 4, 1999. The terms of the Additional Common Stock are more fully described
in the Prospectus forming part of the Registration Statement as it was declared
effective, and the accompanying Letter of Instruction. Copies of the Prospectus,
the Letter of Instruction and the Notice of Guaranteed Delivery are annexed
hereto as Exhibit 1, Exhibit 2 and Exhibit 3, respectively. All terms used and
not defined herein shall have the same meaning as in the Prospectus. Promptly
after the Record Date, the Company will provide ChaseMellon with a list of
holders of Common Stock as of the Record Date (the "Record Stockholders List").
The Rights are evidenced by transferable subscription warrants (the
"Warrants"), a copy of the form of which is annexed hereto as Exhibit 4. The
Warrants entitle the holders to subscribe, upon payment of the Subscription
Price, for shares of Additional Common Stock at the rate of One (1) share for
each 3.4884 Rights evidenced by a Warrant (the "Basic Subscription Privilege").
No fractional shares will be issued. In the event that fractional shares would
be calculated as a result of the exchange ratio above, the number of
Page 1 of 13
<PAGE>
shares of Additional Common Stock to be purchased will be rounded down to the
nearest full share and the fractional share amount shall be cancelled. Rights
are freely transferable among their holders and ChaseMellon will not make any
distinction between Rights issued directly to subscribing shareholders and those
Rights which have been validly and lawfully acquired by the subscribing
shareholder from another.
Further, the Subscription Offer provides that subscribing
shareholders, and only those subscribing shareholders who exercise their Rights
in full, may exercise an Oversubscription Privilege as more fully described in
the Registration Statement. ChaseMellon shall, after the initial allocation of
Additional Common Stock to those shareholders exercising their Basic
Subscription Privilege, allocate any remaining shares (and only to the extent
possible) to those shareholders who exercise the Oversubscription Privilege on a
pro-rata basis to their Basic Subscription, as more fully described in the
Registration Statement.
Further, any remaining shares of Additional Common Stock which have
not been subscribed as a result of the aggregate of elections made by
shareholders under the Basic Subscription Privilege and the Oversubscription
Privilege, shall be deemed the Unsubscribed Shares. Pursuant to that certain
agreement ("Standby Purchase Agreement") between the Company and its majority
shareholder, Casino USA, Inc. ("Casino"), Casino has agreed to purchase at the
Subscription Price all Unsubscribed Shares. Subject to the provisions of this
Agreement below, ChaseMellon is directed by the Company to allocate all
Unsubscribed shares to Casino, and receive proper payment for these shares, in
accordance with the Standby Purchase Agreement.
The Company hereby appoints ChaseMellon as Subscription Agent (the
"Subscription Agent") for the Subscription Offer and agrees with ChaseMellon as
follows:
1) As Subscription Agent, ChaseMellon is authorized and directed
to:
(A) Issue the Warrants in accordance with this Agreement in the names
of the holders of the Common Stock of record on the Record Date, keep such
records as are necessary for the purpose of recording such issuance, and furnish
a copy of such records to the Company. The Warrants may be signed on behalf of
the Subscription Agent by the manual or facsimile signature of a Vice President
or Assistant Vice President of the Subscription Agent, or by the manual
signature of any of its other authorized officers.
(B) Promptly after ChaseMellon receives the Record Stockholders List:
(a) mail or cause to be mailed, by first class mail, to each holder
of Common Stock of record on the Record Date whose address of record is within
the United States and Canada, (i) a Warrant evidencing the Rights to which such
stockholder is entitled under the Subscription Offer, (ii) a copy of the
Prospectus, (iii) a Letter of Instruction, (iv) a Notice of Guaranteed Delivery
and (v) a return envelope addressed to the Subscription Agent; and
(b) mail or cause to be mailed, by air mail, to each holder of Common
Stock of record on the Record Date whose address of record is outside the United
States and Canada, or is an A.P.O. or F.P.O. address (i) a copy of the
Prospectus, (ii) a Notice of Guaranteed Delivery and (iii) a Letter of
Instruction (different from the Letter of Instruction sent to stockholders whose
address of record is within the United States and Canada). ChaseMellon shall
refrain from mailing Warrants issuable to any holder of Common Stock of record
on the Record Date whose address of record is outside the United States and
Canada, or is an A.P.O. or F.P.O. address, and hold such Warrants for the
account of such stockholder
Page 2 of 13
<PAGE>
subject to such stockholder making satisfactory arrangements with the
Subscription Agent for the exercise or other disposition of the Rights evidenced
thereby, and follow the instructions of such stockholder for the exercise, sale
or other disposition of such Rights if such instructions are received at or
before 11:00 a.m., New York City Time, on June 1, 1999.
(C) Mail or deliver a copy of the Prospectus (i) to each assignee or
transferee of Warrants upon ChaseMellon's receiving appropriate documents to
register the assignment or transfer thereof and (ii) with certificates for
shares of Additional Common Stock when such are issued to persons other than the
registered holder of the Warrant.
(D) Accept Subscriptions upon the due exercise (including payment of
the Subscription Price) on or prior to the Expiration Time of Rights in
accordance with the terms of the Warrants and the Prospectus.
(E) Subject to the next sentence, accept Subscriptions from
stockholders whose Warrants are alleged to have been lost, stolen or destroyed
upon receipt by ChaseMellon of an affidavit of theft, loss or destruction and a
bond of indemnity in form and substance satisfactory to ChaseMellon accompanied
by payment of the Subscription Price for the total number of shares of
Additional Common Stock Subscribed for. Upon receipt of such affidavit and bond
of indemnity and compliance with any other applicable requirements, stop orders
shall be placed on said Warrants and ChaseMellon shall withhold delivery of the
shares of Additional Common Stock Subscribed for until after the Warrants have
expired and it has been determined that the Rights evidenced by the Warrants
have not otherwise been purported to have been exercised or otherwise
surrendered.
(F) Accept Subscriptions, without further authorization or direction
from the Company, without procuring supporting legal papers or other proof of
authority to sign (including without limitation proof of appointment of a
fiduciary or other person acting in a representative capacity), and without
signatures of co-fiduciaries, co-representatives or any other person:
(a) if the Warrant is registered in the name of a fiduciary and is
executed by and the Additional Common Stock is to be issued in the name of such
fiduciary;
(b) if the Warrant is registered in the name of joint tenants and is
executed by one of the joint tenants, provided the certificate representing the
Additional Common Stock is issued in the names of, and is to be delivered to,
such joint tenants;
(c) if the Warrant is registered in the name of a corporation and is
executed by a person in a manner which appears or purports to be done in the
capacity of an officer, or agent thereof, provided the Additional Common Stock
is to be issued in the name of such corporation; or
(d) if the Warrant is registered in the name of an individual and is
executed by a person purporting to act as such individual's executor,
administrator or personal representative, provided, the Additional Common Stock
is to be registered in the name of the subscriber as executor or administrator
of the estate of the deceased registered holder and there is no evidence
indicating the subscriber is not the duly authorized representative that he
purports to be.
(G) Accept applications to transfer Warrants and to act therein as a
Transfer Agent for this limited purpose, without further authorization or
direction from the Company, without procuring supporting legal papers or other
proof of authority to sign (including without limitation proof of appointment of
a fiduciary or other person acting in a
Page 3 of 13
<PAGE>
representative capacity), and without signatures of co-fiduciaries, co-
representatives or any other person:
(a) if the Warrant is registered in the name of a fiduciary and is
executed by and the Additional Common Stock is to be issued in the name of such
fiduciary;
(b) if the Warrant is registered in the name of joint tenants and is
executed by one of the joint tenants, provided the certificate representing the
Additional Common Stock is issued in the names of, and is to be delivered to,
such joint tenants;
(c) if the Warrant is registered in the name of a corporation and is
executed by a person in a manner which appears or purports to be done in the
capacity of an officer, or agent thereof, provided the Additional Common Stock
is to be issued in the name of such corporation; or
(d) if the Warrant is registered in the name of an individual and is
executed by a person purporting to act as such individual's executor,
administrator or personal representative, provided, the Additional Common Stock
is to be registered in the name of the subscriber as executor or administrator
of the estate of the deceased registered holder and there is no evidence
indicating the subscriber is not the duly authorized representative that he
purports to be.
(H) Accept Subscriptions not accompanied by Warrants if submitted by
a firm having membership in the New York Stock Exchange or another national
securities exchange or by a commercial bank or trust company having an office in
the United States together with the Notice of Guaranteed Delivery and
accompanied by proper payment for the total number of shares of Additional
Common Stock Subscribed for.
(I) Accept Subscriptions even though unaccompanied by Warrants, under
the circumstances and in compliance with the terms and conditions set forth in
the Prospectus under the heading "The Rights Offering--Special Procedure Under
Notice of Guaranteed Delivery Form."
(J) Refer to the Company for specific instructions as to acceptance
or rejection, Subscriptions received after the Expiration Time, Subscriptions
not authorized to be accepted pursuant to this Paragraph 1, and Subscriptions
otherwise failing to comply with the requirements of the Prospectus and the
terms and conditions of the Warrants.
(K) Upon acceptance of a Subscription:
(a) hold all monies received in a special account for the benefit of
the Company. Promptly following the Expiration Time ChaseMellon shall
distribute to the Company the funds in such account and issue certificates for
shares of Additional Common Stock issuable with respect to Subscriptions which
have been accepted.
(b) advise the Company daily by telecopy and confirm by letter to
Jane A. Orenstein, Esq., Assistant General Counsel (the "Company
Representative"), with a copy to Richard N. Phegley, Vice President & Treasurer
(by telecopy) as to the total number of shares of Additional Common Stock
Subscribed for, total number of Rights sold, total number of Rights partially
Subscribed for and the amount of funds received, with cumulative totals for
each; and in addition advise the Company Representative, by telephone to Jane A.
Orenstein, Esq. at (206) 230-6647 , confirmed by telecopy, of the amount of
funds received identified in accordance with (a) above, deposited, available or
transferred in accordance with (a) above, with cumulative totals; and
Page 4 of 13
<PAGE>
(c) as promptly as possible but in any event on or before 3:30 p.m.,
New York City Time, on the first full business day following the Expiration
Time, advise the Company Representative in accordance with (b) above of the
number of shares Subscribed for, the number of Subscription guarantees received
and the number of shares of Additional Common Stock unsubscribed for.
(L) Upon completion of the Subscription Offer, ChaseMellon shall
requisition certificates from the Transfer Agent for the Common Stock for shares
of Additional Common Stock Subscribed for.
2) (a) The Warrants shall be issued in registered form only. The
Company shall appoint and have in office at all times a Registrar for the
Warrants, satisfactory to ChaseMellon, which shall keep books and records of the
registration and transfers and exchanges of Warrants (such books and records are
hereinafter called the "Warrant Register"). The Company shall promptly notify
the Transfer Agent and Registrar of the exercise of any Warrants. The Company
shall promptly notify ChaseMellon of any change in the Registrar of the
Warrants.
(b) All Warrants issued upon any registration of transfer or
exchange of Warrants shall be the valid obligations of the Company, evidencing
the same obligations, and entitled to the same benefits under this Agreement, as
the Warrants surrendered for such registration of transfer or exchange.
(c) Any Warrant when duly endorsed in blank shall be deemed
negotiable, and when a Warrant shall have been so endorsed the holder thereof
may be treated by the Company, ChaseMellon and all other persons dealing
therewith as the absolute owner thereof for any purpose and as the person
entitled to exercise the rights represented thereby, any notice to the contrary
notwithstanding, but until such transfer is registered in the Warrant Register,
the Company and ChaseMellon may treat the registered holder thereof as the owner
for all purposes.
3) ChaseMellon will follow its regular procedures to attempt to
reconcile any discrepancies between the number of shares of Additional Common
Stock that any Warrant may indicate are to be issued to a stockholder and the
number that the Record Stockholders List indicates may be issued to such
stockholder. In any instance where ChaseMellon cannot reconcile such
discrepancies by following such procedures, ChaseMellon will consult with the
Company for instructions as to the number of shares of Additional Common Stock,
if any, ChaseMellon is authorized to issue. In the absence of such
instructions, ChaseMellon is authorized not to issue any shares of Additional
Common Stock to such stockholder.
4) ChaseMellon will examine the Warrants received by it as
Subscription Agent to ascertain whether they appear to ChaseMellon to have been
completed and executed in accordance with the applicable Letter of Instruction.
In the event ChaseMellon determine that any Warrant does not appear to it to
have been properly completed or executed, or where the Warrants do not appear to
ChaseMellon to be in proper form for Subscription, or any other irregularity in
connection with the Subscription appears to ChaseMellon to exist, it will
follow, where possible, its regular procedures to attempt to cause such
irregularity to be corrected. ChaseMellon is not authorized to waive any
irregularity in connection with the Subscription, unless it shall have received
from the Company the Warrant which was delivered, duly dated and signed by an
authorized officer of the Company, indicating that any irregularity in such
Warrant has been cured or waived and that such Warrant has been accepted by the
Company. If any such irregularity is neither corrected nor waived, ChaseMellon
will return to the subscribing stockholder (at ChaseMellon's option by
Page 5 of 13
<PAGE>
either first class mail under a blanket surety bond or insurance protecting
ChaseMellon and the Company from losses or liabilities arising out of the non-
receipt or nondelivery of Warrants or by registered mail insured separately for
the value of such Warrants) to such stockholder's address as set forth in the
Subscription any Warrants surrendered in connection therewith and any other
documents received with such Warrants, and a letter of notice to be furnished by
the Company explaining the reasons for the return of the Warrants and other
documents.
5) Each document received by ChaseMellon relating to its duties
hereunder shall be dated and time stamped when received.
6) (a) For so long as this Agreement shall be in effect, the
Company will reserve for issuance and keep available free from preemptive rights
a sufficient number of shares of Additional Common Stock to permit the exercise
in full of all Rights issued pursuant to the Subscription Offer. Subject to the
terms and conditions of this Agreement, ChaseMellon will request the Transfer
Agent for the Common Stock to issue certificates evidencing the appropriate
number of shares of Additional Common Stock as required from time to time in
order to effectuate the Subscriptions.
(b) The Company shall take any and all action, including without
limitation obtaining the authorization, consent, lack of objection, registration
or approval of any governmental authority, or the taking of any other action
under the laws of the United States of America or any political subdivision
thereof, to insure that all shares of Additional Common Stock issuable upon the
exercise of the Warrants at the time of delivery of the certificates therefor
(subject to payment of the Subscription Price) will be duly and validly issued
and fully paid and nonassessable shares of Common Stock, free from all
preemptive rights and taxes, liens, charges and security interests created by or
imposed upon the Company with respect thereto.
(c) The Company shall from time to time take all action
necessary or appropriate to obtain and keep effective all registrations,
permits, consents and approvals of the Securities and Exchange Commission and
any other governmental agency or authority and make such filings under Federal
and state laws which may be necessary or appropriate in connection with the
issuance, sale, transfer and delivery of Warrants or Additional Common Stock
issued upon exercise of Warrants.
7) If certificates representing shares of Additional Common Stock
are to be delivered by ChaseMellon to a person other than the person in whose
name a surrendered Warrant is registered, ChaseMellon will issue no certificate
for Additional Common Stock until the Warrant so surrendered has been properly
endorsed (or otherwise put in proper form for transfer) and the person
requesting such exchange has paid any transfer or other taxes or governmental
charges required by reason of the issuance of a certificate for Additional
Common Stock in a name other than that of the registered holder of the Warrant
surrendered, or has established to ChaseMellon's satisfaction that any such tax
or charge either has been paid or is not payable.
8) Should any issue arise regarding federal income tax reporting or
withholding, ChaseMellon will take such action as the Company instructs
ChaseMellon in writing.
9) The Company may terminate this Agreement at any time by so
notifying ChaseMellon in writing. ChaseMellon may terminate this Agreement upon
30 days' prior notice to the Company. Upon any such termination, ChaseMellon
shall be relieved and discharged of any further responsibilities with respect to
its duties hereunder. Upon payment of all outstanding ChaseMellon fees and
expenses, ChaseMellon will forward to the Company
Page 6 of 13
<PAGE>
or its designee promptly any Warrant or other document relating to ChaseMellon's
duties hereunder that ChaseMellon may receive after its appointment has so
terminated. Sections 11, 12, and 14 of this Agreement shall survive any
termination of this Agreement.
10) As agent for the Company hereunder ChaseMellon:
(a) shall have no duties or obligations other than those specifically
set forth herein or as may subsequently be agreed to in writing by ChaseMellon
and the Company;
(b) shall have no obligation to issue any shares of Additional Common
Stock unless the Company shall have provided a sufficient number of certificates
for such Additional Common Stock;
(c) shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or genuineness of any
Warrants surrendered to ChaseMellon hereunder or shares of Additional Common
Stock issued in exchange therefor, and will not be required to or be responsible
for and will make no representations as to, the validity, sufficiency, value or
genuineness of the Subscription Offer;
(d) shall not be obligated to take any legal action hereunder; if,
however, ChaseMellon determines to take any legal action hereunder, and where
the taking of such action might, in its judgment, subject or expose ChaseMellon
to any expense or liability it shall not be required to act unless ChaseMellon
shall have been furnished with an indemnity satisfactory to it;
(e) may rely on and shall be fully authorized and protected in acting
or failing to act upon any certificate, instrument, opinion, notice, letter,
telegram, telex, facsimile transmission or other document or security delivered
to ChaseMellon and believed by it to be genuine and to have been signed by the
proper party or parties;
(f) shall not be liable or responsible for any recital or statement
contained in the Prospectus or any other documents relating thereto;
(g) shall not be liable or responsible for any failure on the part of
the Company to comply with any of its covenants and obligations relating to the
Subscription Offer, including without limitation obligations under applicable
securities laws;
(h) may rely on and shall be fully authorized and protected in acting
or failing to act upon the written, telephonic or oral instructions with respect
to any matter relating to ChaseMellon acting as Subscription Agent covered by
this Agreement (or supplementing or qualifying any such actions) of officers of
the Company;
(i) may consult with counsel satisfactory to ChaseMellon, including
Donald G. Alvarado, Esq., general counsel of the Company, and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered, or omitted by ChaseMellon hereunder in good faith
and in accordance with the advice of such counsel;
(j) may perform any of ChaseMellon's duties hereunder either directly
or by or through agents or attorneys and ChaseMellon shall not be liable or
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with reasonable care by ChaseMellon hereunder; and
Page 7 of 13
<PAGE>
(k) are not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person.
11) In the event any question or dispute arises with respect to the
proper interpretation of the Subscription Offer or ChaseMellon's duties
hereunder or the rights of the Company or of any stockholders surrendering
Warrants pursuant to the Subscription Offer, ChaseMellon shall not be required
to act and shall not be held liable or responsible for its refusal to act until
the question or dispute has been judicially settled (and, if appropriate,
ChaseMellon may file a suit in interpleader or for a declaratory judgment for
such purpose) by final judgment rendered by a court of competent jurisdiction,
binding on all parties interested in the matter which is no longer subject to
review or appeal, or settled by a written document in form and substance
satisfactory to ChaseMellon and executed by the Company and each such
stockholder and party. In addition, ChaseMellon may require for such purpose,
but shall not be obligated to require, the execution of such written settlement
by all the stockholders and all other parties that may have an interest in the
settlement.
12) Any instructions given to ChaseMellon orally, as permitted by
any provision of this Agreement, shall be confirmed in writing by a duly
authorized representative of the Company as soon as practicable. ChaseMellon
shall not be liable or responsible and shall be fully authorized and protected
for acting, or failing to act, in accordance with any oral instructions which do
not conform with the written confirmation received in accordance with this
Section.
13) Whether or not any Warrants are surrendered to ChaseMellon, for
its services as Subscription Agent hereunder, the Company shall pay to
ChaseMellon compensation in accordance with the fee schedule attached as Exhibit
A hereto, together with reimbursement for out-of-pocket expenses, including
reasonable fees and disbursements of counsel.
14) The Company covenants to indemnify and hold ChaseMellon and its
officers, directors, employees, agents, contractors, subsidiaries and affiliates
harmless from and against any loss, liability, damage or expense (including
without limitation any loss, liability, damage or expense incurred for accepting
Warrants tendered without a signature guarantee and the fees and expenses of
counsel) incurred (a) without gross negligence or bad faith or (b) as a result
of ChaseMellon's acting or failing to act upon the Company's instructions,
arising out of or in connection with the Subscription Offer, this Agreement or
the administration of ChaseMellon's duties hereunder, including without
limitation the costs and expenses of defending and appealing against any action,
proceeding, suit or claim in the premises. ChaseMellon shall promptly notify the
Company of any action, proceeding, suit or claim by letter or telex or facsimile
transmission confirmed by letter. The Company shall be entitled to participate
at its own expense in the defense of any such action, proceeding, suit or claim.
Anything in this agreement to the contrary notwithstanding, in no event shall
ChaseMellon be liable for special, indirect or consequential loss or damages of
any kind whatsoever (including but not limited to lost profits), even if
ChaseMellon have been advised of the likelihood of such loss or damage and
regardless of the form of action. Any liability of ChaseMellon's will be limited
to the amount of fees paid by the Company hereunder.
15) If any provision of this Agreement shall be held illegal,
invalid, or unenforceable by any court, this Agreement shall be construed and
enforced as if such provision had not been contained herein and shall be deemed
an Agreement among us to the full extent permitted by applicable law.
Page 8 of 13
<PAGE>
16) The Company represents and warrants that (a) it is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) the making and consummation of the
Subscription Offer and the execution, delivery and performance of all
transactions contemplated thereby (including without limitation this Agreement)
have been duly authorized by all necessary corporate action and will not result
in a breach of or constitute a default under the certificate of incorporation or
bylaws of the Company or any indenture, agreement or instrument to which it is a
party or is bound, (c) this Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid, binding and enforceable obligation
of it, (d) the Subscription Offer will comply in all material respects with all
applicable requirements of law and (e) to the best of its knowledge, there is no
litigation pending or threatened as of the date hereof in connection with the
Subscription Offer.
17) In the event that any claim of inconsistency between this
Agreement and the terms of the Subscription Offer arise, as they may from time
to time be amended, the terms of the Subscription Offer shall control, except
with respect to the duties, liabilities and rights, including compensation and
indemnification of ChaseMellon as Subscription Agent, which shall be controlled
by the terms of this Agreement.
18) Set forth in Exhibit B hereto is a list of the names and
specimen signatures of the persons authorized to act for the Company under this
Agreement. The Secretary of the Company shall, from time to time, certify to
ChaseMellon the names and signatures of any other persons authorized to act for
the Company under this Agreement.
19) Except as expressly set forth elsewhere in this Agreement, all
notices, instructions and communications under this Agreement shall be in
writing, shall be effective upon receipt and shall be addressed, if to the
Company, to Smart & Final Inc., 600 Citadel Drive, Commerce, California 90040,
Attention: Donald G. Alvarado, General Counsel, or, if to the Subscription
Agent, to ChaseMellon Shareholder Services LLC, 450 West 33rd Street, New York,
New York 10001, Attention: Reorganization Department, or to such other address
as a party hereto shall notify the other parties.
20) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflict of
laws rules or principles, and shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto; provided that this Agreement
may not be assigned by any party without the prior written consent of all other
parties.
21) No provision of this Agreement may be amended, modified or
waived, except in a written document signed by both parties.
Please acknowledge receipt of this letter and confirm ChaseMellon's
agreement concerning ChaseMellon's appointment as Subscription Agent and
Transfer Agent, and the arrangements herein provided, by signing and returning
the enclosed copy hereof, whereupon this Agreement and ChaseMellon's acceptance
of the terms and conditions herein provided shall constitute a binding Agreement
between the parties hereto.
Very truly yours,
SMART & FINAL INC.
By: _____________________________________
Page 9 of 13
<PAGE>
Name:
Title:
Accepted as of the date first written above:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
AS SUBSCRIPTION AGENT AND TRANSFER AGENT
By: _____________________________
Name:
Title:
Page 10 of 13
<PAGE>
EXHIBIT "1"
The Registration Statement shall be incorporated herein.
EXHIBIT "2"
The Letter of Instruction shall be incorporated herein.
EXHIBIT "3"
The Notice of Guaranteed Delivery shall be incorporated herein.
EXHIBIT "4"
The Form of Warrant shall be incorporated herein.
Page 11 of 13
<PAGE>
EXHIBIT "A"
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Schedule of Fees as Subscription Agent
For Smart & Final Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
I. Set Up and Administrative Fee $7,500.00
II. Processing Basic subscriptions, each $ 14.00
III. Transferring warrants, subscription certificates, split-ups,
reissuing new certificates, round-ups, each $ 10.00
IV. Issuing subscription certificates to record date holders,
each, and follow-up mailings $ 5.00
V. Processing oversubscriptions, including proration and
refunds, each $ 10.00
VI. Sale of Rights for holders, each $ 10.00
VII. Subscriptions requiring additional handling (window items,
defective presentations, correspondence items, legal items,
and items not providing a taxpayer identification number),
each $ 10.00
VIII. Processing Guarantee of Delivery items, each $ 10.00
IX. Handling Soliciting Dealer payments, each By Appraisal
X. Special Services By Appraisal
XI. Out-of-pocket Expenses (including but not limited to
postage, stationery, telephones, overnight couriers,
messengers, overtime, dinners, transportation, shipping
and trucking) Additional
</TABLE>
A minimum aggregate fee of $25,000.00 shall apply, inclusive of fees above which
are paid on a utilization basis.
Page 12 of 13
<PAGE>
EXHIBIT "B"
[Letterhead of Smart & Final]
Name Position Specimen Signatures
---- -------- -------------------
Page 13 of 13
<PAGE>
EXHIBIT 99.2 - FORM OF INFORMATION AGENT AGREEMENT BETWEEN SMART & FINAL INC.
AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
[LETTERHEAD OF SMART & FINAL]
[Date _________, 1999]
ChaseMellon Shareholder Services LLP
450 West 33rd Street, 14th Floor
New York, New York 10001
Attention: Declan Denehan
This letter of agreement ("Services Agreement") sets forth the terms and
conditions by which ChaseMellon Shareholder Services LLP ("ChaseMellon") shall
provide to Smart & Final Inc. ("Company") certain shareholder information agent
services (the "Services") with respect to the Company's proposed Equity Rights
Offering (the "Offering").
This Services Agreement is for separate services than those described in a
related Subscription Agent Agreement executed (or proposed to be executed)
between the Company and ChaseMellon.
The Services
- ------------
(i) Assist in the coordination of all printing activities and if deemed
appropriate, advertisement placement.
(ii) Establishing contacts with brokers, dealers, banks and other
nominees on your behalf.
(iii) Determining the material requirements.
(iv) Assistance with drafting and reviewing documents.
(v) Facilitate the distribution of materials to the beneficial owners of
Smart & Final Inc.'s common stock and to other interested parties.
(vi) Establishing a toll-free, dedicated telephone line to answer any
shareholder inquiries.
(vii) Status reporting to Company management.
(viii) Payment of all broker forwarding invoices, subject to collection
from you of monies for this purpose.
Fee for the Services
- --------------------
The fee for performing the Services shall be $5,000.00, plus $3.50 per
shareholder telephone call, plus all reasonable out-of pocket expense incurred
by ChaseMellon, including, without limitation, documentation preparation,
telephone, Bank/Broker listings, and postage costs. The basic fee of $5,000.00
shall be payable upon the execution of this Services Agreement. Invoices for
out-of-pocket expenses shall be rendered monthly as incurred and shall be
payable within ten days of receipt. ChaseMellon's services shall commence upon
receipt of a signed copy of this Services Agreement and expire thirty days after
the
<PAGE>
expiration of the Rights Offering or July 31, 1999, whichever is sooner, unless
extended in writing by mutual agreement of the parties
Responsibility
- --------------
The Company agrees to indemnify and hold ChaseMellon, its directors, officers,
employees, agents harmless from and against any and all claims, liabilities,
losses, damages and/or expenses, including reasonable attorneys' fees, which any
of them shall or may incur or sustain in connection with the performance of the
services or this Services Agreement, except to the extent caused directly by
ChaseMellon's negligence or willful misconduct. This indemnification
obligation shall survive the termination of this Services Agreement.
Anything in this Services Agreement to the contrary notwithstanding, in no event
shall ChaseMellon be liable for special, indirect or consequential loss or
damage of any kind whatsoever, even if ChaseMellon has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Miscellaneous
- -------------
This Services Agreement shall be made in, governed by, and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
All information due to the Company from ChaseMellon shall be sent to the
Company's address as above written or such other address as the Company may
advise us in writing, or orally provided with prompt confirmation in writing.
This Services Agreement represents the entire understanding of the parties with
respect to the subject matter hereof, superseded any and all prior
understandings, oral or written, relating hereto and may not be charged orally.
Any waiver or change of any of the provisions hereof must be in writing and
signed by the parties hereto. The failure of either party hereto at any time to
require performance by the other party of any provision hereof shall not affect
the right of such party to require performance at any time thereafter.
If the foregoing terms and conditions are acceptable to ChaseMellon, please sign
and return to us the counterpart of this Services Agreement.
Very truly yours,
SMART & FINAL INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Accepted as of the date first written above:
CHASE MELLON SHAREHOLDER SERVICES LLP
<PAGE>
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE>
EXHIBIT 99.3 - FORM OF STANDBY STOCK PURCHASE AND DEBT REDUCTION AGREEMENT
BETWEEN SMART & FINAL INC. AND CASINO USA
[LETTERHEAD OF SMART & FINAL INC.]
Casino USA, Inc.
524 Chapala Street
Santa Barbara, California 93101
Re: Standby Stock Purchase and Debt Reduction Agreement
Gentlemen:
This letter agreement ("Agreement") will confirm the terms and conditions which
have been negotiated among Smart & Final Inc., a Delaware corporation (the
"Company"), Casino USA, Inc., a California corporation ("Casino USA"), and
Casino Guichard-Perrachon S.A., a publicly traded French joint stock limited
liability company ("Casino") regarding a proposed offering of Company common
stock through an equity rights offering mechanism, with Casino USA acting as a
standby purchaser.
Section 1.
The Rights Offering.
A. Rights Offering. The Company proposes to distribute to holders of record
---------------
of its Common Stock (the "Common Stock"), as of the close of business on
May 12, 1999, or, if later, the date on which the Registration Statement (as
defined below) becomes effective (the "Record Date"), transferable rights
(the "Rights") to purchase an aggregate of 6,486,406 shares of Common Stock
(the "Shares") at a price of $9.25 per share (the "Subscription Price") by
issuing to such holders subscription warrants (the "Subscription Warrants")
evidencing one Right for each share of Common Stock held as of the Record
Date (the "Rights Offering").
B. Subscription Privileges. The Company proposes to offer to sell the Shares
-----------------------
on the basis of one Share for every 3.4884 Rights granted and properly
exercised (the "Basic Subscription Privilege"). In addition, all holders of
Rights are entitled, subject to availability and proration as described in
the Registration Statement, to purchase Shares not purchased by other
stockholders under the Basic Subscription Privilege (the "Oversubscription
Privilege"). The Company expects to mail the Subscription Warrants together
with the prospectus (as defined below) and related instructions to the
record holders of Shares as soon as practicable after the Registration
Statement becomes effective (the "Time of Mailing"). The Rights will expire
at 5:00 P.M., New York City time, on June 3, 1999 (the "Expiration
Date").
<PAGE>
C. Registration Statement. The Company filed on April 2, 1999 with the
----------------------
Securities and Exchange Commission (the "SEC") a registration statement on
Form S-3 (No. 333-75627) and a related preliminary prospectus for
the registration of the Rights and the Shares under the Securities Act of
1933, as amended (the "1933 Act"), has filed an amendment thereto on May 4,
1999 and such amended preliminary prospectuses as may have been required
prior to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such
registration statement (as amended, if applicable) and the final prospectus
relating to the offering constituting a part thereof (including in each case
all documents, if any, incorporated by reference therein), as from time to
time amended or supplemented pursuant to the 1933 Act, are hereinafter
referred to as the "Registration Statement" and the "Prospectus,"
respectively.
D. Related Parties. Casino USA is currently the owner of approximately
---------------
12,415,925 shares of Common Stock, which constitutes approximately 55% of
the total issued and outstanding shares. Casino is the principal shareholder
and beneficial owner of Casino USA.
E. Casino Loan Agreement/New Note. The Company and Casino USA are parties to
------------------------------
that certain Loan Agreement (the "Casino Loan Agreement") dated as of
November 13, 1998, pursuant to which they agreed to consolidate certain
unsecured pre-existing notes and cash advances owed by the Company to Casino
USA, plus a 1.75% structuring fee of the consolidated amount, into one
aggregate principal obligation totaling $55,387,505 (the "Principal
Amount"), bearing interest at the LIBOR rate plus 4.50% per annum and
maturing February 15, 2002. Under the Casino Loan Agreement, the Company
executed and delivered to Casino USA a promissory note in the form attached
to the Casino Loan Agreement (the "New Note") evidencing the obligations
under the Casino Loan Agreement.
F. Purchase Commitments. In order to facilitate the success of the Rights
--------------------
Offering, Casino USA hereby commits to exercise its Basic Subscription
Privilege to subscribe for all Shares that Casino USA may acquire by
exercise of its Rights (the "Basic Shares"). Casino USA may, at its sole
election, exercise its Oversubscription Privilege to subscribe for all or
part of that number of Shares which it is permitted to purchase pursuant to
the Oversubscription Privilege (the "Oversubscription Shares"). Subject to
the terms and conditions of this Agreement, Casino USA further commits to
subscribe (at the Subscription Price) for that number of Shares not
subscribed for by the Company's record holders or their transferees (which
shall include Casino USA) in the Rights Offering (the "Excess Shares").
G. Manner of Payment for Shares. Casino USA hereby agrees to pay for Shares
----------------------------
purchased by it upon exercise of Casino USA's Rights and under this
Agreement by reducing the outstanding Principal Amount under the Casino Loan
Agreement (and reducing the amount owing under the New Note) by the total
Subscription Price otherwise due for such Shares, and to pay cash for Shares
purchased by it pursuant to the Offering to the extent the aggregate
Subscription Price payable by it exceeds the Principal Amount.
<PAGE>
H. Capitalized terms used but not defined in this Agreement shall have the
meanings respectively given to those terms in the Registration Statement.
Section 2.
Purchase, Sale and Delivery of Securities.
A. Closing Time. Payment of the purchase price for, and delivery of
------------
certificates for, the Basic Shares, any Oversubscription Shares and any
Excess Shares (collectively, the "Purchased Shares") shall be made at the
principal executive office of the Company, or at such other place as shall
be agreed upon by Casino USA and the Company, at 8:30 A.M., Los Angeles
time, on the fourth business day after the Expiration Date of the Rights
Offering, or such other time and date as shall be agreed upon by Casino USA
and the Company (such time and date of payment and delivery being herein
called "Closing Time"). Certificates for the Shares purchased by Casino USA
under this Agreement shall be in such denominations and registered in such
names as Casino USA may request in writing at least two business days before
the Closing Time.
B. Manner of Payment for Purchased Shares. Casino USA shall at the Closing Time
--------------------------------------
deliver to the Company (i) the original New Note marked "paid in full," plus
(ii) an amount of U.S. Dollars, paid in immediately available funds
delivered to the Company by wire transfer, equal to the excess, if any, of
(A) the aggregate Subscription Price for the total number of Purchased
Shares over (B) the Principal Amount. If the procedure in clause (ii) is
necessary, the Company shall give written notice to Casino USA at least two
business days prior to the Closing Time setting forth wiring instructions
for the Company's account. Notwithstanding the foregoing, if, pursuant to
this Agreement, Casino USA purchases Shares having an aggregate Subscription
Price which is less than the Principal Amount, Casino USA shall at the
Closing Time, in lieu of the delivery and payment set forth in the preceding
sentence, deliver to the Company a written statement executed by Casino USA
to the effect that the Principal Amount is thereby reduced by the amount
specified in such statement, which shall be equal to the aggregate
Subscription Price for the total number of Purchased Shares acquired by
Casino USA in the Rights Offering. Such notice will be attached to and
become part of the New Note.
C. Affiliate Status. The parties acknowledge that Casino USA is an affiliate
----------------
of the Company for purposes of the 1933 Act, and that the ability of Casino
USA to resell the Purchased Shares may be limited by applicable provisions
of Rule 144 or other limitations in effect from time to time under the 1933
Act. The Company shall be entitled to imprint on or attach to certificates
for Shares delivered to Casino USA the Company's customary legend to the
effect that the holder thereof is an affiliate subject to such limitations.
D. Performance Guarantee. Casino hereby guarantees the performance of Casino
---------------------
USA under this Agreement.
<PAGE>
Section 3.
Representations and Warranties.
A. The Company. The Company hereby represents and warrants to Casino USA as
-----------
follows: (i) the Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions set forth in
Sections 1 and 2 hereof; (ii) the execution and delivery by the Company of
this Agreement, and the consummation by the Company of the transactions set
forth in Sections 1 and 2 hereof, have been duly authorized by all necessary
corporate action on the part of the Company; (iii) this Agreement has been
duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, is required by, or with respect to,
the Company in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions set
forth in Section 2 hereof (other than the filing and effectiveness of the
Registration Statement); (v) the execution and delivery of this Agreement by
the Company and the consummation of the transactions set forth in Sections 1
and 2 hereof by the Company do not conflict with, or result in a breach of,
any law or regulation of any governmental authority applicable to the
Company or any material agreement to which the Company is a party; and (vi)
when issued and paid for in accordance with the provisions of Section 2
hereof, the Purchased Shares sold to Casino USA pursuant to Section 2 hereof
shall be duly authorized, validly issued, fully paid, nonassessable, and
free of any claims or encumbrances.
B. Casino USA. Casino USA hereby represents and warrants to the Company as
----------
follows: (i) it has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions set forth in Sections
1 and 2 hereof; (ii) the execution and delivery by it of this Agreement, and
the consummation by it of the transactions set forth in Sections 1 and 2
hereof, have been duly authorized by all necessary corporate action on its
part; (iii) this Agreement has been duly executed and delivered by it and
constitutes a valid and binding obligation of it enforceable against it in
accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, is required by, or with respect to,
it in connection with the execution and delivery of this Agreement by it or
the consummation by it of the transactions set forth in Sections 1 and 2
hereof (other than any filings pursuant to Section 16(a) of, or Regulation
13D under, the Securities Exchange Act of 1934, as amended); (v) the
execution and delivery of this Agreement by it and the consummation by it of
the transactions set forth in Sections 1 and 2 hereof do not conflict with,
or result in a breach of, any law or regulation of any governmental
authority applicable to it or, at the Closing Time, any material agreement
to which it is a party; (vi) it will acquire the Purchased Shares for its
own account and not with a view to distribution or resale in any manner
which would be in violation of the 1933 Act;
<PAGE>
and (vi) it will have at the Closing Time readily available funds in an
amount sufficient to satisfy its monetary obligations, if any, hereunder.
Section 4.
Covenants of the Parties Hereto.
A. Mutual Assurance. Subject to the terms and conditions of this Agreement,
----------------
each party hereto will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things reasonably necessary
or reasonably desirable to consummate the transactions contemplated by this
Agreement.
B. Fees and Expenses. The Company hereby agrees to pay or reimburse all out-
-----------------
of-pocket expenses and professional fees reasonably incurred by Casino USA
in connection with this Agreement and the Rights Offering (including
reasonable fees and expenses of its investment banking adviser and legal
counsel), in an aggregate amount not to exceed $450,000. The Company agrees
to pay all other expenses and professional fees incurred by the Company in
connection with the Rights Offering, including the expenses referred to in
Part II of the Registration Statement.
C. Standby Purchaser Fee. In consideration of Casino USA's standby purchaser
---------------------
commitment under Sections 1.F. and 1.G. of this Agreement, the Company
agrees to issue to Casino USA at the Closing Time ten thousand (10,000)
shares of Common Stock as a standby purchaser fee, payable in the form of a
certificate including or representing such shares and delivered to Casino
USA at the Closing Time. This fee is in addition to the Shares which are the
subject of the Offering and is in addition to any Purchased Shares which
Casino USA may purchase under the Basic Subscription Privilege or
Oversubscription Privilege or otherwise pursuant to the Rights Offering .
Notwithstanding the foregoing, this fee is not payable unless the
Registration Statement is declared effective and Casino USA timely performs
its obligations hereunder.
Section 5.
Conditions to the Closing.
A. Mutual Conditions. The obligations of Casino USA, on the one hand, and the
-----------------
Company, on the other hand, to consummate their respective obligations
pursuant to Section 2 hereof are subject to the satisfaction on or prior to
the Expiration Date of each of the following conditions:
(i) The Registration Statement shall have become effective not
later than 5:30 P.M. on May 11, 1999; and at the Expiration Date no stop
order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act and no proceedings therefor shall
have been initiated or threatened by the Commission.
<PAGE>
(ii) Each of the representations and warranties of the other
parties hereto contained in this Agreement shall be true and correct in
all material respects, at and as of the Expiration Date, with the same
force and effect as if given on the Expiration Date.
(iii) The Rights Offering shall have been completed in
conformity with all of the requirements related thereto provided in the
Registration Statement and the Prospectus and under applicable the rules
and regulations of the SEC under the 1933 Act.
(iv) The Shares shall have been approved for listing on the New
York Stock Exchange subject to notice of issuance.
B. Other Conditions Benefiting Casino USA. The obligations of Casino USA to
--------------------------------------
consummate its obligations pursuant to Sections 1 and 2 hereof shall also be
subject to the satisfaction on or prior to the Expiration Date of each of
the following conditions:
(i) Material Adverse Change. Since the respective dates as
-----------------------
to which information is given in the Registration Statement and the
Prospectus, there shall not have been any material adverse change in or
affecting the business, prospects, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole.
(ii) Legal Opinion. Casino USA shall have received the
-------------
opinion, dated as of the date hereof, of Donald G. Alvarado, Esq., as
counsel for the Company, in form and substance satisfactory to counsel
for Casino USA, relating to incorporation and good standing of the
Company, authorization of the Rights Offering and the issuance of
Shares, capitalization of the Company, effectiveness and compliance with
regulatory requirements of the Registration Statement, and other
consents and approvals required in connection with the Rights Offering,
including those as may be contemplated in Section 3.A.(iv) of this
Agreement.
(iii) Accountant's Comfort Letter. Casino USA shall have
---------------------------
received from Arthur Andersen LLP a comfort letter with respect to the
Registration Statement dated as of the date hereof, in form and
substance satisfactory to it and its counsel, of the type typically
rendered to underwriters in public offerings in the United States.
C. No Transfer of Rights By Casino USA. Casino USA shall not sell, transfer or
-----------------------------------
assign any of the Rights issued to it in the Rights Offering.
Section 6.
Other Provisions.
A. Notices. Any notice required to be given hereunder shall be sufficient if
-------
in writing and sent by facsimile transmission (with transmission confirmed),
by courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
<PAGE>
If to the Company, to Smart & Final Inc., 600 Citadel Drive, City of
Commerce, California 90040; attention: Donald G. Alvarado, Esq., Senior
Vice President, Law/Development;
If to Casino USA or to Casino, to Casino USA, Inc., 524 Chapala Street,
Santa Barbara, California 93101; attention: Chairman;
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the
date so telecommunicated, personally delivered or mailed.
B. Parties. This Agreement shall inure to the benefit of and be binding upon
-------
Casino USA, the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than Casino USA, the Company and their
respective successors, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of Casino USA and the Company and their
respective successors. No purchaser of Purchased Shares from Casino USA
shall be deemed to be a successor by reason merely of such purchase. The
parties acknowledge the receipt and adequacy of legal consideration for
their respective rights and obligations under this Agreement.
C. Governing Law and Time. This Agreement shall be governed by and construed
----------------------
in accordance with the internal laws of the State of California without
regard to conflicts of law principles. Unless otherwise set forth herein,
specified times of day refer to New York City time.
D. Other General Provisions. The representations and warranties of the parties
------------------------
hereunder shall survive the Closing Time and shall not be affected by any
investigation of the subject matter thereof made by or on behalf of either
party. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and part of one instrument, and a
signature hereto sent by facsimile transmission shall be as binding as
delivery of a manually executed counterpart hereof. Each party agrees to
indemnify and hold harmless the other party from any liability for any
commission or compensation in the nature of a finders' fee (and the costs
and expenses of defending against such asserted liability) for which the
indemnifying party or any of such party's agents is responsible. Any
provision of this Agreement may be amended or waived only with the written
consent of the Company and Casino USA and Casino. This Agreement shall
constitute the entire agreement between the parties hereto, and shall
supersede any prior oral or written term sheets or other agreements or
understandings concerning the subject matter hereof.
Section 7.
Agreement and Execution.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Company, Casino USA and Casino in accordance with its terms.
Executed as of this day of 1999.
--- ----------------
Very truly yours,
Smart & Final Inc.
By
----------------------
Name:
Title:
Accepted as of the date written above in this Section 7.
Casino USA, Inc.
By
------------------------
Name:
Title:
Casino Guichard-Perrachon, S.A.
By
------------------------
Name:
Title:
<PAGE>
EXHIBIT 99.4 - FORM OF INSTRUCTIONS AS TO USE OF SUBSCRIPTION WARRANTS
INSTRUCTIONS AS TO USE OF SMART & FINAL INC.
SUBSCRIPTION WARRANTS
CONSULT CHASEMELLON SHAREHOLDER SERVICES, L.L.C., YOUR BANK OR BROKER WITH ANY
QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by Smart & Final Inc., a Delaware corporation (the "Company"), to the
holders of its Common Stock (the "Common Stock"), as described in the Company's
Prospectus dated May 4, 1999 (the "Prospectus"). Holders of record of
shares of the Common Stock at the close of business on May 12, 1999 (the "Record
Date") are receiving one (1) transferable subscription right (collectively, the
"Rights") for each share of the Common Stock held on the Record Date.
Holders of Rights are entitled to purchase one (1) share of Common Stock
for every 3.4884 Rights granted (the "Basic Subscription Privilege"), upon
payment of $9.25 in cash per share of Common Stock purchased (the "Subscription
Price"). In this Rights Offering, the Company is distributing an aggregate of
22,627,179 Rights exercisable to purchase an aggregate of 6,486,406 shares of
Common Stock (the "Shares").
In addition, subject to the proration described below, each holder of
Rights who fully exercises the Basic Subscription Privilege also has the right
to subscribe at the Subscription Price for additional Shares (the
"Oversubscription Privilege"). Shares will be available for purchase pursuant
to the Oversubscription Privilege only to the extent that all the Shares are not
subscribed for through the exercise of the Basic Subscription Privilege by the
Expiration Date. If the Shares so available (the "Excess Shares") are not
sufficient to satisfy all subscriptions pursuant to the Oversubscription
Privilege, the available Excess Shares will be allocated pro rata among holders
of the Rights exercising the Oversubscription Privilege, in proportion to the
number of Shares each such holder has purchased pursuant to his or her
respective Basic Subscription Privilege; provided, however, that if such pro
rata allocation results in any holder being allocated a greater number of Excess
Shares than such holder subscribed for pursuant to the exercise of such holder's
Oversubscription Privilege, then such holder will be allocated only such number
of Excess Shares as such holder subscribed for and the remaining Excess Shares
will be allocated among all other holders exercising Oversubscription
Privileges. See discussion set forth under "The Rights Offering" in the
Prospectus.
No fractional shares or cash in lieu thereof will be issued or paid. The
number of shares which may be purchased by the exercise of Rights distributed to
record holders by the Company or Rights which have been transferred must be
rounded down to the nearest whole number in order to avoid issuing fractional
shares.
The Rights will expire at 5:00 p.m., New York City time, on June 3,
1999, unless extended (the "Expiration Date"). The Rights are eligible for
trading on the New York Stock Exchange under the symbol "SMF Rt".
The number of Rights to which you are entitled is printed on the face of
your Subscription Warrant. You should indicate your wishes with regard to the
exercise or sale of your Rights by completing the appropriate form or forms on
your Subscription Warrant and returning the certificate to ChaseMellon
Shareholder Services, L.L.C. in the envelope provided.
In order to exercise Rights, on or before 5:00 p.m., New York City time, on
the Expiration Date, ChaseMellon Shareholder Services, L.L.C. must have received
from you (1) your Subscription Warrant, or you must have timely complied with
the guaranteed delivery requirements for your Subscription Warrants, and (2)
payment of the full Subscription Price, including final clearance of any checks.
You may not revoke any exercise of a Right.
<PAGE>
1. SUBSCRIPTION PRIVILEGE.
To exercise Rights, complete Form 1 and send your properly completed
and executed Subscription Warrant, together with payment in full of the
Subscription Price for each share of Common Stock subscribed for pursuant to the
Basic Subscription Privilege and the Oversubscription Privilege, to the
Subscription Agent. Payment of the Subscription Price must be made in U.S.
dollars for the full number of Shares being subscribed for by (a) check or bank
draft drawn upon a U.S. bank or U.S. postal money order payable to ChaseMellon
Shareholder Services, L.L.C., as Subscription Agent, or (b) wire transfer of
same day funds to the account maintained by the Subscription Agent for such
purpose at The Chase Manhattan Bank, New York, NY, ABA No. 021 000 021,
Attention: ChaseMellon Shareholder Services Reorg. Account: 323-213057
(Smart & Final Inc.).
The Subscription Price will be deemed to have been received by
ChaseMellon Shareholder Services, L.L.C. only upon (i) the clearance of any
uncertified check, (ii) the receipt by ChaseMellon Shareholder Services, L.L.C.
of any certified check or bank draft drawn upon a U.S. bank or any U.S. postal
money order, or (iii) the receipt of good funds in ChaseMellon Shareholder
Services, L.L.C.'s account designated above. If you are paying by uncertified
personal check, please note that the funds paid thereby may take at least five
business days to clear. Accordingly, holders of the Rights who wish to pay the
Subscription Price by means of uncertified personal check are urged to make
payment sufficiently in advance of the Expiration Date to ensure that such
payment is received and clears by such date and are urged to consider payment by
means of certified or cashier's check, U.S. postal money order or wire transfer
of funds.
Alternatively, you may cause a written guarantee substantially in the
form of Exhibit A to these instructions (the "Notice of Guaranteed Delivery") to
be received by the Subscription Agent at or prior to the Expiration Date
together with payment in full of the applicable Subscription Price. A Notice of
Guaranteed Delivery must be properly signed and completed by both (i) the holder
of a Subscription Warrant, and (ii) a commercial bank, trust company, securities
broker or dealer, credit union, savings association or other eligible guarantor
institution which is a member of or a participant in a signature guarantee
program acceptable to the Subscription Agent (each of the foregoing being an
"Eligible Institution"). Such Notice of Guaranteed Delivery must state your
name, the number of Rights represented by your Subscription Warrant, the number
of Rights being exercised pursuant to the Basic Subscription Privilege, and the
number of Shares of Common Stock, if any, being subscribed for pursuant to the
Oversubscription Privilege, and must guarantee the delivery to ChaseMellon
Shareholder Services, L.L.C. of your properly completed and executed
Subscription Warrants within three New York Stock Exchange trading days
following the date of the Notice of Guaranteed Delivery. If this procedure is
followed, your Subscription Warrant must be received by ChaseMellon Shareholder
Services, L.L.C. within three New York Stock Exchange trading days of the Notice
of Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery
may be obtained upon request from ChaseMellon Shareholder Services, L.L.C., at
the address, or by calling the telephone number, indicated below.
You may also sell or transfer your Subscription Warrant, or request
your broker or bank to exercise your Subscription Warrant on your behalf, in
accordance with the procedures specified in instruction 3 below.
Banks, brokers or other nominee holders of the Rights who exercise the
Rights and the Oversubscription Privilege on behalf of beneficial owners of
Rights will be required to certify to the Subscription Agent and the Company, in
connection with the exercise of the Oversubscription Privilege, as to the
aggregate number of Rights that have been exercised, and the number of Shares
that are being subscribed for pursuant to the Oversubscription Privilege, by
each beneficial owner of Rights on whose behalf such nominee holder is acting.
If more Shares of Common Stock are subscribed for pursuant to the
Oversubscription Privilege than are available for sale, such Shares will be
allocated, as described above, among persons exercising the Oversubscription
Privilege in proportion to such persons' exercise of Rights pursuant to the
Basic Subscription Privilege.
<PAGE>
The address and telecopier numbers of the Subscription Agent are as
follows:
<TABLE>
<CAPTION>
By Mail: Facsimile Transmission By Hand:
(eligible institutions only):
<S> <C> <C>
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 (201) 296-4293 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
Attn: Reorganization To confirm receipt of facsimile only: Attn: Reorganization Department
Department
(201) 296-4860
If by Overnight Courier:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road--Mail Drop--Reorg
Ridgefield Park, NJ 07660
Attn: Reorganization Department
</TABLE>
The address, telephone and telecopier numbers of ChaseMellon
Shareholder Services, L.L.C., for inquiries, information or requests for
additional documentation is as follows:
450 W. 33rd Street, 14th Floor
New York, NY 10001
(212) 273-8070
(banks and brokers call collect)
CALL TOLL-FREE
(888) 224-2745
If you exercise less than all of the Rights evidenced by your
Subscription Warrant by so indicating in Form 1 of your Subscription Warrant,
ChaseMellon Shareholder Services, L.L.C. will issue to you a new Subscription
Warrant evidencing the unexercised Rights. However, if you choose to have a new
Subscription Warrant sent to you, you may not receive the new Subscription
Warrant in sufficient time to permit you to sell or exercise the Rights
evidenced thereby. If you have not indicated the number of Rights being
exercised, or if you have not forwarded full payment of the Subscription Price
for the number of Shares to be purchased according to the number of Rights that
you have indicated are being exercised, you will be deemed to have exercised the
Basic Subscription Privilege with respect to the maximum number of Rights which
may be exercised for the Subscription Price payment delivered by you; and, to
the extent that the Subscription Price payment delivered by you exceeds the
product of the Subscription Price multiplied by the number of Rights evidenced
by the Subscription Warrants delivered by you (such excess being the
"Subscription Excess"), you will be deemed to have exercised your
Oversubscription Privilege to purchase, to the extent available, that number of
whole Shares equal to the quotient obtained by dividing the Subscription Excess
by the Subscription Price.
2. DELIVERY OF COMMON STOCK.
The following deliveries and payments will be made to the address
shown on the face of your Subscription Warrant unless you provide instructions
to the contrary on Form 4.
(a) Basic Subscription Privilege. As soon as practicable after the
Expiration Date, ChaseMellon Shareholder Services, L.L.C. will mail to each
Rights holder who validly exercises the Basic Subscription Privilege
certificates representing Shares purchased pursuant to the Basic Subscription
Privilege.
(b) Oversubscription Privilege. As soon as practicable after the
Expiration Date, ChaseMellon Shareholder Services, L.L.C. will mail to each
Rights holder who validly exercises the Oversubscription Privilege the number of
<PAGE>
Shares allocated to such Rights holder pursuant to the Oversubscription
Privilege. See "The Rights Offering--Basic and Oversubscription Privileges" in
the Prospectus.
(c) Cash Payments. As soon as practicable after the Expiration Date,
ChaseMellon Shareholder Services, L.L.C. will mail to each Rights holder who
exercises the Oversubscription Privilege any excess funds, without interest,
received in payment of the Subscription Price for each Share that is subscribed
for by such Rights holder but not allocated to such Rights holder pursuant to
the Oversubscription Privilege.
3. TO SELL OR TRANSFER RIGHTS.
(a) Sale or Exercise of Rights through a Bank or Broker. To sell or
exercise all the Rights evidenced by a Subscription Warrant through your bank or
broker, so indicate on Form 2 and deliver your properly completed and executed
Subscription Warrant to your bank or broker. Your Subscription Warrant should be
delivered to your bank or broker in ample time for it to be exercised. If Form
2 is completed without designating a transferee, ChaseMellon Shareholder
Services, L.L.C. may thereafter treat the bearer of the Subscription Warrant as
the absolute owner of all of the Rights evidenced by such Subscription Warrant
for all purposes, and ChaseMellon Shareholder Services, L.L.C. shall not be
affected by any notice to the contrary. Because your bank or broker cannot
issue subscription warrants, if you wish to sell or exercise less than all of
the Rights evidenced by a Subscription Warrant, either you or your bank or
broker must instruct ChaseMellon Shareholder Services, L.L.C. as to the action
to be taken with respect to the Rights not sold, or you or your bank or broker
must first have your Subscription Warrant divided into Subscription Warrants of
appropriate denominations by following the instructions in instruction 4 of
these instructions. The Subscription Warrants evidencing the number of Rights
you intend to sell can then be transferred by your bank or broker in accordance
with the instructions in this instruction 3(a).
(b) Transfer of Rights to a Designated Transferee. To transfer all of
your Rights to a transferee other than a bank or broker, you must complete Form
2 in its entirety, execute the Subscription Warrant and have your signature
guaranteed by an Eligible Institution. A Subscription Warrant that has been
properly transferred in its entirety may be exercised by a new holder without
having a new Subscription Warrant issued. Because only ChaseMellon Shareholder
Services, L.L.C. can issue Subscription Warrants, if you wish to transfer less
than all of the Rights evidenced by your Subscription Warrant to a designated
transferee, you must instruct ChaseMellon Shareholder Services, L.L.C. as to the
action to be taken with respect to the Rights not sold or transferred, or you
must divide your Subscription Warrant into Subscription Warrants of appropriate
smaller denominations by following the instructions in instruction 4 below. The
Subscription Warrant evidencing the number of Rights you intend to transfer can
then be transferred by following the instructions in this instruction 3(b).
(c) Sale of Rights Through the Subscription Agent. To sell all Rights
evidenced by a Subscription Warrant through the Subscription Agent, so indicate
on Form 3 and deliver your properly completed and exercised Subscription Warrant
to the Subscription Agent. If you wish to sell less than all of the Rights
evidenced by a Subscription Warrant, you must instruct ChaseMellon Shareholder
Services, L.L.C. as to the action to be taken with respect to the Rights not
sold, or you may have your Subscription Warrant divided into Subscription
Warrants of appropriate denominations by following the instructions in
instruction 4 of these instructions. The Subscription Warrant evidencing the
number of Rights you intend to transfer can then be transferred by following the
instructions in this instruction 3(c). Promptly following the Expiration Date,
ChaseMellon Shareholder Services, L.L.C. will send the holder a check for the
net proceeds from the sale of any Rights sold. Orders to sell Rights must be
received by ChaseMellon Shareholder Services, L.L.C. on or before 11:00 a.m.,
New York City time on May 28, 1999. No assurance can be given that a market
will develop for the Rights or that ChaseMellon Shareholder Services, L.L.C.
will be able to sell any Rights.
<PAGE>
4. TO HAVE A SUBSCRIPTION WARRANT DIVIDED INTO SMALLER DENOMINATIONS.
Send your Subscription Warrant, together with complete separate
instructions (including specification of the denominations into which you wish
your Rights to be divided) signed by you, to ChaseMellon Shareholder Services,
L.L.C., allowing a sufficient amount of time for new Subscription Warrants to be
issued and returned so that they can be used prior to the Expiration Date.
Alternatively, you may ask a bank or broker to effect such actions on your
behalf. Your signature must be guaranteed by an Eligible Institution if any of
the new Subscription Warrants are to be issued in a name other than that in
which the old Subscription Warrant was issued.
Subscription Warrants may not be exercised in a manner that would
result in the purchase of a fractional Share, and any instruction to do so will
be rejected and rounded down to the nearest whole Share to the extent of payment
actually received (with a refund to you of any excess payment actually received
for any fractional Share by ChaseMellon Shareholder Services, L.L.C.). As a
result of delays in the mail, the time of the transmittal, the necessary
processing time and other factors, you or your transferee may not receive such
new Subscription Warrants in time to enable you to complete a sale or exercise
the associated Rights by the Expiration Date. Neither the Company nor
ChaseMellon Shareholder Services, L.L.C. will be liable to either a transferor
or transferee for any such delays.
5. EXECUTION.
(a) Execution by Registered Holder. The signature on the Subscription
Warrant must correspond with the name of the registered holder exactly as it
appears on the face of the Subscription Warrant without any alteration or change
whatsoever. Persons who sign the Subscription Warrant in a representative or
other fiduciary capacity must indicate their capacity when signing and, unless
waived by ChaseMellon Shareholder Services, L.L.C. in its sole and absolute
discretion, must present to ChaseMellon Shareholder Services, L.L.C.
satisfactory evidence of their authority to so act.
(b) Execution by Person Other than Registered Holder. If the
Subscription Warrant is executed by a person other than the holder named on the
face of the Subscription Warrant, proper evidence of authority of the person
executing the Subscription Warrant must accompany the same unless, for good
cause, ChaseMellon Shareholder Services, L.L.C. dispenses with proof of
authority.
(c) Signature Guarantees. Your signature must be guaranteed by an
Eligible Institution if you wish to transfer your Rights, as specified in
instruction 3(b) above, to a transferee other than a bank or broker or
ChaseMellon Shareholder Services, L.L.C., or if you specify special payment or
delivery instructions pursuant to Form 4.
6. METHOD OF DELIVERY.
The method of delivery of Subscription Warrants and payment of the
Exercise Price to ChaseMellon Shareholder Services, L.L.C. will be at the
election and risk of the Rights holder, but, if sent by mail, it is recommended
that they be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
ChaseMellon Shareholder Services, L.L.C. and the clearance of any checks sent in
payment of the Subscription Price prior to 5:00 p.m., New York City time, on the
Expiration Date.
<PAGE>
7. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE DEPOSITORY
TRUST COMPANY.
In the case of holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the Basic Subscription Privilege
(but not the Oversubscription Privilege) may be effected by instructing DTC to
transfer Rights (such Rights being "DTC Exercised Rights") from the DTC account
of such holder to the DTC account of ChaseMellon Shareholder Services, L.L.C.,
together with payment of the Subscription Price for each Share of Common Stock
subscribed for pursuant to the Basic Subscription Privilege. The
Oversubscription Privilege in respect of DTC Exercised Rights may not be
exercised through DTC. The holder of a DTC Exercised Right may exercise the
Oversubscription Privilege in respect of such DTC Exercised Right by properly
executing and delivering to ChaseMellon Shareholder Services, L.L.C. at or prior
to 5:00 p.m., New York City time on the Expiration Date, a DTC Participant
Oversubscription Exercise Form, in the form available from ChaseMellon
Shareholder Services, L.L.C., together with payment of the appropriate
Subscription Price for the number of Shares for which the Oversubscription
Privilege is to be exercised.
If a Notice of Guaranteed Delivery relates to Rights with respect to
which exercise of the Basic Subscription Privilege will be made through DTC and
such Notice of Guaranteed Delivery also relates to the exercise of the
Oversubscription Privilege, a DTC Participant Oversubscription Exercise Form
must also be received by ChaseMellon Shareholder Services, L.L.C. in respect of
such exercise of the Oversubscription Privilege on or prior to the Expiration
Date.
8. SUBSTITUTE FORM W-9.
Each Rights holder who elects to exercise the Rights and those foreign
stockholders who allow ChaseMellon Shareholder Services, L.L.C. to sell such
foreign holder's Rights should provide ChaseMellon Shareholder Services, L.L.C.
with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9,
which is included as Exhibit B hereto. Additional copies of the Substitute Form
W-9 may be obtained upon request from ChaseMellon Shareholder Services, L.L.C.
at the address, or by calling the telephone number, indicated above. Failure to
provide the information on the form may subject such holder to 31% federal
income tax withholding with respect to (i) dividends that may be paid by the
Company on Shares purchased upon the exercise of Rights (for those holders
exercising Rights), or (ii) funds to be remitted to Rights holders in respect of
Rights sold by ChaseMellon Shareholder Services, L.L.C. (for those holders
electing to have ChaseMellon Shareholder Services, L.L.C. sell their Rights).
<PAGE>
EXHIBIT 99.5 - FORM OF NOTICE OF GUARANTEED DELIVERY
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION WARRANTS
ISSUED BY
SMART & FINAL INC.
This form, or one substantially equivalent hereto, must be used to
exercise Rights pursuant to the Rights Offering described in the Prospectus
dated May 4, 1999 (the "Prospectus") of Smart & Final Inc., a Delaware
corporation (the "Company"), if a holder of Rights cannot deliver the
Subscription Warrant(s) evidencing the Rights to ChaseMellon Shareholder
Services, L.L.C. at or prior to 5:00 p.m. New York City time on June 3,
1999, unless extended (the "Expiration Date"). Such form must be delivered by
hand or sent by facsimile transmission or mail to ChaseMellon Shareholder
Services, L.L.C., and must be received by ChaseMellon Shareholder Services,
L.L.C. on or prior to the Expiration Date. See the discussion set forth under
"The Rights Offering--Exercise of Rights" in the Prospectus.
Regardless of the manner of delivery of the Subscription Warrant,
payment of the Subscription Price of $9.25 per share for each share of Common
Stock subscribed for upon exercise of such Rights must be received by
ChaseMellon Shareholder Services, L.L.C. in the manner specified in the
Prospectus at or prior to 5:00 p.m. New York City time on the Expiration Date.
<TABLE>
<CAPTION>
The Subscription Agent is:
ChaseMellon Shareholder Services, L.L.C.
By Mail: Facsimile Transmission By Hand:
<S> <C> <C>
(eligible institutions only):
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 (201) 296-4293 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
Attn: Reorganization Department Attn: Reorganization Department
To Confirm receipt of facsimile only:
(201) 296-4860
If by Overnight Courier:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road--Mail Drop--Reorg
Ridgefield Park, NJ 07660
Attn: Reorganization Department
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Warrant(s) representing ____________ Rights and that such
Subscription Warrant(s) cannot be delivered to the Subscription Agent at or
before 5:00 p.m., New York City time on the Expiration Date. Upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic
Subscription Privilege to subscribe for one share of Common Stock per 3.4884
Rights represented by such Subscription Warrant and (ii) the Oversubscription
Privilege relating to each such Right to subscribe, to the extent that Excess
Shares (as defined in the Instructions as to Use of Smart & Final Inc.
Subscription Warrants) are available, for an aggregate of up to __________
Excess Shares. The undersigned understands that payment of the Subscription
Price of $9.25 per share for each share of the Common Stock subscribed for
pursuant to the Basic Subscription Privilege and Oversubscription Privilege must
be received by the Subscription Agent at or before 5:00 p.m. New York City time
on the Expiration Date. The undersigned represents that such payment, in the
aggregate amount of $ __________, either (check appropriate box):
[_] is being delivered to ChaseMellon Shareholder Services, L.L.C. herewith
or
[_] has been delivered separately to the ChaseMellon Shareholder Services,
L.L.C.;
and is or was delivered in the manner set forth below (check appropriate box and
complete information relating thereto):
[_] wire transfer of funds
--name of transferor institution ____________________________________
--date of transfer __________________________________________________
--confirmation number (if available) ________________________________
[_] uncertified check (Payment by uncertified check will not be deemed to have
been received by the Subscription Agent until such check has cleared. Holders
paying by such means are urged to make payment sufficiently in advance of the
Expiration Date to ensure that such payment clears by such date.)
[_] certified check
[_] bank draft (cashier's check)
[_] U.S. postal money order
--name of maker _____________________________________________________
--date of check, draft or money order number ________________________
--bank on which check is drawn or issuer of money order _____________
Signature(s) ______________________________________________________________
Name(s) ___________________________________________________________________
___________________________________________________________________________
(PLEASE TYPE OR PRINT)
___________________________________________________________________________
Address(es) _______________________________________________________________
(ZIP CODE)
Area Code and Tel. No(s). _________________________________________________
Subscription Warrant No(s). (if available) ________________________________
___________________________________________________________________________
<PAGE>
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SUBSCRIPTION WARRANT SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or member of the National Association of Securities Dealers, Inc.,
commercial bank or trust company having an office or correspondent in the United
States, or other eligible guarantor institution which is a member of or a
participant in a signature guarantee program acceptable to ChaseMellon
Shareholder Services, L.L.C., guarantees that the undersigned will deliver to
ChaseMellon Shareholder Services, L.L.C. the certificates representing the
Rights being exercised hereby, with any required signature guarantees and any
other required documents, all within three New York Stock Exchange trading days
after the date hereof.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(ADDRESS)
___________________________________________________________________________
(AREA CODE AND TELEPHONE NUMBER)
Dated: ______________________________________________________________, 1999
____________________________________________________________________________
(NAME OF FIRM)
____________________________________________________________________________
(AUTHORIZED SIGNATURE)
The institution which completes this form must communicate the
guarantee to ChaseMellon Shareholder Services, L.L.C. and must deliver the
Subscription Warrant(s) to ChaseMellon Shareholder Services, L.L.C. within the
time period shown herein. Failure to do so could result in a financial loss to
such institution.
<PAGE>
EXHIBIT 99.6 - FORM OF LETTER TO STOCKHOLDERS OF RECORD
SMART & FINAL INC.
6,486,406 COMMON SHARES
INITIALLY OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
SMART & FINAL INC.
Dear Stockholders:
This letter is being distributed to all holders of Common Stock (the
"Common Stock"), of record on May 12, 1999 (the "Record Date"), of Smart &
Final Inc. (the "Company"), in connection with a distribution of transferable
rights ("Rights") to acquire the Common Stock at a subscription price of $9.25
per share for each share as described in the Prospectus dated May 4, 1999.
Each beneficial owner of shares of the Common Stock is entitled to
receive one Right for each share of Common Stock owned as of the Record Date,
and to purchase one (1) share of Common Stock for every 3.4884 Rights held. No
fractional shares or cash in lieu thereof will be issued or paid. The number of
shares which may be purchased pursuant to the exercise of Rights distributed to
record holders by the Company, or which may be purchased pursuant to the
exercise of Rights which have been transferred, must be rounded down to the
nearest whole number (or any lesser number of whole shares) in order to avoid
issuing fractional shares.
Enclosed are copies of the following documents:
1. The Prospectus;
2. The Subscription Warrant;
3. The "Instructions as to Use of Smart & Final Inc. Subscription
Warrant" (including Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9);
4. A Notice of Guaranteed Delivery for Subscription Warrants issued by
Smart & Final Inc.; and
5. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Subscription Agent.
Your prompt action is requested. The Rights will expire at 5:00 P.M.,
New York City time, on June 3, 1999, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, a properly completed and executed Subscription
Warrant (or Notice of Guaranteed Delivery) and payment in full for all of the
Rights exercised must be delivered to ChaseMellon Shareholder Services, L.L.C.
as indicated in the Prospectus prior to 5:00 P.M., New York City time, on the
Expiration Date.
Additional copies of the enclosed materials may be obtained from
ChaseMellon Shareholder Services, L.L.C. Its toll-free telephone number is
(888) 224-2745.
Very truly yours,
SMART & FINAL INC.
<PAGE>
EXHIBIT 99.7 - FORM OF LETTER FROM BROKERS OR OTHER NOMINEES TO BENEFICIAL
OWNERS
6,486,406 SHARES OF COMMON STOCK INITIALLY OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF SMART & FINAL INC.
To Our Clients:
Enclosed for your consideration are a Prospectus, dated May 4,
1999, and the "Instructions as to Use of Smart & Final Inc. Subscription
Warrants" relating to the offer by Smart & Final Inc. (the "Company") of shares
of Common Stock (the "Common Stock") of the Company, at a subscription price of
$9.25 per share, in cash, pursuant to transferable subscription rights (the
"Rights") initially distributed to holders of record ("Record Owners") of shares
of Common Stock as of the close of business on May 12, 1999 (the "Record
Date").
As described in the Prospectus, you will receive one transferable
Right for each share of Common Stock carried by us in your account as of the
Record Date. You are entitled to subscribe for one (1) share of the Common Stock
for every 3.4884 Rights granted to you (the "Basic Subscription Privilege") at a
subscription price of $9.25 per share (the "Subscription Price"). You will also
have the right (the "Oversubscription Privilege"), subject to proration, to
subscribe for shares of the Common Stock available after satisfaction of all
subscriptions pursuant to the Basic Subscription Privilege ("Excess Shares"), at
the Subscription Price. If there are insufficient Excess Shares to satisfy all
exercised Oversubscription Privileges, Excess Shares will be allocated pro rata
among all the holders of the Rights exercising Oversubscription Privileges, in
proportion to the number of shares each such holder has purchased pursuant to
his or her respective Basic Subscription Privilege. Your election to exercise
the Oversubscription Privilege must be made at the time you exercise the Basic
Subscription Privilege, and you must exercise the Basic Subscription Privilege
in full in order to exercise the Oversubscription Privilege.
No fractional shares or cash in lieu thereof will be issued or paid.
The number of shares which may be purchased pursuant to the exercise of Rights
distributed to record holders by the Company, or which may be purchased under
Rights which have been transferred, must be rounded down to the nearest whole
number (or any lesser number of whole shares) in order to avoid issuing
fractional shares. Rights are transferable, and holders that wish to sell their
Rights may do so. The Rights will trade on the New York Stock Exchange (the
"NYSE") up to and including the close of business on the last trading day prior
to the Expiration Date. It is anticipated that the Rights will trade on a "when
issued" basis up to and including the Record Date.
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL
OWNER OF THE SHARES OF COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. EXERCISES AND SALES OF THE RIGHTS MAY BE MADE BY ONLY
US AS THE RECORD OWNER AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we
request instructions as to whether you wish us to elect to subscribe for any
shares of Common Stock, or sell any Rights, to which you are entitled pursuant
to the terms and subject to the conditions set forth in the enclosed Prospectus
and "Instructions as to Use of Smart & Final Inc. Subscription Warrants".
However, we urge you to read these documents carefully before instructing us to
exercise or sell the Rights.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to exercise or sell Rights on your behalf in accordance with
the provisions of the offering described in the Prospectus. The offering will
expire at 5:00 P.M., New York City time, on June 3, 1999, unless the
offering is extended by the Company. Once you have exercised a Right, such
exercise may not be revoked.
If you wish to have us, on your behalf, exercise the Rights for any
shares of the Common Stock to which you are entitled, or sell such Rights,
please so instruct us by completing, executing and returning to us the
instruction form on the reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING
SHOULD BE DIRECTED TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AT
(888) 224-2745.
<PAGE>
EXHIBIT 99.8 - INSTRUCTIONS FROM BENEFICIAL OWNERS TO BROKERS OR OTHER NOMINEES
INSTRUCTIONS BY BENEFICIAL OWNERS TO BROKERS OR OTHER NOMINEES
(accompanying letter from brokers or other nominees to beneficial owners)
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of Common Stock
(the "Common Stock") of Smart & Final Inc. (the "Company").
This will instruct you whether to exercise or sell Rights to purchase
the Common Stock distributed with respect to the Company's Common Stock held by
you for the account of the undersigned, pursuant to the terms and subject to the
conditions set forth in the Prospectus and the related "Instructions as to Use
of Smart & Final Inc. Subscription Warrants".
box 1. [_] Please do not exercise Rights for shares of the Common Stock.
box 2. [_] Please exercise Rights for shares of the Common Stock as set forth
below:
<TABLE>
<CAPTION>
NUMBER
OF SUBSCRIPTION
SHARES PRICE PAYMENT
------ ------------ -------
<S> <C> <C> <C>
Basic Subscription Right*: _____ X $9.25 = $ ________ (Line 1)
Oversubscription Right: _____ X $9.25 = $ ________ (Line 2)
Total Payment Required = $ ________ (Sum of Lines 1 and
2; must equal total
of amounts in
boxes 4 and 5 below)
</TABLE>
* YOU MAY PURCHASE ONE (1) SHARE FOR EVERY 3.4884 RIGHTS YOU HOLD; ANY
RESULTING FRACTIONAL SHARE MUST BE ROUNDED DOWN TO THE NEAREST WHOLE SHARE (OR
ANY LESSER NUMBER OF WHOLE SHARES FOR WHICH YOU ENCLOSE PAYMENT).
box 3. [_] Please SELL Rights.
box 4. [_] Payment in the following amount is enclosed: $_______________
box 5. [_] Please deduct payment from the following account maintained by you as
follows:
______________________________ ______________________________________________
Type of Account Account No.
Amount to be deducted: $ ______________________________________________
Date: __________________, 1999 ______________________________________________
______________________________________________
______________________________________________
Signature(s)
Please type or print name(s) below
_____________________________________________
_____________________________________________
<PAGE>
EXHIBIT 99.9 - ANNOUNCEMENT OF FILING REGISTRATION STATEMENT
Contact: Martin Lynch
(323) 869-7746
[email protected]
Lisa van Velthuyzen
(323) 869-7608
[email protected]
SMART & FINAL ANNOUNCES
FILING OF S-3 REGISTRATION STATEMENT
IMPORTANT ANNOUNCEMENT TO THE HOLDERS OF COMMON STOCK
-----------------------------------------------------
LOS ANGELES, CA, APRIL 30, 1999 -- Smart & Final Inc. (NYSE -- SMF)
has filed a Registration Statement on Form S-3 with the SEC for a fixed price
Rights Offering. The Company proposes to distribute to holders of its
outstanding common stock, at no cost, transferable subscription rights to
purchase additional shares of the common stock at a discount to the market
price. Holders of the common stock will receive one Right for each share of
common stock held by them as of the close of business on the record date, which
is expected to be on or around May 12, 1999, or such later date on or after
which the Registration Statement becomes effective. The Company expects to
provide additional information regarding the Rights Offering, including the
subscription price and ratio and the expiration date, in a press release issued
on or before the record date.
As soon as practicable after the record date, the Company expects to
mail to current stockholders a final prospectus for the Rights Offering
accompanied by a subscription warrant and related explanations for exercising or
selling the rights. The prospectus will contain a description of the Rights
Offering and other information. If these do not arrive within a reasonable time
after the record date, stockholders should notify ChaseMellon Shareholder
Services, L.L.C., at 450 W. 33rd Street, 14th Floor, New York, NY 10001 or
telephone (800) 414-2879. Banks and brokers may call collect at (212) 273-8080.
The Registration Statement relating to the Rights and the underlying
common stock has not yet become effective. These securities may not be sold nor
may offers to buy be accepted prior to the time the Registration Statement
becomes effective. This notice shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of such Rights or
common stock in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such state.
-more-
<PAGE>
Page 2-2-2-2
Filing S-3 Registration Statement
Although the Company has not yet commenced the Rights Offering and
shareholders are not required to take any action at this time, shareholders
should be prepared to act promptly or to have someone authorized to act for them
when you receive their subscription warrant. Whether or not shareholders wish to
exercise or sell their Rights, they should note that in order to validly
exercise Rights, the proper subscription form, and the full payment of the
subscription price for all shares sought to be purchased (including clearance of
any personal or uncertified checks), must actually be received by ChaseMellon
Shareholder Services, L.L.C. before the Rights Offering expires.
Founded in 1871 in downtown Los Angeles, Smart & Final Inc. operated
216 warehouse grocery stores in California, Oregon, Washington, Florida,
Arizona, Nevada, Idaho and Northern Mexico at the end of the 1999 first quarter.
The Company also operates two foodservice distribution companies in northern
California and Florida. Sales for fiscal year 1998 were $1.7 billion. For more
information, visit the Company's website at www.smartandfinal.com.
---------------------
# # # #
<PAGE>
EXHIBIT 99.10 - LETTER TO DEALERS AND OTHER NOMINEES
SMART & FINAL INC.
6,486,406 SHARES OF COMMON STOCK INITIALLY OFFERED PURSUANT TO
RIGHTS DISTRIBUTED TO STOCKHOLDERS OF
SMART & FINAL INC.
To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial
banks, trust companies and other nominees in connection with the offering by
Smart & Final Inc. (the "Company") of 6,486,406 shares of Common Stock (the
"Common Stock"), of the Company, at a subscription price of $9.25 per share,
pursuant to transferable subscription rights (the "Rights") initially
distributed to holders of record of the Common Stock as of the close of business
on May 12, 1999 (the "Record Date"). The Rights are described in the Prospectus
and evidenced by a Subscription Warrant registered in your name or the name of
your nominee.
Each beneficial owner of shares of the Common Stock registered in your
name or the name of your nominee is entitled to one (1) Right for every one (1)
share of the Common Stock owned by such beneficial owner. Holders of Rights are
entitled to purchase one (1) share of newly issued Common Stock for every
3.4884 Rights granted. No fractional shares or cash in lieu thereof will be
issued or paid. The number of shares which may be purchased pursuant to the
exercise of Rights distributed to record holders by the Company, or which may be
purchased pursuant to the exercise of Rights which have been transferred, must
be rounded down to the nearest whole number (or any lesser number of whole
shares) in order to avoid issuing fractional shares.
We are asking you to contact your clients for whom you hold the Common
Stock registered in your name or in the name of your nominee to obtain
instructions with respect to the Rights. Enclosed are copies of the following
documents:
1. The Prospectus;
2. The "Instructions as to Use of Smart & Final Inc. Subscription
Warrant" (including Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9);
3. A form of letter which may be sent to your clients for whose
accounts you hold Common Stock registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Rights;
4. A Notice of Guaranteed Delivery for Subscription Warrants issued by
Smart & Final Inc.; and
5. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Subscription Agent.
Your prompt action is requested. The Rights will expire at 5:00 P.M.,
New York City time, on June 3, 1999, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, a properly completed and executed Subscription
Warrant (unless the guaranteed delivery procedures are complied with) and
payment in full for all Rights exercised must be delivered to ChaseMellon
Shareholder Services, L.L.C. as indicated in the Prospectus prior to 5:00 P.M.,
New York City time, on the Expiration Date.
Additional copies of the enclosed materials may be obtained from
ChaseMellon Shareholder Services, L.L.C. Their toll-free telephone number is
(888) 224-2745 or they may be called collect at (212) 273-8070.
Very truly yours,
SMART & FINAL INC.
<PAGE>
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF SMART & FINAL INC., THE SUBSCRIPTION AGENT OR ANY OTHER PERSON
MAKING OR DEEMED TO BE MAKING OFFERS OF THE COMMON STOCK ISSUABLE UPON VALID
EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR
STATEMENTS MADE IN THE PROSPECTUS.
<PAGE>
EXHIBIT 99.11
CONSENT FROM MERRILL LYNCH & CO.
May 3, 1999
Martin A. Lynch
Executive Vice President
and Chief Financial Officer
Smart & Final Inc.
600 Citadel Drive
Commerce, California 90046
Gentlemen:
As financial advisors to the Special Committee of the Board of Directors of
Smart & Final Inc. (the "Special Committee"), we hereby consent to all
references to our firm as financial advisor to the Special Committee included in
this registration statement.
Very truly yours,
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH,
INCORPORATED
By: /s/ Mark Vander Ploeg
------------------------------------
Name: Mark Vander Ploeg
Title: Managing Director
Investment Banking Group
<PAGE>
EXHIBIT 99.12
FORM OF LETTER AGREEMENT BETWEEN SMART & FINAL INC. AND MERRILL LYNCH & CO. AND
MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED
May 3, 1999
Martin A. Lynch
Executive Vice President
and Chief Financial Officer
Smart & Final Inc.
600 Citadel Drive
Commerce, California 90046
Gentlemen:
1. We understand that Smart & Final Inc. ("Smart & Final," or the "Company"),
proposes to conduct an offering of rights to purchase its common stock, par
value $.01 per share (the "Rights Offering"), pursuant to the registration
statement on Form S-3 filed with the Securities and Exchange Commission on
April 2, 1999, which has not yet been declared effective.
2. The Company has requested that Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") provide a letter (the form of which is
attached hereto as Annex A) to be used solely in the United States, Guam and
Puerto Rico in connection with the Rights Offering for the sole purpose of
compliance with certain provisions of the various U.S. state securities
laws. Merrill Lynch makes no representation hereunder, and assumes no
responsibility to ensure, that use of Merrill Lynch's letter is or will be
sufficient to satisfy such state securities law and any other legal and
regulatory requirements, including the qualification or exemption of the
shares of common stock of Smart & Final in such states. Merrill Lynch also
makes no representation hereunder, and assumes no responsibility to ensure,
that the Rights Offering complies with all regulations and laws of the
United States or that the rights and the shares of common stock of Smart &
Final related thereto have been issued in compliance with the Securities Act
of 1933, as amended and the rules and regulations promulgated thereunder.
This letter agreement is to confirm our understanding with respect to
Merrill Lynch's engagement.
3. Smart & Final agrees to indemnify Merrill Lynch and its affiliates and their
respective directors, officers, employees, agents and controlling persons
(Merrill Lynch and each such person being an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or
several, to which such Indemnified Party may become subject under any
applicable law, domestic or foreign, or otherwise related to or arising out
of the engagement of Merrill Lynch pursuant to, and the performance by
Merrill Lynch or its affiliates of the services contemplated by, this letter
agreement or the Rights Offering, and in each case, will promptly reimburse
any Indemnified Party for all expenses (including reasonable counsel fees
and expenses) as they are incurred in connection with investigation of,
preparation for or defense of any pending or threatened claim or any action
or proceeding arising therefrom, whether or not such Indemnified Party is a
party and whether or not such claim, action or proceeding is initiated or
brought by or on behalf of the Company. The Company agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or their respective security
holders, creditors or affiliates related to or arising out of the engagement
of Merrill Lynch pursuant to, or the performance by Merrill Lynch or its
affiliates of the services contemplated by, this letter agreement.
If the indemnification of an Indemnified Party provided for in this letter
is for any reason held unenforceable or is insufficient in respect of any
losses, claims, damages, liabilities or expenses suffered by an Indemnified
Party,
<PAGE>
the Company agrees to contribute to the losses, claims, damages, liabilities
and expenses for which such indemnification is held unenforceable (i) in
such proportion as is appropriate to reflect the relative benefits to the
Company, on the one hand, and Merrill Lynch, on the other hand, of the
transactions contemplated by this letter agreement (whether or not such
transactions are consummated) or (ii) if (but only if) the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company, on the
one hand, and Merrill Lynch, on the other hand, as well as any other
relevant equitable considerations. The Company agrees that for the purposes
of this paragraph the relative benefits to the Company and Merrill Lynch of
the transactions contemplated shall be deemed to be in the same proportion
that the total consideration to be received or receivable by the Company
under the Rights Offering, as a result of or in connection with the Rights
Offering, bears to the expenses of Merrill Lynch incurred in connection with
this letter agreement if actually reimbursed by the Company to Merrill Lynch
under this letter agreement; provided, however, that, to the extent
------------------
permitted by applicable law, in no event shall the Indemnified Parties be
required to contribute an aggregate amount in excess of the aggregate
expenses of Merrill Lynch actually reimbursed by the Company to Merrill
Lynch under this letter agreement.
The Company agrees that, without Merrill Lynch's prior written consent, they
will not settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding in respect of which
indemnification could be sought under the indemnification provision of this
letter agreement, whether or not Merrill Lynch or any other Indemnified
Party is an actual or potential party to such claim, action or proceeding,
unless such settlement, compromise or consent includes an unconditional
written release in form and substance satisfactory to the Indemnified
Parties of each Indemnified Party from all liability arising our of such
claim, action or proceeding and does not include any statements as to
admission of fault, culpability or failure to act by or on behalf or any
Indemnified Party.
The Company acknowledges and agrees that Merrill Lynch has been retained
solely for the purposes set forth herein and that the letter referred to in
paragraph 2 hereof will only be distributed or used in the United States,
Guam and Puerto Rico. In such capacity, Merrill Lynch shall act as an
independent contractor, and any duties of Merrill Lynch arising our of its
engagement pursuant to this letter agreement shall be owed solely to the
Companies.
4. Merrill Lynch's engagement hereunder will terminate upon the closing of the
Rights Offering, it being understood that the provisions relating to
indemnification, limitations of the liability of Indemnified Parties,
contribution, settlements, the status of Merrill Lynch as an independent
contractor, the limitation as to whom Merrill Lynch shall owe any duties,
waiver of right to trial by jury and provisions relating to governing law,
agent for service of process, submission to jurisdiction and waiver of
immunity will survive any such termination.
5. In the event that an Indemnified Party is requested or required to appear as
a witness in any action brought by or on behalf of or against the Company in
which such Indemnified Party is not named as a defendant, the Company agrees
to reimburse Merrill Lynch for all reasonable expenses incurred by it as
they are incurred in connection with such Indemnified Party's appearing and
preparing to appear as such a witness, including, without limitation, the
reasonable fees and expenses of its legal counsel.
6. No waiver, amendment or other modification of this letter agreement shall be
effective unless in writing and signed by each party to be bound.
7. This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in
and to be performed in that state (without giving effect to the conflicts of
law principles thereof).
8. Merrill Lynch and the Company (in their own behalf and, to the extent
permitted by applicable law, on behalf of their shareholders, as the case
may be) waives all rights to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising our of the engagement of Merrill Lynch pursuant to, or the
performance by Merrill Lynch of the services contemplated by, this letter
agreement.
<PAGE>
Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to Merrill Lynch the duplicate copy of this letter
agreement enclosed herewith.
Very truly yours,
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH,
INCORPORATED
By:
----------------------------------------
Name: Mark Vander Ploeg
Title: Managing Director
Investment Banking Group
Accepted and Agreed
to as of the date first
written above:
By:
-----------------------------
Martin A. Lynch
Executive Vice President and Chief Financial Officer
<PAGE>
ANNEX A
LETTERHEAD OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This letter is furnished in connection with the enclosed materials related
to the offering of rights to purchase shares of common stock of Smart & Final
Inc. (the "Rights Offering").
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") is
acting solely as the agent for the Rights Offering (please see enclosed
prospectus for details). To the extent required by applicable law in certain
jurisdictions, rights to purchase common stock of Smart & Final Inc. are offered
through Merrill Lynch.
Merrill Lynch does not assume any responsibility for the attached materials
relating to the Rights Offering which were prepared by Smart & Final Inc. and
does not recommend or endorse any action by you concerning the materials.
Questions regarding the Rights Offering should be directed to:
ChaseMellon Shareholder Services, L.L.C.
1-888-224-2745
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
