Exhibit 10.51

 

EIGHTH AMENDMENT, WAIVER AND COLLATERAL RELEASE

 

This Eighth Amendment, Waiver and Collateral Release (this “Amendment”) is
entered into as of April 8, 2004, by and among SMART & FINAL INC., a Delaware
corporation (the “Borrower”), the Guarantors listed on the signature pages
hereof, the financial institutions and other entities party hereto (the
“Lenders”), and BNP PARIBAS, as Administrative Agent for the Lenders (the
“Administrative Agent”).

 

RECITALS

 

A. The Borrower, the Lenders, the Administrative Agent, Harris Trust & Savings
Bank, as syndication agent, and Cooperative Centrale Raiffeisen-Boerenleenbank
B.A., “Rabobank Nederland”, New York Branch, as documentation agent, are parties
to that certain Credit Agreement dated as of November 30, 2001 (as amended to
date, the “Credit Agreement”). Capitalized terms used herein without definition
have the meanings ascribed to such terms in the Credit Agreement.

 

B. The Borrower has informed the Administrative Agent that it intends to sell
(the “Asset Sale”) six of its California real properties and related
improvements thereon, each identified on Annex A hereto (collectively, the “Sale
Assets”), to the Owner Trustee under the Synthetic Lease for the price indicated
next to such property on Annex A hereto and a total purchase price of
$14,300,000 in the aggregate. The Borrower has also informed the Agent that the
Borrower will separately fund the expenses relating to the Asset Sale and that
the full amount of the $14,300,000 aggregate price to be paid by the Owner
Trustee for the purchase of the Sale Assets shall be treated as the “Net Cash
Proceeds” (as defined in the Credit Agreement) for all purposes under the Credit
Agreement and this Amendment. Upon consummation of the Asset Sale, the Sale
Assets will constitute Synthetic Lease Properties. The Borrower intends to
continue to occupy and operate the Sale Assets as the Lessee under the Synthetic
Lease.

 

C. Section 6.02(d) of the Credit Agreement prohibits sales of assets by the Loan
Parties except under certain circumstances. Under Section 6.02(d)(iii), the Loan
Parties may sell assets if, among other things, the aggregate purchase price
paid to all of the Loan Parties for such asset and all other assets sold by the
Loan Parties during the same Fiscal Year pursuant to Section 6.02(d)(iii) does
not exceed $7,500,000 in any Fiscal Year and $15,000,000 during the term of the
Credit Agreement (the “Proceeds Limitation”). The Asset Sale does not meet the
requirements of Section 6.02(d)(iii).

 

D. The definition in the Credit Agreement of “Eligible Real Property” limits the
value of all Eligible Real Property to an amount not in excess of $55 million
(the “Eligible Real Property Value Limitation”).

 

E. The Borrower has requested that the Lenders and the Administrative Agent (i)
consent to the Asset Sale, (ii) agree to waive the Proceeds Limitation of
Section 6.02(d)(iii) in connection with the Asset Sale, (iii) release the
first-priority Lien granted to the Administrative Agent under the Collateral
Documents with respect to the Sale Assets (the “Release”), and substitute such
Lien with a second-priority Lien in favor of

 

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the Administrative Agent pursuant to a Second Mortgage, Subordinate Security
Agreement, and/or other agreements or documents that the Administrative Agent
may deem necessary or desirable to create a valid and subsisting Lien in its
favor for the benefit of the Secured Parties, subordinate only to the Lien
created by the Synthetic Lease Documents to the extent provided in the
Intercreditor Agreements, and (iv) amend the definition of the Eligible Real
Property to remove the Eligible Real Property Value Limitation.

 

F. The Administrative Agent and the Lenders have agreed to (i) consent to the
Asset Sale, (ii) consent to the Release, (iii) waive the Proceeds Limitation of
Section 6.02(d)(iii) in connection with the Asset Sale, and (iv) amend the
definition of “Eligible Real Property” to remove the Eligible Real Property
Value Limitation, in each case in accordance with the terms and conditions set
forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto hereby agree as follows:

 

Section 1. Section References. Unless otherwise expressly stated herein, all
Section references herein shall refer to Sections of the Credit Agreement.

 

Section 2. Consents. The Administrative Agent and the Lenders hereby consent to
the Asset Sale and the Release.

 

Section 3. Waiver of Section 6.02(d)(iii) (Sales of Assets). Solely in
connection with the Asset Sale and the Release, the Lenders hereby waive the
Proceeds Limitation of Section 6.02(d)(iii), and hereby agree that in
determining compliance with the Proceeds Limitation of Section 6.02(d)(iii), the
proceeds from the Asset Sale shall not be taken into account; provided, that the
Net Cash Proceeds from the Asset Sale shall be applied in accordance with
Section 2.05(b)(iii), and the Revolving Facility shall be permanently reduced in
accordance with Section 2.04(b).

 

Section 4. Release; Second Lien.

 

(a) Upon the later to occur of (i) consummation of the Asset Sale, and (ii)
satisfaction of the conditions precedent set forth in Section 7 hereof (such
date, the “Release Date”), the Lenders authorize the Administrative Agent to
release its Lien on the Sale Assets granted pursuant to the Collateral Documents
and to execute and deliver any documents and instruments deemed appropriate by
the Administrative Agent to effect the same, including any release of the owned
real property described in Annex A hereto at such time as Borrower may request.
On the Release Date, the Administrative Agent shall, at the expense of the
Borrower, (x) promptly return to the Borrower any and all instruments,
certificates and other documents evidencing any such first-priority lien, charge
or encumbrance on the Sale Assets granted pursuant to the Collateral Documents,
and (y) execute, deliver and file or record, or cause to be filed or recorded,
any and all such documents and instruments as may be required in order to
release the Lien on the Sale Assets granted to the Administrative Agent pursuant
to the Collateral Documents.

 

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(b) Upon the consummation of the Asset Sale, the Sale Assets shall constitute
Synthetic Lease Properties, and shall become subject to a Lien granted to the
Administrative Agent for the benefit of the Secured Parties pursuant to one or
more Second Mortgages, Subordinate Security Agreements, and/or other agreements
and documents that the Administrative Agent may deem necessary or desirable to
create a valid and subsisting Lien in its favor for the benefit of the Secured
Parties, subordinate only to the Lien created by the Synthetic Lease Documents
to the extent provided in the Intercreditor Agreements.

 

Section 5. Amendment to Section 1.01 (Certain Defined Terms). The definition of
“Eligible Real Property” set forth in Section 1.01 is hereby amended by deleting
it in its entirety and replacing it with the following:

 

“Eligible Real Property” means all real property owned by the Borrower and its
Domestic Subsidiaries that is (i) a retail grocery and restaurant supply store
or a food and restaurant supply distribution facility, in each case of the type
and size customarily used and operated by the Borrower or any of its Domestic
Subsidiaries in the ordinary course of its business as of the Closing Date, (ii)
owner-occupied, (iii) covered by insurance as required by Section 6.01(d), and
(iv) located in a region in which the Borrower and/or any of its Domestic
Subsidiaries conducts business materially in the nature of the business
conducted by such Person as of the Closing Date. The value of such real property
shall be the appraised value of such real property as determined by Cushman &
Wakefield or, if Cushman & Wakefield is unable or unwilling to perform the
requested services, another independent appraiser acceptable to the
Administrative Agent, using methodology acceptable to the Administrative Agent.
Notwithstanding the foregoing, Eligible Real Property shall not include (A) any
real property in respect of which a Mortgage creating a valid and perfected
first priority Lien in favor of the Administrative Agent and the Lender Parties
securing the Secured Obligations has not been recorded or (B) any fixtures or
equipment or leasehold improvements.

 

Section 6. Amendments to Synthetic Lease Documents. Upon the execution of the
Synthetic Lease Documents Amendments required under Section 7(a)(iv) of this
Amendment, the Required Lenders shall, by notice from the Administrative Agent
to the Borrower at any time within 90 days after receipt by the Lenders of the
Synthetic Lease Documents Amendments, be entitled to amend the Credit Agreement
to reflect any changes to the provisions of the Synthetic Lease Documents that
the Required Lenders consider more favorable than the corresponding provisions
in the Credit Agreement.

 

Section 7. Conditions Precedent. The effectiveness of this Amendment is subject
to the satisfaction of each of the following conditions precedent:

 

(a) The Administrative Agent shall have received all of the following, in form
and substance satisfactory to the Administrative Agent:

 

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(i) Amendment Documents. This Amendment and any other instrument, document or
certificate required by the Administrative Agent to be executed or delivered by
the Borrower or any other Person in connection with this Amendment (including
any Second Mortgage, Subordinate Security Agreement, and/or other agreements or
documents that the Administrative Agent may deem necessary or desirable to
create a valid and subsisting Lien on the Sale Assets in its favor for the
benefit of the Secured Parties, subordinate only to the Lien created by the
Synthetic Lease Documents to the extent provided in the Intercreditor
Agreements), duly executed by such Persons (the “Amendment Documents”);

 

(ii) Copies of Sale Documents. Upon request by the Administrative Agent, true
and correct copies of the asset purchase agreements and any other agreements,
documents or instruments executed in connection with the Asset Sale;

 

(iii) Consent of Required Lenders. The written consent of the Required Lenders
to this Amendment;

 

(iv) Amendment and Waiver in connection with Synthetic Lease Documents. (A)
Copies of the amendment and waiver documents with respect to the Synthetic Lease
Documents (the “Synthetic Lease Documents Amendments”), pursuant to which (1)
the asset sale covenant in the Synthetic Lease Documents will be amended or
waived to permit the Asset Sale, and (2) any other conforming changes to the
Synthetic Lease Documents reasonably requested by the Administrative Agent will
be made, and (B) evidence that such amendment, waiver and release documents have
been executed and are in full force and effect; and

 

(v) Additional Information. Such additional documents, instruments and
information as the Administrative Agent may reasonably request to effect the
transactions contemplated hereby.

 

(b) The Administrative Agent shall have received the Net Cash Proceeds of the
Asset Sale on the date of receipt thereof by the Borrower or any of its
Subsidiaries.

 

(c) The representations and warranties contained herein and in the Credit
Agreement shall be true and correct as of the date hereof as if made on the date
hereof (except for those which by their terms specifically refer to an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date).

 

(d) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all other agreements, documents and
instruments executed or delivered pursuant hereto, and all legal matters
incident thereto, shall be satisfactory to the Administrative Agent.

 

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(e) No Default or Event of Default shall have occurred and be continuing, after
giving effect to this Amendment.

 

Section 8. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that, as of the date of and
after giving effect to this Amendment, (a) the execution, delivery and
performance of this Amendment and any and all other Amendment Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of the Borrower and will not violate the Borrower’s
certificate of incorporation or bylaws, (b) all representations and warranties
set forth in the Credit Agreement and in any other Loan Document are true and
correct as if made again on and as of such date (except those, if any, which by
their terms specifically relate only to an earlier date, in which case such
representations and warranties are true and correct as of such earlier date),
(c) no Default or Event of Default has occurred and is continuing, and (d) the
Credit Agreement (after giving effect to this Amendment), and all other Loan
Documents are and remain legal, valid, binding and enforceable obligations in
accordance with the terms thereof.

 

Section 9. Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Administrative Agent or the Lenders, or any closing, shall
affect the representations and warranties or the right of the Administrative
Agent and the Lenders to rely upon them.

 

Section 10. Certain Waivers. The Borrower and each Guarantor hereby agrees that
neither the Administrative Agent nor any Lender shall be liable under a claim
of, and hereby waives any claim against the Administrative Agent and the Lenders
based on, lender liability (including, but not limited to, liability for breach
of the implied covenant of good faith and fair dealing, fraud, negligence,
conversion, misrepresentation, duress, control and interference, infliction of
emotional distress and defamation and breach of fiduciary duties) as a result of
any discussions or actions taken or not taken by the Administrative Agent or the
Lenders on or before the date hereof or the discussions conducted pursuant
hereto, or any course of action taken by the Administrative Agent or any Lender
in response thereto or arising therefrom. This Section 10 shall survive the
execution and delivery of this Amendment and the other Loan Documents and the
termination of the Credit Agreement.

 

Section 11. Reference to Agreement. Each of the Loan Documents, including the
Credit Agreement, and any and all other agreements, documents or instruments now
or hereafter executed and/or delivered pursuant to the terms hereof or pursuant
to the terms of the Credit Agreement as amended hereby, are hereby amended so
that any reference in such Loan Documents to the Credit Agreement, whether
direct or indirect, shall mean a reference to the Credit Agreement as amended
hereby.

 

Section 12. Costs and Expenses. The Borrower shall pay on demand all reasonable
costs and expenses of the Administrative Agent (including the reasonable fees,

 

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costs and expenses of counsel to the Administrative Agent) incurred in
connection with the preparation, execution and delivery of this Amendment.

 

Section 13. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

 

Section 14. Execution. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.

 

Section 15. Limited Effect. This Amendment relates only to the specific matters
covered herein, shall not be considered to be a waiver of any rights any Lender
may have under the Credit Agreement (other than as expressly set forth herein),
and shall not be considered to create a course of dealing or to otherwise
obligate any Lender to execute similar amendments or grant any waivers under the
same or similar circumstances in the future.

 

Section 16. Ratification By Guarantors. Each of the Guarantors hereby agrees to
this Amendment, and each of the Guarantors acknowledges that such Guarantor’s
Guaranty shall remain in full force and effect without modification thereto.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

SMART& FINAL INC.,

as Borrower

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

AMERICAN FOODSERVICE

DISTRIBUTORS

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

SMART & FINAL STORES

CORPORATION

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

SMART & FINAL OREGON, INC. By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

PORT STOCKTON FOOD

DISTRIBUTORS, INC.

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President-Finance

 

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AMERIFOODS TRADING COMPANY By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

CASINO FROZEN FOODS, INC. By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

FOODSERVICESPECIALISTS.COM,

INC.

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

OKUN PRODUCE INTERNATIONAL,

INC.

By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

HL HOLDING CORPORATION By:  

/s/ Richard N. Phegley

--------------------------------------------------------------------------------

   

Name:

Title:

 

Richard N. Phegley

Senior Vice President &

Chief Financial Officer

 

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BNP PARIBAS,

as Administrative Agent and a Lender

By:  

/s/ Sean T. Conlon

--------------------------------------------------------------------------------

   

Name:

Title:

 

Sean T. Conlon

Managing Director

 

   

/s/ C. Bettles

--------------------------------------------------------------------------------

   

Name:

Title:

 

C. Bettles

Managing Director

 

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HARRIS TRUST & SAVINGS BANK By:  

/s/ Scott Place

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Name:

Title:

 

Scott Place

Vice President

 

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COOPERATIVE CENTRALE

RAIFFEISEN-BOERENLEENBANK

B.A., “RABOBANK NEDERLAND”,

NEW YORK BRANCH

By:  

/s/ Bradford F. Scott

--------------------------------------------------------------------------------

   

Name:

Title:

 

Bradford F. Scott

Executive Director

 

By:  

/s/ Rebecca O. Morrow

--------------------------------------------------------------------------------

   

Name:

Title:

 

Rebecca O. Morrow

Executive Director

 

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CREDIT INDUSTRIEL ET

COMMERCIAL

By:  

/s/ Eric Dulot

--------------------------------------------------------------------------------

   

Name:

Title:

 

Eric Dulot

Vice President

 

By:  

/s/ Albert M. Calo

--------------------------------------------------------------------------------

   

Name:

Title:

 

Albert M. Calo

Vice President

 

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COBANK, ACB By:  

--------------------------------------------------------------------------------

   

Name:

Title:

   

 

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UNION BANK OF CALIFORNIA, N.A. By:  

/s/ Peter Thompson

--------------------------------------------------------------------------------

   

Name:

Title:

 

Peter Thompson

Vice President

 

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U.S. BANK NATIONAL ASSOCIATION By:  

/s/ Janet Jordan

--------------------------------------------------------------------------------

   

Name:

Title:

 

Janet Jordan

Vice President

 

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NATEXIS BANQUE-BFCE By:  

/s/ Anne Ulrich

--------------------------------------------------------------------------------

   

Name:

Title:

 

Anne Ulrich

Vice President

 

By:  

/s/ P. J. van Tulder

--------------------------------------------------------------------------------

   

Name:

Title:

 

P. J. van Tulder

Group Head

 

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TRANSAMERICA BUSINESS

CAPITAL CORPORATION

By:  

--------------------------------------------------------------------------------

   

Name:

Title:

   

 

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CITY NATIONAL BANK By:  

/s/ Steve Sloan

--------------------------------------------------------------------------------

   

Name:

Title:

 

Steve Sloan

Senior Vice President

 

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RZB FINANCE LLC By:  

/s/ John A. Valiska

--------------------------------------------------------------------------------

   

Name:

Title:

 

John A. Valiska

Group Vice President

 

By:  

/s/ Christoph Hoedl

--------------------------------------------------------------------------------

   

Name:

Title:

 

Christoph Hoedl

Vice President

 

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BANK OF THE WEST By:  

/s/ Chuck Weerasooriya

--------------------------------------------------------------------------------

   

Name:

Title:

 

Chuck Weerasooriya

Vice President

 

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PREFERRED BANK By:  

/s/ Walt Duchanin

--------------------------------------------------------------------------------

   

Name:

Title:

 

Walt Duchanin

Executive Vice President

 

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BANK LEUMI USA By:  

/s/ Jacques Delvoye

--------------------------------------------------------------------------------

   

Name:

Title:

 

Jacques Delvoye

Vice President

 

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ANNEX A

SALE ASSETS

 

1. 266 E. Huntington Drive, Monrovia, CA 91016 (ID# 314) - Price $2,600,000

 

2. 20410 Susana Road, Long BeachCarson, CA 90810 (ID# 369) – Price $2,100,000

 

3. 6201 Alameda Street, Huntington Park, CA 90001 (ID# 479) – Price $2,400,000

 

4. 1575 Centinela Avenue, Inglewood, CA 90302 (ID# 457) – Price $2,300,000

 

5. 2720 Beverly Boulevard, Los Angeles, CA 90057 (ID# 459) – Price $2,800,000

 

6. 14490 Newhope Street, Moreno Valley, CA 92553 (ID# 475) – Price $2,100,000

 

Total Price for All Six Properties: $14,300,000