Exhibit 10.56

 

WAIVER AND AMENDMENT NO. 8

 

This Waiver and Amendment No. 8 dated as of May 3, 2005 (this “Waiver and
Amendment”) is among the Persons that have executed this Waiver and Amendment
(the “Parties”). Capitalized terms used, but not defined, in this Waiver and
Amendment are used as defined in the Lease Agreement, dated as of November 30,
2001 (the “Lease”), between Wells Fargo Bank Northwest, National Association, as
Owner Trustee under S&F Trust 1998-1, as lessor, and Smart & Final Inc., as
lessee (“Lessee”), as modified by (i) Waiver and Amendment Agreement No. 1,
dated as of June 4, 2002, (ii) Waiver and Amendment Agreement No. 2, dated as of
February 14, 2003, (iii) Amendment Agreement No. 3, dated as of June 1, 2003,
(iv) Waiver and Amendment Agreement, No. 4, dated as of July 11, 2003, (v)
Consent, Waiver, Collateral Release and Amendment Agreement No. 5A, dated as of
September 3, 2003, (vi) First Supplement to Consent, Waiver, Collateral Release
and Amendment Agreement No. 5A, dated as of September 5, 2003, (vii) Consent,
Waiver and Amendment Agreement No. 5B, dated as of September 26, 2003, (viii)
Sixth Amendment and Waiver to Lease Agreement, dated as of September 12, 2003,
(ix) Amendment Agreement No. 7, dated as of October 21, 2003, (x) Consent and
Waiver, dated as of March 8, 2004, and (xi) Consent and Waiver, dated as of May
1, 2004.

 

RECITALS

 

A. Lessee has informed the Agent that it exceeded the Capital Expenditures
limitation set forth Section 28.5(e) of the Lease for the quarter ending March
27, 2005. Such occurrence is a Lease Event of Default pursuant to Section 17.1
of the Lease.

 

B. Lessee has requested and the Majority Secured Parties, on the terms and
subject to the conditions of this Waiver and Amendment, have agreed to waive the
Lease Event of Default described above (“Waived Default”).

 

C. The Credit Agreement, dated as of November 30, 2001, among the Lessee,
certain financial institutions and BNP Paribas as administrative agent was
amended and restated as of November 18, 2004 (the “Amended and Restated Credit
Agreement”). Certain financial covenants in the Amended and Restated Credit
Agreement were changed from the original Credit Agreement.

 

D. Lessee has requested that the financial covenants in the Lease be amended to
be made consistent with the financial covenants in the Amended and Restated
Credit Agreement.

 

NOW, THEREFORE, for good and valuable consideration received, the Parties hereto
agree as follows:

 

1. Waiver. The Majority Secured Parties, on the terms and subject to the
conditions of this Waiver and Amendment, hereby waive the Waived Default.

 

2. Amendments.

 

(a) The following definitions in Appendix A of the Participation Agreement are
amended to read as follows:

 

“Adjusted EBITDA” means, for any period, determined for the Lessee and its
Subsidiaries on a Consolidated basis, EBITDA.

 

1

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

“EBITDA” means, for any period, net income (or net loss) excluding all non-cash
extraordinary items of gain or loss, plus, to the extent deducted in determining
such net income (or net loss), the sum of (a) interest expense, (b) income tax
expense, (c) depreciation expense, (d) amortization expense and (e) all other
non-cash charges (including impairment charges with respect to assets and
goodwill, but excluding any non-cash charge that results in an accrual of a
reserve for cash charges in any future period).

 

“Fixed Charge Coverage Ratio” means, as of any date of determination, determined
for the period of four consecutive fiscal quarters ending as of the last day of
each fiscal quarter of the Lessee, the ratio of (a) the sum of Consolidated
EBITDA of the Lessee and its Subsidiaries and (ii) rent expense for the Borrower
and its Subsidiaries on a Consolidated basis for the four most recently
completed fiscal quarters of the Borrower to (b) the sum of Consolidated
Interest Expense of the Lessee and its Subsidiaries, (ii) rent expense for the
Lessee and its Subsidiaries on a Consolidated basis for the four most recently
completed fiscal quarters of the Borrower and (iii) dividends paid by the Lessee
that are permitted under Section 28.3(f) of the Lease.”

 

(b) Section 28.3(f)(ii) of the Lease is amended and restated in its entirety to
read as follows:

 

“(ii) Lessee may declare and pay cash dividends to its stockholders pursuant in
an amount not to exceed $10,000,000 per fiscal year of the Lessee commencing
with fiscal year 2005;”

 

(c) Section 28.5 of the Lease is amended and restated in its entirety to read as
follows:

 

“So long as the Advance or any other Obligation of any Credit Party under any
Operative Agreement shall remain unpaid, Lessee will:

 

(a) Net Worth. Maintain at all times a Consolidated Net Worth of not less than
the sum of (i) $210,000,000 (beginning October 4, 2004) plus (ii) 50% of
positive cumulative Consolidated Net Income for the fiscal quarter ending
January 2, 2005 and each fiscal quarter thereafter (but without any deduction
for any period in which Consolidated Net Income is a negative number) plus (iii)
100% of the amount of all cash proceeds of any equity issuances by Lessee or any
of its Subsidiaries after the date of the Waiver and Amendment No. 8 to this
Agreement; provided, however, that changes in other comprehensive income shall
be disregarded in calculating Consolidated Net Worth.

 

(b) Senior Leverage Ratio. Not permit the Senior Leverage Ratio at the end of
any fiscal quarter of the Lessee commencing with the second fiscal quarter of
fiscal year 2005 to exceed 1.60 to 1.0.

 

(c) Adjusted Leverage Ratio. Not permit the Adjusted Leverage Ratio at the end
of any fiscal quarter of Lessee commencing with the second fiscal quarter of
Fiscal Year 2005 to exceed 3.50 to 1.0.

 

2

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

(d) Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage Ratio at
the end of any fiscal quarter of Lessee commencing with the second fiscal
quarter of Fiscal Year 2005 to be less than 2.25 to 1.0.

 

(e) Capital Expenditures. Not make, or permit any of its Subsidiaries to make,
any Capital Expenditures that would cause the aggregate of all such Capital
Expenditures made by Lessee and its Subsidiaries to exceed $60,000,000 during
any Fiscal Year.”

 

3. Lessee’s Agreements and Acknowledgements. The Lessee acknowledges and agrees
to all matters approved or waived by the Majority Secured Parties in Section 1
of this Waiver and Amendment.

 

4. Conditions Precedent. This Waiver and Amendment shall not be effective until
the date (the “Waiver and Amendment Closing Date”) that each of the following
conditions precedent shall have been satisfied.

 

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

 

(i) Waiver and Amendment. This Waiver and Amendment, duly executed by the Lessee
and each Guarantor and any other instrument, document or certificate required by
the Agent to be executed or delivered by the Lessee or any other Person in
connection with this Waiver and Amendment, duly executed by them (collectively,
the “Waiver and Amendment Documents”);

 

(ii) Consent of Majority Secured Parties. This Waiver and Amendment duly
executed by the Majority Secured Parties; and

 

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

 

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

 

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

 

5. Representations and Warranties. Each Credit Party represents and warrants to
the Agent and the Secured Parties that, as of the date of and after giving
effect to this Waiver and Amendment, (a) the execution, delivery and performance
of this Waiver and Amendment and all other Waiver and Amendment Documents
executed or delivered in connection herewith have been authorized by all
requisite corporate action on the part of each Credit Party and will not violate
any Credit Party’s certificate of incorporation or bylaws, (b) all
representations and warranties set forth in the Lease and in any other Operative
Agreement are true and correct as if made again on and as of such date (except
those, if any, that by their terms specifically relate only to an earlier date,
in which case such representations and warranties are true and correct as of the
earlier date), (c) no Lease Default or Lease Event of Default has occurred and
is continuing, and

 

3

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

(d) the Lease and all other Operative Agreements are and remain legal, valid,
binding and enforceable obligations in accordance with their terms.

 

6. Survival of Representations and Warranties. All representations and
warranties made by any Credit Party in this Waiver and Amendment or any other
Operative Agreement shall survive the execution and delivery of this Waiver and
Amendment and the other Operative Agreements, and no investigation by the Agent
or the Secured Parties, or any closing, shall affect the representations and
warranties or the right of the Agent and the Secured Parties to rely thereon.

 

7. Costs and Expenses. The Lessee shall pay on demand all reasonable costs and
expenses of the Agent (including the reasonable fees, costs and expenses of
counsel to the Agent) incurred in connection with the preparation, execution and
delivery of this Waiver and Amendment.

 

8. Governing Law. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT-OF-LAWS
PRINCIPLES.

 

9. Execution. This Waiver and Amendment may be executed in any number of
counterparts and by different Parties on 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 instrument. A Party’s delivery of an
executed counterpart of this Waiver and Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Waiver and
Amendment.

 

10. Limited Effect. This Waiver and Amendment relates only to the specific
matters it covers, shall not be considered to be a waiver of any other rights
any Secured Party may have under the Operative Agreements, and shall not be
considered to create a course of dealing or to otherwise obligate any Secured
Party to grant similar waivers or execute any amendments under the same or
similar circumstances in the future.

 

11. Ratification by Guarantors. Each Guarantor consents to this Waiver and
Amendment, and each Guarantor acknowledges that its guaranty remains in full
force and effect without any modification.

 

12. Certain Waivers. Each Credit Party agrees that none of the Financing Parties
shall be liable under a claim of, and waives any claim against any Financing
Party based upon 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, defamation and breach of fiduciary duty) as a
result hereof, the discussions conducted pursuant hereto, or any course of
action taken by any Financing Party in response thereto or arising therefrom.
This Section 12 shall survive the execution and delivery of this Waiver and
Amendment and the expiration or termination of the Lease.

 

4

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

LESSOR:

Wells Fargo Bank Northwest, National Association,

As Owner Trustee under S&F Trust 1998-1

 

  By:  

/s/ VAL T. ORTON        

Name:

 

Val T. Orton

Title:

 

Vice President

 

LESSEE:

Smart & Final Inc.

 

  By:  

/s/ RICHARD N. PHEGLEY        

Name:

 

Richard N. Phegley

Title:

 

Senior Vice President and

   

    Chief Financial Officer

 

5

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

A-2 LENDER, B LENDER AND HOLDER:

Casino USA, Inc.

 

  By:  

/s/ ANDRE DELOLMO        

Name:

 

Andre Delolmo

Title:

 

President

 

6

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

A-2 LENDER:

General Electric Capital Corporation,

as successor in interest to GMAC Business Credit, LLC

 

  By:  

/s/ JAMES H. KAUFMAN        

Name:

 

James H. Kaufman

Title:

 

Duly Authorized Signatory

 

 

7

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

A-2 LENDER:

Natexis Banques Populaires

 

          By:  

/s/ NICOLAS REGENT        

      By:  

/s/ PIETER J. VAN TULDER        

Name:

 

Nicolas Regent

      Name:  

Pieter J. van Tulder

Title:

 

Vice President Multinational

      Title:  

Group Head

 

8

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

A-2 LENDER:

BNP Paribas Leasing Corporation

 

          By:  

/s/ LLOYD G. COX        

      By:  

/s/ BARRY MENDELSOHN        

Name:

 

Lloyd G. Cox

      Name:  

Barry Mendelsohn

Title:

 

Managing Director

      Title:  

Director

 

 

9

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

A-2 LENDER AND AGENT:

Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.

“Rabobank Nederland,” New York Branch

 

          By:  

/s/ BRADFORD F. SCOTT        

      By:  

/s/ REBECCA O. MORROW        

Name:

 

Bradford F. Scott

      Name:  

Rebecca O. Morrow

Title:

 

Executive Director

      Title:  

Executive Director

 

 

10

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

B LENDER:

GE Commercial Equipment Financing Corporation

 

  By:  

/s/ JAMES H. KAUFMAN        

Name:

 

James H. Kaufman

Title:

 

Duly Authorized Signatory

 

11

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

GUARANTORS:

American Foodservices Distributors

Smart & Final Stores Corporation

Smart & Final Oregon, Inc.

Port Stockton Food Distributors, Inc.

Amerifoods Trading Company

Casino Frozen Foods, Inc.

FoodService Specialists.Com, Inc.

Okum Produce International, Inc.

HL Holding Corporation

 

  By:  

/s/ RICHARD N. PHEGLEY        

Name:

 

Richard N. Phegley

Title:

 

Senior Vice President and

   

Chief Financial Officer

 

12