[Logo of Wells Fargo Bank]
September 18, 1997
Smart & Final, Inc.
4700 South Boyle Avenue
Los Angeles, CA 90058
Attention: Richard Phegley, Treasurer
Dear Richard:
I am pleased to advise you that Wells Fargo Bank, N.A. ("WFB") has approved for
use by Smart & Final, Inc. an uncommitted short term money market facility in
the principal amount of up to fifty million dollars ($50,000,000), subject to
the following terms and conditions:
BORROWER: Smart & Final, Inc. ("BORROWER")
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PRINCIPAL AMOUNT: Up to fifty million dollars ($50,000,000). Advances under
this facility shall be made in multiples of five million
dollars ($1,000,000) up to an aggregate of $50,000,000.00
outstanding at any one time. WFB shall not have any
commitment or obligation to make any advances and each
advance will be made only in WFB's sole discretion.
INTEREST RATE: A fixed rate of interest as quoted by WFB on the date of each
advance.
TERM OF ADVANCE: As mutually agreed by WFB and ("BORROWER") at the time
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of each advance provided that no advance shall have a term
exceeding ninety (90) days and no advance shall mature after
December 17, 1998. Principal and interest of each advance
shall be payable at the maturity of each advance. WFB shall
have the option of assigning or selling participations in any
advances.
PURPOSE: For working capital requirements.
EFFECTIVE DATE: September 18, 1997.
TERMINATION DATE: At any time upon written notice by either ("BORROWER")
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or WFB, provided, however, that such termination shall not
affect any advance outstanding at the time of termination. In
any event, this line of credit will expire no later than
September 17, 1998.
September 18, 1997
Page 2
DOCUMENTATION: 1. Note as enclosed.
2. Supporting documentation, including Board Resolution,
Certificate of Incumbency and Authorized Signatures.
OTHER TERMS: 1. Continued maintenance of a financial conditional
satisfactory to WFB.
2. Provision in a timely manner to WFB of quarterly
unaudited financial statements and an audited fiscal
year-end report certified by a nationally recognized
accounting firm. Provision of 10Q and 10K reports as
available.
WIRE INSTRUCTIONS: WFB will wire monies to the following instructions only. Any
changes must by communicated to WFB in writing and signed by
an authorized signer.
Bank Name : Wells Fargo Bank, N.A.
ABA Number : 121000248
Credit To : Smart & Final, Inc.
Account Number : 4159-391218
COMMITMENT FEE: It is understood that this facility does not constitute a
commitment by WFB to lend at any time and that any advance
hereunder shall be at WFB's sole discretion. Accordingly, no
commitment fee will be payable to WFB.
GOVERNING LAW: This letter is governed by and construed under the laws of
the State of California.
ARBITRATION: 1. Arbitration. Upon the demand of any party, any Dispute
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shall be resolved by binding arbitration (except as set
forth in paragraph 5 below) in accordance with the terms
of this letter. A "Dispute" shall mean any action,
dispute, claim or controversy of any kind, whether in
contract or tort, statutory or common law, legal or
equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, this letter
or the enclosed note, or any past, present or future
extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly
to this letter or the enclosed note, including without
limitation, any of the foregoing arising in connection
with the exercise of any self-help, ancillary or other
remedies pursuant to this letter or the enclosed note.
Any party may by summary proceedings bring an action in
court to compel arbitration of a Dispute. Any party who
fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and
expenses incurred by such other party in compelling
arbitration of any Dispute.
September 18, 1997
Page 3
2. Governing Rules. Arbitration proceedings shall be
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administered by the American Arbitration Association
("AAA") or such other administrator as the parties shall
mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration
shall be resolved in accordance with the Federal
Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision
in this letter or the enclosed note. The arbitration
shall be conducted at a location in California selected
by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such
rules, the terms and procedures set forth herein shall
control. All statutes of limitation applicable to any
Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to
matters directly relevant to the Dispute being
arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that
is a bank of the protections afforded to it under 12
U.S.C. (S)91 or any similar applicable state law.
3. No Waiver; Provisional Remedies, Self-Help and
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Foreclosure. No provision hereof shall limit the right
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of any party to exercise self-help remedies such as
setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain
provisional or ancillary remedies, including without
limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during
the pendency of any arbitration or other proceeding. The
exercise of any such remedy shall not waive the right of
any party to compel arbitration hereunder.
4. Arbitrator Qualifications and Powers; Awards.
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Arbitrators must be active members of the California
State Bar or retired judges of the state or federal
judiciary of California, with expertise in the
substantive law applicable to the subject matter of the
Dispute. Arbitrators are empowered to resolve Disputes by
summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve
all Disputes in accordance with the substantive law of
the state of California, (ii) may grant any remedy or
relief that a court of the state of California could
order or grant within the scope hereof and such ancillary
relief as is necessary to make effective any award, and
(iii) shall have the power to award recovery of all costs
and fees, to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge
could pursuant to the Federal Rules of Civil Procedure,
the California Rules of Civil Procedure or other
applicable law. Any Dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of
greater than $5,000,000 (including damages, costs, fees
and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more
than $5,000,000. Any Dispute in which the amount in
controversy exceeds $5,000,000 shall
September 18, 1997
Page 4
be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators
must actively participate in all hearings and
deliberations.
5. Judicial Review. Notwithstanding anything herein to the
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contrary, in any arbitration in which the amount in
controversy exceeds $25,000,000, the arbitrators shall be
required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the
arbitrators shall not have the power to make any award
which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be
binding upon the parties unless the findings of fact are
supported by substantial evidence and the conclusions of
law are not erroneous under the substantive law of the
state of California, and (iii) the parties shall have in
addition to the grounds referred to in the Federal
Arbitration Act for vacating, modifying or correcting an
award the right to judicial review of (A) whether the
findings of fact rendered by the arbitrators are
supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive
law of the state of California. Judgment confirming an
award in such a proceeding may be entered only if a court
determines the award is supported by substantial evidence
and not based on legal error under the substantive law of
the state of California.
6. Miscellaneous. To the maximum extent practicable, the
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AAA, the arbitrators and the parties shall take all
action required to conclude any arbitration proceeding
within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party
required in the ordinary course of its business, by
applicable law or regulation, or to the extent necessary
to exercise any judicial review rights set forth herein.
If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the
arbitration provision most directly related to this
letter or the enclosed note or the subject matter of the
Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of this
letter or the enclosed note and any relationship between
the parties.
If the above terms and conditions are acceptable to you, please indicate by
signing and returning the enclosed copy of this letter and the original note.
September 18, 1997
Page 5
We sincerely appreciate the opportunity to provide you with this competitive
source of short-term funding and look forward to your active use of this
facility.
WELLS FARGO BANK, N. A.
/s/ Kathleen Barnes
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Name Kathleen Barnes
Vice President
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Title
Accepted By:
SMART & FINAL, INC.
/s/ Richard Phegley
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Name Richard Phegley
Vice President and Treasurer
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Title
Enclosures
NOTE
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$50,000,000 September 18, 1997
For value received, the undersigned, Smart & Final, Inc. ("Borrower"), hereby
promises to pay to the order of WELLS FARGO BANK, N. A. ("WFB"), in United
States dollars and in immediately available funds at 707 Wilshire Boulevard, Los
Angeles, California, the principal sum of fifty million dollars ($50,000,000) or
so much thereof as may be outstanding hereunder, whichever is less, together
with interest from the date of each advance on the daily unpaid principal
balance of said advance. Each advance hereunder shall be repaid on the date
mutually agreed by Borrower and WFB at the time of making such advance, together
with interest thereon at the rate per annum mutually agreed by Borrower and WFB
at the time of making of such advance, provided that all principal and interest
outstanding on December 17, 1998 shall be due and payable on such date.
WFB shall not be obligated to make any advance hereunder and any advances
will be made solely in WFB's discretion.
Interest on each advance hereunder shall be computed on the basis of a year
of 360 days for the actual number of days elapsed. Any amount of principal not
paid when due hereunder shall thereafter bear interest at a rate per annum equal
to 1% in excess of the rate announced within WFB from time to time as its "Prime
Rate." Interest not paid when due shall thereafter bear like interest as the
principal.
In the event any advance hereunder is prepaid prior to the maturity date
agreed upon for that advance, the Borrower shall reimburse WFB on demand for any
loss incurred by WFB as a result of such prepayment, including any loss of
income resulting from WFB's reinvestment or reemployment of the amount prepaid
at a rate which is less than the interest rate agreed upon for such advance.
WFB is authorized to record on the schedule attached to and made a part of
this Note (a) the date, amount, maturity date and rate of interest agreed upon
by WFB and Borrower with respect to each advance and (b) all payments received
by WFB hereunder. Such schedule shall be prima facie evidence of the matters so
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recorded, provided that WFB's failure to make any such entries shall not affect
Borrower's obligations hereunder.
This Note is referred to in, and is entitled to the benefits of, that certain
letter agreement between WFB and the Borrower of even date herewith.
Borrower hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. Borrower promises to pay costs of collection and reasonable
attorneys' fees if default is made in the payment of this Note.
In the event of nonpayment when due of principal of or interest on this Note,
the whole amount of principal and interest shall, at the option of the holder of
this Note, become immediately due and payable.
Advances under this Note may be requested, and the interest rate quoted by
WFB agreed to, by any authorized officer of the undersigned. The undersigned
hereby authorizes WFB to rely upon the telephonic or written instruction of any
person identifying himself or herself as an authorized officer of the
undersigned without any obligation on the part of WFB to confirm the identity or
authority of such persons.
This Note shall be governed by and construed under the laws of the State of
California.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by
its officer or officers thereunto duly authorized and directed by appropriate
corporate authority.
SMART & FINAL, INC.
/s/ Richard Phegley
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Name
Vice President & Treasurer
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Title
2
SCHEDULE TO NOTE OF (SMART & FINAL, INC.)
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DATED (SEPTEMBER 1, 1997)
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Principal Maturity Principal Interest Paid
Date of Amount of Date of Amount Amount Through Principal Notation
Advance Advance Advance Paid Paid Date Balance Made By
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