EXHIBIT 10.53
[LOGO OF SMART & FINAL]
Smart & Final Inc.
600 Citadel Drive
Commerce, California 90040
(323) 869-7500
May 11, 2001
Mr. Ross E. Roeder
Re: Agreements Regarding, and Amendments to,
Employment Agreement
Dear Ross:
With respect to that certain letter agreement between you and Smart &
Final, Inc., a Delaware corporation (the "Company"), dated as of January 1,
1999, a copy of which is attached hereto as Exhibit A (the "Agreement"), you and
the Company agree that effective as of the date of this Letter, the Agreement
shall be amended as follows:
1. Section 1 of the Agreement shall be amended by adding the following to
the end of that Section:
"Notwithstanding the foregoing, in the event that pursuant to Section
2 below, you are designated to serve as the Company's Chairman and Chief
Executive Officer ("CEO") for calendar year 2004, you shall serve as the
Company's non-executive Chairman during calendar year 2005. If you fail to
receive timely written notification pursuant to Section 2 below of the
Company's intent to have you serve as its Chairman and CEO for calendar
year 2004, you shall serve as the Company's non-executive Chairman during
such calendar year. As non-executive Chairman, you shall devote such time
as you in good faith deem necessary to perform the duties of such
position."
2. Section 2 of the Agreement shall be deleted in its entirety and
replaced with the following:
"Term. The term of your employment under this Agreement (the
"Employment Term") shall commence as of January 1, 1999 and, unless
terminated
Mr. Ross E. Roeder
May 11, 2001
Page 2
earlier as provided in Section 9 below, shall terminate on December 31,
2004; provided, that in the event the Company gives you written
notification on or prior to June 30, 2003 of its intent to have you serve
as its Chairman and CEO for the 2004 calendar year, the Employment Term
shall be automatically extended until December 31, 2005. (The five-year
period of calendar years 1999 through 2003 is hereinafter referred to as
the "Initial Term.")"
3. Section 3 of the Agreement shall be amended by adding the following to
the end of the last sentence thereof:
", except that during the calendar year you serve as non-executive
Chairman of the Company you shall be paid an annual Base Salary at a rate
equal to fifty percent (50%) of your annual Base Salary as of the December
31 immediately prior to such year."
4. Section 4 of the Agreement shall be amended by adding the following to
the end of the first sentence of that Section:
"except that during the calendar year you serve as non-executive
Chairman of the Company you shall be paid an annual bonus in an amount not
less than fifty percent (50%) of the highest target bonus for such year
paid to any individual serving as the Company's CEO in that year (the "CEO
Bonus"), or, in the event the lowest Company earnings target established
for any individual serving as the Company's CEO in such year is achieved,
you will instead be paid no less than one hundred percent (100%) of the CEO
Bonus paid for such year. In the event that actual bonus payments to other
Company executives under the Company bonus plan exceed target (as
previously established by the Board) for calendar year 2004 (if you are
serving as non-executive Chairman of the Company in 2004) or 2005, your
bonus payout for the applicable year shall be increased accordingly."
5. The third sentence of Section 6.a. of the Agreement is deleted and
replaced with the following:
"Notwithstanding the foregoing, all of your shares of Restricted Stock
shall vest upon the earlier of (i) a Change in Control (as defined in
Exhibit A hereto) or (ii) the end or termination of the Employment Term
other than as a result of a termination for Cause."
Mr. Ross E. Roeder
May 11, 2001
Page 3
6. The fourth sentence of Section 6.a. of the Agreement is amended by
deleting all of the language in that sentence that precedes clause (i) and by
replacing it with the following:
"In addition, in the event of any transaction that constitutes a "Rule
13(e)-3 transaction" as that term is defined in Rule 13(e)-3 promulgated by
the Securities Exchange Commission under the Securities Exchange Act of
1934 (a "Going Private Transaction"),"
7. Section 6 shall be amended by adding a new Subsection c. at the end
thereof to read as follows:
"c. On each Restricted Share Award Date (as defined below) during
calendar years 2001, 2002 and 2003, you will be awarded a number of
restricted shares of Common Stock ("Restricted Shares") under the Equity
Plan that is not less than (A) 1.5, multiplied by (B) (x) minus (y), where
(x) equals the greatest number of Restricted Shares, on an aggregate basis,
awarded to any Current Executive (as defined below) during the period
commencing on January 1, 2001 and ending on the applicable Restricted Share
Award Date (including awards made on that Restricted Share Award Date) for
which the determination under this subsection is being made (the
"Applicable Period"), and where (y) equals the aggregate number of
Restricted Shares awarded to you during the Applicable Period. In the
event you are designated to serve as the Company's Chairman and CEO for
calendar year 2004, you will be awarded a number of Restricted Shares under
the Equity Plan on each Restricted Share Award Date during calendar year
2004 that is not less than the greatest number of Restricted Shares, on an
aggregate basis, awarded to any Future Executive (as defined below) during
calendar year 2004 through the applicable determination date under this
subsection. For purposes of this Agreement (i) "Current Executive" shall
mean any executive employed by the Company as of the date of this
Amendment, (ii) "Future Executive" shall mean any executive employed by the
Company on the date on or before June 30, 2003, the Company notifies you of
your role with the Company for calendar year 2004 pursuant to Section 2
hereof and (iii) "Restricted Share Award Date" shall mean any date on which
the Company awards Restricted Shares to a Current Executive or Future
Executive except that in the event a Current Executive is selected by the
Company's Board of Directors during 2003 to serve as Chief Executive
Officer commencing in 2004 or thereafter, the offer by the Company in 2003
(or the offer by the Company and acceptance by such Current Executive in
2003) of terms of employment as Chief Executive Officer to such Current
Executive which include an award or grant of restricted shares, the
Restricted Share Award Date for such shares shall not be deemed to have
occurred prior to January 1, 2004 and shall be
Mr. Ross E. Roeder
May 11, 2001
Page 4
deemed to have occurred January 1, 2004. Any Restricted Share award under
this Subsection (c) shall vest with respect to fifty percent (50%) of the
shares subject thereto, on the first anniversary of the award date and with
respect to the remaining shares subject thereto, on the second anniversary
of the award date, and shall otherwise be subject to the vesting
acceleration provisions of Subsection 6.a. hereof. In addition, the Company
will provide you with a loan to pay any 83(b) Tax you incur with respect to
any awards of Restricted Shares made pursuant to this subsection, on the
same basis as the loan made to you under Sections 6.a and b. hereof
(including, without limitation, the bonus and Tax Gross Up provisions),
provided that a loan made to you in connection with any award under this
subsection shall be due, and any related bonus shall be paid, two (2) years
from the applicable award date, subject to earlier payment as provided
under section 6.b. By way of clarification, nothing in this section or
Section 7 hereof is intended to diminish or conflict with the right of the
Compensation Committee to determine the timing, size or other terms of any
grants under the Company's Equity Plan to any current or newly recruited
executives, including the right to not make any awards under the Equity
Plan during the Employment Term.
8. Section 7 shall be amended by designating the existing paragraph as
"a." and by adding the following new Subsection b.:
"b. On each Option Grant Date (as defined below) during calendar
years 2001, 2002 and 2003, you shall be granted stock options to purchase a
number of shares of Common Stock under the Equity Plan that is not less
than (A) 1.5 multiplied by (B) (x) minus (y), where (x) equals the greatest
number of shares subject to options, on an aggregate basis, granted to a
Current Executive during the period commencing on January 1, 2001 and
ending on the applicable Option Grant Date (including grants made on that
Option Grant Date) for which the determination under this subsection is
being made (the "Applicable Grant Period"), and where (y) equals the
aggregate number of shares of Common Stock subject to options granted to
you during the Applicable Grant Period. If you are designated to serve as
the Company's Chairman and CEO for calendar year 2004, you will be granted
on each Option Grant Date during calendar year 2004 stock options to
purchase a number of shares of Common Stock under the Equity Plan that is
not less than the greatest number of shares subject to options, on an
aggregate basis, granted to any Future Executive in calendar 2004 through
and including the Option Grant Date for which the determination is being
made. Any options granted pursuant to this subsection (i) shall vest with
respect to one-third (1/3) of the shares of Common Stock subject thereto on
the day immediately before each of the first three (3) anniversaries of the
grant date, (ii) shall be granted on terms at least as favorable as the
terms of any other grant made on the applicable
Mr. Ross E. Roeder
May 11, 2001
Page 5
Option Grant Date and (iii) shall otherwise be subject to the provisions
that apply to your Options under Section 7.a. hereof (including, without
limitation, the provisions relating to vesting acceleration). For purposes
of this Agreement, "Option Grant Date" shall mean any date on which a grant
of options to purchase Common Stock is made, except that in the event a
Current Executive is selected by the Company's Board of Directors during
2003 to serve as Chief Executive Officer commencing in 2004 or thereafter,
the offer by the Company in 2003 (or the offer by the Company and
acceptance by such Current Executive in 2003) of terms of employment as
Chief Executive Officer to such Current Executive which include a grant of
options, the Option Award Date for such options shall not be deemed to have
occurred prior to January 1, 2004 and shall be deemed to have occurred
January 1, 2004."
9. Section 7.a. shall be amended by deleting the fourth sentence thereof
and replacing it with the following:
"Notwithstanding the foregoing, upon the earlier of (i) a Change in
Control and (ii) the end or termination of the Employment Term other than
as a result of your termination for Cause, all the outstanding Options
shall immediately vest and shall remain exercisable for the two (2) year
period following the end or termination of the Employment Term, as
applicable, but in no event beyond the expiration of the Option's stated
term."
10. Section 8.a. of the Agreement shall be amended by deleting the first
sentence of that Section and by adding the following in its place:
"Effective for the calendar years 1999 through 2005 your pre-
retirement vesting percentage under the Company's Supplemental Executive
Retirement Plan as the same exists on the date of this Letter (the "SERP")
for each year of service will be five percent (5%) except that in the year
in which you serve as non-executive Chairman of the Company your pre-
retirement vesting percentage under the SERP will be two and one-half
percent (2 1/2%). In addition, your "Final Average Compensation" for all
purposes under the SERP shall be determined as provided in Section 1.15
thereof, except that for purposes of the calculation, the fifth calendar
year preceding the year you serve as non-executive Chairman shall be
substituted for the year you serve as non-executive Chairman unless the
inclusion of the year you serve as non-executive chairman would increase
your Final Average Compensation.
11. Section 8.e. of the Agreement shall be amended by adding the words
"with an "own occupation" standard for disability" after the words "long term
disability policy" on the second line of that Section.
Mr. Ross E. Roeder
May 11, 2001
Page 6
12. Section 10.a. shall be amended by adding the following to the end of
that section:
"In addition, the second sentence of Section 4 (as amended by this
Letter) shall apply."
13. Section 10.b.i. of the Agreement shall be deleted and replaced by the
following:
"Continued payment on a monthly basis of your then current monthly
Base Salary (without future increase) for twenty-four (24) months, except
that if your employment or service is terminated during the 2004 or 2005
calendar year, the payment of your Base Salary shall continue for a period
of twelve (12) months (the applicable period hereinafter referred to as the
"Severance Period")."
14. Section 10.b.vii. of the Agreement shall be deleted and replaced with
the following:
"The disability policy (including Tax Gross Up) provided for in
Section 8.e. above for the twenty-four (24) month period commencing on your
termination date."
15. Section 10.c. shall be deleted in its entirety.
16. Section 10.e. shall be amended by deleting the word "or" where it
appears prior to clause (v) of that section and by adding the words "or (vi) any
Going Private Transaction." to the end of that section.
17. Section 11.b. of the Agreement shall be amended by deleting the word
"or" where it appears immediately prior to clause (iii) of that section and by
adding the following to the end of the section:
"or (iv) by the Company due to your Disability as that term is defined
in Section 9(e)."
18. Section 11 of the Agreement shall be amended by adding the following
at the end thereof:
"c. In the event you terminate your employment for any reason (or no
reason) within the thirty (30) day period commencing upon a Change in Board
Composition, then, in lieu of the benefits provided to you under Section 10
above, you shall be entitled to the payments and benefits described in
clauses i., ii., iii., iv. and v. of Section 11.a. within (except as
otherwise provided) ten (10) business days of your
Mr. Ross E. Roeder
May 11, 2001
Page 7
termination, except that the payments and periods described in clauses ii.,
iii., iv. and v. shall be determined by substituting the number two (2) for
the number three (3) in each place the number three (3) is referred to in
those clauses. For purposes of this subsection, a Change in Board
Composition shall mean any cessation of service on the Board by a Board
member where in the preceding six (6) months, four (4) or more members of
the Board have ceased to be Board members.
d. Notwithstanding anything in this Agreement to the contrary, in the
event (i) you terminate your employment for any reason within the thirty
(30) day period commencing upon a Change in Board Composition and (ii) such
termination of employment is also a Qualifying Termination during the
period commencing one-hundred eighty (180) days prior to the date of a
Change in Control and ending on the second anniversary of the date of the
Change in Control, then, you shall be entitled to the payments and benefits
described in Section 11.a. (and not Section 11.c) hereof.
19. It is agreed that the Company will pay your legal expenses in
connection with the negotiation and preparation of this amendment, up to
$50,000.
If agreed to by you, the Agreement, as amended by this Letter Agreement,
contain all of the terms of your employment with the Company and supersedes any
prior understandings or agreements, whether oral or written, between you and the
Company with regard to its subject matter. To the extent any provision of this
amendment conflicts with or modifies any provision of the Agreement, the
provisions of this amendment shall control.
You may indicate your agreement with this amendment and accept its terms by
signing and dating below.
Very truly yours,
SMART & FINAL, INC.
By: /s/ Thomas G. Plaskett
----------------------
Thomas G. Plaskett
Authorized Member of the Board of Directors
Mr. Ross E. Roeder
May 11, 2001
Page 8
AGREED AND ACCEPTED:
/s/ Ross E. Roeder
- ------------------------
ROSS E. ROEDER
Dated: May 20, 2001
Attachment