EXHIBIT 10.17

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Jeff D. Whynot

 

600 Citadel Drive

Senior Vice President – Human Resources

 

Commerce, California 90040

(323) 869-7642

 

Fax (877) 804-3392

jeff.whynot@smartandfinal.com

 

 

 

 

 

 

January 25, 2014

 

 

 

Eleanor Hong

 

 

Re: Offer of Employment

 

Dear Eleanor:

 

 

I am pleased to offer you the Senior Vice President position of Chief Marketing
Officer for Smart & Final Stores LLC (the “Company”). In that capacity you will
report directly to Dave Hirz, President & CEO. Your office will be located at
the Corporate Office in Commerce, California.

 

Employment.

Your first date of employment is tentatively planned for Monday, February 24,
2014.

 

As is the Company’s policy with all its associates, your employment is deemed
“at will” and may not be made otherwise except in writing by the CEO. Please
acknowledge your acceptance of this offer letter and the items contained herein
by executing the enclosed copy and returning it to me by Monday, January 27,
2014 or it will be deemed to have expired.

 

Compensation.

Your base salary will be $7,692.31 per week which is paid on a biweekly basis
and is $400,000.00 if annualized. You will be a participant in an annual
incentive program with an annual target of 60% of base salary and a maximum of
150% of the target, which is based upon overall company performance against
EBITDA, comparable store sales and new store performance. The 2014 incentive
plan objectives and payment scales are to be finalized at the upcoming Board
meeting on January 31, 2014 and will be sent to you upon Board approval. Your
2014 bonus payment will not be prorated. You must be employed at the end of the
fiscal plan year in order to be eligible for that year’s bonus payment, except
as provided below under the heading “Termination.”

 

Benefits.

You will accrue 4 weeks of vacation per year and the accrual is capped at 8
weeks (two times your annual accrual).

 

You will be eligible for medical, dental, vision, and life insurance, at 1x your
annual salary, which is effective the first of the month following 30 days of
employment. You are also eligible to participate in the executive medical
program. You may participate in the 401(k) plan following 90 days of employment
with a company match of fifty cents on the dollar up to your first six percent
of salary deferred for a potential match of 3% a year, subject to the terms of
the 401(k) plan. You will also be eligible to participate in the Supplemental
Deferred Compensation Plan.

 

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Eleanor Hong

January 25, 2014

Page 2

 

 

 

Stock Options.

Subject to the approval of the Board of Directors (or a duly authorized
committee thereof) of Smart & Final Holdings, Inc. (“Holdings”), Holdings will
grant you nonqualified options to purchase 1,250 shares of common stock of
Holdings (the “Options”) within 30 days of your start date on the terms set
forth below:

 

·                 The per share exercise price of 850 of the Options will be
$1,500 (which shall not be less than the fair market value of the underlying
shares), and the per share exercise price of 400 of the Options will be $2,250.

·                 The Options will vest in five equal installments of 20% per
year, subject to your continuous service through each such vesting date.

·                 The Options will be subject to the terms and conditions of the
stock incentive plan and standard award agreement under which they are granted
(provided that your resignation for Good Reason (as defined below) will be
treated under the award agreement as if your employment was terminated without
Cause).

 

Sign-on Bonus.

We are also offering you a $200,000.00 sign-on bonus to be paid in four
installments; within 10 days following your start date, at 6 months, at one
year, and at 18 months of employment. You must be employed at each installment
period to be eligible for that installment payment, except as provided below
under the heading “Termination.”

 

Relocation.

We are offering you a relocation package to include:

 

·                 Movement of household goods including cars and artwork, and
storage for up to six months. At your discretion, the Company can work with you
for a direct billing of these services or reimburse you for the expense if you
prefer to coordinate the moving yourself. The Company will provide a rental
vehicle or a company vehicle for you to use until your personal vehicles arrive
in California.

 

·                 The Company will provide temporary housing at no cost to you
not to exceed six months. This housing would include furnishing. This also can
be a direct billing arrangement or a reimbursement of expenses, depending on
your preference.

 

·                 The Company will cover the travel expenses of air, hotel and
transportation for up to 5 trips from California to Wisconsin while you are in
the process of selling your home.

 

·                 Reasonable costs associated with selling your current home, to
include:

 

o                Brokerage fee (up to 6%)

o                Title charges

o                Escrow charges

o                Pest inspection

o                Natural hazard report

 

·                 Reasonable costs associated with buying a new home, to
include:

 

o                Appraisal fee

o                Flood Zone fee

o                Funding fee

o                Tax service fee

o                Settlement/closing fee

o                Doc prep fees

o                Endorsement fee

 

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Eleanor Hong

January 25, 2014

Page 3

 

 

 

o                Title insurance

o                Inspection fee

o                Courier fees

o                Recording fees

o                Pool inspection

o                Loan Processing Fee

 

·                 Gross up to cover income tax related to the relocation package

 

Should you resign without Good Reason or be terminated for Cause prior to
completing two years of service, you agree to repay the relocation expenses on a
click down using a reduction of 1/24th for each month of completed service.

 

The reimbursement and payment of all of the relocation expenses provided above
will be subject to, and consistent with, the Company’s policies for expense
payment and reimbursement, in effect from time to time.

 

Arbitration Agreement.

As a condition of your employment, you are required to execute the Mandatory
Arbitration Agreement in the form attached hereto as Exhibit A.

 

Termination of Employment.

 

Termination without Cause; Resignation for Good Reason.

Subject to your executing, and not revoking the Release (described below), if
the Company terminates your employment without Cause (as defined below) or if
you resign for Good Reason (as defined below), you will be entitled to the
following severance (“Severance”):

 

·                 Continued regular payments of your Base Salary, at the highest
annual rate in effect at any time up to and including the date of your
termination of employment, for a 12 month period following the date of your
termination of employment, payable in accordance with the Company’s regular
payroll practices, provided, however, that payment will not commence until at
least 60 days following the date of your termination of employment. The first
payment will include any amounts that would otherwise have been made to you
between the date of your termination of employment and the date of the first
payment.

 

·                 An amount equal to the annual bonus that you would be entitled
to receive under the Company’s annual bonus plan, if any, had your employment
not been terminated during the performance period for such annual bonus plan and
based on the attainment of the relevant performance goals for the performance
period, multiplied by a fraction, the numerator of which is the number of days
during the performance period in which you were employed by the Company and the
denominator of which is 365. You will be entitled to receive the bonus, if any,
payable pursuant to this paragraph at the same time that the Company pays
bonuses to its continuing employees under such annual bonus plan.

 

·                 A continuation of the welfare benefits of medical (including
the Executive Medical Reimbursement Plan), dental and vision insurance, through
the earlier of (1) 12 months or (2) until you obtain eligibility of welfare
benefits from a subsequent employer (the “Continuation Period”). Such welfare
benefits will be provided to you at the same

 

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Eleanor Hong

January 25, 2014

Page 4

 

 

 

premium cost, and at the same coverage level, as in effect as of the date of
your termination of employment. However, in the event the premium cost and/or
level of coverage changes for all employees of the Company, the cost and/or
coverage level, likewise, will change for you in a corresponding manner.
Notwithstanding the foregoing, if the Company is otherwise unable to continue to
cover you under its group health plans without adverse tax consequences to you
or the Company, then, in either case, an amount equal to the difference between
the full monthly plan premium payment and the current monthly premium paid as an
active employee will thereafter be paid to you as currently taxable compensation
in substantially equal monthly installments over the Continuation Period (or the
remaining portion thereof).

 

·                 For a period of twelve (12) months after the date of your
termination of employment, the Company will provide you with reasonable
executive level outplacement services that are directly related to your
termination of employment with the Company.

 

·                 Any unpaid sign-on bonus amounts that you would have been
entitled to receive had you remained employed with the Company through 18 months
of employment, payable on the 60th day following your termination of employment.

 

Any Other Termination.

If your employment is terminated other than by the Company without Cause or by
you for Good Reason, you will receive your Base Salary and accrued vacation
through the date of such termination of employment, at the rate then in effect,
plus all other amounts to which you are entitled under any compensation plans of
the Company at the time such payments are due, and the Company shall have no
further obligations to you.

 

Release.

In order to receive the Severance, you must execute a release (“Release”) of the
Company and its affiliates, officers, directors, stockholders, employees,
agents, insurers, representatives and successors from and against any and all
claims that you may have against any person or entity relating to your
employment by the Company and the termination thereof and such Release must
become effective and enforceable in accordance with its terms on or before the
60th day after your termination of employment.  For the avoidance of doubt, the
Release shall be in a form applicable to senior executives of the Company and
shall not waive any rights which you may have in relation to your Options.

 

Cause; Good Reason.

“Cause” shall mean a finding by the Company that you have (i) committed a felony
or a crime involving moral turpitude; (ii) committed an act of gross negligence
or fraud in connection with the performance of your duties; (iii) materially
violated any policy of the Company (which, if curable, is not cured within 30
days after notice to you thereof); (iv) failed or refused to substantially
perform your material employment duties (other than by reason of physical or
mental impairment) or to implement the reasonable directives of the Company
(which, in each case, if curable, is not cured within 30 days after notice to
you thereof); or (v) willfully engaged in misconduct that is materially
injurious to the Company, monetarily or otherwise.

 

“Good Reason” shall mean any of the following actions if taken without your
prior written consent: (i) a material breach by the Company of this letter or
any documents relating to your Options; (ii) a material reduction in your
responsibilities or duties as in effect on your start date; or (iii) a change in
the geographic location at which you must perform the services to a location
that is 25 miles further (one-way) from your residence (as of the date of such
change in geographic location) than the Company’s location is from such
residence. Notwithstanding any provision of this letter to the contrary, a
reduction of your Base Salary in connection with a Companywide reduction in
salary or a general reduction in salary of the Company’s executive officers, in
each

 

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Eleanor Hong

January 25, 2014

Page 5

 

 

 

case, where the percentage reduction of your Base Salary is not greater than the
percentage reduction of all other executives, shall not be Good Reason.

 

To resign for Good Reason you must provide not less than 30 days’ and not more
than 60 days’ prior written notice to the Company specifying in reasonable
detail the reason; provided, however, that the Company shall have a reasonable
opportunity to cure any such Good Reason (to the extent curable) within 30 days
after the Company’s receipt of such notice; and provided further that, if the
Company is not seeking to cure, the Company shall not be obligated to allow you
to continue working during such period and may, in its sole discretion,
accelerate such termination of your employment to any date during such period
(provided that the Company shall be obligated, in addition to any Severance, to
pay the Base Salary and continue the medical, dental and vision insurance, which
you would have received during the notice period). You may not terminate
employment for Good Reason regarding any of the Company’s acts or omissions of
which you have actual notice for 90 days or more.

 

Section 409A.

This letter is intended to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, all
provisions hereof, or incorporated herein by reference, will be construed and
interpreted to comply with Section 409A of the Code. Further, for purposes of
the limitations on nonqualified deferred compensation under Section 409A of the
Code, each payment of compensation under this letter will be treated as a
separate payment of compensation. Notwithstanding any other provision hereof, if
you are, as of the date of termination, a “specified employee” for purposes of
Treasury Regulation § 1.409A-1(i), then any amount payable to you pursuant to
this letter that is required to be deferred to avoid the imposition of taxes
under Section 409A of the Code, will not be paid before the date that is six
months after the date of your termination (or the earliest date permitted under
Section 409A of the Code), to the extent such delay is necessary in order to
avoid the imposition of taxes under Section 409A of the Code. Any reimbursements
or in-kind benefits provided under this letter will be made or provided in
accordance with the requirements of Section 409A of the Code, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during the period of time specified in this letter, (ii) the amount of expenses
eligible for reimbursement, or in kind benefits provided, during a calendar year
may not affect the expenses eligible for reimbursement, or in kind benefits to
be provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement
or in kind benefits is not subject to liquidation or exchange for another
benefit. In no event may you, directly or indirectly, designate the calendar
year of a payment.

 

Return of Property; Proprietary Information; Non-Disparagement.

 

Return of Property.

You hereby agree that upon the date of your termination of employment, you must
promptly return to the Company any and all property of the Company, including
any keys, Company vehicles, credit cards, passwords, cellular telephones,
computers, software, hardware, manuals, equipment, furniture, or any other
tangible or intangible property of the Company which you may have in your
possession, custody or control. You further agree that in connection with your
termination of employment with the Company you will fully and voluntarily
cooperate with Company personnel in: (1) the transition of any duties,
information or other business of the Company; (2) any communication to staff or
subordinates; (3) the disclosure of any material Company business underway; and
(4) taking all steps necessary to safeguard and secure any Company equipment,
programs, data, and access thereto and to refrain from any action that would
jeopardize same.

 

Propriety Information.

 

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Eleanor Hong

January 25, 2014

Page 6

 

 

 

You acknowledge and agree that you will have access to certain “Confidential
Information” of the Company. “Confidential Information” as used throughout this
letter means any secret or proprietary information not generally available to
the public relating directly to the Company’s business and that of the Company’s
affiliated companies and subsidiaries, including, but not limited to, sales,
software, technical compilations, products, customer lists, pricing policies,
employment records and policies, operational methods, marketing plans and
strategies, product development techniques or plans, business acquisition plans,
personnel acquisition plans, methods of manufacture, technical processes,
designs and design projects, inventions and research programs, trade “know-how,”
trade secrets (as defined in California Civil Code section 3426.1(d)), specific
software, algorithms, computer processing systems, object and source codes, user
manuals, systems documentation, and other business affairs of the Company and
the Company’s affiliated companies and subsidiaries. Any breach of the
provisions of this confidentiality provision shall be deemed a material breach
of this letter.

 

Non-Disparagement.

Following your employment with the Company, you shall not disparage or
negatively criticize the Company, its management, its products, or any of its
employees to any person in any manner whatsoever.  Following your employment the
Company shall direct its directors and officers to not disparage you or
negatively criticize you to any person in any manner whatsoever.

 

It is understood and agreed that the promises and representations as to the
confidentiality and non-disparagement provisions contained herein constitute a
material consideration of this letter, and any breach by you of said
confidentiality and/or non-disparagement provisions shall be deemed a material
breach of this letter. Further, you agree that in the event of any breach of
these provisions, monetary damages are not adequate and the Company may seek
injunctive or other equitable relief to prevent any further breach in any court
of competent jurisdiction.

 

Miscellaneous.

 

Governing Law.

This letter shall be governed by and construed in accordance with the laws of
the State of California without regard to principles of conflict of laws.

 

Employment Requirements.

To comply with some formalities, please be prepared to demonstrate proof of
citizenship so that an I-9 can be filed under the Immigration Reform and Control
Act of 1986. Also, in an effort to be consistent with our hiring practices
across the board, all employees are required to successfully complete a drug and
background screening as a condition of employment.

 

Successors and Assigns; Binding Agreement.

The rights and obligations of the parties under this letter shall be binding
upon and inure to the benefit of the parties hereto and their heirs, personal
representatives, successors and permitted assigns. This letter is a personal
contract, and, except as specifically set forth herein, your rights and
interests herein may not be sold, transferred, assigned, pledged or hypothecated
by any party without the prior written consent of the others. As used herein,
the term “successor” as it relates to the Company or Holdings, shall include,
but not be limited to, any successor by way of merger, consolidation or sale of
all or substantially all of such entity’s assets or equity interests.

 

I genuinely look forward to you joining our team at an exciting time at Smart &
Final. We are looking forward to the valuable contributions you will bring to
the Company. Congratulations and welcome aboard!

 

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Eleanor Hong

January 25, 2014

Page 7

 

 

 

 

Very truly yours,

 

 

 

/s/ Jeff D. Whynot

 

Jeff D. Whynot

 

Senior Vice President, Human Resources

 

 

 

 

 

 

Agreed to and accepted this 27 day of January 2014.

 

 

 

 

/s/ Eleanor Hong

 

Eleanor Hong

 

 

 

Cc:                         Dave Hirz

 

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EXHIBIT A

MANDATORY ARBITRATION AGREEMENT

 

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MUTUAL ARBITRATION AGREEMENT

 

The purpose of this Mutual Arbitration Agreement (“Agreement”) is to allow for
the speedy, cost-effective resolution of any disputes arising out of your
employment between you and Smart & Final (and/or any of its directors,
executives, employees, associates, members, shareholders, and partners) via
private arbitration. Unlike a court proceeding, a private arbitration is often
quicker and less expensive. The same claims that could have been brought in a
court of law and determined by a judge or jury will, under this Agreement, be
resolved by a neutral arbitrator chosen by the parties. In other words, while
the place and manner in which claims may be decided has changed, your right to
have your claims decided by an independent third party remains unchanged.

 

Therefore, in order to fairly and quickly resolve any disputes which may arise
in the context of your employment relationship, and as a condition of your
employment and continued employment with Smart & Final (the “Company”), you
(“Associate”) and the Company agree as follows:

 

The Company and Associate (collectively, the “Parties”) agree that a final and
binding arbitration held before a single, neutral arbitrator shall be the
exclusive remedy for all covered claims between them. A “covered claim” is any
claim (except a claim that by law is non-arbitrable) arising out of, related to,
or in any way connected with Associate’s employment with the Company, including
but not limited to, one for breach of contract, for any provision of the
California Labor Code or a Wage Order, for unpaid expenses, or wages, for unpaid
compensation or penalties for missed meal or rest breaks, for wrongful
termination, for unfair competition, and for discrimination, harassment, or
unlawful retaliation. As to any covered claim, each Party waives the right to
jury trial and to bench trial, and also waives the right to bring, maintain,
participate in, or receive money from, any class, collective, private attorney
general or representative proceeding, whether in arbitration or otherwise.

 

This Agreement does not apply to claims for workers compensation, disability
benefits, unemployment insurance, or claims arising under the National Labor
Relations Act, each of which may be filed with the appropriate governmental
agency. Claims based upon any pension or welfare plan that have terms which
contain arbitration or other non-judicial dispute resolution procedures also are
not covered by this Agreement. Nothing in this agreement restricts Associate
from exercising statutory rights to seek assistance from the Department of Fair
Employment and Housing or the Equal Employment Opportunity Commission. However,
if one of these agencies issues a right to sue notice or seeks monetary recovery
or other relief on the Associate’s behalf, binding arbitration will be the sole
remedy. Either Party may seek injunctive relief in a court of law to compel
arbitration and to preserve the status quo pending the completion of such
arbitration. The Company may take all steps necessary to enforce this Agreement
in legal proceedings, but will not discipline or otherwise retaliate against
Associate for engaging in concerted activity, even if that activity is in breach
of this Agreement.

 

A request for arbitration must be submitted within the appropriate statute of
limitations period under governing law. Arbitration will occur in Los Angeles
County in accordance with the American Arbitration Association’s Employment
Arbitration Rules (“AAA Rules”), except where such rules contradict this
Agreement or state or federal law. A copy of the AAA Rules is available for you
to review at Human Resources. If the parties cannot agree on an arbitrator, AAA
Rules will govern selection. The Parties shall have the right to conduct
discovery consistent with the AAA Rules and may bring motions prior to the
arbitration hearing. The arbitrator shall issue a written award within thirty
(30) days of the conclusion of evidence, which states the reasons to support the
decision and is based on governing law and evidence cited. The arbitrator can
order the same individual remedies that a judge could in a court of law. In
deciding legal issues related to any claim and in determining the appropriate
legal or equitable remedy, the arbitrator shall apply the applicable federal,
state or local law. When the Company’s policies are at issue, the arbitrator
shall have no power to alter, amend or change any of the Company’s policies but
shall only determine whether any Company policy has been violated as alleged and
any damages that may arise from that violation.

 

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Each party shall bear its own costs and attorney fees; however, the arbitrator
may award costs and attorney fees to the prevailing party to the extent
permitted by law. If the claim concerns an alleged violation of public policy or
a statutory or constitutional provision, the Company will pay all costs unique
to the arbitration to the extent such costs would not be otherwise incurred in a
court proceeding -- for instance, the Company will, if required, pay the
arbitrator’s fees to the extent they exceed court filing fees. If the claim does
not concern an alleged violation of a public policy or a statutory or
constitutional provision, the non-prevailing Party shall pay the arbitrator’s
fees and costs.

 

This Agreement is governed by and enforceable under the Federal Arbitration Act
(“FAA”). Either Party’s ability to appeal the arbitrator’s written decision is
strictly limited by applicable law under the FAA. This Agreement is the full and
complete agreement of the Parties relating to the subject matter hereof. The
Agreement can be modified only in a writing signed by the Associate and an
authorized officer of the Company, stating the intent to revoke or modify this
Agreement. If any provision in this Agreement is determined to be unenforceable,
then the remaining provisions shall remain in full effect, and the unenforceable
provisions shall be severed or reformed so as to make the Agreement enforceable.

 

BY SIGNING BELOW, I KNOWINGLY AND VOLUNTARILY WAIVE THE RIGHT TO CLASS,
REPRESENTATIVE, AND COLLECTIVE PROCEDURES, AND THE RIGHT TO TRIAL BY JURY OR
JUDGE FOR ANY COVERED CLAIM; I RETAIN ALL OTHER RIGHTS, INCLUDING MY RIGHT TO
COUNSEL, TO CALL AND CROSS-EXAMINE WITNESSES, AND TO HAVE MY CLAIMS ADDRESSED BY
AN IMPARTIAL FACTFINDER. I ACKNOWLEDGE THAT I AM HEREBY ADVISED TO SEEK LEGAL
ADVICE AS TO MY RIGHTS AND RESPONSIBILITIES UNDER THIS AGREEMENT.

 

 

 

 

 

 

 

Associate ID #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

, 2014

Associate (Print Name)

Signature

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeff D. Whynot

                /s/ Jeff D. Whynot

January 25, 2014

Smart & Final

Signature

 

Date

 

2

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