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,
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
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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.
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:
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Name: Mark Vander Ploeg
Title: Managing Director
Investment Banking Group
Accepted and Agreed
to as of the date first
written above:
By:
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Martin A. Lynch
Executive Vice President and Chief Financial Officer
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