UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14A-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-12

SMART & FINAL INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

[LOGO OF SMART & FINAL(R) INC.]

SMART & FINAL INC.
600 Citadel Drive
Commerce, California 90040

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

July 2, 2002

TO THE STOCKHOLDERS:

The Annual Meeting of Stockholders of Smart & Final Inc. (the "Company")
will be held at the Company's corporate headquarters, 600 Citadel Drive,
Commerce, California 90040, on Tuesday, July 2, 2002, at 10:00 a.m., local
time, for the following purposes:

1. To elect three (3) directors of the Company to serve until the 2005
annual meeting and until their successors have been elected and qualified;

2. To approve the amendment and restatement of the Long-Term Equity
Compensation Plan to restate in one document all previous amendments
thereto and to, among other things, amend such plan to: (i) increase from
100,000 shares to 300,000 shares the maximum aggregate number of shares
that may be granted in the form of stock options pursuant to an award
granted in any one fiscal year to any single participant, (ii) increase
from 3,600,000 shares to 5,100,000 shares the aggregate number of shares
available for grant thereunder, and (subject to restrictions on the maximum
number of shares reserved for grant) to allow for the number of shares
available for grant to be increased annually by the number of awards
exercised by participants, and (iii) remove the authority to make future
grants under the Plan to non-employee director members of the Board.

3. To approve the amendment and restatement of the Non-Employee Director
Stock Plan to restate in one document the initially approved plan and to
amend such plan to: (i) allow for grants of stock options and restricted
stock to the Company's non-employee directors, (ii) increase from 125,000
shares to 375,000 shares the aggregate number of shares available for grant
thereunder, and (subject to restrictions on the maximum number of shares
reserved for grant) to allow for the number of shares available for grant
to be increased annually by the number of awards exercised by non-employee
directors, and (iii) permit incorporation into the Plan prior grants of
stock options covering an aggregate of 158,500 shares to non-employee
director members of the Board.

4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.

The Board has determined that only holders of record of the Company's
Common Stock at the close of business on June 7, 2002, will be entitled to
receive notice of, and to vote at, the Annual Meeting or any adjournment
thereof.

WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT, YOU ARE REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE IN ORDER THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE
ANNUAL MEETING.

DONALD G. ALVARADO
Secretary

Commerce, California
June 14, 2002

SMART & FINAL INC.

600 Citadel Drive
Commerce, California 90040

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

PROXY STATEMENT

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

GENERAL

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Smart & Final Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held at the Company's
corporate headquarters, 600 Citadel Drive, Commerce, California 90040, on
Tuesday July 2, 2002, at 10:00 a.m., local time, and at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice. The
approximate date of mailing of this Proxy Statement, Notice and the
accompanying proxy is June 14, 2002.

Proxy Information

A stockholder giving a proxy has the power to revoke it at any time before
it is exercised by filing with the Secretary of the Company an instrument
revoking it or a duly executed proxy bearing a later date or by voting in
person at the Annual Meeting. Subject to such revocation, all shares
represented by each properly executed proxy received by the Company will be
voted in accordance with the instructions indicated thereon, and if
instructions are not indicated, will be voted to: (i) elect the nominees for
director named in this Proxy Statement; (ii) approve the amendment and
restatement of the Company's Long-Term Equity Compensation Plan as described
herein; and (iii) approve the amendment and restatement of the Company's Non-
Employee Director Stock Plan as described herein. Under the rules of the New
York Stock Exchange, Inc., brokers who hold shares in street name for
customers have the authority to vote on the election of directors and certain
other matters when they have not received instructions from beneficial owners,
but lack such authority on other matters. For all the proposals presented
below, such brokers have authority to vote on the election of directors and
ratification of the selection of auditors.

Record Date and Voting

Each stockholder of record at the close of business on June 7, 2002 (the
"Record Date") is entitled to one vote for each share then held on each matter
submitted to a vote of stockholders. As of the Record Date, which was fixed by
the Board of Directors of the Company (the "Board") for determining the
stockholders entitled to notice of and to vote at the Annual Meeting, the
outstanding voting securities of the Company consisted of 29,394,841 shares of
Common Stock, par value $.01 per share. A majority of the shares entitled to
vote will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes (i.e., votes withheld by brokers on non-routine proposals in the
absence of instructions from beneficial owners) are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.

In the election of directors described below, votes may be cast in favor or
withheld. The three director nominees who receive the greatest number of votes
cast in the election will be elected. Shares marked withheld or otherwise not
voted in the election (including abstentions and broker non-votes) have no
impact on the election. For purposes of the votes on the proposals to amend
and restate the Company's Long-Term Equity Compensation Plan and to amend and
restate the Company's Non-Employee Director Stock Plan, votes may be cast for
or against, or may be withheld from voting on, such proposals. Such proposals,
to be approved, require the affirmative vote of a majority of the total votes
present at the meeting. Abstentions and broker non-votes are counted in
determining the total number of votes present at the meeting, and thus they
have the effect of a vote against those proposals.

ELECTION OF DIRECTORS

Nominees

Three directors of the Company's Board are to be elected at the Annual
Meeting to hold office until the annual meeting held in 2005 and until their
successors are elected and qualified. The Board is currently divided into
three classes serving staggered terms normally of three years each. The term
of office of one class of directors expires each year, and at each annual
meeting the successors to the directors of the class whose term is expiring in
that year are elected to hold office for a term of three years and until their
successors are elected and qualified. The three directors whose terms expire
this year, Messrs. Crull, Ornstein and Roeder, have been nominated for re-
election to a term expiring in 2005. In the election of directors, unless
properly instructed otherwise, the proxy holders intend to vote for the
election of those nominees. It is not anticipated that any of the nominees
will decline or be unable to serve as a director. If, however, that should
occur, the proxy holders will vote the proxies in their discretion for any
nominee designated to fill the vacancy by the present Board.

For purposes of reference below, as of December 30, 2001 Casino USA, Inc.
("Casino USA") owned 56.8% of the Company's outstanding stock. Casino
Guichard-Perrachon, S.A. ("Casino France"), a publicly traded French joint
stock limited liability company, is the principal stockholder of Casino USA.
Casino France and its subsidiaries (collectively "Groupe Casino") are
currently engaged in retail grocery, restaurant, food production and other
businesses in parts of Europe, South America and Asia and, through the
Company, the United States. Groupe Casino currently owns 59.8% of the
Company's Common Stock. (see "Security Ownership of Certain Beneficial Owners
and Management" below).

The following table sets forth, as of June 14, 2002, certain information
concerning each person nominated for election as a director of the Company:

Director Year Term
Name Age Since Would Expire
---- --- -------- ------------

Timm F. Crull...................................... 71 1994 2005
Joel-Andre Ornstein................................ 47 1999 2005
Ross E. Roeder..................................... 64 1984 2005

Timm F. Crull. Mr. Crull has been a director of the Company since December
1994. He currently serves on the Company's Audit Committee and is Chairman of
the Compensation Committee. Mr. Crull was Chairman of the Board and Chief
Executive Officer of Nestle USA, Inc. (food and related products) from 1991
until his retirement in 1994. He held the position of Chairman of the Board
and President of Carnation Company (food and related products) from 1985 to
the beginning of 1990. Mr. Crull has been a director of Hallmark Cards, Inc.
(greeting cards) since 1984 and is a member of the Compensation and Audit
Committees of Hallmark Cards, Inc.

Joel-Andre Ornstein. Mr. Ornstein became a director of the Company in May
1999. Since 1989, Mr. Ornstein has been Senior Adviser to the Chairman and
Chief Executive Officer and a director of Euris, S.A. ("Euris"), a Paris-based
investment holding company controlled by Mr. Jean-Charles Naouri, a French
citizen whose principal business is making corporate investments and who owns
a controlling interest in Casino France, the Company's majority stockholder.
Mr. Ornstein is also Chairman of Euristates, Inc., the U.S. based subsidiary
of Euris. He is a director of Euristates, Inc. and The Athlete's Foot Inc.

Ross E. Roeder. Mr. Roeder has been a director of the Company since 1984,
and became the Chairman, President and Chief Executive Officer in January
1999. Until his appointment as Chairman and Chief Executive Officer, he also
served as Chairman of the Audit Committee and a member of the Compensation
Committee. Mr. Roeder became Chairman of the Governance Committee in early
1999 and is a member of the boards of directors of the Company's principal
subsidiaries. Until 1998 Mr. Roeder was Chairman of Morgan-Kaufman Publishers,
Inc. (publishers of computer science text and reference books), where he was
also a director from 1986 to 1998. Mr. Roeder has served on the Board of
Directors of Chico's FAS, Inc. (retail women's stores)

since 1997 and the Board of Directors of Gulf West Bank in St. Petersburg,
Florida since 1995. Mr. Roeder's employment agreement provides that he may
terminate his employment with the Company for "good reason", which includes
the failure of Mr. Roeder to be elected to the Board during his employment
term. (For a further discussion of Mr. Roeder's employment agreement see
"Executive Compensation--Roeder Employment Agreement")

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE NAMED
ABOVE TO SERVE FOR THE TERM ELECTED.

Directors Continuing in Office

The following table sets forth, as of June 14, 2002, certain information
concerning the directors of the Company continuing in office:

Director Year Term
Age Since Will Expire
--- -------- -----------

Pierre B. Bouchut................................... 46 1994 2004
Christian P. Couvreux............................... 51 1997 2003
James S. Gold....................................... 51 1994 2003
Antoine Guichard.................................... 75 1986 2003
David J. McLaughlin................................. 66 1990 2004
Thomas G. Plaskett.................................. 58 1994 2004
Etienne Snollaerts.................................. 46 1998 2004

Pierre B. Bouchut. Mr. Bouchut has been a director of the Company since
December 1994 and has been a member of the Board of Directors of Casino France
since September 1996. He currently serves as General Manager for Casino
France. From 1990 to 1997 he was Director of Finance for Casino France. Mr.
Bouchut was an associate at McKinsey & Company Inc. (management consulting)
from 1988 to 1990.

Christian P. Couvreux. Mr. Couvreux has been a director of the Company
since September 1997 and currently serves on the Company's Governance
Committee. Since May 1997, he has been Chairman of the Executive Board and
Chief Executive Officer of Casino France and is a director of Casino USA. Mr.
Couvreux was previously Deputy General Manager of Casino France where he was
responsible for purchasing, logistics and marketing. Mr. Couvreux has been
associated with Groupe Casino since 1990 when Casino France purchased La Ruche
Meridionale, a French international trading company of which Mr. Couvreux held
several positions including Chief Executive Officer.

James S. Gold. Mr. Gold has been a director of the Company since April 1994
and in May 2001 was appointed to serve on the Company's Compensation
Committee. Mr. Gold was a General Partner of Lazard Freres & Co. (investment
banking) from 1985 until May 1995, when he became a Managing Director. Mr.
Gold has been associated with Lazard Freres & Co., LLC, since 1977. He is also
a director of The Hain Celestial Group, Inc.

Antoine Guichard. Mr. Guichard has been a director of the Company since
1986 and currently serves on the Company's Governance Committee. Mr. Guichard
is the Secretary and a director of Casino USA. Since 1966 he has been a gerant
(managing partner) of Groupe Casino. He served as Chairman of the Executive
Committee of the Company from 1990 until 1998. He is now Chairman of Groupe
Casino, Conseil de Surveillance (Board of Supervisors).

David J. McLaughlin. Mr. McLaughlin has been a director of the Company
since 1990 and currently serves on the Company's Audit and Compensation
Committees. He has been a director of Scientific Atlanta, Inc. (communications
and instrumentation products) since 1987 and Troy Biosciences Incorporated
since 1994. From 2000 to 2001, he was the Vice Chairman of Troy Biosciences
Incorporated where he also served as President and Chief Executive Officer
from 1996 to 1999. From January 2000 to date, he has served as the President
and Chief Executive Officer of Pentacle Press LLC (publishing and research).

Thomas G. Plaskett. Mr. Plaskett has been a director of the Company since
April 1994, currently serves as Chairman of the Audit Committee and is a
member of the Compensation and Governance Committees. Mr. Plaskett served as
Chairman of the Board of Greyhound Lines, Inc. (transportation) from February
1995 to March 1999 and the Managing Director of Fox Run Capital Associates
(private financial advisory and venture capital services) since November 1991.
He is a director of Probex Corporation, an energy technology company in
Carrollton, Texas. Mr. Plaskett was formerly the Vice Chairman and Executive
Vice President of Legend Airlines, a privately-held airline based in Dallas,
Texas which in December 2000 filed a petition for insolvency under Federal
bankruptcy laws. From 1988 to September 1991, he was Chairman and Chief
Executive Officer of Pan Am Corporation (commercial airline). Mr. Plaskett has
been a director of RadioShack Corporation (retail electronics) since 1986 and
is also a member of its Audit Committee.

Etienne Snollaerts. Mr. Snollaerts has been a director of the Company since
1998 and in May 2001 was appointed to serve on the Company's Compensation
Committee. He is currently the Deputy General Manager and Director of the
supply chain within Groupe Casino. In addition to these responsibilities, he
supervises Groupe Casino's investment in the Company. Prior to this he was in
charge of the international activities of Groupe Casino which included
operations in ten countries. Mr. Snollaerts has been associated with Casino
France since 1990 and served as Director of Purchasing and Logistics and as
Director of Retail Distributions, Store Operations and Information Systems.
Prior to joining Casino France, he was a management consultant with Alexander
Proudfoot Company.

Committees of the Board and Attendance at Meetings

The Company has established three standing committees of the Board, an
Audit Committee, a Compensation Committee, and a Governance Committee. Each of
these committees is responsible to the full Board and its activities are
therefore generally subject to the approval of the Board. The functions
performed by these committees are summarized as follows:

The Audit Committee consists of Messrs. Plaskett (as Chairman), Crull, and
McLaughlin. The Audit Committee has adopted a written charter, a copy of which
was attached as Appendix A to the Company's proxy statement filed with the SEC
in April 2001. The Audit Committee's functions are more fully described below
under the heading "Report of the Audit Committee". During fiscal 2001, the
Board re-examined the Audit Committee's composition and confirmed that all
members of the Company's Audit Committee are "independent" within the meaning
of the New York Stock Exchange's listing standards. During fiscal 2001, there
were three regular meetings of the Audit Committee.

The Compensation Committee consists of Messrs. Crull (as Chairman), Gold,
McLaughlin, Plaskett and Snollaerts. The Compensation Committee (i) approves
salary practices and base salary amounts for executive personnel; (ii)
approves the structure of and determines awards under the Company's annual
incentive bonus plan for executive officers; (iii) makes awards under the
Company's Long-Term Equity Compensation Plan; (iv) approves the strategy and
structure of the Company's other employee plans and benefits; and (v) makes
recommendations to the Board with respect to base salary and incentive
compensation of the Chief Executive Officer. During fiscal 2001, there were
three regular meetings of the Compensation Committee and one special meeting.

The Governance Committee consists of Messrs. Roeder (as Chairman),
Couvreux, Guichard and Plaskett. The Governance Committee acts as a nominating
committee, seeking out, evaluating and recommending to the Board qualified
nominees for election as directors of the Company and considering other
matters pertaining to the size and composition of the Board and its
committees. The Governance Committee gives appropriate consideration to
qualified individuals recommended by stockholders for nomination as directors
of the Company, provided that such recommendations are accompanied by
information sufficient to enable the Governance Committee to evaluate the
qualifications of such individuals. The Governance Committee also makes awards
under the Company's Non-Employee Director Stock Plan. During fiscal 2001, the
Governance Committee met once.

During fiscal 2001, the Board held four regular meetings and two special
meetings; each director with the exception of Messrs. Couvreux and Guichard
attended at least 75% of the aggregate of (a) the total number of

meetings of the Board and (b) the total number of committee meetings held by
all committees of the Board on which he served.

Compensation of Directors

During fiscal 2001, all of the Company's non-employee directors served an
entire fiscal year and were compensated by cash payments and shares of the
Company's common stock. For the cash component of their compensation, the non-
employee directors are paid an annual fee consisting of $15,000, paid in
quarterly installments in advance at the beginning of each calendar quarter.
Each non-employee director also received $1,000 in cash for each Board meeting
and each committee meeting attended in person and $500 in cash for each
meeting attended by telephone. Expenses incurred in attending meetings in
person are reimbursable by the Company. Directors who are employees of the
Company or its subsidiaries are not compensated for service as members of the
Board or any committee of the Board.

In addition to the cash payments described above, on May 1 of each year the
Company's non-employee directors also receive an automatic award of shares
under the Company's Non-Employee Director Stock Plan. This award of the
Company's common stock is valued at approximately $15,000 on the date of the
award, pursuant to the terms of the Non-Employee Director Stock Plan and is
issued to each non-employee director who is serving as such on the award date.
For purposes of the Non-Employee Director Stock Plan, an eligible non-employee
director is one who is a member of the Company's Board, who is not and has not
been an employee of the Company or its direct or indirect subsidiaries and who
is paid an annual cash retainer fee for his services as a director. For the
May 1, 2001 grant, Messrs. Bouchut, Couvreux, Crull, Gold, Guichard,
McLaughlin, Ornstein, Plaskett and Snollaerts were all eligible non-employee
directors under the Non-Employee Director Stock Plan and each received 1,369
shares of common stock. Each share award comprises that number of shares equal
to the quotient of $15,000 divided by the fair market value of a share on the
award date as defined in the plan. Cash is paid in lieu of fractional shares.
Any shares awarded must be held by such non-employee director for at least six
months after the award date.

The Company's Stock Incentive Plan, as amended, expired in June 2001 as to
new grants. This plan provided that any elected or appointed non-employee
director serving prior to 1998 received an automatic grant of options to
purchase 22,500 shares of the Company's Common Stock, as of the date of his
initial appointment or election. Such options are nonqualified stock options,
have exercise prices equal to the fair market value of the Common Stock at the
date of grant, have an exercise term of ten years after the date of grant and
are subject to early termination in the event the option holder ceases to be a
director, becomes permanently disabled or dies. One-third of these options
become exercisable two years after the date of grant and each year thereafter,
so that 100% would be exercisable four years after the date of grant. There
are still 40,000 options that have been granted under the Company's Stock
Incentive Plan to non-employee directors, but have not been exercised. These
options will expire, if not exercised, on or before June 18, 2006.

The Company also has a Directors Deferred Compensation Plan (the "Directors
Deferred Compensation Plan"), in which the Company's directors are eligible to
defer on a pre-tax basis up to 100% of their director's cash fees (with a
minimum annual deferral of $2,500) and any shares of the Company's common
stock received as compensation for their services as a director. Participation
is voluntary on an annual basis. Deferrals of cash amounts are credited to a
special bookkeeping account in the participant's name, and earnings on
deferrals are indexed to certain investment fund options. Deferrals of the
Company's common stock are held within the plan, for the benefit of the
deferring director's account and are not redeemable for cash. The Company pays
all benefits and costs from its general assets and, while it has created a
non-qualified grantor trust whose assets will be used to pay benefits and
defray expenses, the assets of the trust are subject to the claims of the
Company's general creditors in the event of the Company's insolvency or
bankruptcy. In general, participants will receive benefits under the Directors
Deferred Compensation Plan after retirement in one of four pre-elected payment
options: one lump-sum payment; or a stream of five, ten or 15 annual payments.
Limited withdrawals prior to retirement are permitted in accordance with the
terms of the Directors Deferred Compensation Plan. The Directors Deferred

Compensation Plan also provides additional death benefits in the event of
death prior to retirement. During 2001, five directors participated in this
plan.

Executive Officers

The following table sets forth as of June 14, 2002, the names, ages and
titles of the executive officers of the Company, Smart & Final Stores
Corporation ("Smart & Final Stores"), American Foodservice Distributors, Inc.
("American Foodservice Distributors"), Port Stockton Food Distributors, Inc.
dba Smart & Final Foodservice Distributors ("Smart & Final Foodservice") and
Henry Lee Company ("Henry Lee"):

Name Age Title
---- --- -----

Ross E. Roeder 64 Chairman of the Board, President and Chief Executive Officer of
the Company and Smart & Final Stores, President and Chief
Executive Officer of American Foodservice Distributors,
Chairman of the Board and Chief Executive Officer of Smart &
Final Foodservice and Chairman of the Board of Henry Lee
Donald G. Alvarado 47 Senior Vice President, General Counsel and Secretary of the
Company and Smart & Final Stores, and Secretary of American
Foodservice Distributors, Smart & Final Foodservice and Henry
Lee
Dennis L. Chiavelli 56 Executive Vice President, Operations of the Company and
Executive Vice President of Operations for Smart & Final Stores
Andre Delolmo 50 Senior Vice President of Business Development for Smart & Final
Stores
Zeke Duge 55 Senior Vice President and Chief Information Officer of Smart &
Final Stores
Richard A. Link 48 Vice President and Controller of the Company
Norah Morley 50 Senior Vice President, Marketing of Smart & Final Stores
Suzanne Mullins 49 Senior Vice President, Operations of Smart & Final Stores
Richard N. Phegley 46 Senior Vice President and Chief Financial Officer of the
Company, Smart & Final Stores and American Foodservice
Distributors, and Senior Vice President, Finance of Smart &
Final Foodservice and Henry Lee
Robert J. Schofield 52 Executive Vice President and Chief Operating Officer of American
Foodservice Distributors
Timothy M. Snee 48 Senior Vice President, Buying of Smart & Final Stores
Jeff D. Whynot 45 Senior Vice President, Human Resources of Smart & Final Stores

Executive officers of the Company are appointed by the Board of the Company
and serve at the Board's discretion.

Ross E. Roeder. See "ELECTION OF DIRECTORS--Nominees".

Donald G. Alvarado. Mr. Alvarado was named Senior Vice President, General
Counsel of the Company and Smart & Final Stores in September 1996 and also
serves as Secretary of the Company, American Foodservice Distributors, Smart &
Final Foodservice, Henry Lee and Smart & Final Stores. From 1997 to 1999 he
was also Senior Vice President Law/Development. From 1991 until September 1996
he served as Vice President, General Counsel and Secretary of the Company. He
joined the Company in 1987 as Assistant General Counsel and was appointed
Secretary in 1989. He has been Secretary of Smart & Final Stores since 1990.
He was also Assistant Secretary of Casino USA and its former wholly-owned
subsidiary Casino Realty, Inc. ("Casino Realty") from 1989 to January 1994.

Dennis L. Chiavelli. Mr. Chiavelli was named Executive Vice President,
Operations of the Company and Smart & Final Stores in September 1996. From
September 1991 to September 1996 he served as Senior Vice President of
Operations and Development of Smart & Final Stores. Earlier in 1991, he was
Executive Vice President, Real Estate of Casino Realty. He was a Vice
President and General Manager of Casino Realty and a Vice President of Casino
USA from late 1987 to early 1991.

Andre Delolmo. Mr. Delolmo was appointed as Senior Vice President, Business
Development of Smart & Final Stores in October 2001, with responsibility for
developing store growth opportunities in existing and new geographic markets.
Mr. Delolmo also serves as President of Casino USA, a position he has held
since July, 1999. Mr. Delolmo has been employed by Groupe Casino since 1977 in
operational management positions in France and other countries.

Zeke Duge. Mr. Duge joined Smart & Final Stores in September 2000 as Senior
Vice President and Chief Information Officer in charge of data processing and
technology for Smart & Final Stores. Immediately before joining the Company,
Mr. Duge was Vice President and Chief Information Officer of West Marine, Inc.
(boating specialty retailer). Mr. Duge has more than 30 years experience in
data processing having also held various positions at Xerox Computer Services
(computer services), Nissan (automobile manufacturing), Tandem Computers
(computer manufacturing) and Oracle Corporation (computer software).

Richard A. Link. Mr. Link joined the Company in October 2001 as Vice
President and Controller. In December 2001, he was designated as the Company's
Chief Accounting Officer by the Board. From September 1988 through February
2001, Mr. Link served in various capacities with Maxicare Health Plans, Inc.
(health insurance) including Senior Vice President, Accounting and Chief
Accounting Officer from September 1988 through November 1997, Executive Vice
President--Finance and Administration and Chief Financial Officer from
December 1997 through February 2001 and was appointed the Chief Operating
Officer from August 1999 through February 2001. Mr. Link previously served
with Price Waterhouse as a senior audit manager and is a certified public
accountant.

Norah Morley. Ms. Morley joined Smart & Final Stores in August 1999 as
Senior Vice President of Marketing. From 1996 to 1999, Ms. Morley was the
Senior Vice President of Marketing, Buying and Distribution for The Sweet
Factory (retail candy) and from 1992 to 1996, Vice President of Marketing and
Buying with W.H. Smith: The Wall Music. Prior to that position, she was Vice
President of Marketing for Frank's Nursery and Crafts, and held various
positions in consumer packaged goods marketing, including Director of
Marketing for The Pillsbury Company (food products).

Suzanne Mullins. Ms. Mullins was appointed Senior Vice President, Store
Operations of Smart & Final Stores in July 1997. Before her promotion in 1997,
she was Vice President, Buying for Smart & Final Stores from August 1994 and
Vice President, Operations of Smart & Final Stores from 1991 to 1994. Prior to
that, Ms. Mullins held various store operations positions, including District
Manager, since joining Smart & Final Stores in 1987.

Richard N. Phegley. Mr. Phegley joined Smart & Final Stores as Vice
President and Treasurer in August 1996 and was additionally appointed Vice
President and Treasurer of the Company, American Foodservice Distributors, and
Henry Lee in May 1999. In May 2001, he was appointed Senior Vice President and
Chief Financial Officer of the Company, Smart & Final Stores and American
Foodservice Distributors. Mr. Phegley joined Smart & Final Stores after 17
years with Atlantic Richfield Company, now a subsidiary of BP Amoco plc.
(integrated international oil and gas), where he served in senior treasury,
strategic planning, and financial management positions.

Robert J. Schofield. Mr. Schofield was appointed to the position of
Executive Vice President and Chief Operating Officer of American Foodservice
Distributors in February 2000. In these capacities, he is responsible for all
foodservice operations for the Company. From August 1999 through January 2000,
Mr. Schofield served as a consultant to the Company regarding its Foodservice
companies. Mr. Schofield was President of the western division of US
Foodservice (foodservice distribution) from 1994 to 1999. Prior thereto, he
was President of Affiliated Food Distributors (Giant Stores--retail grocery)
and Senior Vice President of Spartan Stores (retail grocery).

Timothy M. Snee. Mr. Snee was appointed Senior Vice President of Buying for
Smart & Final Stores in June 1999. From 1998 to June 1999, he was Vice
President of Buying. Mr. Snee joined Smart & Final Stores

after 26 years with Ralphs Grocery Company (retail grocery) where he served as
a vice president in charge of various buying departments, and held management
positions in accounting, distribution, and operations.

Jeff D. Whynot. In January 2000, Mr. Whynot joined Smart & Final Stores as
the Senior Vice President of Human Resources. From 1998 to 2000, Mr. Whynot
was employed by Dames & Moore Group, (engineering consulting), most recently
as Vice President of Human Resources. From 1984 to 1998, Mr. Whynot worked for
Knott's Berry Farm (food products and entertainment). During the last five
years of his employment with Knott's Berry Farm, Mr. Whynot served as the Vice
President of Human Resources.

Report of the Audit Committee

The Audit Committee has reviewed and discussed with management of the
Company and Arthur Andersen LLP ("Andersen"), the independent auditing firm of
the Company for the fiscal year 2001, the audited financial statements of the
Company, as of December 30, 2001 and for the fiscal year then ended (the
"Audited Financial Statements"). In addition, the Audit Committee has
discussed with Andersen the matters required to be discussed by Statements on
Auditing Standards 61 (Codification of Statements on Auditing Standards
AU (S) 380).

The Audit Committee received and reviewed the written disclosures and the
letter from Andersen required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees). The Audit Committee has discussed with that firm its
independence from the Company. The Audit Committee additionally discussed with
management of the Company and the auditing firm such other matters and
received such assurances from them as it deemed appropriate.

Management is responsible for the Company's internal controls and the
financial reporting process. Andersen is responsible for performing an
independent audit of the Company's financial statements in accordance with
generally accepted auditing standards and issuing a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.

Based on the above-described reviews and discussions and a review of the
report of Andersen with respect to the Audited Financial Statements, and
relying thereon, the Audit Committee recommended to the Company's Board the
inclusion of the Audited Financial Statements in the Company's Annual Report
on Form 10-K/A (Amendment No. 2) for the fiscal year ended December 30, 2001.

In light of recent events and developments concerning Andersen subsequent
to the fiscal year ended December 30, 2001, the Audit Committee has undertaken
additional inquiry and diligence by monitoring events and circumstances that
could potentially impair Andersen's abilities to fulfill auditor
responsibilities to the Company under its engagement as independent public
accountants. During May 2002 the Audit Committee and management met with two
other independent accounting firms to establish potential alternatives for the
Company should circumstances later warrant. On June 6, 2002, the Audit
Committee received a report from management concerning developments related to
Andersen and the Audit Committee concluded that it was unlikely Andersen would
be able to fulfill the role of independent accountant to the Company for
fiscal year 2002. On June 7, 2002 the Audit Committee presented this
conclusion to the Board and unanimously recommended that the Company discharge
Andersen and retain Ernst & Young LLP ("E&Y") as the Company's independent
auditors for fiscal year ending December 29, 2002. This recommendation was
then unanimously approved by the Board subject to the execution of appropriate
documentation between the Company and E&Y.

would have caused it to make reference to the subject matter of such
disagreement in its reports on the financial statements for such fiscal years.
Except to the extent discussed below, there were no reportable events within
the meaning of Item 304(a)(1)(v) of Regulation S-K for the fiscal years ended
December 30, 2001 and December 30, 2000 and within the interim period from
December 31, 2001 through June 7, 2002.

As announced on April 22, 2002, the Company identified certain accounting
issues at its Stockton, California broadline foodservice subsidiary impacting
prior-years previously reported operating results that caused it to restate
its financial statements. The issues giving rise to the restatement were not
detected by the Company's internal control processes and were the result of a
significant deficiency in the design or operation of the control procedures at
the subsidiary, which could be deemed a material weakness in accounting
controls at the subsidiary. The Company has taken steps to thoroughly
investigate such deficiencies and has taken appropriate remedial actions. With
respect to these deficiencies, the Audit Committee discussed them with
Andersen and authorized Andersen to respond fully to inquiries of E&Y
concerning them.

AUDIT COMMITTEE
Thomas G. Plaskett, Chairman
Timm F. Crull
David J. McLaughlin

Compensation Committee Report on Executive Compensation

The Compensation Committee's basic philosophy (which is intended to apply
to all Company management, including the Chief Executive Officer) is to
provide competitive levels of compensation designed to motivate, retain and
attract management, with incentives linked to the Company's financial
performance, enhanced stockholder value and personal performance. Executive
compensation generally consists of the following main components: (i) a base
salary, (ii) an annual incentive bonus and (iii) an opportunity to receive
stock options, stock appreciation rights or other performance-based
compensation under the Company's Long-Term Equity Compensation Plan.

Chief Executive Officer Compensation. The Compensation Committee has
established a formal process for evaluating the Chief Executive Officer's
performance. This process generally begins at the last scheduled Compensation
Committee meeting of the fiscal year (typically held in late November or early
December). Mr. Roeder assumed the position of Chief Executive Officer of the
Company in January 1999. Mr. Roeder's Employment Agreement with the Company
established a minimum base salary of $600,000, which was subsequently
increased by the Compensation Committee to $650,000 during 2000 and to
$700,000 in 2001. Mr. Roeder's Employment Agreement also provides that he is
eligible to receive a bonus of 100% of his base salary if certain performance
targets are met. For the fiscal year 2001, these performance targets were
partially met and Mr. Roeder received a bonus of $560,000 (representing 80% of
his base salary), paid in early 2002.

Base Salaries. Base salaries for executive officers are reviewed annually
and designed to be competitive with salaries paid at other companies of
comparable size and complexity in the retail and wholesale food distribution
business and in other comparable businesses (including, for example, certain
non-food, multi-unit retail companies). The Compensation Committee uses these
companies for comparative purposes because it believes that the Company
competes with these companies in attracting and maintaining the Company's
management. Information on these companies is collected by the Compensation
Committee from published industry surveys and competitor's proxy information.
The Compensation Committee's policy is to adjust salaries in a way that
recognizes executive performance and responsibilities and enables the Company
to attract and retain highly qualified executives. In fiscal 2001, executive
base salaries (other than for the Chief Executive Officer) were increased an
average of 6% (ranging from 2% to 16%) and, consistent with the Compensation
Committee's policy objectives, were at median levels among the comparison
companies.

Annual Incentive Bonus Plan. The Compensation Committee believes that the
annual incentive bonus plan is an integral part of the overall compensation
package offered to the Company's executive officers. The

Compensation Committee specifically approves bonus amounts for executive
officers and also determines the bonus amount for the Chief Executive Officer
consistent with the terms of his Employment Agreement (as described above in
the section on "Chief Executive Officer Compensation". From approximately 1993
through fiscal 2000, the Compensation Committee primarily used corporate
earnings per share to determine corporate performance goals.

During fiscal 2000, the Compensation Committee decided to link the annual
incentive bonus plan to specific financial objectives as a means of
encouraging improvements in financial performance. The objectives range from
total financial performance of the Company (which is the only objective for
determining the bonus awarded to the Chief Executive Officer) to performance
of particular operating units, and also includes individual targets to help
reach certain tactical objectives. Accordingly in fiscal 2001, the bonuses
awarded to executives, depending on the person's position with the Company,
were based upon financial objectives and key strategic goals tied to overall
performance at the Company, Region, and Division levels and specified personal
objectives.

Actual bonus amounts are determined after the fiscal year end. At that
time, the Chief Executive Officer meets with the Compensation Committee to
review the performance of the executive officers (other than himself) and
presents his recommendations for their actual bonus amounts. The Compensation
Committee determined that management had partially met their profit objectives
in fiscal 2001 and as a result, approved the recommendations of the Chief
Executive Officer for bonus awards. Actual bonuses to executive officers
(other than the Chief Executive Officer) averaged approximately 30% of base
salary and ranged from approximately 3% to 48%.

Stock Incentive Plan. The Company's Stock Incentive Plan authorized the
issuance of options covering up to 2,450,000 shares of the Company's Common
Stock. This plan expired in June 2001 as to new grants and no awards of stock
were made under the Stock Incentive Plan during fiscal year 2001. As of June
7, 2002, there were 544,780 options that have been granted under this plan,
but have not been exercised. These options will expire on or before June 18,
2006, if not exercised before that date.

Long-Term Equity Compensation Plan. The Company also grants stock-based
awards under the Long-Term Equity Compensation Plan ("Equity Compensation
Plan"). At the annual meeting in May 2001, and in consideration of the
impending expiration of the Stock Incentive Plan, the stockholders approved an
amendment to the Equity Compensation Plan increasing the stock-based awards
allowed under this plan from 2,470,000 shares to 3,600,000 shares of the
Company's Common Stock and extending the expiration date thereof from December
31, 2006 to December 31, 2010. The increase in the number of shares approved
by the stockholders in May 2001 is approximately equivalent to the number of
authorized shares that were not granted under the Stock Incentive Plan and
thus expired with that Plan in June 2001. Under guidelines set by the
Compensation Committee, incentive-based compensation constitutes a greater
portion of executives' potential long-term pay pursuant to awards granted. The
primary objectives of the Equity Compensation Plan are to optimize the
profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of
participants in the Equity Compensation Plan to those of the Company's
stockholders. In fiscal 2001, the Compensation Committee granted 300,000
options to Mr. Roeder under the Equity Compensation Plan. The first one-third
of these options, 100,000 shares, will vest on September 27, 2003, the second
one-third of the options, 100,000 shares, will vest on September 27, 2004 and
the final one-third of the options, 100,000 shares, will vest on September 27,
2005. In fiscal 2001, the Company's other executive officers received a total
of 287,500 options under the Equity Compensation Plan. No restricted stock was
granted in fiscal 2001.

Certain Other Benefits. The Company provides health, welfare, and pension
benefits to the executive officers that are generally available to all full-
time employees of the Company. The Company also provides certain perquisites
to its executive officers, including, depending upon the executive officer,
reimbursement of tax preparation and/or financial planning expenses, club dues
and moving expenses, car allowances, supplemental executive retirement plan,
life insurance policies, long-term disability plans and executive medical
coverage.

Other Matters. The Compensation Committee has reviewed the Company's
compensation plans with regard to the deductibility limitation contained in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). The Compensation Committee has decided at present not to alter
the Company's compensation plans to comply with the deductibility requirements
of Section 162(m). The Compensation Committee will continue to review the
issue and monitor whether the Company's compensation plans should be amended
in the future to meet the deductibility requirements. The Equity Compensation
Plan provides that at all times when Internal Revenue Code Section 162(m) is
applicable, all awards granted under the Equity Compensation Plan shall comply
with the requirements of that Section, although the Compensation Committee may
determine that such compliance is not desired with respect to any particular
award.

COMPENSATION COMMITTEE
Timm F. Crull, Chairman
James S. Gold (May 2001--present)
David J. McLaughlin
Thomas G. Plaskett
Etienne Snollaerts (May 2001--present)

Performance Graph

The graph below compares the cumulative total stockholder return on the
Company's Common Stock over a five year period with the cumulative total
return on the Dow Jones Equity Market Index and the Dow Jones Food Retailers
and Wholesalers Index over the same period (assuming an initial investment of
$100 and the reinvestment of all dividends).
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN AMONG SMART & FINAL INC.
DOW JONES TOTAL MARKET AND
DOW JONES FOOD RETAILERS & WHOLESALERS
[PERFORMANCE GRAPH APPEARS HERE]

Measurement Period Smart & Dow Jones Dow Jones Food
(Fiscal Year Covered) Final Inc. Total Market Retailers & Wholesalers
- --------------------- ---------- ------------ -----------------------

FYE 12/96 $100.00 $100.00 $100.00
FYE 12/97 $ 84.52 $131.81 $127.95
FYE 12/98 $ 46.03 $164.63 $185.02
FYE 12/99 $ 34.67 $202.04 $125.79
FYE 12/00 $ 40.65 $183.31 $167.04
FYE 12/01 $ 49.92 $161.46 $143.94

Compensation Committee Interlocks and Insider Participation

Decisions on compensation of the Company's executive officers and the
Company's Chief Executive Officer are generally made by the Compensation
Committee of the Board. All such decisions relating to the compensation of
executive officers are reviewed, and in fiscal 2001 were approved without
change, by the full Board. During the entire fiscal 2001, the Compensation
Committee consisted of Messrs. Crull, McLaughlin and Plaskett. In May 2001,
Messrs. Gold and Snollaerts were also appointed to serve on the compensation
committee. Mr. Snollaerts is an employee of Groupe Casino, the Company's
majority stockholder. However, no member of the Compensation Committee is now
or ever has been an employee of the Company or its subsidiaries.

Mr. Gold is a Managing Director with Lazard Freres & Co., L.L.C. (an
investment banking firm). Lazard Freres has provided services to Groupe Casino
and to the Company in the past and may, in the future provide such services.

Relationship Between the Company and Casino USA. Casino France, acting
through Casino USA, acquired the Company's then parent company in 1984. Groupe
Casino owns 59.8% of the outstanding shares of the Company's Common Stock.
Since the Common Stock does not have cumulative voting rights, the holders of
shares having more than 50% of the voting power may elect all of the directors
of the Company, and the holders of the remaining shares would not be able to
elect any directors.

Casino France owns approximately 99% of the outstanding shares of Casino
USA's capital stock. 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 of Common Stock owned by it. The Company's Board
currently includes Messrs. Bouchut, Couvreux, Guichard, Ornstein and
Snollaerts who also serve as directors of Casino USA and/or who are affiliated
with Groupe Casino. In October 2001, Mr. Delolmo was appointed as the Senior
Vice President of Business Development for Smart & Final Stores in addition to
his position as President and Chief Executive Officer of Casino USA. Since
that time Mr. Delolmo has devoted substantially all of his efforts to Smart &
Final Stores.

Certain Transactions between the Company and Casino USA. The Company and
Casino USA are parties to a 1991 intercompany agreement (the "Intercompany
Agreement"). The Intercompany Agreement provides for the performance of
various administrative services by the Company for Casino USA and by Casino
USA for the Company. None of the parties are obligated to use such services.
Intercompany services are provided at the cost of providing such services,
including the estimated allocable costs of (i) management and other employees
performing the services, (ii) computer time, (iii) allocable overhead and (iv)
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 such services cannot exceed $100,000
in any three-month period without the written consent of the user of such
services. The Intercompany Agreement also provides that Casino USA will not,
and will cause its affiliates that it controls or any corporation of which
either holds more than 5% of the capital stock not to, engage in the Company's
business. The initial term of the Intercompany Agreement was two years, and
has been renewed from time to time as provided therein.

Since 1986, the Company 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 approximately $287,000 for
fiscal 2001. It is anticipated that the Company 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.

The Company and Casino USA are also parties to a tax sharing arrangement
covering income tax obligations in the State of California. Under this
arrangement, the Company 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. The Company made
tax sharing payments to Casino USA aggregating $2,381,000 in fiscal 2001.

Effective November 30, 2001, the Company entered into a $175,000,000
secured revolving credit facility ("Credit Agreement") with a group of
commercial bank lenders to replace a $129,000,000 credit facility that
commenced in November 1998. The proceeds available under the Credit Agreement
were used to pay off the outstanding balance of the 1998 credit facility and
the Company's $16,000,000 note to Casino USA. Effective November 30, 2001, the
Company additionally entered into an $87,100,000 operating lease agreement
("Lease Agreement"). Several financial institutions and Casino USA are all
participants in the Lease Agreement. Casino USA's share of participation in
the Lease Agreement is $16,100,000.

Executive Compensation

Summary Compensation Table. The following table sets forth information
concerning cash and noncash compensation for each of the last three fiscal
years awarded to or earned by the Chief Executive Officer of the Company, the
four most highly compensated executive officers of the Company other than the
Chief Executive Officer, and one former executive officer who served as an
executive officer during the first five months of the fiscal year; each
executive officer included in the table must have earned over $100,000 in
salary and bonus during 2001.

SUMMARY COMPENSATION TABLE

Annual Compensation
------------------------------------------------------------------------------------
Long Term
Compensation Awards
---------------------
Restricted Securities
Stock Underlying
Name and Principal Fiscal Salary Bonus Other Annual Awards Options All Other
Position Year ($)(1) ($)(2) Compensation($)(3) ($)(4) (#)(5) Compensation($)(6)
------------------ ------ -------- -------- ------------------ ---------- ---------- ------------------

Ross E. Roeder.......... 2001 $678,077 $560,000 $-0- $ -0- 300,000 $ 49,302
Chairman of the Board
and 2000 $631,577 $650,000 $-0- $171,210 72,500 $ 36,050
Chief Executive Officer 1999 $599,664 $200,000 $-0- $606,250 212,500 $ 5,524

Martin A. Lynch*........ 2001 $338,096 $ -0- $-0- $ -0- -0- $254,970
Former Executive Vice
President 2000 $327,191 $100,000 $-0- $172,380 112,500 $252,326
and Chief Financial
Officer 1999 $286,139 $ 40,000 $-0- $ -0- 64,700 $ 45,493

Dennis L. Chiavelli..... 2001 $282,404 $136,800 $-0- $ -0- 45,000 $ 19,554
Executive Vice 2000 $266,054 $162,000 $-0- $177,371 54,800 $146,514
President, Operations 1999 $245,262 $ 51,912 $-0- $ -0- 43,100 $ 11,106

Zeke Duge............... 2001 $254,135 $102,000 $-0- $ -0- 25,000 $131,588
Senior Vice President,
Chief 2000 $ 67,308 $ 41,667 $-0- $ 76,250 30,000 $ -0-
Information Officer 1999 N/A N/A N/A N/A N/A N/A

Robert J. Schofield..... 2001 $243,943 $105,000 $-0- $ -0- 45,000 $ 18,007
Executive Vice
President, 2000 $215,292 $129,000 $-0- $ 49,844 25,000 $ 19,811
American Foodservice
Distributors 1999 $124,850 N/A N/A N/A N/A N/A

Donald G. Alvarado...... 2001 $239,115 $ 84,000 $-0- $ -0- 20,000 $ 19,391
Senior Vice President,
General 2000 $226,539 $115,000 $-0- $118,080 17,000 $ 84,936
Counsel 1999 $207,308 $ 30,000 $-0- $ -0- 27,600 $ 11,228

- -------
* Mr. Lynch retired as Executive Vice President and Chief Financial Officer
on May 23, 2001

(1) Includes amounts deferred by the named officers under the Company's 401(k)
Savings Plan (the "401(k) Savings Plan"), which was established in fiscal
1992 and under which all named officers are or were eligible to
participate during fiscal 2001; and the Company's Supplemental Deferred
Compensation Plan (the "Supplemental Deferred Compensation Plan"), which
was established to first take effect for fiscal 1995. Mr. Schofield's 2000
salary includes $29,234 in consulting fees that he was paid prior to
becoming an employee of the Company. The amount listed for Mr. Schofield
for 1999 is for consulting services. Mr. Duge's salary for fiscal 2000
commenced in September 2000, when he joined Smart & Final Stores.

(2) Includes bonus payments made in the year after the listed year for
services performed in the listed year, and excludes bonus payments made in
the listed year for services performed in the prior year.

(3) Includes perquisites and other personal benefits, securities or property
paid to each named executive officer (including, depending upon the
executive officer, reimbursement of tax preparation and/or financial
planning expenses, club dues and car allowances). Such perquisites and
other personal benefits when stated as zero were less than the lesser of
$50,000 or 10% of the total annual salary and bonus set forth in the
columns entitled "Salary" and "Bonus."

(4) No restricted shares were granted in 2001. On December 28, 2001, the
aggregate restricted stock holdings of such persons, valued at $10.59 per
share (representing the closing price on the NYSE for the Common Stock on

December 28, 2001), were as follows: Mr. Roeder, 4,421 shares with an
aggregate value of $46,818; Mr. Lynch, 25,349 shares with an aggregate
value of $268,446; Mr. Chiavelli, 22,397 shares with an aggregate value of
$237,184; Mr. Duge, 10,000 shares with an aggregate value of $105,900; Mr.
Schofield had no restricted stock holdings at the end of fiscal 2001; and
Mr. Alvarado, 14,076 shares with an aggregate value of $149,065. In 2001,
the following restricted shares granted in 2000 vested at the price of
$10.75 per share: Mr. Roeder, 20,000 shares for $215,000; Mr. Lynch, 5,000
shares for $53,750; Mr. Chiavelli, 9,000 shares for $96,750; Mr.
Schofield, 7,250 shares for $77,938; and Mr. Alvarado, 6,000 shares for
$64,500.

(5) For fiscal 2001, includes for Messrs. Roeder, Chiavelli, Duge, Schofield
and Alvarado, respectively, options to purchase 300,000, 45,000, 25,000,
45,000 and 20,000 shares granted pursuant to the Equity Compensation Plan.

(6) The compensation reported includes, as applicable, amounts contributed by
the Company under the 401(k) Savings Plan, the Supplemental Deferred
Compensation Plan, deferred compensation paid to Mr. Lynch pursuant to his
Deferred Compensation Agreements with the Company, and the dollar value of
insurance premiums paid by the Company with respect to term life insurance
and health care plans for the benefit of the named officer. Mr. Lynch's
compensation in 2001 includes the payment of $108,000 in consulting
payments pursuant to the amendment to his employment agreement discussed
below and a payment for all accrued and unused vacation days of $64,423.
Mr. Duge's compensation in 2001 includes a one time payment of $113,960 in
relocation and related tax expenses. Mr. Duge also received a relocation
loan of $225,000 from the Company which was fully repaid in 2001. Company
contributions under the 401(k) Plan and the Supplemental Deferred
Compensation Plan during fiscal 2001 were as follows: $3,465, aggregate
for both plans for each of Messrs. Roeder, Lynch, Chiavelli, Duge,
Schofield and Alvarado. In fiscal 2000, the Company changed its vacation
policy to include a ceiling or maximum on vacation accrual. As a result of
this change in policy, and pursuant to California law, Messrs. Lynch,
Chiavelli and Alvarado received $176,550, $125,128, $57,937, respectively,
as payment for the vacation days that they had already accrued in excess
of the newly established ceiling. Company contributions under the 401(k)
Savings Plan and the Supplemental Deferred Compensation Plan during fiscal
2000 were as follows: $2,550 for Messrs. Roeder, Lynch, Chiavelli,
Alvarado and $1,034 for Mr. Schofield. Company contributions under the
401(k) Savings Plan and the Supplemental Deferred Compensation Plan during
fiscal 1999 were as follows: $1,558 for Mr. Roeder, $2,400, aggregate for
both plans for each of Messrs. Lynch, Chiavelli and Alvarado. Company
payments of life and health insurance premiums during fiscal 2001 were as
follows: $21,891 for Mr. Roeder, $18,031 for Mr. Lynch, $16,089 for Mr.
Chiavelli, $14,163 for Mr. Duge, $14,542 for Mr. Schofield, and $15,926
for Mr. Alvarado. Company payments of life and health insurance premiums
during fiscal 2000 were as follows: $12,744 for Mr. Roeder, $18,853 for
Mr. Lynch, $18,836 for Mr. Chiavelli, $18,778 for Mr. Schofield and
$24,449 for Mr. Alvarado. During fiscal 1999, Company payments of life and
health insurance premiums were as follows: $3,966 for Mr. Roeder, $10,479
for Mr. Lynch, $8,706 for Mr. Chiavelli, and $8,828 for Mr. Alvarado.
Pursuant to the terms of his Deferred Compensation Agreements, for fiscal
2001, 2000, and 1999, the Company paid on behalf of Mr. Lynch deferred
compensation in the amounts of $61,052, $54,374, and $32,614,
respectively. In accordance with the Roeder Employment Agreement, Mr.
Roeder received a bonus of $23,946 in fiscal 2001 and $20,756 in fiscal
2000 in recognition of interest due under two loans and the net amount of
personal tax gross-up on the bonus.

Option Grants Table. The following table summarizes options granted during
fiscal 2001 to the persons listed in the Summary Compensation Table above:

OPTION GRANTS IN LAST FISCAL YEAR

Individual Grants
-----------------------------------------------------------------
Number of Exercise
Securities % of Total Price Grant Date
Underlying Options Granted Per Present Value
Options to Employees in Share Expiration of Stock
Name Granted (#)(1) Fiscal Year ($/sh) Date Options ($)(2)
- ---- -------------- --------------- -------- ---------- --------------

Ross E. Roeder.......... 300,000 33.47% $10.132 9/27/11 $1,255,850
Martin A. Lynch......... -0- N/A N/A N/A N/A
Dennis L. Chiavelli..... 45,000 5.02% $10.132 9/27/11 $ 188,378
Zeke Duge............... 25,000 2.79% $10.132 9/27/11 $ 104,654
Robert J. Schofield..... 45,000 5.02% $10.132 9/27/11 $ 188,378
Donald G. Alvarado...... 20,000 2.23% $10.132 9/27/11 $ 83,723

- --------
(1) Options granted are nonqualified stock options granted under the Equity
Compensation Plan, may be exercised up to ten years after the date of the
grant and are subject to early termination in the event the option holder
ceases to be an employee, becomes permanently disabled or dies. No option
can be granted at an option price of less than the fair market value of
Common Stock at the time the option is granted. For the grants made in
2001, one-third of the options become exercisable two years after the date
of grant and each year thereafter so that 100% are exercisable four years
after the date of grant. Unvested options will vest immediately upon a
change in control.

(2) The Company used the Black-Scholes model of option valuation to determine
the present values at the grant dates. The Company does not advocate or
necessarily agree that the Black-Scholes model can properly determine the
value of an option. Calculations for the named executive officers are
based on the following assumptions: individual option terms of up to 10
years, volatility of 36.66%, no dividends, and interest rates of 6.309%
for Mr. Roeder, 5.723% for Mr. Lynch, 5.795% for Mr. Chiavelli, 5.687% for
Mr. Duge, 6.040% for Mr. Schofield, and 5.909% for Mr. Alvarado, which
corresponds to the weighted average of the ten year Treasury note rates
with a maturity date corresponding to the option term for each of the
grants. The real value of the options in this table depends upon the
actual performance of the Company's stock during the applicable period and
upon when they are exercised.

Aggregated Option Exercises Table. The following table summarizes option
exercises during fiscal 2001, and the number of all options and the value of
all in-the-money options held at the end of fiscal 2001, by the executive
officers named in the above Summary Compensation Table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

Number of Securities
Underlying Unexercised Value of Unexercised
Options at End In-The-Money Options at
Shares Acquired Value of Fiscal 2001 (#) End of Fiscal 2001 ($)(1)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- ------------ ------------------------- -------------------------

Ross E. Roeder(2)....... -0- -0- 164,168/420,832 $189,835/$418,065
Martin A. Lynch......... -0- -0- 118,380/ 58,820 $ 34,679/$126,319
Dennis L. Chiavelli..... -0- -0- 52,707/100,193 $ 25,782/$153,192
Zeke Duge............... -0- -0- 0/ 55,000 $ 0/$ 98,510
Robert J. Schofield..... -0- -0- 0/ 70,000 $ 0/$113,485
Donald G. Alvarado...... -0- -0- 11,040/ 53,560 $ 14,794/$ 94,505

- --------
(1) Based on the market value of underlying securities at fiscal year end
closing price of $10.59 per share on December 28, 2001, less the exercise
price.

(2) Mr. Roeder's options include 22,500 shares of exercisable options and
50,000 shares of total options for his service to the Company, prior to
fiscal year 1999, as a non-employee director.

Pension Plan and 401(k) Savings Plans. The following table sets forth
estimated annual pension benefits under the Smart & Final Pension Plan (the
"Pension Plan"), on a straight life annuity basis for representative years of
service as defined in the Pension Plan. Such benefits are subject to reduction
for certain prior company retirement benefit plans.

PENSION PLAN TABLE

Estimated Annual Retirement Benefits at
Age 65
Final Average For Indicated Years of Credited
Remuneration on Earnings Based Service(1)
Which Retirement on Each Year's ---------------------------------------
Benefits are Based(2) Limited Earnings 15 20 25 30 35
- --------------------- ---------------- -- ------- ------- ------- -------

$ 125,000............ $125,000 $18,750 $25,000 $31,250 $37,500 $43,750
$ 150,000............ $150,000 $22,500 $30,000 $37,500 $45,000 $52,500
$ 175,000............ $175,000 $26,250 $35,000 $43,750 $52,500 $61,250
$ 200,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$ 225,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$ 250,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$ 500,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$ 750,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$1,000,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$1,250,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000
$1,500,000............ $200,000 $30,000 $40,000 $50,000 $60,000 $70,000

- --------
(1) Amounts shown are for employees hired on January 1, 2002 and assume
retirement at age 65 after employment for the indicated number of years.
Estimated annual retirement benefits are based on the plan in effect on
January 1, 2002 and assume that no other offsets or grandfathered benefits
are applied.

(2) Effective January 1, 2002, the compensation used to determine the
retirement benefit could not exceed $200,000 for all years of service.
This limit is adjusted annually for cost-of-living. For purposes of this
table, it is assumed to remain at $200,000 for all future years.

The Company maintains the Pension Plan for the benefit of Smart & Final
Stores' employees who meet certain age and service requirements, to provide
certain benefits in the event of normal, early or disability retirement, or
death. Smart & Final Stores' employees that are covered by a collective
bargaining agreement are not covered by the Pension Plan. The benefits are
calculated on the basis of the participant's years of service (with years of
service prior to January 1, 1992 being credited as though each year was 1.5
years) and the participant's qualifying average pay during his five highest
paid consecutive years of service in the ten years prior to the date he ceases
his employment, with the minimum benefits for certain qualifying participants
being at least equal to his accrued benefit they would have received under the
Company's prior pension plan. The qualifying average pay on which benefits are
based includes bonuses, overtime and other compensation but does not include
amounts to be paid under the Pension Plan or any other employee benefit plan.
A participant becomes 100% vested in his retirement benefit at the end of the
fifth year of service. Under the Pension Plan, at the end of fiscal 2001,
Messrs. Roeder, Lynch, Chiavelli, Duge, Schofield and Alvarado had credited
approximately 3, 12.5, 16, 1, 2 and 14.25 actual year(s) of service,
respectively, and would have been entitled to minimum annual benefits of
approximately $5,000, $25,725, $33,608, $1,700, $3,400 and $26,855,
respectively.

The Company also maintains a defined contribution plan (the "401(k) Savings
Plan") which is intended to satisfy the tax qualification requirements of
Section 401(k) of the Internal Revenue Code. All employees of the

Company (other than those covered by the Smart & Final Foodservice and Henry
Lee employee benefit plans described below) who meet certain age and service
requirements are eligible to participate in the 401(k) Savings Plan, which
allows participants to contribute, for fiscal 2001, up to 15% of their
compensation or $10,500, whichever was lower. In fiscal 2001, the Company
increased its match from 25% to 33% of each dollar contributed up to 6% of
each participant's eligible compensation. Additionally, in fiscal 2001, the
Company made a discretionary 8% match with respect to contributions made in
fiscal 2000, to adjust that year's match from 25% to 33%. Participants'
contributions to the 401(k) Savings Plan, which are deemed to be contributions
of the Company for tax purposes, are deducted from the participants'
compensation prior to the calculation of federal and state income taxes,
thereby decreasing the amount of a participant's compensation subject to tax.

Participants are currently entitled to direct their contributions to one or
more of thirteen investment options. None of a participant's account balance
in the 401(k) Savings Plan may be withdrawn prior to termination of employment
or his attainment of age 70, whichever occurs earlier, except upon certain
qualified financial hardships or through loans. Distribution of a
participant's account balance, if less than $5,000, will generally be made in
a lump sum payment in the year following the termination of employment.
Distribution of a participant's account balance in excess of $5,000 will be
made in accordance with the participant's election following the termination
of employment. A participant's contributions to the 401(k) Savings Plan will
vest immediately. The Company's contributions on behalf of a participant will
vest at the rate of 25% per year beginning after the second year of the
participant's service and will be 100% vested after five years.

Henry Lee and Smart & Final Foodservice each maintain a defined
contribution plan which is intended to satisfy the tax qualification
requirements of Section 401(k) of the Internal Revenue Code. The Henry Lee
401(k) Plan is similar to the 401(k) Savings Plan with respect to the tax
advantages, loan features and hardship withdrawal provisions. The Henry Lee
401(k) Plan differs from the Company's plan in several respects. The
differences include eligibility requirements, the Henry Lee automatic match of
50% of each dollar contributed up to 6% of the participant's contribution, and
immediate vesting in all employer contributions. Participants are entitled to
direct their contributions to eight different investment options. The Smart &
Final Foodservice Plan is similar to the 401(k) Plan, but also calls for a 50%
automatic match of each dollar contributed up to 6% of the participant's
contribution. There is a five year vesting schedule at a rate of 20% per year
commencing the first year of eligible employment. Participants are entitled to
direct their contributions to five different investment options. For those
Smart & Final Foodservice employees that are part of a collective bargaining
unit, the company's contribution to the 401(k) Plan is based upon the terms of
their agreement.

Supplemental Executive Retirement Plan. Since 1998, the Company has
provided a Supplemental Executive Retirement Plan ("SERP") to certain of its
key executives and other highly compensated employees which provides for a
single life annuity to be payable monthly commencing at age 65 or upon the
participant's early retirement or disability as those terms are defined in the
SERP document. A participant may be entitled to receive benefits under the
SERP in the event of a change in control of the Company. In addition, in the
event the participant dies prior to his or her retirement, disability or
termination of employment, his or her survivor also may be entitled to receive
benefits under the SERP. The amount of the annuity benefit is determined by
multiplying the standard benefit percentage assigned to each participant
according to his or her title and position by the average of the final five
calendar years of a participant's compensation. Participants in the SERP are
selected by the Board of the Company. The SERP is administered by a third
party administrator. At fiscal year end 2001, there were 19 participants in
the SERP, including all of the executive officers listed in the Summary
Compensation Table.

Deferred Compensation Plan. The Company also has a Supplemental Deferred
Compensation Plan (the "Deferred Compensation Plan") in which certain Company
employees who earned annual base compensation of at least $85,000 in 2001 are
eligible to defer pre-tax up to 100% of their base compensation, cash bonus
(with a minimum annual deferral of $2,500), and shares of restricted stock.
Participation is voluntary on an annual basis. Deferrals are credited to a
special bookkeeping account in the participant's name, and earnings on
deferrals are indexed to certain investment fund options. The Company pays all
benefits and costs from its general assets and, while it has created a non-
qualified grantor trust whose assets will be used to pay benefits and defray

expenses, the assets of the trust are subject to the claims of the Company's
general creditors in the event of the Company's insolvency or bankruptcy. In
general, participants will receive benefits under the Deferred Compensation
Plan after retirement (with the minimum age for early retirement being 55 with
ten years of service) in one of four pre-elected payment options, one lump-sum
payment or a stream of five, ten or 15 annual payments. Limited withdrawals
prior to retirement are permitted in accordance with the terms of the Deferred
Compensation Plan. In addition to the general death benefits provided to all
employees of the company, the Deferred Compensation Plan provides its own
death benefits in the event of the death, prior to retirement, of a
participating employee.

Executive Severance Agreement. The Company's officers and certain
designated officers of the Company's subsidiaries are eligible to participate
in the 2001 Executive Severance Plan ("Executive Severance Plan") which
provides a minimum severance of 12 months base salary, or a month's base
salary for each year of service, whichever is greater. Severance is not
available to executives who are terminated for cause or who voluntarily
terminate their employment. All the welfare benefits received by the officer
during his employment are continued during the severance period. Following a
change of control, the executives can resign for "good reason" and be eligible
for the benefits available under the Executive Severance Plan. "Good reason"
is defined as a reduction in duties and/or compensation, or being asked to
relocate. Under a "good reason" resignation, executive vice presidents are
eligible for a two year severance period. Participants in the Executive
Severance Plan are selected by the Compensation Committee. At fiscal year end
2001 there were 17 participants in the plan.

Roeder Employment Agreement. In early 1999, the Company and Mr. Roeder
entered into an employment agreement (the "Roeder Employment Agreement")
wherein Mr. Roeder agreed to serve as Chairman and Chief Executive Officer of
the Company through December 31, 2001. In May 2001 the agreement was amended
to extend the term of Mr. Roeder's employment through December 31, 2004; for
2004, Mr. Roeder will serve as the Company's Chairman but not its Chief
Executive Officer. However, if the Company requests that Mr. Roeder continue
to serve as Chairman and Chief Executive Officer of the Company in 2004, then
his Employment Agreement will automatically extend until December 31, 2005 and
Mr. Roeder will serve as the Company's Chairman but not as Chief Executive
Officer during 2005.

Mr. Roeder's base salary is determined from time to time by the Board, but
may not be less than $600,000 per year on an annualized basis. Once increased,
the base salary may not be decreased. At present, his base salary is $700,000.
The Roeder Employment Agreement provides that Mr. Roeder has the opportunity
to earn an annual cash bonus and that the minimum target annual bonus
opportunity will be at least 100% of his annual base salary, provided that the
Company meets its financial targets. Mr. Roeder received a bonus of 80% of his
annual base salary for the 2001 fiscal year, which was paid in 2002. Mr.
Roeder also has the opportunity to earn long-term incentive awards and
participate in all Company qualified retirement plans, group term life
insurance, comprehensive health and major medical insurance, short and long-
term disability and all other benefits and perquisites in which other
executives and employees of the Company are eligible to participate, including
SERP benefits in an amount not less than $125,000 per year, automobile
allowance, retiree medical coverage and financial planning services, all as
commensurate with Mr. Roeder's position. Mr. Roeder is entitled to certain tax
"gross up" benefits relating to his bonus and restricted stock awards
described below. Mr. Roeder is also entitled to a minimum of five weeks paid
vacation per year.

On September 27, 2001, Mr. Roeder received a grant of 300,000 options from
the Equity Compensation Plan. These grants have a ten year term and vest as
follows: 100,000 on September 27, 2003, 100,000 on September 27, 2004, and
100,000 on September 27, 2005. In fiscal 2000, Mr. Roeder received a grant of
20,000 shares of restricted stock under the Equity Compensation Plan. All of
these shares vested in February 2001 in accordance with the Roeder Employment
Agreement. Mr. Roeder voluntarily elected, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, to be taxed on the fair market value of these
shares on the date they were transferred to Mr. Roeder and, pursuant to the
Roeder Employment Agreement, the Company contemporaneously provided Mr. Roeder
with a loan in the principal amount of $61,951, evidenced by a promissory note
bearing interest at 6.35%. The principal amount of the loan is equal to the
amount of income and payroll taxes payable by Mr. Roeder on the compensation
recognized as a result of the issue of shares of restricted stock and the

Section 83(b) election. The principal amount of the note will be paid in
fiscal 2002. In fiscal 1999, Mr. Roeder also made a voluntary election
pursuant to Section 83(b) of the Internal Revenue Code with respect to a grant
of 50,000 shares of restricted stock and, pursuant to the Roeder Employment
Agreement, the Company contemporaneously provided Mr. Roeder with a loan in
the principal amount of $273,149, evidenced by a promissory note bearing
interest at 4.84%.

In accordance with the Roeder Employment Agreement, Mr. Roeder has received
bonuses of approximately $23,946 in fiscal 2001 and $20,756 in fiscal 2000 in
recognition of interest due under these two loans and the net amount of
personal tax gross-up on the bonus. Also in accordance with the Roeder
Employment Agreement and following the scheduled maturity of these two loans,
Mr. Roeder will receive in fiscal 2002 a bonus in the aggregate principal
amount of the two loans and the net amount of personal tax gross-up on the
bonus. In December 2000, Mr. Roeder received 4,421 shares of restricted stock
as part of the Voluntary Exchange Program, for which Mr. Roeder surrendered
approximately 15,000 stock options of approximately equal value. These shares
have not vested. The Board also granted Mr. Roeder 50,000 options from the
Equity Compensation Plan on February 15, 2000. These options have a ten year
term and vest as follows: 16,667 shares vest on February 15, 2002; 16,667
shares vest on February 15, 2003; and the remaining 16,666 shares vest on
February 15, 2004. In the event of a Change in Control, termination of the
Roeder Employment Agreement due to his death or disability, a termination by
the Company without cause or a termination with good reason, all outstanding
options will immediately vest and remain exercisable for the two-year period
following the date of termination but in no event beyond the expiration of the
maximum ten year term. The Roeder Employment Agreement further provides that
during its term Mr. Roeder will receive an annual grant of options in an
amount at least equal to 1.5 times the number of options granted to any other
executive officer of the Company. In addition, in June 1999 Mr. Roeder
received a loan from the Company in the amount of $47,101, in connection with
his purchase of stock in the Company's equity offering. The loan bears
interest at 4.84%.

In the event the Company terminates Mr. Roeder's employment without cause,
or Mr. Roeder terminates the Roeder Employment Agreement with "good reason,"
as defined below, Mr. Roeder is entitled to receive his then current monthly
base salary for 24 months unless his employment or service is terminated
during 2004 or 2005, then the payment of his base salary shall continue for a
period of 12 months (the "Severance Period"). Mr. Roeder would also receive a
monthly amount equal to his annual bonus target for the last Company fiscal
year completed prior to the date of termination divided by 12. In addition,
Mr. Roeder would continue to receive payment for continuation of his and his
spouse's medical insurance coverage through COBRA for a period equal to 18
months or until Mr. Roeder were to cease to be eligible for COBRA coverage or
he becomes eligible to receive comparable coverage through another employer.
The Company will also continue to provide Mr. Roeder with his long-term
disability policy for a period of 24 months commencing on the termination
date. Mr. Roeder would also receive additional service and compensation credit
under the SERP until he reaches age 65, and continued payment of financial
planning services through the Severance Period, plus all other amounts in
which he is vested or otherwise entitled under the Company's retirement and
employee benefit plans, including retiree medical insurance coverage as
described above, at the time such amounts are normally payable. For purposes
of the Roeder Employment Agreement, disability generally means Mr. Roeder's
inability to perform his duties due to illness or mental infirmity for a
period of more than 180 consecutive days. For purposes of the Roeder
Employment Agreement, "good reason" is defined as a diminution in Mr. Roeder's
title and authority, relocation of the Company's principal office without his
consent, the failure of the Company to pay his salary or any other material
breach by the Company, or the failure of Mr. Roeder to be elected to the Board
or appointed as Chairman of the Board during the employment term.

Upon the effective date of a Qualifying Termination due to a Change in
Control, the Company shall continue to pay Mr. Roeder (i) any accrued
obligations, (ii) a lump-sum payment equal to three times his base salary then
in effect and (iii) a lump-sum cash payment equal to three times the greater
of (x) the highest annual bonus paid by the Company in the prior three fiscal
years, or (y) his annual bonus target for the fiscal year of termination.
Mr. Roeder would also receive continuation of health and welfare benefits for
three years (subject to termination if Mr. Roeder obtains employment that
offers substantially similar benefits) as well as three

additional years of service and compensation credit under the SERP. In the
event any of the payments in connection with a Change in Control cause an
excise tax to be imposed on Mr. Roeder under Section 4999 of the Code, the
Company shall pay Mr. Roeder, in cash, an additional amount such that the net
amount retained by Mr. Roeder after deduction for any excise tax and any
income tax and excise tax upon tax payments made by the Company, shall be
equal to the amount Mr. Roeder would have retained had no such excise tax been
imposed. For purposes of the Roeder Employment Agreement, the term "Change in
Control" has the same definition as in the Company's Executive Severance Plan.

The Roeder Employment Agreement also contains Mr. Roeder's covenant not to
compete with the Company during the term and for the longer of twelve months
following the expiration of the Roeder Employment Agreement or any period
during which the amounts are paid under the Roeder Employment Agreement, and a
covenant, for a period of 12 months following the expiration of the Roeder
Employment Agreement, not to attempt to induce other employees of the Company
to terminate employment with the Company or to interfere in a similar manner
with the business of the Company.

Lynch Agreement. On May 23, 2001, Mr. Lynch retired as Executive Vice
President and Chief Financial Officer of the Company and from all other
executive positions with the Company and its subsidiaries. In connection with
his retirement and effective at that date, the Company and Mr. Lynch entered
into an agreement amending the previous employment agreement between the
Company and Mr. Lynch whereby Mr. Lynch agreed to remain available to provide
consulting services and not to compete with the Company for a period of
approximately two years commencing June 1, 2001. The amendment further
provided that Mr. Lynch will continue to receive salary payments for 24
months, which commenced on June 1, 2001, at an annual rate of $335,000, his
last salary rate. The amendment also provides that he will receive non-compete
payments and a consulting retainer totaling $13,500 per month for the 24 month
period. For certain consulting services that Mr. Lynch provides at either the
Company's offices or other locations designated by the Company, Mr. Lynch will
receive an additional per diem consulting fee that is to be negotiated between
the Company and Mr. Lynch, along with reimbursement of his incurred expenses.
During the two year period that Mr. Lynch is consulting with the Company, he
will continue to receive the other benefits that he received under his
employment agreement, other than the performance-based bonus or accrued
vacation time. Those benefits include the deferred compensation plan and the
SERP and all other benefits afforded under the employment agreement, as
amended, between Mr. Lynch and the Company. At the conclusion of the
consulting agreement, Mr. Lynch will be fully vested in the SERP, all unvested
stock options, restricted stock and any other equity benefits to which he was
entitled upon the date of his retirement from the Company.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the ownership of the
Company's Common Stock as of June 7, 2002 by: (i) each person known to the
Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock; (ii) each director and nominee for
director of the Company; (iii) each executive officer named in the Summary
Compensation Table; and (iv) all directors and executive officers of the
Company and its subsidiaries 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
Beneficially of
Name Owned Class
- ---- ------------ -------

Casino Guichard-Perrachon S.A.(1)......................... 17,584,060 59.8%
Baron Capital Group, Inc.(2).............................. 5,491,509 18.7%
Ross E. Roeder(4)......................................... 341,594 1.2%
Martin A. Lynch(4)........................................ 198,745 *
Dennis L. Chiavelli (4)................................... 135,760 *
James S. Gold(4).......................................... 54,443 *
David J. McLaughlin(3)(4)................................. 49,443 *
Donald G. Alvarado(4)..................................... 47,016 *
Timm F. Crull(4)(5)....................................... 35,932 *
Thomas G. Plaskett(4)..................................... 31,366 *
Etienne Snollaerts(4)..................................... 25,682 *
Christian P. Couvreux(4).................................. 25,380 *
Pierre B. Bouchut(4)...................................... 24,366 *
Joel-Andre Ornstein(4).................................... 21,494 *
Antoine Guichard(4)....................................... 20,516 *
Robert J. Schofield(4).................................... 15,584 *
All directors and executive officers as a group (20
persons)(4).............................................. 1,170,500 3.1%

- --------
* Less than 1%.
(1) Casino Guichard-Perrachon S.A. ("Casino France"), 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 600 Citadel
Drive, Commerce, California 90040, and the address of Casino France is 24,
rue de la Montat, 42008 St.-Etienne Cedex 2, France. Rallye, a publicly
traded French joint stock corporation, holds more than 50% of the voting
interest in Casino France. Mr. Jean-Charles Naouri, through intermediary
companies, indirectly controls more than 50% of the voting interest in
Rallye. This note (1) is based on Amendment No. 5 to Schedule 13D
("Amendment No. 5") filed by Casino USA on May 25, 2000 and prior reports,
and on information provided to the Company by Casino France.

(2) All information with respect to Baron Capital Group, Inc. ("BCG"), a
holding company controlled by Ronald Baron, is based on Amendment No. 13
to Schedule 13D filed on May 8, 2002, by BCG. Mr. Baron has sole voting
and dispositive power over 19,300 shares held by him personally (or
approximately .06% of the outstanding shares) and shared voting and
dispositive power over 5,491,509 shares (or 18.7% of the outstanding
shares). Of the 5,491,509 shares, (a) 3,625,500 shares are held for the
account of BAMCO, Inc. ("BAMCO"), a registered investment advisor
controlled by Mr. Baron, and of this amount 2,560,000 are held for the
account of Baron Asset Fund ("BAF"), a registered investment company
advised by BAMCO, Inc., and (b) 1,866,009 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 for
BCG, BAMCO, BAF and BCM is 767 Fifth Avenue, 24th Floor, New York, New
York 10153.

(3) Includes shares held in profit sharing or IRA accounts for the benefit of
the named individual or members of his immediate family.

(4) Includes shares which such persons have the right to acquire within 60
days pursuant to the exercise of outstanding stock options. These stock
options include 251,667 options attributable to Mr. Roeder;
137,987 options attributable to Mr. Lynch; 69,994 options attributable to
Mr. Chiavelli; 8,334 options attributable to Mr. Schofield; 22,227 options
attributable to Mr. Alvarado; 36,334 options attributable to Mr. Gold;
31,334 options attributable to Mr. McLaughlin; 13,834 options each
attributable to Messrs. Bouchut, Couvreux, Crull, Guichard, Plaskett and
Snollaerts; and 16,334 options attributable to Mr. Ornstein. An additional
90,448 options will vest within 60 days for the remaining unnamed
executive officers as a group. This amount also includes restricted shares
that the directors and/or executive officers may have deferred under the
Directors Deferred Compensation Plan or the Deferred Compensation Plan.

(5) Shares held in family trust.

PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE LONG-TERM EQUITY
COMPENSATION PLAN TO (1) INCREASE FROM 100,000 SHARES TO 300,000 SHARES THE
MAXIMUM AGGREGATE NUMBER OF SHARES THAT MAY BE GRANTED IN THE FORM OF STOCK
OPTIONS IN ANY ONE FISCAL YEAR TO ANY SINGLE PARTICIPANT, (2) INCREASE FROM
3,600,000 SHARES TO 5,100,000 SHARES THE AGGREGATE NUMBER OF SHARES AVAILABLE
FOR GRANT THEREUNDER, AND (SUBJECT TO RESTRICTIONS ON THE MAXIMUM NUMBER OF
SHARES RESERVED FOR GRANT) TO ALLOW FOR THE NUMBER OF SHARES AVAILABLE FOR
GRANT TO BE INCREASED ANNUALLY BY THE NUMBER AWARDS EXERCISED BY PARTICIPANTS,
AND (3) REMOVE THE AUTHORITY TO MAKE FUTURE GRANTS UNDER THE PLAN TO NON-
EMPLOYEE DIRECTOR MEMBERS OF THE BOARD.

At the Annual Meeting there will be submitted to the stockholders, a
proposal to approve the Company's Long-Term Equity Compensation Plan ("Equity
Compensation Plan"), as amended and restated. The amended Equity Compensation
Plan increases the maximum aggregate number of stock options that may be
granted to a single individual in any one fiscal year from 100,000 shares to
300,000 shares and increases the number of shares available for award in the
form of stock options, stock appreciation rights, restricted stock awards,
performance units and/or performance shares from 3,600,000 shares to 5,100,000
shares, subject to increase annually as provided in the Equity Compensation
Plan. In September 2001, the Board approved the proposed amendment to increase
the maximum aggregate number of stock options that may be granted to a single
individual in any one fiscal year from 100,000 shares to 300,000 shares,
subject to approval by the stockholders. On February 19, 2002, the Board
approved the proposed increase in the total number of shares available for
grant under the Equity Compensation Plan from 3,600,000 shares to 5,100,000
shares, subject to increase annually as provided in the Equity Compensation
Plan, and the amendment and restatement of this plan, subject to stockholder
approval. If the proposed amendment and restatement is not approved by the
Company's stockholders, the proposed amendments are automatically null and
void. The Board first approved the Equity Compensation Plan in February 1997
and the stockholders adopted the Equity Compensation Plan in May 1997. The
Equity Compensation Plan was amended by the Board and the stockholders in 1999
to increase the number of shares covered thereby to 2,470,000 shares. In 2000,
the Board clarified that the terms of the Equity Compensation Plan permitted
the grant of restricted stock awards to non-employee directors. In 2001, the
Equity Compensation Plan was further amended to increase the number of shares
covered thereby to 3,600,000 shares and to extend the term thereof to December
31, 2010.

The Board's decision to recommend an increase in the number of shares
available under the Equity Compensation Plan was based in part on the
recommendation of Towers Perrin, who had been retained by the Compensation
Committee to conduct a comprehensive review of the executive compensation
program. As part of this review, Towers Perrin evaluated the Equity
Compensation Plan. The Company's guidelines for issuing options and restricted
shares under this plan were revised in accordance with current market
standards for publicly traded companies, because the Board believes that a
greater use of stock-based incentives can optimize the profitability and
growth of the Company by providing the Company with the means to attract and
retain the services of employees who contribute to the success of the Company.
Using these new standards, Towers Perrin provided the Compensation Committee
with a forecast of the needs for shares for future grants to current
executives as well as new hires and promotions. Based on Towers Perrin's
recommendations, the Board decided

to submit to the stockholders this proposal to amend the Company's Equity
Compensation Plan to increase the amount of shares available for grant
thereunder from 3,600,000 shares to 5,100,000 shares, subject to increase
annually as provided in the Equity Compensation Plan.

At the Annual Meeting, there will be submitted to the stockholders a
proposal to approve the amendment and restatement of the Company's non-
employee director stock plan ("Non-Employee Director Stock Plan"), which will
provide for grants of stock options and restricted stock to non-employee
directors [see the proposal following]. The Board believes that all future
grants of stock options and restricted stock should be made to non-employee
directors only through the Non-Employee Director Stock Plan. As a result, the
amended Equity Compensation Plan removes the authority to make further grants
under the Equity Compensation Plan to non-employee directors, and non-employee
director members of the Board will cease to be eligible to receive grants
under the Equity Compensation Plan.

The Equity Compensation Plan provides for numerous different types of
incentive programs and allows for a variety of awards. Thus, the Board has
concluded that the additional shares authorized by the stockholders to grant
should come from this plan as it would provide the Company with the
flexibility best suited to meet the purposes of retaining and attracting
employees who would contribute to the success of the Company. Thus, the Board
is seeking stockholder approval to increase by 1,500,000 shares the number of
shares available for awards under the Equity Compensation Plan, subject to
increase annually as provided in the Equity Compensation Plan.

The amendment and restatement of the Equity Compensation Plan will also
revise the Equity Compensation Plan to conform and clarify the provisions in
light of the proposed amendments. Additionally, any prior amendments and
clarifications and certain related conforming changes will be effectuated in
the amendment and restatement of the Equity Compensation Plan.

As of June 7, 2002, under the Equity Compensation Plan, options to purchase
an aggregate of 2,577,144 shares of its Common Stock were outstanding and
restricted stock awards totaling approximately 351,260 shares have been
granted. Of these restricted shares, grants have been made to 17 company
officers (including all executive officers). In March 2002, 29,700 of the
total restricted shares vested in 10 company officers because the five year
vesting period had lapsed. In February 2001, 50,000 restricted shares vested
in Mr. Roeder according to the terms of his Employment Agreement. There are
approximately 661,540 shares of Common Stock available for future awards under
the Equity Compensation Plan as of June 7, 2002. Certain information regarding
options and restricted stock awards granted to the executive officers named in
the Summary Compensation Table and to certain non-employee directors is set
forth under "Executive Compensation" and "Election of Directors--Compensation
of Directors" above.

The following summary of certain principal features of the Equity
Compensation Plan is qualified in its entirety by the complete text of the
Equity Compensation Plan, as amended and restated, a copy of which is attached
hereto as Exhibit A. Capitalized terms used herein and not otherwise defined
herein shall have the meaning ascribed to them in the Equity Compensation
Plan. As of June 7, 2002, the closing price of a share of the Company's common
stock as reported on the New York Stock Exchange composite-transactions report
was $8.51.

Purpose. The Equity Compensation Plan is intended to (i) optimize the
profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of
Participants to those of the Company's stockholders, (ii) provide Participants
with an incentive for excellence in individual performance, (iii) promote team
work among Participants, and (iv) provide flexibility to the Company in its
ability to motivate, attract and retain the services of Participants to make
significant contributions to the Company's success and to allow Participants
to share in the success of the Company.

General. The Equity Compensation Plan permits the granting of Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Performance Units
and Performance Shares to eligible participants. The total number of shares of
the Company's common stock available for Awards to be granted under the Equity
Compensation Plan is currently 3,600,000 shares. In the event that options
granted under the Equity Compensation Plan terminate or expire without being
exercised, shares not purchased under such lapsed options will again become
generally available to be issued on the exercise of additional options granted
under the Equity Compensation Plan. The Equity Compensation Plan, as amended,
provides for an automatic increase in the

number of stock options, stock appreciation rights, restricted stock awards,
performance units and performance shares available for award to eligible
participants in an amount equal to the number of such grants exercised in any
given fiscal year, and also provides for an automatic increase in the number
of shares available for such grants, so that (subject to restrictions on the
maximum number of shares reserved for grant) at all times the Equity
Compensation Plan will have 5,100,000 shares available for issuance as
provided in the Equity Compensation Plan. The Equity Compensation Plan also
provides for a maximum number of shares available for Awards of Incentive
Stock Options.

Administration of the Equity Compensation Plan. The Equity Compensation
Plan is administered by the Compensation Committee of the Company's Board. The
Equity Compensation Plan does not require that the Compensation Committee
members must qualify as "disinterested persons" under Rule 16b-3 under the
Securities Exchange Act of 1934 ("Rule 16b-3"), or as "outside directors"
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Equity Compensation Plan does require, however, in general terms,
(i) that at all times when Code Section 162(m) is applicable, all Awards
granted under the Equity Compensation Plan shall comply with the requirements
of Code Section 162(m) unless the Compensation Committee determines that such
compliance is not desired with respect to any Award, and (ii) with respect to
"Insiders," that transactions under the Equity Compensation Plan are intended
to comply with all applicable conditions of Rule 16b-3. Subject to the terms
of the Equity Compensation Plan, the Compensation Committee has the full power
to select employees to participate in the Equity Compensation Plan, determine
the sizes and types of Awards, determine the terms and conditions of Awards,
construe and interpret the Equity Compensation Plan and any agreement entered
into under the Plan, establish, amend or waive any rules and regulations for
the Equity Compensation Plan's administration and, amend the terms and
conditions of any outstanding Award to the extent such terms and conditions
are within the discretion of the Compensation Committee. The Compensation
Committee also has the discretion for making any adjustments in Awards, the
Shares available for Awards and the numerical limitation for Awards to reflect
any transactions such as stock splits or any merger or reorganization of the
Company. The Board may amend or terminate the Equity Compensation Plan at any
time and for any reason but, as required under Rule 16b-3, certain material
amendments to the Equity Compensation Plan must be approved by the
stockholders.

Eligibility to Receive Awards. Currently, any full-time active employee of
the Company and its subsidiaries is eligible to be selected to receive one or
more Awards. The Company and its subsidiaries currently have approximately
5,846 employees. The actual number of employees who will receive Awards under
the Equity Compensation Plan cannot be determined because eligibility for
participation in the Equity Compensation Plan is in the discretion of the
Compensation Committee. Employee directors are also eligible to receive all
Awards under the Equity Compensation Plan.

Options. Currently, the Compensation Committee may grant Nonqualified Stock
Options and/or Incentive Stock Options (which are entitled to favorable tax
treatment) to full-time employees. The number of shares covered by each option
will be determined by the Compensation Committee, but during any fiscal year
of the Company, no participant may be granted Options for more than 300,000
shares. The price of the shares of the Company's common stock subject to each
Option is set by the Compensation Committee but cannot be less than 100% of
the fair market value (determined on the date of grant) of the shares covered
by the option. The option price of each option must be paid in full at the
time of exercise. The Compensation Committee may permit the option price to be
paid in cash or through the tender of shares of the Company's common stock
already owned by the Participant, or by a combination of cash and shares. The
Compensation Committee may also allow the cashless exercise of an option as
permitted under the Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions or by any other means the Compensation
Committee determines to be consistent with the Equity Compensation Plan's
purposes and applicable law. Options become exercisable and terminate at the
times and on the terms established by the Compensation Committee, but options
generally shall not be exercisable later than the 10th anniversary date of the
grant.

Stock Appreciation Rights. Stock Appreciation Rights ("SARs") may be
granted as a separate award or together with an option to full-time employees.
Upon exercise of a SAR, the participant will receive a payment from the
Company equal to (1) the difference between the fair market value of a share
on the date of exercise

over the grant price multiplied by (2) the number of shares with respect to
which the SAR exercised. The grant price of a free standing SAR equals the
fair market value of a share on the date of grant of the SAR. The grant price
of a Tandem SAR equals the option price of the related option. SARs may be
paid in cash or shares of the Company's common stock, as determined by the
Compensation Committee. The number of shares covered by each SAR will be
determined by the Compensation Committee, but during any fiscal year of the
Company, no participant may be granted SARs for more than 100,000 shares. The
Compensation Committee also determines the other terms and conditions of each
SAR. SARs expire at the same times established by the Compensation Committee
but subject to the maximum time limits as are applicable to options granted
under the Equity Compensation Plan.

Restricted Stock Awards. Restricted Stock Awards are shares of the
Company's common stock which vest in accordance with terms established by the
Compensation Committee in its discretion. For example, the Compensation
Committee may provide the Restricted Stock will vest only if one or more
performance goals are satisfied and/or only if the participant remains
employed with the Company for a specified period of time. Any performance
measures may by applied on a Company-wide basis or an individual unit basis,
as deemed appropriate in light of the participant's specific responsibilities.
The number of shares covered by each Award of Restricted Stock will be
determined by the Compensation Committee, but during any fiscal year of the
Company no participant may be granted Restricted Stock for more than 100,000
shares.

Performance Units and Performance Shares. Performance Units and Performance
Shares are amounts credited to a bookkeeping account established for the
participant. A Performance Unit has an initial value that is established by
the Compensation Committee at the time of its grant. A Performance Share has
an initial value equal to the fair market value of a share of the Company's
common stock on the date of grant. Whether a Performance Unit or Performance
Share actually will result in a payment to a participant will depend upon the
extent to which performance goals established by the Compensation Committee
are satisfied. Performance measures may be chosen from among profits, net
income (before or after tax), share price, earnings per share, return on
assets, return on equity, operating income, return on capital, return on
investment, stockholder return, sales, customer service, employee satisfaction
or economic value added. The applicable performance goals (and all other terms
and conditions of an award of Performance Units or Performance Shares) will be
determined in the discretion of the Compensation Committee. After a
Performance Unit or Performance Share has vested (that is, after the
applicable performance goal or goals have been achieved), the participant will
be entitled to a payout of cash and/or common stock, as determined by the
Compensation Committee not to exceed $2,000,000 for any one participant in any
fiscal year.

Non-transferability of Awards. Awards granted under the Equity Compensation
Plan may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than (except in the case of Restricted Stock) by will
or by the applicable laws of descent and distribution, provided that in the
discretion of the Compensation Committee, a participant's award agreement
(except in the case of an Incentive Stock Option) may provide otherwise.

Change in Control. On the occurrence of a change in control, all options
and SARs granted become immediately exercisable, any restriction periods and
restrictions imposed on Restricted Stock lapse and all target pay-out
opportunities attainable under all outstanding Awards of Restricted Stock,
Performance Units and Performance Shares shall be deemed to have been fully
earned for the entire performance period as of the effective date in a Change
in Control. In addition, the vesting of all Awards denominated in shares shall
accelerate as of the effective date of a Change in Control and certain cash
payments shall be made to participants, with respect to the assumed
achievement of performance goals, on a prorata basis. For purposes of the
Equity Compensation Plan, a "Change in Control" means generally, either (1)
any Person acquires beneficial ownership of more than 35% of the Company's
voting power, (2) during any two consecutive year period there is a change in
those persons constituting a majority of the Board at the beginning of such
period, or (3) a plan of complete liquidation, an agreement for the sale of
substantially all the Company's assets or a merger, consolidation or
reorganization of the Company involving current stockholders obtain at least
65% of the voting power of the Company (or surviving entity).

Tax Aspects. Based on management's understanding of current federal income
tax laws, the tax consequences of the grant of Awards under the Equity
Compensation Plan are as follows:

A recipient of an option or SAR granted under the Equity Compensation Plan
will not have taxable income at the time of grant. Upon exercise of a
Nonqualified Stock Option or SAR, the participant generally must recognize as
taxable ordinary income an amount equal to the fair market value on the date
of exercise of the shares exercised minus the option price or grant price. Any
gain or loss recognized upon any later sale or other disposition of the
acquired shares generally will be a capital gain or loss.

Upon exercise of an Incentive Stock Option, the participant generally will
not be required to recognize any taxable income on account of the exercise.
Upon a later sale or other disposition of the shares, the participant must
recognize long-term capital gain or ordinary income, depending on the length
of time the participant has held the shares prior to sale.

A participant who receives Restricted Stock or Performance Units or
Performance Shares will not recognize taxable income upon receipt, but instead
will recognize ordinary income when the shares or units vest. Alternatively,
the participant may elect under Section 83(b) of the Internal Revenue Code to
be taxed at the time of receipt of the Restricted Stock or Performance Units
or Performance Shares. If the Restricted Stock or Performance Units or
Performance Shares are subsequently forfeited, the participant is not entitled
to a deduction for the loss. However, if the participant holds the Restricted
Stock, Performance Units or Performance Shares until after the shares vest and
subsequently sells the shares upon vesting, the gain will be taxed as a
capital gain as opposed to ordinary income. In all cases, the amount of
ordinary income recognized by the participant will be equal to the fair market
value of the shares at the time income is recognized, minus the amount, if
any, paid for the shares.

Any taxes required to be withheld must be paid by the participant at the
time of exercise. With respect to withholding required upon exercise of
options, participants may elect, subject to the approval of the Compensation
Committee, to satisfy tax withholding requirements in whole or in part, by
having the Company withhold shares having a fair market value on the date that
the tax is determined equal to the minimum statutory total tax which could be
imposed on the transaction.

The Company generally will be entitled to a tax deduction in connection
with an Award made under the Equity Compensation Plan only to the extent that
the participant recognizes ordinary income from the award. Section 162(m) of
the Internal Revenue Code contains special rules regarding the federal income
tax deductibility of compensation paid to the Company's Chief Executive
Officer and to each of the four most highly compensated executive officers.

The general rule is that annual compensation paid to any of these specified
executives will be deductible only to the extent that it does not exceed
$1,000,000 or qualifies for the performance based exception under Section
162(m). The Equity Compensation Plan has been designed so that the
Compensation Committee, in its discretion, may in the future make grants of
options and SARs which will qualify as performance based compensation under
Section 162(m).

The proposed amendments included in the proposed amendment and restatement
of the Equity Compensation Plan require the approval of the affirmative vote
of a majority of the outstanding shares of Common Stock present (in person or
by proxy) and entitled to vote at the Annual Meeting. Abstentions and broker
non-votes are counted in determining the total number of shares present at the
Annual Meeting and thus have the effect of a vote against the proposal.

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT AND RESTATEMENT OF THE EQUITY COMPENSATION PLAN IN THE FORM
ATTACHED HERETO.

PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE NON-EMPLOYEE
DIRECTOR STOCK PLAN TO (1) ALLOW FOR GRANTS OF STOCK OPTIONS AND RESTRICTED
STOCK TO NON-EMPLOYEE DIRECTORS, (2) INCREASE FROM 125,000 SHARES TO 375,000
SHARES THE AGGREGATE NUMBER OF SHARES AVAILABLE FOR GRANT THEREUNDER, AND
(SUBJECT TO RESTRICTIONS ON THE MAXIMUM NUMBER OF SHARES RESERVED FOR GRANT)
TO ALLOW FOR THE NUMBER OF SHARES AVAILABLE FOR GRANT TO BE INCREASED ANNUALLY
BY THE NUMBER OF AWARDS EXERCISED BY NON-EMPLOYEE DIRECTORS, AND (3) PERMIT
INCORPORATION INTO THE PLAN PRIOR GRANTS OF STOCK OPTIONS COVERING AN
AGGREGATE OF 158,500 SHARES TO NON-EMPLOYEE DIRECTOR MEMBERS OF THE BOARD.

At the Annual Meeting there will be submitted to the stockholders a
proposal to approve the Company's Non-Employee Director Stock Plan ("Non-
Employee Director Stock Plan"), as amended and restated. The amended Non-
Employee Director Stock Plan allows the grant of stock options and restricted
stock to non-employee directors and increases the aggregate number of shares
available for award in the form of shares, stock options, or restricted stock
awards from 125,000 shares to 375,000 shares, subject to increase annually as
provided in the Non-Employee Director Stock Plan. On February 19, 2002, the
Board approved the proposed amendment to the Non-Employee Director Stock Plan,
subject to stockholder approval. If the proposed amendment is not approved by
the Company's stockholders, it is automatically null and void. The Board first
approved the Non-Employee Director Stock Plan in February 1996 and the
stockholders adopted the Non-Employee Director Stock Plan in May 1996.

The Non-Employee Director Stock Plan currently provides for automatic
awards of shares in May of each year, with each award to a non-employee
director comprising that number of shares equal to the quotient of $15,000
divided by the fair market value of a share on the award date. The Board's
decision to recommend the granting of stock options and restricted stock to
non-employee directors pursuant to the Non-Employee Director Stock Plan was
based in part on the recommendation of Towers Perrin, who had been retained by
the Compensation Committee to conduct a comprehensive review of the executive
compensation program. As part of this review, Towers Perrin evaluated the
Equity Compensation Plan and the Non-Employee Director Stock Plan. The
Company's guidelines for issuing options and restricted stock to non-employee
directors under the Non-Employee Director Stock Plan were revised in
accordance with current market standards for publicly traded companies because
the Board believes that a greater use of stock-based incentives can optimize
profitability and growth of the Company by providing the Company with the
means to attract and retain the services of non-employee directors who
contribute to the success of the Company. Using these new standards, Towers
Perrin provided the Compensation Committee with a forecast of the needs for
shares for future grants to non-employee directors. Based on Towers Perrin's
recommendations, the Board decided to submit to the stockholders this proposal
to amend the Company's Non-Employee Director Stock Plan to allow for the grant
of options and restricted stock under the plan.

If the compensation proposals presented to the stockholders for approval at
the Annual Meeting are approved, all future grants of stock, stock options and
restricted stock to non-employee directors will be made from the Non-Employee
Director Stock Plan and not from the Equity Compensation Plan. The purpose of
this grant of stock options and restricted stock is to align the interests of
the Board with the Company's stockholders and to create a greater incentive
among the Board members to promote the Company's success and profitability,
thus allowing the Board the flexibility to determine the amount of stock
options and restricted stock to be awarded each year suits this purpose. Thus,
the Board is requesting stockholder approval for the annual grant of stock
options and restricted stock to non-employee directors in an amount to be
determined each year.

As of June 7, 2002, 55,476 shares of common stock had been awarded to non-
employee directors in the form of automatic awards of shares. There are
approximately 69,524 shares of common stock remaining available for future
awards under the Non-Employee Director Stock Plan as of June 7, 2002. The Non-
Employee Director

Stock Plan, as amended, provides for an automatic increase in the number of
stock options and restricted stock available for award to non-employee
directors in an amount equal to the number of such grants exercised in any
given fiscal year, and also provides for an automatic increase in the number
of shares available for such grants, so that (subject to restrictions on the
maximum number of shares reserved for grant) at all times the Non-Employee
Director Stock Plan will have 375,000 shares available for issuance as
provided in the Non-Employee Director Stock Plan. Certain information
regarding awards of shares to certain non-employee directors is set forth
under "Executive Compensation" and "Election of Directors--Compensation of
Directors" above.

During 1999 and 2000, the Company issued options to purchase 158,500 shares
of the Company's common stock to various non-employee directors. The amended
and restated Non-Employee Director Stock Plan contemplates inclusion of the
options granted to non-employee directors under the previous grants into the
Non-Employee Director Stock Plan, and the number of shares reserved for
issuance includes an additional 158,500 shares to cover the award of stock
options already granted to non-employee directors. This transfer of the
outstanding stock options granted to non-employee directors is intended to
reduce the administrative costs associated with administering the grant of
such stock options.

The following summary of certain principal features of the Non-Employee
Director Stock Plan is qualified in its entirety by the complete text of the
Non-Employee Director Stock Plan, as amended and restated, in the form
attached hereto as Exhibit B. Capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to them in the Non-Employee
Director Stock Plan. As of June 7, 2002, the closing price of a share of the
Company's common stock as reported on the New York Stock Exchange composite--
transactions Report was $8.51.

Purpose. The Non-Employee Director Stock Plan is intended to promote the
interests of the Company and its stockholders by (i) providing an incentive to
those directors of the Company who are not employees of the Company or its
subsidiaries to serve on the Board of the Company and (ii) linking the
personal interests of such directors with the interests of the stockholders in
the continuing financial success of the Company.

General. The Non-Employee Director Stock Plan permits the granting of
shares, stock options and restricted stock to non-employee directors. The
total number of shares of the Company's common stock available for awards to
be granted under the Non-Employee Director Stock Plan is currently 125,000
shares. The Non-Employee Director Stock Plan, as amended, provides for an
increase from 125,000 shares to 375,000 shares in the aggregate number of
shares available for grant thereunder, an automatic increase in the number of
stock options and restricted stock available for award to non-employee
directors in an amount equal to the number of such grants exercised in any
given fiscal year, and an automatic increase in the number of shares available
for such grants, so that (subject to restrictions on the maximum number of
shares reserved for grant) at all times the Non-Employee Director Stock Plan
will have 375,000 shares available for issuance as provided in the Non-
Employee Director Stock Plan.

Administration of the Non-Employee Director Stock Plan. The Non-Employee
Director Stock Plan is administered by a "Plan Committee," which is the
Governance Committee of the Board, or any successor committee of the Board
which the Board appoints to administer the Non-Employee Director Stock Plan.
The Non-Employee Director Stock Plan does not require that the Plan Committee
members must qualify as "disinterested persons" under Rule 16b-3 under the
Securities Exchange Act of 1934 ("Rule 16b-3"), but does require, in general
terms, that the Non-Employee Director Stock Plan comply in all respects with
the applicable provisions of Rule 16b-3 in connection with any award of
shares, options or restricted stock to a non-employee director. In addition,
non-employee directors only may be granted nonqualified stock options, and any
grant of a non-qualified stock option to a non-employee director must be
approved by the Board (and not a committee thereof) in the manner provided in
Rule 16b-3(d)(1), or otherwise approved or ratified in a manner provided in
Rule 16b-3, or such non-employee director must hold such non-qualified stock
option for at least the period provided in Rule 16b-3. Subject to the
obligations of the Board described above, the Plan Committee may select non-
employee directors to participate in the Non-Employee Director Stock Plan,
determine the size and types of awards, determine the terms and conditions of
awards, construe and interpret the Non-Employee Director Stock

Plan and any agreement entered into under the Non-Employee Director Stock
Plan, establish, amend or waive any rules and regulations for the Non-Employee
Director Stock Plan's administration, and amend the terms and conditions of
any outstanding awards to the extent such terms and conditions are within the
discretion of the Plan Committee. The Plan Committee also has the discretion
for making any adjustments in awards, the shares, options or restricted stock
available for awards, and the numerical limitation for awards to reflect any
transactions such as stock splits or any merger or reorganization of the
Company. The Board may amend or terminate the Non-Employee Director Stock Plan
at any time and for any reason but, as required under Rule 16b-3, certain
material amendments to the Non-Employee Director Stock Plan must be approved
by the stockholders.

Eligibility to Receive Awards. Any non-employee director of the Company is
eligible to be selected to receive awards of shares, stock options or
restricted stock.

Automatic Awards of Shares. An award of shares shall be automatically made
on May 1 of each year to each non-employee director who is serving as such on
the award date. Each award shall comprise that number of shares equal to the
quotient of $15,000 divided by the fair market value of a share on the award
date provided that if the award calculation results in fractional shares, such
awards shall be rounded down to the nearest whole share number and cash shall
be paid in lieu of fractional shares, and provided further that if there are
not sufficient shares available under the Non-Employee Director Stock Plan to
permit the award of shares to be made to all non-employee directors eligible
therefor, then the award of shares to be made to all such eligible non-
employee directors shall be reduced pro rata (to zero if necessary) so as not
to exceed the number of shares available for award under the Non-Employee
Director Stock Plan and cash shall be paid in lieu of the difference. In the
event that any shares awarded under the automatic award of shares provisions
of the Non-Employee Director Stock Plan are newly issued by the Company, the
non-employee director receiving such shares shall pay to the Company, in cash,
an amount equal to the par value of such shares. Any shares awarded under the
Non-Employee Director Stock Plan must be held by the non-employee director for
at least six month after the award date.

Options. The Board may grant nonqualified stock options to non-employee
directors in such number, and upon such terms, and at any time and from time
to time as shall be determined by the Board. Each option grant shall be
evidenced by an award agreement that shall specify the option price, the
duration of the option, the number of shares to which the option pertains, and
such other provisions as the Board shall determine. The award agreement also
shall specify that the option is intended to be a nonqualified stock option
whose grant is intended not to fall under the provisions of section 422 of the
Internal Revenue Code of 1986. The option price for each grant of an option
under the Non-Employee Director Stock Plan shall be at least equal to one
hundred percent (100%) of the fair market value of a share on the award date.
The option price of each option must be paid in full at the time of exercise.
The Board may permit the option price to be paid in cash or through the tender
of shares of the Company's common stock already owned by the non-employee
director, or by a combination of cash and shares. The Board may also allow the
cashless exercise of an option as permitted under the Federal Reserve Board's
Regulation T, subject to applicable securities law restrictions, or by any
other means the Board determines to be consistent with the Non-Employee
Director Stock Plan's purposes and applicable law. Options become exercisable
and terminate at the times and on the terms established by the Board, but
options generally shall not be exercisable later than the tenth (10th)
anniversary date of the grant.

Restricted Stock Awards. Restricted stock awards are shares of the
Company's common stock which vest in accordance with terms established by the
Board in its discretion. Each restricted stock grant shall be evidenced by a
restricted stock award agreement that shall specify the period of restriction,
the number of shares of restricted stock granted, and such other provisions as
the Board shall determine. For example, the Board may provide that the
restricted stock will vest only if one or more performance goals are satisfied
and/or if the non-employee director remains as a director of the Company for a
specified period of time. Any performance measures may be applied on a
Company-wide basis or an individual unit basis, as deemed appropriate in light
of the non-employee director's specific responsibilities. During the period of
restriction, the non-employee director holding shares of restricted stock may
exercise full voting rights with respect to the shares and may be credited
with regular cash dividends paid with respect to the shares.

Nontransferability of Awards. Awards granted under the Non-Employee
Director Stock Plan may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than (except in the case of
restricted stock) by will or by the applicable laws of descent and
distribution, provided that in the discretion of the Board, a non-employee
director's award agreement may provide otherwise.

Change in Control. On the occurrence of a change in control, all options
granted become immediately exercisable, any period of restriction and
restrictions imposed on restricted stock lapse and all target payout
opportunities attainable under all outstanding awards of restricted stock
shall be deemed to have been fully earned for the entire performance period as
of the effective date of a change in control. In addition, the vesting of all
awards denominated in shares shall accelerate as of the effective date of the
change in control and certain cash payments shall be made to non-employee
directors with respect to the assumed achievement of any performance goals on
a pro rata basis. For purposes of the Non-Employee Director Stock Plan, a
"change in control" means, generally, either (i) any person acquires
beneficial ownership of more than thirty-five percent (35%) of the Company's
voting power, (ii) during any two (2) consecutive year period there is a
change in those persons constituting a majority of the Board at the beginning
of such period, or (iii) a plan of complete liquidation, an agreement for the
sale of substantially all of the Company's assets or a merger, consolidation
or reorganization of the Company involving current stockholders obtain at
least sixty-five percent (65%) of the voting power of the Company (or
surviving entity).

Tax Aspects. Based on management's understanding of the current federal
income tax laws, the tax consequences of the grant of awards under the Non-
Employee Director Stock Plan are as follows:

A non-employee director who receives an automatic award of shares will
recognize as taxable ordinary income an amount equal to the fair market value
of the shares on the award date.

A non-employee director who receives an option granted under the Non-
Employee Director Stock Plan will not have taxable income at the time of the
grant. Upon exercise of a nonqualified stock option, the non-employee director
generally must recognize as taxable ordinary income an amount equal to the
fair market value on the date of exercise of the shares exercised minus the
option price. Any gain or loss recognized upon any later sale or other
disposition of the acquired shares generally will be a capital gain or loss.

A non-employee director who receives restricted stock will not recognize
taxable income upon receipt, but instead will recognize ordinary income when
the shares vest. Alternatively, the non-employee director may elect under
section 83(b) of the Internal Revenue Code to be taxed at the time of receipt
of the restricted stock. If the restricted stock is subsequently forfeited,
the non-employee director is not entitled to a deduction for the loss.
However, if the non-employee director holds the restricted stock until after
the shares vest and subsequently sells the shares upon vesting, the gain will
be taxed as a capital gain as opposed to ordinary income. In all cases, the
amount of ordinary income recognized by the non-employee director will be
equal to the fair market value of the shares at the time income is recognized,
minus the amount, if any, paid for the shares.

Any taxes required to be withheld must be paid by the non-employee director
at the time of exercise. With respect to withholding required upon exercise of
options, non-employee directors may elect, subject to approval by the Board,
to satisfy tax withholding requirements in whole or in part by having the
Company withhold shares having a fair market value on the date that the tax is
determined equal to the minimum statutory total tax which could be imposed on
the transaction.

The Company generally will be entitled to a tax deduction in connection
with an award made under the Non-Employee Director Stock Plan only to the
extent that the non-employee director recognizes ordinary income from the
award.

The proposed amendment to the Non-employee Director Stock Plan requires the
approval of the affirmative vote of a majority of the outstanding shares of
common stock present (in person or by proxy) and entitled to vote at the
Annual Meeting. Abstentions and broke or non-votes are counted in determining
the total number of shares present at the Annual Meeting and thus have the
effect of a vote against the proposal.

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT AND RESTATEMENT OF THE NON-EMPLOYEE DIRECTOR STOCK PLAN IN THE FORM
ATTACHED HERETO.

INDEPENDENT AUDITORS

The Board had appointed Arthur Andersen LLP ("Andersen"), independent
public accountants, as auditors of the Company for the fiscal year ending
December 29, 2002. In light of recent events and developments concerning
Andersen subsequent to the fiscal year ended December 30, 2001, the Audit
Committee has undertaken additional inquiry and diligence by monitoring events
and circumstances impacting Andersen's abilities to fulfill auditor
responsibilities to the Company. During May 2002 the Audit Committee and
management met with two other independent accounting firms to establish
potential alternatives for the Company should circumstances later warrant. On
June 6, 2002, the Audit Committee received a report from management concerning
developments related to Andersen and the Audit Committee concluded that it was
unlikely Andersen would be able to fulfill the role of independent accountant
to the Company for fiscal year 2002. On June 7, 2002 the Audit Committee
presented this conclusion to the Board and unanimously recommended that the
Company discharge Andersen and retain Ernst & Young LLP ("E&Y") as the
Company's independent auditors for fiscal year ending December 29, 2002. This
recommendation was then unanimously approved by the Board subject to the
execution of appropriate documentation between the Company and E&Y.

The reports of Andersen on the financial statements of the Company for each
of the fiscal years ended December 30, 2001 and December 31, 2000 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. For the fiscal years
ended December 30, 2001 and December 31, 2000 and within the interim period
from December 31, 2001 through June 7, 2002, there were no disagreements with
Andersen on any matter of accounting principles or practices, financial
statement disclosure or audit scope or procedure which, if not resolved to the
satisfaction of Andersen, would have caused it to make reference to the
subject matter of such disagreement in its reports on the financial statements
for such fiscal years. Except to the extent discussed below, there were no
reportable events within the meaning of Item 304(a)(l)(v) of Regulation S-K
for the fiscal years ended December 30, 2001 and December 30, 2000 and within
the interim period from December 31, 2001 through June 7, 2002.

During each of the two most recent fiscal years and within the interim
period from December 31, 2001 through June 7, 2002, the Company did not
consult E&Y with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated financial
statements, or any other matters or reportable events as set forth in
Items 304(a)(2)(i) and (ii) of Regulation S-K.

The Company does not expect Andersen to have a representative at the Annual
Meeting and does not know if E&Y will have a representative available to
appear at the Annual Meeting.

Audit Fees

The aggregate fees billed by Andersen for professional services rendered
for the audit of the Company's financial statements for the fiscal year ended
December 30, 2001 and for the reviews of the financial statements included in
the Company's Form 10-Qs for that fiscal year were $455,000.

Financial Information Systems Design and Implementation Fees

The Company was not billed any fees for professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by Andersen for
the fiscal year ended December 30, 2001.

All Other Fees

The aggregate fees billed for services rendered by Andersen, other than the
services described above under the headings "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for the fiscal year ended
December 30, 2001 were $307,000.

The Audit Committee has considered whether the provision of services other
than those described above under the heading "Audit Fees" are compatible with
maintaining the independence of the Company's principal accountants.

ANNUAL REPORT

The Company's Annual Report to Stockholders for fiscal year 2001 is being
mailed to all stockholders. Any stockholder who has not received a copy may
obtain one by writing to the Company.

THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K/A (Amendment No. 2), FOR THE YEAR ENDED DECEMBER 30, 2001 (EXCLUSIVE OF
EXHIBITS THERETO), FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON
REQUEST OF ANY PERSON WHO WAS A HOLDER OF RECORD, OR WHO REPRESENTS IN GOOD
FAITH THAT HE OR SHE WAS A BENEFICIAL OWNER, OF COMMON STOCK ON JUNE 7, 2002.
ANY SUCH REQUEST SHALL BE IN WRITING AND ADDRESSED TO THE SECRETARY OF THE
COMPANY, 600 CITADEL DRIVE, COMMERCE, CALIFORNIA 90040, TELEPHONE NUMBER (323)
869-7500.

SUBMISSION OF STOCKHOLDER PROPOSALS

The Company's Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate directors at an
annual or special meeting of stockholders, must provide timely notice thereof
in writing. To be timely, a stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Company (i) in
the case of an annual meeting that is called for a date that is within 30 days
before or after the anniversary date of the immediately preceding annual
meeting of stockholders, not less than 60 days nor more than 90 days prior to
such anniversary date and (ii) in the case of an annual meeting that is called
for a date that is not within 30 days before or after the anniversary date of
the immediately preceding annual meeting, or in the case of a special meeting
of stockholders, not later than the close of business on the tenth day
following the day on which notice of the date of the meeting was mailed or
public disclosure of the date of the meeting was made, whichever occurs first.
The Bylaws also specify certain requirements for a stockholder's notice to be
in proper written form. If the Company does not receive timely notice of any
such proposed business, the proxy holders may exercise discretionary authority
with respect to that proposal. If the Company does receive timely notice of
any such proposed business, the proxy holders may exercise discretionary
authority with respect to that proposal but only to the extent permitted by
the regulations of the Securities and Exchange Commission.

A proposal by a stockholder intended to be presented at the 2003 Annual
Meeting must be received by the Company at its principal executive offices by
December 17, 2002, to be included in the Proxy Statement for that Annual
Meeting, and all other conditions for such inclusion must be satisfied.

OTHER MATTERS

The Company knows of no other matters to be brought before the Annual
Meeting. However, if any other matters are properly presented for action, the
persons named in the accompanying proxy intend to vote on such matter in their
discretion.

SOLICITATION OF PROXIES

The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail, telephone or telegram and personally by
directors, officers and other employees of the Company, but such persons will
not receive any compensation for such services over and above their regular
salaries. The Company will reimburse brokers, banks, custodians, nominees and
fiduciaries holding stock in their names or in the names of their nominees for
their reasonable charges and expenses in forwarding proxies and proxy material
to the beneficial owners of such stock.

BY ORDER OF THE BOARD OF DIRECTORS

Donald G. Alvarado
Secretary

June 14, 2002

EXHIBIT A

SMART & FINAL INC.

LONG-TERM EQUITY COMPENSATION PLAN

(AMENDED AND RESTATED)

ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION

1.1. Establishment of the Plan. Smart & Final Inc., a Delaware corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "Smart & Final Inc. Long-Term Equity
Compensation Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares and Performance Units.

The Plan shall become effective as of February 21, 1997 (the "Effective
Date") and shall remain in effect as provided in Article 1.3 hereof. The Plan,
as amended and restated, shall become effective as of September 1, 2001.

1.2. Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.

The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants
to share in the success of the Company.

1.3. Duration of the Plan. The Plan shall commence on the Effective Date,
as described in Article 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after December 31, 2010.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:

2.1. "Award" means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units.

2.2. "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.

2.3. "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.

2.4. "Board" or "Board of Directors" means the Board of Directors of the
Company.

2.5. "Change in Control" of the Company shall be deemed to have occurred
(as of a particular day, as specified by the Board) upon the occurrence of any
event described in this Article 2.5 as constituting a Change in Control.

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A Change in Control will be deemed to have occurred as of the first day any
one (1) or more of the following events shall have been satisfied:

(a) Any Person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), becomes the Beneficial Owner, directly or indirectly, of
securities of the Company, representing more than thirty-five percent (35%)
of the combined voting power of the Company's then outstanding securities;
or (b) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of
such period constitute the Board (and any new Director, whose election by
the Company's stockholders was approved by a vote of at least two-thirds (
2/3) of the Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority thereof; or (c)
The stockholders of the Company approve: (i) a plan of complete liquidation
of the Company; or (ii) an agreement for the sale or disposition of all or
substantially all the Company's assets; or (iii) a merger, consolidation,
or reorganization of the Company with or involving any other corporation,
other than a merger, consolidation, or reorganization that would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least sixty-
five percent (65%) of the combined voting power of the voting securities of
the Company (or such surviving entity) outstanding immediately after such
merger, consolidation, or reorganization.

However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Participant, if that Participant is part of a purchasing
group which consummates the Change-in-Control transaction. The Participant
shall be deemed "part of a purchasing group" for purposes of the preceding
sentence if the Participant is an equity participant or has agreed to become
an equity participant in the purchasing company or group (except for (i)
passive ownership of less than three percent (3%) of the voting equity
securities of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is otherwise deemed not
to be significant, as determined prior to the Change in Control by a majority
of the continuing Non-Employee Directors).

2.6. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

2.7. "Committee" means the Compensation Committee of the Board, as
specified in Article 3 herein, or such other Committee appointed by the Board
to administer the Plan with respect to grants of Awards.

2.8. "Company" means Smart & Final Inc., a Delaware corporation, including
any and all Subsidiaries, and any successor thereto as provided in Article 18
herein.

2.9. "Director" means any individual who is a member of the Board of
Directors of the Company.

2.10. "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan exists,
at the discretion of the Committee.

2.11. "Effective Date" shall have the meaning ascribed to such term in
Article 1.1 hereof.

2.12. "Employee" means any full-time, active employee of the Company.
Directors who are not employed by the Company shall not be considered
Employees under this Plan.

2.13. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

2.14. "Fair Market Value" shall be determined on the basis of the closing
sale price on the principal securities exchange on which the Shares are traded
or, if there is no such sale on the relevant date, then on the last previous
day on which a sale was reported.

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2.15. "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.

2.16. "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.

2.17. "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.

2.18. "Named Executive Officer" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.

2.19. "Nonemployee Director" means an individual who is a member of the
Board of Directors of the Company but who is not an Employee of the Company.

2.20. "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.

2.21. "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.

2.22. "Option Price" or "Exercise Price" means the price at which a Share
may be purchased by a Participant pursuant to an Option.

2.23. "Participant" means an Employee who has outstanding an Award granted
under the Plan.

2.24. "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).

2.25. "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.

2.26. "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.

2.27. "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.

2.28. "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

2.29. "Restricted Stock" means an Award granted to a Participant pursuant
to Article 8 herein.

2.30. "Retirement" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.

2.31. "Shares" means the shares of common stock of the Company.

2.32. "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.

2.33. "Subsidiary" means any corporation, partnership, joint venture, or
other entity in which the Company has a majority voting interest (including
all division, affiliates, and related entities).

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2.34. "Tandem SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Option
(and when a Share is purchased under the Option, the Tandem SAR shall
similarly be canceled).

ARTICLE 3. ADMINISTRATION

3.1. The Committee. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board.

3.2. Authority of the Committee. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Persons who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan as they apply to any eligible Persons; establish, amend,
or waive rules and regulations for the Plan's administration as they apply to
eligible Persons; and (subject to the provisions of Article 15 herein) amend
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan.
Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan, as the Plan applies
to eligible Persons. As permitted by law, the Committee may delegate its
authority as identified herein.

3.3. Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all
Persons, including the Company, its stockholders, Employees, Participants, and
their estates and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

4.1. Number of Shares Available for Grant. Subject to adjustment as
provided in Article 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be Five Million One Hundred
Thousand (5,100,000), provided that effective as of May 30 of each year, there
shall be an automatic increase in the number of Shares available for Awards to
eligible Participants in an amount equal to the number of Shares issued by
reason of such Awards being exercised during such fiscal year, (provided that
the maximum aggregate number of Shares available for Awards under the Plan
during any fiscal year of the Company shall not exceed seventeen and four-
tenths percent (17.4%) of the adjusted average of the outstanding Common
Stock, as that number is determined by the Company to calculate fully diluted
earnings per share for the preceding fiscal year) and provided further that
the maximum number of Shares available for Awards of Incentive Stock Options
under the Plan shall be Five Hundred Ten Thousand (510,000) shares. The
Committee shall determine the appropriate methodology for calculating the
number of shares issued pursuant to the Plan.

Unless and until the Committee determines that an Award to a Named
Executive Officer shall not be designed to comply with the Performance-Based
Exception, the following rules shall apply to grants of such Awards under the
Plan:

(a) Options: The maximum aggregate number of Shares that may be granted
in the form of Options, pursuant to any Award granted in any one fiscal
year to any one single Participant shall be three hundred thousand
(300,000).

(b) SARs: The maximum aggregate number of Shares that may be granted in
the form of Stock Appreciation Rights, pursuant to any Award granted in any
one fiscal year to any one single Participant shall be one hundred thousand
(100,000).

(c) Restricted Stock: The maximum aggregate grant with respect to Awards
of Restricted Stock granted in any one fiscal year to any one Participant
shall be one hundred thousand (100,000) Shares.

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(d) Performance Shares/Performance Units: The maximum aggregate payout
with respect to Awards of Performance Shares or Performance Units granted
in any one fiscal year to any one Participant shall be the value of two
million dollars ($2 million) at the end of the Performance Period.

4.2. Adjustments in Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares which may be
delivered under Article 4.1, in the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan, and in the Award limits
set forth in subarticles 4.1(a) and 4.1(b), as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of
Shares subject to any Award shall always be a whole number.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1. Eligibility. Persons eligible to participate in this Plan include all
Employees, including employees who are members of the Board of Directors of
the Company and its subsidiaries.

5.2. Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Persons, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.

ARTICLE 6. STOCK OPTIONS

6.1. Eligibility; Grant of Options. Subject to the terms and provisions of
the Plan, Options may be granted to eligible Persons in such number, and upon
such terms, and at any time and from time to time as shall be determined by
the Committee.

6.2. Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as
the Committee shall determine. The Award Agreement also shall specify whether
the Option is intended to be an ISO within the meaning of Code Section 422, or
an NQSO whose grant is intended not to fall under the provisions of Code
Section 422.

6.3. Option Price. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.

6.4. Duration of Options. Each Option granted to an Employee shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.

6.5. Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, which need not be the same
for each grant or for each Participant.

6.6. Payment. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) subject to
applicable securities law restrictions, by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the total Option Price (provided that the Shares which are tendered must have
been held by the Participant for at least six (6) months prior to their tender

A-5

to satisfy the Option Price), or (c) by a combination of (a) and (b), as the
Committee may specify in the Award Agreement entered into with each
Participant.

The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law. Subject to any
governing rules or regulations, as soon as practicable after receipt of a
written notification of exercise and full payment, the Company shall deliver
to the Participant, in the Participant's name, Share certificates in an
appropriate amount based upon the number of Shares purchased under the
Option(s).

6.7. Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.

6.8. Termination of Employment. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Options issued pursuant to this
Article 6, and may reflect distinctions based on the reasons for termination
of employment with the Company.

6.9. Non-transferability of Options.

(a) Incentive Stock Options. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
ISOs granted to a Participant under the Plan shall be exercisable during
his or her lifetime only by such Participant.

(b) Nonqualified Stock Options. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant.

ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1. Eligibility; Grant of SARs. Subject to the terms and conditions of
the Plan, SARs may be granted to eligible Persons at any time and from time to
time as shall be determined by the Committee. The Committee may grant
Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.

The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs. The grant price of a Freestanding SAR shall equal the
Fair Market Value of a Share on the date of grant of the SAR. The grant price
of Tandem SARs shall equal the Option Price of the related Option.

7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR
may be exercised only with respect to the Shares for which its related Option
is then exercisable.

Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%)

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of the difference between the Option Price of the underlying ISO and the Fair
Market Value of the Shares subject to the underlying ISO at the time the
Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when
the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.

7.3. Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.

7.4. SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.

7.5. Term of SARs. The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.

7.6. Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.

7.7. Termination of Employment. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and/or
its subsidiaries. Such provisions shall be determined in the sole discretion
of the Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of
employment.

7.8. Non-transferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime
only by such Participant.

ARTICLE 8. RESTRICTED STOCK

8.1. Eligibility; Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to eligible Persons in such amounts as the
Committee shall determine. Without limiting the generality of the foregoing,
Shares of Restricted Stock may be granted in connection with payouts under
other compensation programs of the Company.

8.2. Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock granted,
and such other provisions as the Committee shall determine.

8.3. Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Restricted Stock Award Agreement, or upon earlier satisfaction of any
other conditions, as specified by the Committee in its sole discretion and set
forth in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.

8.4. Other Restrictions. The Committee may impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a

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requirement that Participants pay a stipulated purchase price for each Share
of Restricted Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), time-based
restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable Federal or state securities laws.

The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied. Except as
otherwise provided in this Article 8, Shares of Restricted Stock covered by
each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.

8.5. Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.

8.6. Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying
Shares while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the
generality of the preceding sentence, if the grant or vesting of Restricted
Shares granted to a Named Executive Officer is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Shares, such that the dividends and/or the
Restricted Shares maintain eligibility for the Performance-Based Exception.

8.7. Termination of Employment. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's
employment with the Company. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Shares of Restricted
Stock issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of employment with the Company; provided, however
that, except in the cases of terminations connected with a Change in Control
and terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock which qualify for the Performance-Based Exception and which
are held by Named Executive Officers shall occur at the time they otherwise
would have, but for the employment termination.

ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES

9.1. Eligibility; Grant of Performance Units/Shares. Subject to the terms
of the Plan, Performance Units and/or Performance Shares may be granted to
eligible Persons upon such terms, and at any time and from time to time, as
shall be determined by the Committee.

9.2. Value of Performance Units/Shares. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value
of a Share on the date of grant. The Committee shall set performance goals in
its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be
paid out to the Participant. For purposes of this Article 9, the time period
during which the performance goals must be met shall be called a "Performance
Period."

9.3. Earning of Performance Units/Shares. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved.

9.4. Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares shall be made in a single lump sum following
the close of the applicable Performance Period.

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Subject to the terms of this Plan, the Committee, in its sole discretion, may
pay earned Performance Units/Shares in the form of cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares at the close of the applicable
Performance Period. Such Shares may be granted subject to any restrictions
deemed appropriate by the Committee.

At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which
have been earned, but not yet distributed to Participants (such dividends
shall be subject to the same accrual, forfeiture, and payout restrictions as
apply to dividends earned with respect to Shares of Restricted Stock, as set
forth in Article 8.6 herein). In addition, Participants may, at the discretion
of the Committee, be entitled to exercise their voting rights with respect to
such Shares.

9.5. Termination of Employment Due to Death, Disability, or
Retirement. Unless determined otherwise by the Committee and set forth in the
Participant's Award Agreement, in the event the employment of a Participant is
terminated by reason of death, Disability, or Retirement during a Performance
Period, the Participant shall receive a payout of the Performance Units/Shares
which is prorated, as specified by the Committee in its discretion. Payment of
earned Performance Units/Shares shall be made at a time specified by the
Committee in its sole discretion and set forth in the Participant's Award
Agreement. Notwithstanding the foregoing, with respect to Named Executive
Officers who retire during a Performance Period, payments shall be made at the
same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.

9.6. Termination of Employment for Other Reasons. In the event that a
Participant's employment terminates for any reason other than those reasons
set forth in Article 9.5 herein, all Performance Units/Shares shall be
forfeited by the Participant to the Company unless determined otherwise by the
Committee, as set forth in the Participant's Award Agreement.

9.7. Non-transferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Further, except as otherwise
provided in a Participant's Award Agreement, a Participant's rights under the
Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.

ARTICLE 10. PERFORMANCE MEASURES

Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used for purposes of such grants shall be chosen from among
profits, net income (either before or after taxes), share price, earnings per
share, return on assets, return on equity, operating income, return on
capital, return on investment, stockholder return, sales, customer service,
employee satisfaction, or economic value added. The Committee shall have the
discretion to adjust the determinations of the degree of attainment of the
pre-established performance goals; provided, however, that Awards which are
designed to qualify for the Performance-Based Exception, and which are held by
Named Executive Officers, may not be adjusted upward (the Committee shall
retain the discretion to adjust such Awards downward).

In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).

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ARTICLE 11. BENEFICIARY DESIGNATION

Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a
form prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.

ARTICLE 12. DEFERRALS

The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.

ARTICLE 13. RIGHTS TO CONTINUED SERVICE

13.1. Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment or
directorship at any time, nor confer upon any Participant any right to
continue in the employ of the Company.

13.2. Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.

ARTICLE 14. CHANGE IN CONTROL

14.1. Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:

(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;

(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse;

(c) The target payout opportunities attainable under all outstanding
Awards of Restricted Stock, Performance Units and Performance Shares shall
be deemed to have been fully earned for the entire Performance Period(s) as
of the effective date of the Change in Control. The vesting of all Awards
denominated in Shares shall be accelerated as of the effective date of the
Change in Control, and there shall be paid out in cash to Participants
within thirty (30) days following the effective date of the Change in
Control a pro rata amount based upon an assumed achievement of all relevant
performance goals and upon the length of time within the Performance Period
which has elapsed prior to the Change in Control.

14.2. Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant's
outstanding Awards; provided, however, the Board, upon recommendation of the
Committee, may terminate, amend, or modify this Article 14 at any time and
from time to time prior to the date of a Change in Control.

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ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION

15.1. Amendment, Modification, and Termination. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, however, that no amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3 under the
Exchange Act, including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of stockholders of the
Company entitled to vote thereon.

15.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual
or nonrecurring events (including, without limitation, the events described in
Article 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that
no such adjustment shall be authorized to the extent that such authority would
be inconsistent with the Plan's meeting the requirements of Section 162(m) of
the Code, as from time to time amended.

15.3. Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.

15.4. Compliance with Code Section 162(m). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes
are made to Code Section 162(m) to permit greater flexibility with respect to
any Award or Awards available under the Plan, the Committee may, subject to
this Article 15, make any adjustments it deems appropriate.

ARTICLE 16. WITHHOLDING

16.1. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy Federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

16.2. Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee,
to satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to
be determined equal to the minimum statutory total tax which could be imposed
on the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE 17. INDEMNIFICATION

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him or her in settlement
thereof, with the Company's approval, or paid by him or her in satisfaction of
any judgement in any such action,

A-11

suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation of Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.

ARTICLE 18. SUCCESSORS

All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

ARTICLE 19. LEGAL CONSTRUCTION

19.1. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.

19.2. Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

19.3. Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

19.4. Securities Law Compliance. With respect to Insiders, transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.

19.5. Governing Law. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.

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EXHIBIT B

SMART & FINAL INC.

NON-EMPLOYEE DIRECTOR STOCK PLAN
(AMENDED AND RESTATED)

1. PURPOSE

The purpose of this Smart & Final Inc. Non-Employee Director Stock Plan
(this "Plan") is to promote the interests of the Company and its stockholders
by (i) providing an incentive to those directors of the Company who are not
employees of the Company or its subsidiaries to serve on the Board, and (ii)
linking the personal interests of such directors with the interests of the
stockholders in the continuing financial success of the Company.

2. DEFINITIONS

For purposes of this Plan, each term set forth in this Section 2 shall have
the meaning set forth opposite such term and, when the defined meaning is
intended, the term is capitalized.

2.1 "Award Agreement" means an agreement entered into by the Company and
each Non-Employee Director setting forth the terms and provisions applicable
to awards granted under this Plan.

2.2 "Award Date" means, (i) for purposes of the initial automatic award of
Shares under Section 4 of this Plan, May 10, 1996 and, thereafter, for
purposes of automatic awards of Shares under Section 4, May 1 of each
succeeding year in which this Plan is in effect, and (ii) for purposes of
awards of Options or Restricted Stock under Section 5 and 6 of this Plan, the
date on which such awards of Options or Restricted Stock are granted to any
Non-Employee Director.

2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.

2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company.

2.5 "Change in Control" of the Company shall be deemed to have occurred (as
of a particular day, as specified by the Board) upon the occurrence of any
event described in this Section 2.5 as constituting a Change in Control.

A Change in Control will be deemed to have occurred as of the first day any
one (1) or more of the following events shall have been satisfied:

(a) Any Person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), becomes the Beneficial Owner, directly or indirectly, of
securities of the Company, representing more than thirty-five percent (35%)
of the combined voting power of the Company's then outstanding securities;
or (b) During any period of two (2) consecutive years (not including any
period prior to July 2, 2002), individuals who at the beginning of such
period constitute the Board (and any new Director, whose election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority thereof; or (c)
The stockholders of the Company approve: (i) a plan of complete liquidation
of the Company; or (ii) an agreement for the sale or disposition of all or
substantially all the Company's assets; or (iii) a merger, consolidation,
or reorganization of the Company with or involving any other corporation,
other than a merger, consolidation, or reorganization that would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to

B-1

represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least sixty-five percent
(65%) of the combined voting power of the voting securities of the Company
(or such surviving entity) outstanding immediately after such merger,
consolidation, or reorganization.

However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Non-Employee Director, if that Non-Employee Director is part
of a purchasing group which consummates the Change-in-Control transaction. The
Non-Employee Director shall be deemed "part of a purchasing group" for
purposes of the preceding sentence if the Non-Employee Director is an equity
participant or has agreed to become an equity participant in the purchasing
company or group (except for (i) passive ownership of less than three percent
(3%) of the voting equity securities of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group which is
otherwise deemed not to be significant, as determined prior to the Change in
Control by a majority of the continuing Non-Employee Directors).

2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

2.7 "Company" means Smart & Final Inc., a Delaware corporation.

2.8 "Director" means any individual who is a member of the Board.

2.9 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

2.10 "Fair Market Value" shall be determined on the basis of the closing
price on the principal securities exchange on which the Shares are traded or,
if there is no such sale on the relevant date, then on the last previous day
on which a sale was reported.

2.11 "Non-Employee Director" means any Director who is not and has not been
an employee of the Company.

2.12 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Section 6 herein and which is not intended to meet the
requirements of Code Section 422.

2.13 "Option" means a Nonqualified Stock Option as described in Section 6
herein.

2.14 "Option Price" or "Exercise Price" means the price at which a Share
may be purchased by a Non-Employee Director pursuant to an Option.

2.15 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Board, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Section 6 herein.

2.16 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

2.17 "Plan" means this Smart & Final Inc. Non-Employee Director Stock Plan,
as the same may be amended from time to time.

2.18 "Plan Committee" means the Governance Committee of the Board, or any
successor committee of the Board which the Board appoints to administer this
Plan.

2.19 "Restricted Stock" means an award granted to a Non-Employee Director
pursuant to Section 6 herein.

B-2

2.20 "Rule 16b-3" means Rule 16b-3 as promulgated under Section 16(b) of
the Exchange Act, or any successor provisions thereto.

2.21 "Share(s)" mean share(s) of Stock.

2.22 "Stock" means the Common Stock, par value $.01 per share, of the
Company.

3. SHARES AVAILABLE FOR AWARD

Shares awarded under this Plan may be authorized but unissued Shares or
authorized and issued shares held in the Company's treasury or acquired by the
Company for purposes of this Plan. The aggregate number of Shares to be
awarded under this Plan shall not exceed 375,000 shares, provided, however, in
the event of any change in the outstanding Shares by reason of a
recapitalization, stock dividend, stock split, split-up, combination or
exchange of shares or any similar change affecting the Stock, the Board (whose
determination shall be conclusive) shall make appropriate and proportionate
adjustments in the aggregate share limitation set forth in the immediately
preceding clause. Effective as of May 30 of each year, there shall be an
automatic increase in the number of Shares, Options and Restricted Stock
available for award to Non-Employee Directors in an amount equal to the number
of Shares issued during the prior fiscal year by reason of such awards being
exercised during such fiscal year (provided that the maximum aggregate number
of Shares, Options and Restricted Stock available for award to Non-Employee
Directors under the Non-Employee Director Stock Plan during any fiscal year of
the Company shall not exceed one and three-tenths percent (1.3%) of the
adjusted average of the outstanding Common Stock, as that number is determined
by the Company to calculate fully diluted earnings per share for the
preceeding fiscal year) and there shall also be an automatic increase in the
number of Shares available for such awards, so that at all times the Non-
Employee Director Stock Plan shall have 375,000 Shares available for awards as
provided in the Non-Employee Director Stock Plan. No fractional Shares shall
be issued under this Plan as a result of any adjustment made under this
Section 3.

4. AUTOMATIC AWARD OF SHARES

An award of Shares shall be automatically made on the Award Date to each
Non-Employee Director who is serving as such on the Award Date. Each award
shall comprise that number of Shares equal to the quotient of $15,000 divided
by the Fair Market Value of a Share on the Award Date; provided, however, if
this award calculation results in fractional Shares, such award shall be
rounded down to the nearest whole Share number and cash shall be paid in lieu
of fractional shares, and provided, further, if at any time there are not
sufficient Shares available under this Plan to permit the award of Shares to
be made to all Non-Employee Directors eligible therefor, then the award of
Shares to be made to all such eligible Non-Employee Directors under this
Section 4 shall be reduced pro rata (to zero if necessary) so as to not exceed
the number of Shares available for award under this Plan and cash shall be
paid in lieu of the difference. In the event that any Shares awarded under
this Section 4 are newly issued by the Company, the Non-Employee Director
receiving such Shares shall pay to the Company, in cash, an amount equal to
the par value of such Shares. Any Shares awarded under this Plan must be held
by such Non-Employee Director at least six months after the Award Date or, in
the case of Shares awarded on May 10, 1996, six months after the date of the
stockholder approval of this Plan, as described in Section 10.1 of this Plan.

5. GRANT OF OPTIONS

5.1 Eligibility; Grant of Options. Subject to the terms and provisions of
the Plan, Options may be granted to Non-Employee Directors in such number, and
upon such terms, and at any time and from time to time as shall be determined
by the Board. Notwithstanding anything in this Plan to the contrary, (a) Non-
Employee Directors may be granted only an NQSO and (b) (i) any grant of an
NQSO to a Non-Employee Director shall be (A) approved by the Board (and not a
committee thereof) in the manner provided in Rule 16b-3(d)(1) promulgated
under the Exchange Act or (B) otherwise approved or ratified in the manner
provided in Rule 16b-3(d)(2) promulgated under the Exchange Act; or (ii) such
Non-Employee Director shall hold such NQSO for at least the period provided in
Rule 16b-3(d)(3) promulgated under the Exchange Act.

B-3

5.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as
the Board shall determine. The Award Agreement also shall specify that the
Option is intended to be an NQSO whose grant is intended not to fall under the
provisions of Code Section 422.

5.3 Option Price. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the Award Date.

5.4 Duration of Options. Each Option granted to an Employee shall expire at
such time as the Board shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.

5.5 Exercise of Options. Options granted under this Section 5 shall be
exercisable at such times and be subject to such restrictions and conditions
as the Board shall in each instance approve, which need not be the same for
each grant or for each Non-Employee Director.

5.6 Payment. Options granted under this Section 5 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) subject to
applicable securities law restrictions, by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the total Option Price (provided that the Shares which are tendered must have
been held by the Non-Employee Director for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b), as the Board may specify in the Award Agreement entered into with each
Non-Employee Director.

The Board also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Board determines to be
consistent with the Plan's purpose and applicable law.

Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Non-Employee Director, in the Non-Employee Director's
name, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).

5.7 Restrictions on Share Transferability. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Section 5 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.

5.8 Termination of Directorship. Each Non-Employee Director's Award
Agreement shall set forth the extent to which the Non-Employee Director shall
have the right to exercise the Option following termination of the Non-
Employee Director's service as a Director of the Company. Such provisions
shall be determined in the sole discretion of the Board, shall be included in
the Award Agreement entered into with each Non-Employee Director, need not be
uniform among all Options issued pursuant to this Section 5, and may reflect
distinctions based on the reasons for termination of service as a Director of
the Company.

5.9 Non-transferability of Options. Except as otherwise provided in a Non-
Employee Director's Award Agreement, no NQSO granted under this Section 5 may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in a Non-Employee Director's Award
Agreement, all NQSOs granted to a Non-Employee Director under this Section 5
shall be exercisable during his or her lifetime only by such Non-Employee
Director.

B-4

6. RESTRICTED STOCK

6.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Shares of
Restricted Stock to Non-Employee Directors in such amounts as the Board shall
determine. Without limiting the generality of the foregoing, Shares of
Restricted Stock may be granted in connection with payouts under other
compensation programs of the Company.

6.2 Restricted Stock Award Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock granted,
and such other provisions as the Board shall determine.

6.3 Transferability. Except as provided in this Section 6, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Board and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Board in its sole discretion and set forth in
the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Non-Employee Director under the Plan shall be
available during his or her lifetime only to such Non-Employee Director.

6.4 Other Restrictions. The Board may impose such other conditions and/or
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, a requirement that Non-
Employee Directors pay a stipulated purchase price for each Share of
Restricted Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), time-based
restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable Federal or state securities laws.

Except as otherwise provided in this Section 6, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Non-Employee Director after the last day of the applicable
Period of Restriction.

6.5 Voting Rights. During the Period of Restriction, Non-Employee Directors
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.

6.6 Dividends and Other Distributions. During the Period of Restriction,
Non-Employee Directors holding Shares of Restricted Stock granted hereunder
may be credited with regular cash dividends paid with respect to the
underlying Shares while they are so held. The Board may apply any restrictions
to the dividends that the Board deems appropriate.

6.7 Termination of Directorship. Each Restricted Stock Award Agreement
shall set forth the extent to which the Non-Employee Director shall have the
right to receive unvested Restricted Shares following termination of the Non-
Employee Director's service as a Director of the Company. Such provisions
shall be determined in the sole discretion of the Board, shall be included in
the Award Agreement entered into with each Non-Employee Director, need not be
uniform among all Shares of Restricted Stock issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of service as a
Director of the Company.

B-5

7. CHANGE IN CONTROL

7.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:

(a) Any and all Options granted hereunder shall become immediately
exercisable, and shall remain exercisable throughout their entire term;

(b) Any Periods of Restriction and restrictions imposed on Restricted
Shares shall lapse;

(c) Any target payout opportunities attainable under all outstanding
awards of Restricted Stock shall be deemed to have been fully earned for
the entire performance period(s) as of the effective date of the Change in
Control. The vesting of all awards denominated in Shares shall be
accelerated as of the effective date of the Change in Control, and there
shall be paid out in cash to Non-Employee Directors within thirty (30) days
following the effective date of the Change in Control a pro rata amount
based upon an assumed achievement of all relevant performance goals and
upon the length of time within the performance period which has elapsed
prior to the Change in Control.

7.2 Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Section 7 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any award theretofore granted under the Plan without the prior
written consent of the Non-Employee Director with respect to said Non-Employee
Director's outstanding awards; provided, however, the Board, upon
recommendation of the Plan Committee, may terminate, amend, or modify this
Section 7 at any time and from time to time prior to the date of a Change in
Control.

8. NATURE OF AUTOMATIC AWARD PAYMENTS

All automatic awards of Shares under Section 4 of this Plan shall be in
lieu of a portion of the annual cash retainer fees otherwise due to each
eligible Non-Employee Director in consideration of past services performed for
the Company by such Non-Employee Directors; provided, however, that such
automatic awards of Shares shall not be deemed to constitute "covered
compensation" for purposes of the Smart & Final Directors Deferred
Compensation Plan.

9. ADMINISTRATION

The Plan Committee shall administer this Plan in accordance with its
provisions and shall interpret this Plan, prescribe, amend and rescind any
rules and regulations necessary or appropriate for the administration of this
Plan and make such other determinations and take such other action as it deems
necessary or advisable, except as otherwise expressly reserved to the Board in
this Plan. The Plan Committee shall act by a majority of its members by vote
in a meeting or by written instrument signed by a majority of its members. Any
interpretation, determination, or other action made or taken by the Plan
Committee shall be final and binding upon all Non-Employee Directors and all
other persons. Neither the Plan Committee members nor the Directors, officers
or employees of the Company shall be under any duty to provide to any Non-
Employee Director or any other person tax or legal advice concerning any
matter relating to this Plan. Members of the Plan Committee shall serve
without additional compensation for their services as members, but all
expenses and liabilities they incur in connection with the administration of
this Plan shall be borne by the Company. No Plan Committee member shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, and all such persons shall be fully protected
by the Company with respect to any such action, determination or
interpretation.

B-6

10. EFFECTIVE DATE AND DURATION

10.1 Adoption of this Plan. This Plan was adopted by the Board effective as
of February 22, 1996, subject to the approval of the stockholders of the
Company at the 1996 annual meeting of stockholders and was amended and
restated effective as of July 2, 2002, subject to the approval of the
stockholders of the Company at the 2002 annual meeting of stockholders. The
amendments to this Plan, as set forth in the amended and restated Plan, shall
be automatically null and void in the event that such stockholder approval is
not so obtained in accordance with the applicable laws of the State of
Delaware.

10.2 Term. Unless terminated earlier as provided herein, this Plan shall
terminate on February 22, 2005. No award of Shares shall be made after the
date this Plan terminates; provided, however, the applicable terms and
conditions of this Plan, and any terms and conditions applicable to any award
of Shares made prior to the date this Plan terminates, shall survive the
termination of this Plan.

10.3 Amendment and Termination. The Board may from time to time amend,
modify, suspend or terminate this Plan; provided, however, that no amendment
or modification of this Plan shall become effective without stockholder
approval if such stockholder approval is required by law, rule or regulation,
and provided, further, to the extent required under Rule 16b-3, the provisions
of this Plan shall not be amended or modified more than once every six months,
except that the foregoing clause shall not preclude any amendment or
modification to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974 or the rules thereunder in effect from time to
time. Except as otherwise stated in this Plan or required by law, no
amendment, modification, suspension or termination of this Plan shall
materially and adversely alter or impair any right of any Non-Employee
Director with respect to any prior award of Shares, without the written
consent of such Non-Employee Director.

10.4 Reformation to Comply with Rule 16b-3. It is the intent of the Company
that this Plan comply in all respects with the applicable provisions of Rule
16b-3 in connection with any award of Shares to a Non-Employee Director.
Accordingly, if any provision of this Plan does not comply with the
requirements of Rule 16b-3 as then applicable to such transaction, such
provision will be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such Non-Employee
Director shall avoid liability under Section 16(b).

11. MISCELLANEOUS

11.1 Investment Representation. By his or her receipt of an award of
Shares, Options or Restricted Stock under this Plan, a Non-Employee Director
will be deemed to have represented and warranted to the Company that the
Shares, Options or Restricted Stock being acquired are being acquired for
investment and not for resale or with a view to the distribution thereof.

11.2 Compliance With Laws and Regulations. This Plan, any Shares, Options
or Restricted Stock awarded under this Plan, and the obligations of the
Company to issue or deliver Shares, Options or Restricted Stock shall be
subject to all applicable federal and state laws, rules and regulations and to
any approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any Shares, Options, or
Restricted Stock either (i) prior to (a) the listing of such Shares on any
stock exchange on which the Stock may then be listed and (b) the completion of
any registration or qualification of such Shares which is required under any
federal or state law, or any ruling or regulation of any government body, and
which the Company shall, in its sole discretion, determine to be necessary or
advisable; or (ii) until exemptions from such registration and qualification
requirements are established to the reasonable satisfaction of the Company and
its counsel. The Company may, in order to insure that resales are made in
compliance with all applicable federal or state law, imprint a legend on
certificates representing such Shares to the effect that the Shares may not be
resold in the absence of compliance with the applicable restrictions or a
determination that no restrictions are applicable.

B-7

11.3 Non-transferability. A Non-Employee Director's rights and interests
under this Plan may not be assigned, hypothecated, encumbered or transferred,
in whole or in part, whether directly, by operation of law or otherwise
(except, in the event of the death of a Non-Employee Director, by will or the
laws of descent and distribution). Without limiting the generality of the
foregoing, no rights or interests of any Non-Employee Director under this Plan
shall be subject to attachment, execution, garnishment, sequestration, the
laws of bankruptcy or any other legal or equitable process.

11.4 No Rights to Directorship. Nothing in this Plan or in any action taken
under this Plan shall confer upon any Non-Employee Director any right to
continued or future service on the Board and shall not interfere with or limit
in any way the right of the stockholders to remove any Non-Employee Director
from his position as a Director. Participation under this Plan does not
constitute an employment contract between any Non-Employee Director and the
Company or any of its direct or indirect subsidiaries.

11.5 Certain Corporate Transactions. Nothing in this Plan shall in any way
prohibit the Company from merging with or consolidating into another
corporation, or from selling or transferring all or substantially all of its
assets, or from distributing all or substantially all of its assets to its
stockholders in liquidation, or from dissolving and terminating its corporate
existence.

11.6 Unfunded Plan. This Plan shall be unfunded and the Company shall not
be required to establish any special fund or to make any segregation of assets
to assure the award or delivery of Shares, Options or Restricted Stock under
this Plan. To the extent that a Non-Employee Director or any other person
acquires a right to receive an award pursuant to this Plan, such right shall
be no greater than the right of an unsecured general creditor of the Company.

11.7 Taxes. The Company shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to, or to otherwise
require payment from, a Non-Employee Director of an amount sufficient to cover
any federal, state, local or foreign taxes required to be withheld with
respect to any award of Shares, Options or Restricted Stock under this Plan.
The Company shall have the further right to require that a Non-Employee
Director furnish any information deemed necessary by the Company to meet any
tax reporting obligations before delivering any Shares pursuant to this Plan.

11.8 Headings. The Section and other headings contained in this Plan are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.

11.9 Governing Law. The validity and construction of this Plan and any
action taken under this Plan shall be governed by the laws, without regard to
the laws as to choice or conflict of laws, of the State of Delaware.

B-8

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PROXY PROXY

SMART & FINAL INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Donald G. Alvarado and Richard N. Phegley,
and each of them, proxies of the undersigned, each with full power to act
without the other and with power of substitution, to represent the undersigned
and vote as directed on the reverse hereof all shares of Common Stock, $.01 par
value per share, of Smart & Final Inc. (the "Company"), which the undersigned
may be entitled to vote at the Annual Meeting of Stockholders of the Company to
be held on July 2, 2002, or any adjournment thereof, and in their discretion
upon such other business as may properly come before the Annual Meeting, or any
adjournments thereof.

(Continued on reverse side)

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X FOLD AND DETACH HERE X

Admission Ticket

[LOGO OF SMART & FINAL]

2002 Annual Meeting of Stockholders

Tuesday, July 2, 2002
10:00 AM

Smart & Final Inc. Corporate Headquarters
600 Citadel Drive
Commerce, California 90040

PLEASE ADMIT Non-Transferable

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR AND THE FOLLOWING PROPOSALS.

Please mark [X]
your votes as
indicated in
this example

FOR WITHHOLD AUTHORITY
all nominees listed to vote for all
(except as indicated) nominees listed
1. Election of Directors
Nominees: 01 Timm F. Crull, [_] [_]
02 Joel-Andre Ornstein,
and 03 Ross E. Roeder

(INSTRUCTION: To withhold authority to vote for any nominee, cross his name
out above.)
FOR AGAINST ABSTAIN
2. Proposal to Approve the Amended [_] [_] [_]
and Restated Long-Term Equity
Compensation Plan:

FOR AGAINST ABSTAIN
3. Proposal to Approve the Amended [_] [_] [_]
and Restated Non-Employee Director
Stock Plan:

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER AND, IF NO DIRECTIONS ARE GIVEN, WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES AND ALL OF THE PROPOSALS.

Signature______________________________________________ Date __________, 2002

Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee, or guardian, set forth your full title. When
shares are held in more than one name, both parties should sign. If a
corporation, sign in full corporate name by President or other authorized
officer. If a partnership, sign in partnership name by authorized person.

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FOLD AND DETACH HERE

[LOGO OF SMART & FINAL]