-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXqqwtfmnxEPMN7RUYz9jUNwwPFH9j6zMPF226fPUYFEeQ4kKZI/RalR95hlcnVs gALTeEVzJscQJbPv39cC7w== 0000929624-99-000627.txt : 19990405 0000929624-99-000627.hdr.sgml : 19990405 ACCESSION NUMBER: 0000929624-99-000627 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19990402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMART & FINAL INC/DE CENTRAL INDEX KEY: 0000875751 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 954079584 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-75627 FILM NUMBER: 99586758 BUSINESS ADDRESS: STREET 1: 600 CITADEL DRIVE CITY: CITY OF COMMERCE STATE: CA ZIP: 90040 BUSINESS PHONE: 3238697500 MAIL ADDRESS: STREET 1: 600 CITADEL DRIVE CITY: CITY OF COMMERCE STATE: CA ZIP: 90040 FORMER COMPANY: FORMER CONFORMED NAME: SFI CORP /CA DATE OF NAME CHANGE: 19600201 S-3 1 FORM S-3 As Filed with the Securities and Exchange Commission on April 2, 1999 Registration No. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- SMART & FINAL INC. (Exact name of registrant as specified in its charter) Delaware 95-4079584 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
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) --------------- Copies to: 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
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. [_] --------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Title of each class Proposed maximum of securities to be Amount to be aggregate offering Amount of registered registered price Registration Fee - ------------------------------------------------------------------------------------- Rights.................. (1) N/A None (2) - ------------------------------------------------------------------------------------- Common Stock ........... (3) $60,000,000 $16,680 - -------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- (1) Such indeterminable number of rights as may be issued to existing stockholders at the rate of one right for each share of Common Stock outstanding as of a future record date. (2) The rights are registered in the same registration statement as the securities being offered pursuant to the rights. Therefore, pursuant to Rule 457(g), no registration fee is payable with respect to the rights. (3) An indeterminable number of shares of common stock that may be issued at the actual offering price per share where the aggregate offering price for these shares equals $60,000,000. 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. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. Subject to + +completion, dated April 2, 1999. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Prospectus Smart & Final Inc. Rights Offering of Shares of Common Stock at $ per Share If you held our common stock on [one business day after the effective date of the registration statement relating to this prospectus], 1999, Smart & Final has granted to you rights to purchase additional shares of common stock for a subscription price of $ 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 rights granted. Our common stock is traded on the New York Stock Exchange under the symbol "SMF". On May , 1999, the last reported sale price for the common stock was $ 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 [20 calendar days after the mailing date of the final prospectus promptly after the record date], 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 "Rights Offering" at page . 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 shareholders exercise their rights under this offering, Casino USA's ownership of Smart & Final will increase to approximately %. 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 . - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Subscription Discounts and Proceeds to the Price Commissions Company - -------------------------------------------------------------------------------- Per Share.......................... $ None $ Total.............................. $60,000,000 None $60,000,000 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
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 , 1999. 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
Page ---- 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
2 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. . [when filed: 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 AND 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 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 $ per share. Smart & Final has granted to its stockholders on , 1999 one right for each outstanding share of common stock. Each stockholder may purchase one share of common stock for every rights granted. 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, 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 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 , 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 1-800- . Subscription documents and payments: send to ChaseMellon Shareholder Service, L.L.C., at the address indicated in 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 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? If you were a record holder of Smart & Final common stock on , 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 this 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 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 . 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 . 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 shares of its common stock to be issued upon exercise of the rights. Shares of Common Stock Outstanding Prior to this Offering................... [22,527,179 outstanding on , 1999.] Shares of Common Stock Outstanding After this Offering................... , if this offering is completed. Record Date................. , 1999. Expiration Date and Time.... The rights expire at 5:00 p.m., New York City time, on , 1999, unless properly exercised before that time and date. 6 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 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 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 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 % 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, 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.......... $ 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 pricing committee of 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] [$0.50] 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 Shareholder Services, L.L.C. will attempt to sell rights by referring 8 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 . 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. Telephone: 1-800- . Information Agent........... ChaseMellon Shareholder Services, L.L.C. Telephone: 1-800- . 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 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 "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 under the 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 SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)
FISCAL YEAR (A) -------------------------------------------------------- 1998 (D) 1997 (C) 1996 1995 1994 (B) ---------- ---------- ---------- ---------- -------- INCOME STATEMENT DATA: Sales................. $1,661,629 $1,453,020 $1,302,561 $1,173,325 $952,477 Income from operations........... 1,151 15,930 42,588 32,465 28,511 Interest income (expense), net....... (13,304) (8,117) (3,373) (2,028) 521 Earnings (loss) per common share, assuming dilution.... (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.......... 22,596 22,753 21,206 20,751 20,520 FINANCIAL DATA (AT FISCAL YEAR-END): Total assets.......... 582,264 488,145 441,424 314,656 267,813 Long-term debt and capital leases....... 78,712 80,024 82,644 43,586 21,124 Current maturities on long term debt....... 139,680 11,176 10,356 39 1,554
- -------- (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 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 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:
1998 1997 1996 ------ ----- ----- 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 ====== ===== =====
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. . 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. 12 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. 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. 13 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. 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. 14 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 is approximately $2.0 million. At the end of fiscal 1998, Smart & Final had incurred approximately $1.3 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. 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. 15 .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 above 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 reductions in this debt. 16 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 $ relating to the offering of rights incurred by Smart & Final. Smart & Final has also 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 , 1999, there were registered holders of the common stock, and the closing price per share of the common stock as listed on the NYSE composite tape was $ . 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.
Dividend High Low Declared ---- --- -------- 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
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 CAPITALIZATION The following table shows our capitalization as of January 3, 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 an assumed subscription price of $8.50 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 with 70% of the shares subscribed for by Casino USA and 30% of the shares 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. SMART & FINAL INC. CAPITALIZATION TABLE (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JANUARY 3, 1999 ------------------ AS ACTUAL ADJUSTED -------- -------- Debt: Short term debt, excluding capital leases (average interest rate 7.72%)............................... $138,995 $122,995 (1) Notes Payable, net of current maturities (average interest rate 6.50%)............................... 15,839 15,839 Note Payable to Casino USA (average interest rate 9.58%)............................................. 55,388 13,388 (1) -------- -------- Total debt........................................ 210,222 152,222 -------- -------- 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 29,627,179 shares issued and outstanding, as adjusted)............... 225 296 (2,3) Additional paid-in capital.......................... 144,987 202,124 (2,3,4) Cumulative translation loss......................... (835) (835) Retained earnings................................... 44,909 44,816 (5) -------- -------- Total stockholders' equity........................ 189,286 246,401 -------- -------- Total capitalization.............................. $399,508 $398,623 ======== ========
- -------- (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, 7,090,000 shares will issued for net proceeds of $58,000,000 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 the 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 $93,000 (after tax) due to reduction of the senior debt facility. 18 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the ownership of Smart & Final common stock as of , 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.
NUMBER OF SHARES PERCENT OF NAME BENEFICIALLY OWNED CLASS ---- ------------------ ---------- MORE THAN 5% BENEFICIAL OWNERS Casino USA, Inc.(1).......................... 12,415,925 % Baron Capital Group, Inc.(2)................. 5,027,820 % 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)....................... 31,414 * Director James S. Gold(3)............................. 27,014 * Director Timm F. Crull(3)(5).......................... 26,014 * Director Thomas G. Plaskett(3)........................ 25,014 * Director Pierre B. Bouchut(3)......................... 24,014 * Director Christian P. Couvreux(3)..................... 9,059 * Director Antoine Guichard............................. 1,514 * Director Jean-Louis Bougier........................... 559 * Director FORMER EXECUTIVE OFFICERS Robert J. Emmons(6).......................... 977,500 % Roger M. Laverty, III(7)..................... 297,420 % All directors and executive officers as a group ( persons).......................... %
- -------- * 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 19 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. (2) All information with respect to Baron Capital Group, Inc. ("BCG"), a holding company controlled by Ronald Baron, is based solely on Amendment No. 10 to Schedule 13D dated February 26, 1999, filed by BCG. Mr. Baron has sole voting and dispositive power over 15,000 shares held by him personally (or % of the outstanding shares) and shared voting and dispositive power over 5,027,820 shares (or % of the outstanding shares). Of the 5,027,820 shares, 3,502,000 shares are held for the account of BAMCO, Inc., a registered investment advisor controlled by Mr. Baron, and of this amount 3,201,500 are held for the account of Baron Asset Fund, a registered investment company advised by BAMCO, Inc. 3,502,000 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 has the obligation to acquire 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, Couvreux, Guichard, [ ], and Snollaerts, also serve as directors of Casino USA and/or are otherwise affiliated with Casino Guichard- Perrachon, S.A. 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 20 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 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 by 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 its 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 with a net book value of $71,440,000 from Casino USA and its former subsidiary Casino Realty, Inc. which were 21 being operated as Smart & Final stores, office and warehouse facilities 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 advances 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 prior debt consolidated, 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. 22 Standby Purchase Agreement with Casino USA in this Rights Offering Pursuant to a certain Standby Purchase and Debt Reduction Agreement, Casino USA has agreed to acquire all of the shares offered under the rights described in 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 % 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 will use all net cash proceeds from the rights offering to prepay senior debt owed to its other lenders. 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 %, and the standby purchaser fee of 10,000 shares of common stock to be paid to Casino USA. 23 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 [$0.50] 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 a pricing committee of the Board of Directors, with the approval of the special committee, 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 has made 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 our 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 , 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. 24 . 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:
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT COURIER: ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services, L.L.C. Services, L.L.C. Services, L.L.C. 85 Challenger Road--Mail Drop-- Post Office Box 3301 120 Broadway, 13th Floor Reorg South Hackensack, NJ 07606 New York, New York 10271 Ridgefield Park, NJ 07660 Attn: Reorganization Attn: Reorganization Attn: Reorganization Department Department Department
ChaseMellon Shareholder Services, L.L.C.'s facsimile number is (201) . The telephone number for confirmation of receipt of facsimiles is (201) . 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. 25 Basic and Oversubscription Privileges Basic Subscription Privilege. You are entitled to purchase one share of common stock at the subscription price for every rights exercised . Smart & Final has reserved a total of 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 $ 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 rounded downward to the nearest whole share, and refund 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 , 1999, unless extended by Smart & Final, in its sole discretion, to no later than 1999. After that time, 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. 26 Casino USA Standby Purchase and Debt Reduction Agreement. Casino USA held shares, or approximately 55% of Smart & Final's outstanding common stock, on the record date. 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 % of the outstanding common stock after completion of the rights offering. Casino USA will pay for shares it purchases 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 other lenders. 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 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 $ relating to the offering of rights incurred by Smart & Final. Smart & Final has also 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. 27 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. (1-800- ) 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: - (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 timely: . 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. 28 . 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 3 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 3 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 below under "ChaseMellon Shareholder Services, L.L.C.," or may be delivered by telegram or facsimile transmission (telecopier no. (201) ). To confirm facsimile deliveries, please call (201) . 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 below. 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 payment 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 "Method of Transferring 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 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 exercise of rights would be unlawful or materially burdensome. See "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) , collect; all others (800) ). 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 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 , 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 , 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 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 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 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 , 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 will proceeds will be delivered to Smart & Final if you do not claim them within 2 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 32 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 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 "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 33 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. 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 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 34 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 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 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. SEC registration fee............................................ $ 16,680 Subscription Agent fees and expenses............................ 110,000 Information Agent fees and expenses............................. 65,000 Registration Agent fees and expenses............................ 55,000 Legal fees and expenses (including blue sky fees and expenses).. 440,000 Accounting fees................................................. 125,000 Printing and mailing expenses................................... 270,000 Special Committee Financial Advisor fees and expenses........... 165,000 Special Committee legal counsel fees and expenses............... 135,000 Special Committee expenses...................................... 35,000 NYSE listing fees............................................... 45,000 Fees and expenses incurred by Casino USA and reimbursed by the registrant..................................................... 450,000 Miscellaneous................................................... 80,000 ---------- Total......................................................... $1,991,680 ==========
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 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 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 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Commerce, State of California, on April 2, 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. POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ross E. Roeder and Martin A. Lynch, or either of them, his attorneys-in-fact, with full power of substitution, for him in any and all capacities, to sign any amendments to this Registration Statement on Form S-3, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Ross E. Roeder Chairman of the Board, March 31, 1999 ____________________________________ Chief Executive Officer, Ross E. Roeder and Director (Principal Executive Officer) /s/ Martin A. Lynch Executive Vice President and March 31, 1999 ____________________________________ Chief Financial Officer Martin A. Lynch (Principal Financial Officer and Principal Accounting Officer) Director ____________________________________ Jean-Louis Bourgier Director ____________________________________ Pierre Bouchut
II-3 /s/ Christian P. Couvreux Director March 31, 1999 ____________________________________ Christian P. Couvreux /s/ Timm F. Crull Director March 31, 1999 ____________________________________ Timm F. Crull Director ____________________________________ James S. Gold Director ____________________________________ Antoine Guichard /s/ David J. McLaughlin Director March 31, 1999 ____________________________________ David J. McLaughlin /s/ Thomas G. Plaskett Director March 31, 1999 ____________________________________ Thomas G. Plaskett /s/ Etienne Snollaerts Director March 31, 1999 ____________________________________ Etienne Snollaerts
II-4 INDEX TO EXHIBITS
Exhibit Number Description ------- ----------- 4.1 Form of Subscription Warrant 5.1(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(1) Consent of Donald G. Alvarado, Esq. (to be 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(1) Consent from Merrill Lynch & Co.
- -------- (1) To be filed by amendment. EX-4.1 2 FORM OF SUBSCRIPTION WARRANT EXHIBIT 4.1 - FORM OF SUBSCRIPTION WARRANT SMART & FINAL INC. SUBSCRIPTION WARRANT FOR RIGHTS OFFERING FOR HOLDERS OF RECORD ON ________, 1999 - --------------------------------- ---------------------------- 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 ________, 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 ___________ Rights (the "Basic Subscription Privilege") at a subscription price of $ __________ 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 ___________, 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 (800) 414-2879). 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 __________, 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: $ _________ 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. 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. (_______ 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 ___________________-(Smart & Final). (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. (___)________________ 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. 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. 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: ______________________________________________________________ EX-23.1 3 CONSENT OF ARTHUR ANDERSEN LLP 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 April 2, 1999 EX-99.1 4 SUBSCRIPTION AGENT AGREEMENT 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 ____________, 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 $__________ 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 __________ p.m. New York City Time, on _______________, 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 ____________________. 1999. Said Registration Statement was declared effective on ____________________, 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 ____ 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 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 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 _________, 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 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 (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 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 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 (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 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 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 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 EXHIBIT "A" CHASEMELLON SHAREHOLDER SERVICES, L.L.C. Schedule of Fees as Subscription Agent For Smart & Final Inc.
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
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 EXHIBIT "B" [Letterhead of Smart & Final] Name Position Specimen Signatures ---- -------- ------------------- Page 13 of 13 EX-99.2 5 INFORMATION AGENT AGREEMENT 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 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 By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- EX-99.3 6 STANDBY STOCK PURCHASE AND DEBT REDUCTION AGREEMENT 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 __________, 1999, or such later date on which the Registration Statement (as defined below) becomes effective (the "Record Date"), transferable rights (the "Rights") to purchase an aggregate of __________ shares of Common Stock (the "Shares") at a price of $___ 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 _________ 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 __________, 1999 (the "Expiration Date"). C. Registration Statement. The Company filed on April ___, 1999 with the ---------------------- Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (No. 333-_______________) 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 such amendments thereto, if any, 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 --------------- _________ shares of Common Stock , which constitutes approximately ___% 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 is 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 (the "Unsubscribed 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 upon exercise of those Rights by Casino USA, 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. 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 such procedure 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 an amount specified therein, 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. 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; 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 ______________, 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. (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: 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. 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: EX-99.4 7 INSTRUCTIONS AS TO USE OF SUBSCRIPTION WARRANT 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 __________, 1999 (the "Prospectus"). Holders of record of shares of the Common Stock at the close of business on _____________, 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 _______ Rights granted (the "Basic Subscription Privilege"), upon payment of $_______ in cash per share of Common Stock purchased (the "Subscription Price"). In this Rights Offering, the Company is distributing an aggregate of approximately ___________ Rights exercisable to purchase an aggregate of approximately ______________ 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 ___________, 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. 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: __________________________ (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. The address and telecopier numbers of the Subscription Agent are as follows:
By Mail: Facsimile Transmission By Hand: (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 To confirm receipt of facsimile only: Attn: Reorganization Department Department (201) 496-4860 If by Overnight Courier: ChaseMellon Shareholder Services, L.L.C. 85 Challenger Road--Mail Drop--Reorg Ridgefield Park, NJ 07660 Attn: Reorganization Department
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) 273-8080 (banks and brokers call collect) CALL TOLL-FREE (800) 414-2879 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 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 __________, 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. 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. 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). EX-99.5 8 NOTICE OF GUARANTEED DELIVERY 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 ____________, 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 ____________, 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 $ ______ 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.
The Subscription Agent is: ChaseMellon Shareholder Services, L.L.C. By Mail: Facsimile Transmission By Hand: (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) 496-4860 If by Overnight Courier: ChaseMellon Shareholder Services, L.L.C. 85 Challenger Road--Mail Drop--Reorg Ridgefield Park, NJ 07660 Attn: Reorganization Department
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. 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 _________ 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 $________ 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) ________________________________ ___________________________________________________________________________ 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. EX-99.6 9 LETTER TO STOCKHOLDERS OF RECORD EXHIBIT 99.6 - FORM OF LETTER TO STOCKHOLDERS OF RECORD SMART & FINAL INC. ________________ 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 ____________, 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 $ ________ per share for each share as described in the Prospectus dated __________, 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 _______ 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 ___________, 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 (800) 414-2879. Very truly yours, SMART & FINAL INC. EX-99.7 10 LETTER FROM BROKERS OR OTHER NOMINEES EXHIBIT 99.7 - FORM OF LETTER FROM BROKERS OR OTHER NOMINEES TO BENEFICIAL OWNERS _____________ 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 ____________, 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 $ _______ 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 ___________, 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 ________ Rights granted to you (the "Basic Subscription Privilege") at a subscription price of $ _______ 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 ____________, 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 (800) 414-2879. EX-99.8 11 INSTRUCTIONS OF BENEFICIAL OWNERS 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:
NUMBER OF SUBSCRIPTION SHARES PRICE PAYMENT ------ ------------ ------- Basic Subscription Right*: _____ X $ = $ ________ (Line 1) Oversubscription Right: _____ X $ = $ ________ (Line 2) Total Payment Required = $ ________ (Sum of Lines 1 and 2; must equal total of amounts in boxes 4 and 5 below)
* YOU MAY PURCHASE ONE (1) SHARE FOR EVERY _______ 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 _____________________________________________ _____________________________________________ EX-99.9 12 ANNOUNCEMENT OF FILING REGISTRATION STATEMENT EXHIBIT 99.9 - ANNOUNCEMENT OF FILING REGISTRATION STATEMENT May ____, 1999 IMPORTANT ANNOUNCEMENT TO THE HOLDERS OF COMMON STOCK OF SMART & FINAL INC. Smart & Final Inc. (the "Company") has filed a Registration Statement on Form S-3 (the "Registration Statement") with the SEC for a fixed price rights offering (the "Rights Offering"). The Company proposes to distribute to holders of its outstanding Common Stock, at no cost, transferable subscription rights (the "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 ___________, 1999, or such later date as 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 about the record date. As soon as practicable after the record date, the Company expects to mail to you 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, please 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. Although the Company has not yet commenced the Rights Offering and you are not required to take any action at this time, you should be prepared to act promptly or to have someone authorized to act for you when you receive your subscription warrant. Whether or not you wish to exercise or sell your Rights, please 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. Very truly yours, SMART & FINAL INC. EX-99.10 13 LETTER TO DEALERS AND OTHER NOMINEES EXHIBIT 99.10 - LETTER TO DEALERS AND OTHER NOMINEES SMART & FINAL INC. _________________ 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 __________ shares of Common Stock (the "Common Stock"), of the Company, at a subscription price of $ ________ 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 _________, 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 _______ 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 ____________, 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 (800) 414-2879 or they may be called collect at (212) 273-8080. Very truly yours, SMART & FINAL INC. 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. -----END PRIVACY-ENHANCED MESSAGE-----