Exhibit 10.10
[LOGO]
San Francisco, 31 January 1995
Smith's Food & Drug Centers, Inc.
Attn: Mr. Paul Tezak
Vice President -Finance & Treasurer
1550 South Redwood Road
P.O. Box 30550
Salt Lake City, Utah 84130
Dear Sirs:
We are pleased to confirm the continued availability of our committed
credit facility for Smith's Food & Drug Centers, Inc. (the "Company")
under the following terms and conditions:
1. The Facility.
A. Amount of Facility. Banca di Roma (the "Bank") agrees to
make loans and other advances (hereinafter called
individually a "Loan" and collectively, "the Loans") to the
Company in an aggregate principal amount at any one time
outstanding up to but not exceeding Fifteen Million United
States Dollars ($15,000,000.00). Within such limit the
Company may borrow, repay and reborrow at any time or from
time to time until the revocation of this facility by the
Bank as further discussed below.
B. Purpose of the Facility. This facility may be used for the
general corporate purposes of the Company.
C. Interest. Interest shall be computed in respect of the
amounts drawn under this facility at rates quoted by the Bank
and accepted by the Customer at the time of utilization. In
any event the rate quoted by the Bank shall not exceed the
London Interbank Offered Rate plus 0.50 percent per annum.
Interest shall be computed on the actual number of days
elapsed and on the basis of a 360 day year. Interest is
payable on the maturity date of each Loan.
D. Commitment Fee. The Company agrees to pay the Bank a
commitment fee of 0.25 percent per annum on the unutilized
portion of the facility. The commitment fee shall be
computed on the actual number of days elapsed and on the
basis of a 360 day year. The commitment fee is payable
calendar quarterly in arrears as billed by the Bank.
E. Payments under the Facility. Payments in respect to Loans
and the commitment fee are to be made in the legal currency
of the United States of America.
F. Expiry of the Facility. The facility is committed for a
period of eighteen months plus one day to include an
"evergreen" clause for the automatic renewal of same each six
months, barring notice of cancellation of the evergreen
facility by the Customer or the Bank. (For example, using
the new trigger dates, the Bank's commitment currently
will expire on 31 July 1996, but on 31 July 1995, the
expiration will extend automatically to 31 January 1997.
Thereafter, on 31 January 1996, the expiry automatically
extends to 31 July 1997, and so on, so that at no time will
there be less than one year and one day of availability,
barring notice of cancellation of the evergreen facility by
the Customer or the Bank).
2. Conditions of Lending. The commitment of the Bank to make
each Loan to be made by it hereunder is subject to the following
conditions precedent:
(1) No event of default specified in Section 5 hereof,
and no event which with notice or lapse of time or
both would become such an event of default, shall
have occurred and be continuing; the representations
of the Company in Section 4 hereof shall be true on
and as of the date of the making of such Loan with
the same force and effect as if made on and as of
such date.
(2) The Company shall from time to time promptly execute
and deliver all further instruments and documents,
and take all further action that may be reasonably
necessary or desirable or that the Bank may
reasonably request in order to carry out the
purposes of this facility agreement, to evidence its
signing authority and to enable the Bank to enforce
its rights and remedies hereunder.
(3) All legal matters incident to the transactions
hereby contemplated shall be satisfactory to the
Bank.
3. Covenants. So long as the availability of this facility
shall be outstanding and until the payment in full of all
Loans outstanding hereunder and the performance of all other
obligations of the Company hereunder, the Company agrees
that, unless the Bank shall otherwise consent in writing, it
will:
A. Furnish Financial Statements. The Company will
furnish the Bank:
(1) within one hundred twenty (120) days after the end
of each fiscal year of the Company, copies of the
balance sheets of the Company, including any
consolidated subsidiaries, as at the close of such
fiscal year and statements of income and retained
earnings of the Company and its consolidated
subsidiaries for such year, certified by independent
public accountants selected by the Company and
satisfactory to the Bank;
(2) within ninety (90) days after the end of the first
three quarters of each fiscal year of the Company,
copies of balance sheets of the Company and its
consolidated subsidiaries as at the end of such
quarters and statements of income and retained
earnings of the company and its consolidated
subsidiaries for the period from the beginning of
the fiscal year to the end of such quarter.
(3) from time to time, such further information
regarding the business, affairs, and financial
condition of the Company and its consolidated
subsidiaries as the Bank may reasonably request.
All financial statements delivered hereunder shall be
prepared on the basis of generally accepted accounting
principals and practices applied on a basis consistent
with those used in the preparation of the audited
financial statements of the Company.
B. Remain in compliance with Laws, etc. The Company
will, and will cause each of its consolidated subsidiaries
to, comply in all material respects with all applicable
laws, rules, regulations and orders of all governmental
bodies and officers having power to regulate or supervise
its business activities provided, however, that neither
the Company nor any of its consolidated subsidiaries shall
be required to comply with any such laws, rules or
regulations and orders so long as the validity thereof
shall be contested in good faith by appropriate
proceedings and adequate book reserve shall have been set
aside with respect thereto in accordance with generally
accepted accounting principles.
C. Maintain a consolidated tangible net worth of not less
than $350,000,000.
"Consolidated Tangible Net Worth" shall mean all assets
appearing on a balance sheet of the Company and its
Consolidated subsidiaries determined on a consolidated
basis in accordance with GAAP less (without limitation
and without duplication of deductions) the sum of (a)
consolidated Indebtedness to include preferred stock
and all short and long term debt obligations (other
than liabilities subordinated to the satisfaction of
Bank to the Obligations incurred hereunder), (b) and
reserves established by Company or any Consolidated
subsidiary for anticipated losses and expenses
including deferred taxes payable, (c) the amount, if
any, of such intangible items as goodwill (including
any amounts, however designated on the balance sheet,
investments in excess of underlying tangible assets),
trademarks, trademark rights, trade name rights,
copyrights, patents, patent rights, licenses,
unamortized debt discount, marketing expenses and
deferred research and development costs.
4. Representations.
The Company hereby represents and warrants to the Bank
that:
A. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware
and is duly qualified to transact business or own real
property in each state or other jurisdiction in which
its principal real properties are located or in which
it conducts any important or material part of its
business; and the Company has corporate power to enter
into and abide by the terms of this facility agreement
and to borrow hereunder.
B. Corporate Authority. The making and performance by
the Company of this facility agreement and the Loans
hereunder have been duly authorized by all necessary
corporate action and will not violate any provision of
law or of its charter or bylaws, or result in the
breach of or constitute a default or require consent
under, or result in the creation of any lien, charge,
or encumbrance upon any property or assets of the
Company pursuant to any indenture or other agreement
or instrument to which the Company is a party or by
which the Company or its property may be bound or
affected, other than as specifically provided herein.
C. Financial Condition. The balance sheets and
statements of income and retained earnings of the
Company and its consolidated subsidiaries, heretofore
furnished to the Bank, are complete and correct and
fairly represent the financial condition of the
Company and its consolidated subsidiaries as at the
dates of said financial statements and the results of
their operations for the periods ending on said dates.
Neither the Company nor any of its consolidated
subsidiaries has any material contingent obligations,
liabilities for taxes, long-term leases or forward or
long-term commitments not disclosed by, or reserved
against in, said balance sheets or the notes thereto,
and at the present time there are no material
unrealized or anticipated losses from any unfavorable
commitments of the Company or any consolidated
subsidiary. Since the date of the latest of such
statements there has been no material adverse change
in the financial condition of the Company and its
consolidated subsidiaries from that set forth in said
balance sheets as at that date.
D. Litigation. There are no material suits or material
proceedings pending, or to the knowledge of the
Company threatened against or affecting the Company or
any of its consolidated subsidiaries which, if
adversely determined, would have a material adverse
effect on the financial condition or business of the
Company and its consolidated subsidiaries and there
are no material proceedings by or before any
governmental commission, board, bureau, or other
administrative agency pending, or to the knowledge of
the Company, threatened, against the Company or any of
its consolidated subsidiaries.
5. Defaults.
If any of the following events of default shall occur and
shall not have been remedied:
A. Any representation or warranty made by the Company in
this facility agreement or in any request or
certificate of the Company furnished to the Bank shall
prove to have been incorrect in any material respect
when made or at any time while this facility agreement
is in effect; or
B. The Company shall default in the payment, when due,
of any principal of or interest on the Loans or any
other sum payable by the Company under this facility
agreement; or
C. The Company shall default in the performance of any
other obligation to be performed by it contained
herein and such default shall continue for thirty (30)
days after the Bank has given the Company written
notice of such default; or
D. The Company shall default in the payment of any of its
indebtedness in an aggregate amount of at least
$20,000,000 or in the performance of any covenants
with respect to such indebtedness and such
indebtedness shall have been accelerated by the holder
or holders thereof prior to its stated maturity or
maturities and such default shall continue unremedied
for a period of 30 calendar days; or
E. The Company or any of its consolidated subsidiaries
shall (1) apply for or consent to the appointment of a
receiver, trustee, or liquidator of itself, or of all
or a substantial part of its assets, (2) be unable, or
admit in writing its inability to pay its debts as
they fall due, (3) make a general assignment for the
benefit of its creditors, (4) be adjudicated a
bankrupt or insolvent, or (5) file a voluntary
petition in bankruptcy or a petition or an answer
seeking reorganization or an arrangement with
creditors or to take advantage of any insolvency law
or an answer admitting the material allegations of a
petition filed against it in any bankruptcy,
reorganization, or insolvency proceeding, or any
corporate action shall be taken by it for the purpose
of effecting any of the foregoing; or
F. An order, judgment, or decree shall be entered,
without the application, approval, or consent of the
Company or any of its consolidated subsidiaries by any
court of competent jurisdiction, approving a petition
seeking reorganization of the Company or any such
consolidated subsidiary or appointing a receiver,
trustee, or liquidator of the Company or any such
consolidated subsidiary or of all or a substantial
part of any of their respective assets and such order,
judgment or decree shall continue unstayed and in
effect for any period of more than thirty (30)
consecutive days;
then, and in any such case, the Bank may by written
notice to the Company (i) immediately terminate the
facility hereunder and/or (ii) declare the principal
of and interest accrued to be forthwith due and
payable, whereupon the same shall become forthwith due
and payable.
6. Notices.
All notices, requests, and demands shall be in writing and
shall be personally delivered or sent by mail or by telex,
and shall be deemed to have been duly given when delivered
by hand, or, if mailed, when deposited in the United
States mail, certified and return receipt requested,
postage and charges prepaid, or, in the case of any telex,
when sent, answerback received, and, regardless of method,
addressed to such party at its address set forth as
follows or such other address as such party may hereafter
designate by written notice to the other:
The Company: Smith's Food & Drug Centers, Inc.
1550 South Redwood Road Salt
Lake City, Utah 84104
The Bank: Banca di Roma
Attn: Credit Department
One Montgomery Street
Telesis Tower - Suite 2200
San Francisco, CA 94104
7. Miscellaneous.
A. As used in this facility agreement, "Taxes" shall mean
taxes, levies, imposts, duties, withholdings or other
charges of whatsoever nature levied, imposed,
collected, withheld or assessed by any government or
any political subdivision or taxing authority thereof,
other than any such charges on or measured by the net
income, net worth or shareholders' capital of the
Bank.
B. Neither failure nor delay on the part of the Bank to
exercise any right, power, or privilege hereunder
shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or
privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right,
power, or privilege.
C. This facility agreement and each Loan shall be deemed
to be contracts made under the laws of the State of
California and for all purposes shall be governed by
the laws of California, without regard to the conflict
of laws statutes of such state. The Company hereby
irrevocably agrees that any legal action or
proceedings against the Company with respect to the
facility agreement may be brought in the courts of the
State of California, in any United States District
Court located in California and, by execution and
delivery of this facility agreement, the Company
hereby irrevocably submits to each such jurisdiction
and hereby irrevocably waives any and all objections
which the Company may have as to venue in any of the
above courts.
D. The Company will pay costs of collection (including
reasonable counsel fees) in case default is made in
the payment of any Loan made under this agreement.
E. Each payment or prepayment of principal, interest
or other amount payable by the Company under this
facility agreement and any other document required
hereunder shall, to the extent permitted by applicable
law, be made without set-off or counterclaim and free
and clear of, and exempt from, and without deduction
or withholding for or on account of, any present or
future Taxes levied, imposed, collected, withheld or
assessed by any governmental entity or any political
subdivision or taxing authority thereof. For the
purposes here, "Taxes" shall exclude (i) any taxes,
levies, impost, duties, withholdings or other charges
of whatsoever nature levied, imposed, collected,
withheld or assessed by any government or any
political subdivision or taxing authority thereof
which are measured by net income, net worth, or
shareholders' capital; (ii) any such taxes or
withholdings imposed on interest income under Sections
871 or 881 of the Internal Revenue Code or any
corresponding provisions of succeeding laws and (iii)
any amounts required to be withheld under Sections
1441 or 1442 of the Internal Revenue Code. The Bank
hereby represents that it is currently engaged in the
active conduct of the banking business in the United
States and the interest payable in connection with the
Loans is effectively connected with the conduct of
such business within the meaning of Section 864 of the
Internal Revenue Code and the regulations promulgated
thereunder as such may be amended from time to time.
So long as the Bank is engaged in the active conduct
of the banking business in the United States, the Bank
will deliver to the Company, as and when required by
the Company, a properly executed Form W-9 (or any
successor form or statement) setting forth its
taxpayer identification number and a properly executed
Form 4224 (or any successor form or statement)
claiming exemption from withholding of tax on income
effectively connected with its conduct of a trade or
business in the United States. If any Taxes are
levied, imposed, collected, subject to withholding or
assessed on any such payment or prepayment, the
Company shall make any withholding required for the
account of the Bank and make timely payment thereof to
the appropriate governmental authority, and shall, in
any event, forthwith pay to the Bank such additional
amounts as may be necessary so that the net amount
actually received by the Bank in respect of each such
payment or prepayment, after withholding, deduction or
payment for or on account of such Taxes, and after
payment by the Bank of any taxes due by reason of the
payment of such additional amounts will not be less
than the amount the Bank is entitled to receive
hereunder had no such Taxes been deducted, withheld
from or paid in respect of such payment. The Company
shall, promptly upon receipt, furnish to the Bank all
official receipts evidencing payment of any such Taxes
(which shall be either originals, duplicate originals,
or copies duly certified or authenticated). The Bank
may, but is not required to, pay at any time and from
time to time any amount in respect of such Taxes or
penalties therefore or interest thereon, in which
event the Company shall, in each instance, reimburse
the Bank on demand therefor and pay to the Bank the
additional amounts specified above.
F. If, after the date of this facility agreement, the
adoption or enactment of any applicable law or
governmental rule, requirement, guideline, order,
regulation, or any change therein, or change in the
interpretation or administration thereof by any
judicial or governmental authority, central bank,
comparable agency or other person charged with the
interpretation or administration thereof, or
compliance by the Bank with any request or directive
(whether or not having the force of law) of any such
authority (a "Change of Law") shall make it unlawful
or impossible for the Bank to make or maintain any of
the Loans, the Bank shall immediately notify the
Company of such Change of Law. Thereafter, the
Company's right to request the making of or
continuation of, and the Bank's obligation to make or
continue, a Loan shall be terminated. The Company
shall repay the Loan in full, (a) at the specified
maturity if the Bank may lawfully continue to maintain
the Loan to such day, or (b) immediately if the Bank
may not lawfully continue to fund or maintain the Loan
and the Bank so notifies the Company (which notice
shall be conclusive and binding upon the Company for
all purposes in the absence of error); provided,
however, that the Company and the Bank will, if
possible, take all reasonable and feasible steps to
mitigate the effect of any such Change in Law.
G. If, after the date of this facility agreement, the
Bank shall reasonably demonstrate that, because of any
Change of Law which shall have general applicability
to the Bank and to other lending institutions
similarly situated, (including, without limitation,
those affecting Taxes or reserve or special deposit or
similar requirements), the direct cost to the Bank of
making, renewing or maintaining any of the Loans has
been increased, or an additional direct cost imposed,
or any sum received or receivable by the Bank
hereunder has been reduced, in any of the foregoing
cases by an amount deemed by the Bank to be material
(including, without limitation, reductions resulting
from any material difference between the Federal
Reserve System reserve requirement imposed on the Bank
after the date of this facility agreement and the
reserve requirement for which the Bank is compensated
as of the date hereof in determining the interest
rate), the Company shall from time to time, upon
demand by the Bank, pay to the Bank such additional
amount or amounts as will compensate the Bank for such
increased or additional cost or such reduction. Any
such demand shall be accompanied by a statement of the
Bank setting forth the basis of the Bank's
determination of the amount necessary to compensate
the Bank, which statement as to the Bank's direct cost
shall, in the absence of error, be conclusive and
binding on the Company for all purposes.
H. In the Event of Default by the Company on loans made
by Bank under this agreement, the Company shall
compensate the Bank, within ten (10) days after
written notice by the Bank, for all reasonable losses,
costs and expenses in respect of any interest paid or
premium or penalty incurred by the Bank to lenders or
otherwise in respect of funds borrowed by or deposited
with it to make or maintain any of the Loans which the
Bank may sustain as a consequence of any Event of
Default by the Company.
We are pleased that you have provided us with the opportunity to
continue to assist in your banking needs and look forward to
strengthening our relationship with you in the future.
Sincerely yours,
BANCA DI ROMA - SAN FRANCISCO
/s/ Richard G. Dietz /s/Thomas C. Woodruff
We confirm our agreement with the above
and agree to abide by its terms.
Smith's Food & Drug Centers, Inc.
By: /s/ Paul Tezak
Title: V.P. Finance and Treasurer Date: February 8, 1995