Document:

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                         2001 Executive Severance Plan

                              Smart & Final Inc.

                                 January 2001

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Contents

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<TABLE>
<CAPTION>
                                                                       Page
<S>                                                                    <C>
Article 1.   Establishment, Term and Purpose                              3

Article 2.   Definitions                                                  4

Article 3.   Participation                                                7

Article 4.   General Severance Benefits                                   7

Article 5.   Change-in-Control Severance Benefits                         9

Article 6.   Excise Tax Equalization Payment                             11

Article 7.   Form and Timing of Severance Benefits                       12

Article 8.   Legal Remedies                                              12

Article 9.   Outplacement Assistance                                     13

Article 10.  Noncompetition                                              13

Article 11.  Successors and Assignment                                   14

Article 12.  Miscellaneous                                               14

Appendix                                                                 17

Exhibit A                                                                18

Exhibit B                                                                19
</TABLE>

                                       2
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                              Smart & Final Inc.
                         2001 Executive Severance Plan

                                 INTRODUCTION
                                 ============

     The purpose of this Executive Severance Pay Plan (the "Plan) is to enable
Smart & Final Inc. and its Affiliates (the "Company") to offer a form of
protection to the officers and other key employees of the Company in the event
their employment with the Company terminates.

     Accordingly, the Company's Board of Directors has adopted this Plan
effective January 1, 2001, upon the recommendation of the Compensation
Committee, for selected officers and key employees of the Company and its
Affiliates in an effort to assist in replacing the loss of income caused by a
termination of employment under the circumstances described herein.

     Except as specifically provided herein with respect to individual
employment agreements and any agreements providing payments in connection with a
change of control of the Company, this Plan amends and supersedes any severance
plans, policies and/or practices of the Company in effect for employees who
participate in the Plan.

Article 1. Establishment, Term and Purpose
==========================================

     1.1.  Establishment of the Plan.  Smart & Final Inc. (hereinafter referred
to as the "Company") hereby establishes an executive severance plan to be known
as the "Smart & Final Inc. 2001 Executive Severance Plan" (the "Plan").  The
Plan shall become effective immediately upon January 1, 2001 (the "Effective
Date").

     1.2.  Term of the Plan.  This Plan will commence on the Effective Date and
shall continue in effect for three (3) full calendar years.

     However, in the event a Change in Control occurs during the original or any
extended term, this Plan will remain in effect for the longer of: (i) twenty-
four (24) months beyond the month in which such Change in Control occurred; (ii)
until all obligations of the Company hereunder have been fulfilled, and until
all benefits required hereunder have been paid to Participants.

     1.3.  Purpose of the Plan.  The purpose of the Plan is to provide certain
key employees of the Company employment protection and financial security in the
event of an involuntary termination ("General Severance").  The Plan also is
intended to provide certain key employees of the Company who have a qualifying
termination in connection with a change in control of the Company and who are
otherwise eligible under the Plan with enhanced severance benefits ("Change-in-
Control Severance") in lieu of General Severance.

                                       3
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Article 2. Definitions
======================

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

     2.1.  "Base Salary" means the salary of record paid to a Participant as
annual salary, excluding amounts received under incentive or other bonus plans,
whether or not deferred.

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

     2.3.  "Beneficiary" means the persons or entities designated or deemed
designated by a Participant pursuant to Section 10.2 herein.

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

     2.5.  "Cause" shall be defined as conduct of a Participant which is finally
adjudged to be knowingly fraudulent, deliberately dishonest or willful
misconduct.  The Committee shall make the determination of whether Cause exists,
and after giving the Participant the opportunity to respond to the allegation
that Cause exists.

     2.6.  "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 2.6 as constituting a Change of Control.

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

     (a)   With the exception of Group Casino, 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 percent (30%) of the combined voting
           power of the Company's then outstanding securities; or

     (b)   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, with the exception of Group
           Casino or 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 eighty percent (80%) of the combined
           voting power of the voting securities of the Company (or such
           surviving entity) outstanding immediately after such merger,
           consolidation, or reorganization.

                                       4
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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 Nonemployee
Directors).

     2.7.  "Change-in-Control Severance Benefits" mean the payment of change-in-
control severance compensation as provided in Section 5.4 herein.

     2.8.  "Code" means the United States Internal Revenue Code of 1986, as
amended.

     2.9.  "Committee" means the Compensation Committee of the Board, or any
other committee appointed by the Board to  perform the functions of the
Compensation Committee.

     2.10.  "Company" means Smart & Final Inc., a Delaware corporation
(including any and all subsidiaries), or any successor thereto as provided in
Article 9 herein.

     2.11.  "Disability" shall mean, for all purposes of this Plan, the
incapacity of a Participant, due to injury, illness, disease, or bodily or
mental infirmity, to engage in the performance of substantially all of the usual
duties of employment with the Company, such Disability to be determined by the
Committee upon receipt and in reliance on competent medical advice from one (1)
or more individuals, selected by the Committee, who are qualified to give such
professional medical advice.

     2.12.  "Effective Date" means the date this Plan set forth above,
contingent upon approval of the Board, or such other date as the Board shall
designate in its resolution approving this Plan.

     2.13.  "Effective Date of Termination" means the date on which a Qualifying
Termination occurs which triggers the payment of Severance Benefits hereunder.

     2.14.  "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

     2.15.  "General Severance Benefits" means the payment of general severance
compensation as provided in Section 4.3 herein.

     2.16.  "General Severance Period" shall mean, for a particular Participant,
the period commencing on the Participant's Effective Date of Termination and
continuing for one month for every year of service with the Company, subject to
a minimum General Severance Period of 12 months.

     2.17.  "Good Reason" shall mean, without the Participant's express written
consent, the occurrence of any one or more of the following:

                                       5
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     (a)    The assignment of the Participant to duties materially inconsistent
            with the Participant's authorities, duties, responsibilities, and
            status (including offices, titles, and reporting requirements) as an
            employee of the Company, or a reduction or alteration in the nature
            or status of the Participants authorities, duties, or
            responsibilities from those in effect during the immediately
            preceding fiscal year;

     (b)    Without the Participant's consent, the Company's requiring the
            Participant to be based at a location which is at least fifty (50)
            miles further from the Participant's current primary residence than
            is such residence from the Company's current headquarters, except
            for required travel on the Company's business to an extent
            substantially consistent with the Participant's business obligations
            as of the Effective Date;

     (c)    A reduction by the Company in the Participant's Base Salary as in
            effect on the Effective Date or as the same shall be increased from
            time to time;

     (d)    A material reduction in the Participant's level of participation in
            any of the Company's short-and/or long-term incentive compensation
            plans, or employee benefit or retirement plans, policies, practices,
            or arrangements in which the Participant participates as of the
            Effective Date; provided, however, that reductions in the levels of
            participation in any such plans shall not be deemed to be "Good
            Reason" if the Participant's reduced level of participation in each
            such program remains substantially consistent with the average level
            of participation of other executives who have positions commensurate
            with the Participant's position; or

     (e)    The failure of the Company to obtain a satisfactory agreement from
            any successor to the Company to assume and agree to perform this
            Agreement, as contemplated in Article 11 herein.

     2.18.  "Participant" means an officer of the Company who fulfills the
eligibility and participation requirements, as provided in Article 3 herein.

     2.19.  "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).

     2.20.  "Plan" means this 2001 Executive Severance Plan.

     2.21.  "Qualifying Change-in-Control Termination" means any of the events
described in Section 5.3 herein, the occurrence of which triggers the payments
of Change-in-Control Severance Benefits hereunder.

     2.22.  "Qualifying General Termination" means any of the events described
in Section 4.2 herein, the occurrence of which triggers the payments of General
Severance Benefits hereunder.

     2.23.  "Qualifying Termination" means either a Qualifying Change-in-Control
Termination or a Qualifying General Termination.

                                       6
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     2.24.  "Retirement" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.

     2.25.  " Severance Benefits" means either General Severance Benefits or
Change-in-Control Severance Benefits.

     2.26.  "Tier I Executive" means an officer who has been selected to
participate in the Plan and designated as Tier 1 Executive pursuant to Section
3.2.

     2.27.  "Tier II Executive" means an officer who has been selected to
participate in the Plan and designated as a Tier II Executive pursuant to
Section 3.2.

Article 3. Participation
========================

     3.1.   Eligible Employees.  Individuals eligible to participate in the Plan
shall include all officers of the Company, as determined by the Committee in its
sole discretion.

     3.2.   Participation. Subject to the Terms of the Plan, the Committee may,
from time to time select from all officers those who shall participate in the
Plan.  Officers selected to participate in the Plan shall be designated as
either a Tier I Executive or a Tier II Executive and identified in the attached
Appendix to the Plan, as may be amended from time to time to reflect new
officers participating in the Plan, promotions, or officers who have terminated
Employment with the Company.

     3.3.   Release. As a condition of receiving benefits hereunder, the
Participation shall be required to provide the Employer with a release of all
claims of any kind whatsoever against the Company and its Affiliates, their
officers, directors and employees, known or unknown, as of the date of his or
her termination of employment.  The release shall be in such form as requested
by the Company, in substantially the form set forth in exhibit C.

Article 4. General Severance Benefits
=====================================

     4.1. Right to General Severance Benefits. A Participant shall be entitled
to receive from the Company General Severance Benefits, as described in Section
4.3 herein, a Participant's employment with the Company shall end for any reason
specified in Section 4.2 herein.  Participants shall not be entitled to receive
General Severance Benefits if they are terminated for Cause, or if their
employment with the Company ends due to death, Disability, or Retirement.

     4.2. Qualifying General Termination.  The occurrence of any one or more of
the following events shall trigger payment of General Severance Benefits to a
Participant under this Plan:

     (a)    An involuntary termination of the Participant's employment by the
            Company for reasons other than Cause, death, or Disability;

     (b)    A successor company fails or refuses to assume the Company's
            obligations under this Plan, as required by Article 11 herein.

                                       7
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     4.3.  Description of General Severance Benefits.  In the event that a
Participant becomes entitled to receive General Severance Benefits, as provided
in Sections 4.1 and 4.2 herein, the Company shall pay to the Participant and
provide him or her with the following:

     (a)   Continued regular payments of the Participant's Base Salary, at the
           highest annual rate in effect at any time up to an including the
           Effective Date of Termination, through the end of the General
           Severance Period;

     (b)   An amount equal to the Participant's unpaid Base Salary and accrued
           vacation pay through Effective Date of Termination.

     (c)   An amount equal to the Participant's unpaid targeted annual bonus,
           established for the plan year in which the Participant's Effective
           Date of Termination occurs, adjusted for actual performance through
           the Effective Date of Termination and multiplied by a fraction, the
           numerator of which is the number of days completed in the then-
           existing fiscal year through the Effective Date of Termination, and
           the denominator of which is three hundred sixty-five (365);

     (d)   A continuation of the welfare benefits of medical, dental and vision
           insurance, and group term life through the earlier of (1) the end of
           the General Severance Period or (2) until the participant obtains
           eligibility of welfare benefits from a subsequent employer

           Benefits provided under this Section 4.3(d) shall be provided to
           Participants at the same premium cost, and at the same coverage
           level, as in effect as of the Participant's Effective Date of
           Termination.

           However, in the event the premium cost and/or level of coverage shall
           change for all employees of the Company, the cost and/or coverage
           level, likewise, shall change for each Participant in a corresponding
           manner.

     (e)   A lump-sum cash payment of the entire balance of the Participant's
           compensation which has been deferred under the Company's nonqualified
           deferred compensation plan(s) together with all interest that has
           been credited with respect to such deferred compensation balance.

     (f)   For the purposes of SERP benefit calculations for eligible officers,
           the Target Bonus amount shall be used instead of the actual bonus
           amount earned for years 1996 through 1999.

     4.4.  Termination for Disability.  If a Participant's employment is
terminated due to Disability, the Participant shall receive his or her Base
Salary through the Effective Date of Termination, at which point in time the
Participant's benefits shall be determined in accordance with the Company's
disability, retirement, insurance, and other applicable plans and programs then
in effect.

     4.5.  Termination for Retirement or Death.  If a Participant's employment
is terminated by reason of his or her Retirement or death, the Participant's
benefits shall be determined in accordance with the company's retirement,
survivor's benefits, insurance, and other applicable programs of the Company
then in effect.

                                       8
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     4.6.  Termination for Cause. If a Participant's employment is terminated
either: (i) by the Company for Cause; or (ii) by the Participant (other than for
Retirement), the Company shall pay the Participant his or her full Base Salary
and accrued vacation through the Effective Date of Termination, at the rate then
in effect, plus all other amounts to which the Participant is entitled under any
compensation plans of the Company, at the time such payments are due, and the
Company shall have no further obligations to the Participant under this Plan.

Article 5. Change-in-Control Severance Benefits
------------------------------------------------

     5.1.  Right to Change-in-Control Severance Benefits.  A Participant shall
be entitled to receive from the Company Change-in-Control Severance Benefits, as
described in Section 5.4 herein, in lieu of General Severance Benefits, as
described in Section 4.3 herein, if there has been a Change in Control of the
Company and if, within the six (6) full calendar month period prior to the
effective date of a Change  in Control, or within twenty-four (24) calendar
months following the effective date of a Change in Control, the Participant's
employment with the Company shall end for any reason specified in Section 5.3
herein.

     Participants shall not be entitled to receive Change-in-Control Severance
Benefits if they are terminated for Cause, or if their employment with the
Company ends due to Death or Disability, or due to a voluntary termination of
employment by the Participant without Good Reason.

     5.2.  Services During Certain Events.  In the event a Person begins a
tender or exchange offer, circulates a proxy to shareholders of the Company, or
takes other steps seeking to effect a Change in Control, each Participant agrees
that he or she will not participate in such activity or voluntarily leave the
employ of the Company and will render services until such Person has abandoned
or terminated his or its efforts to effect a Change in Control, provided,
however, if a participant elects to do so he or she waives any benefits under
this plan.

     5.3.  Qualifying Change-in-Control Termination.  The occurrence of any one
or more of the following events within twenty-four (24) calendar months
following the effective date of Change-in-Control of the Company shall trigger
the payment of Change-in-Control Severance Benefits to a Participant under this
plan:

     (a)   An involuntary termination of the Participant's employment by the
           Company for reasons other than Cause, Death, Disability, Retirement;

     (b)   A voluntary termination by the Participant for Good Reason;

     (c)   A successor company fails or refuses to assume the company's
           obligations under this Plan, as required by Article 11 herein; or

     (d)   The Company or any successor company breaches any of the provisions
           of this Plan.

     5.4.  Description of Change-in-Control Severance Benefits.  In the event
that a Participant becomes  entitled to receive Change-in-Control Severance
Benefits, as provided in Sections 5.1 and 5.3 herein, the Company shall pay to
the Participant and provide him or her with the following:

                                       9
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     (a)   For Tier I Executives: An amount equal to two (2) times the highest
           rate of the Participant's annualized Base Salary rate in effect at
           any time up to and including the Effective Date of Termination; or

           For Tier II Executives: An amount equal to the highest rate of the
           Participant's annualized Base Salary rate in effect at any time up to
           and including the Effective Date of Termination;

     (b)   For Tier I Executives:  An amount equal to two (2) times the
           Participant's average annual bonus earned over three (3) full fiscal
           years prior to the Effective Date of Termination; or

           For Tier II Executives:  An amount equal to the Participant's average
           annual bonus earned over three (3) full fiscal years prior to the
           Effective Date of Termination;

     (c)   An amount equal to the Participant's unpaid Base Salary and accrued
           vacation pay through the Effective Date of Termination:

     (d)   An amount equal to the Participant's unpaid targeted annual bonus,
           established for the plan year in which the Participant's Effective
           Date of Termination occurs, adjust to reflect actual performance
           through the Effective Date of Termination and multiplied by a
           fraction, the numerator of which is the number of days completed in
           the then-existing fiscal year through the Effective Date of
           Termination, and the denominator of which is three hundred sixty-five
           (365);

     (e)   For Tier I Executives: A continuation of the welfare benefits of
           medical insurance, dental insurance, and group term life through the
           earlier of (1) the end of the General Severance Period or (2) until
           the participant obtains eligibility of welfare benefits from a
           subsequent employer.

           For Tier II Executives: A continuation of the welfare benefits of
           medical insurance, dental insurance, and group term life through the
           earlier of (1) the end of the General Severance Period or (2) until
           the participant obtains eligibility of welfare benefits from a
           subsequent employer.

           Benefits provided under this section 5.4(e) shall be provided to
           Participants at the same premium cost, and at the same coverage
           level, as in effect as of the Participant's Effective Date of
           Termination. However, in the event the premium cost and/or level of
           coverage shall change for all employees of the Company, the cost
           and/or coverage level, likewise, shall change for each Participant in
           a corresponding manner;

     (f)   A continuation of the financial planning and tax services provided by
           the Company to the Participant through the end of the calendar year
           in which the Effective Date of Termination occurs; and

     (g)   A lump-sum cash payment of the entire balance of the Participant's
           compensation which has been deferred under the Company's nonqualified
           deferred

                                       10
<PAGE>

          compensation plan(s) together with all interest that has been credited
          with respect to such deferred compensation balance.

     (h)  For the purposes of SERP benefit calculations for eligible officers,
          the Target Bonus amount shall be used instead of the actual bonus
          amount earned for years 1996 through 1999.

     5.5. Termination for Disability.  Following a Change in Control of the
Company, if a Participant's employment is terminated due to Disability, the
Participant shall receive his or her Base Salary through the Effective Date of
Termination, at which point in time the Participant's benefits shall be
determined in accordance with the Company's disability, retirement, insurance,
and other applicable plans and programs then in effect.

     5.6. Termination for Retirement or Death.  Following a Change in Control
of the Company, if a Participant's employment is terminated by reason of his or
her Retirement or death, the Participant's benefits shall be determined in
accordance with the Company's retirement, survivor's benefits, insurance, and
other applicable programs of the Company then in effect.

     5.7. Termination for Cause or by a Participant Other Than Good Reason or
Retirement. Following a Change in Control of the Company, if a Participant's
employment is terminated either: (i) by the Company for Cause; or (ii) by the
Participant (other than for Retirement) and other than for Good Reason, the
Company shall pay the Participant his or her full Base Salary and accrued
vacation through the Effective Date of Termination, at the rate then in effect,
plus all other amounts to which the Participant is entitled under any
compensation plans of the Company, at the time such payments are due, and the
Company shall have no further obligations to the Participant under this Plan.

Article 6. Excise Tax Equalization Payment
------------------------------------------

     6.1. Excise Tax Equalization Payment.  In the event that a Participant
becomes entitled to payments and/or benefits which would constitute "parachute
payments" within the meaning of Section 280 (b) of the Code, the provisions of
Exhibit B will apply.

     6.2. Tax Computation.  For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amounts of such Excise
Tax:

     (a)  Any other payments or benefits received or to be received by the
          Participant in connection with a Change in Control of the Company or
          the Participant's termination of employment (whether pursuant to the
          terms of this Plan or any other plan, arrangement, or agreement with
          the Company, or with any Person whose actions result in a Change in
          Control of the Company or any Person affiliated with the Company or
          such Persons) shall be treated as "parachute payments" within the
          meaning of Section 280G(b)(2) of the code, and all "excess parachute
          payments" within the meaning of Section 280G(b)(1) shall be treated as
          subject to the Excise Tax, unless in the opinion of tax counsel as
          supported by the Company's independent auditors and acceptable to the
          Participant, such other payments or benefits (in whole or in part) do
          not constitute parachute payments, or unless such excess parachute
          payments (in whole or in part) represent reasonable compensation for
          services actually rendered within the meaning of

                                       11
<PAGE>

          Section 280G(b)(4) of the Code in excess of the base amount within
          meaning of Section 280G(b)(3) of the Code, or are otherwise not
          subject to the Excise Tax;

     (b)  The amount of the Total Payments which shall be treated as subject to
          the Excise Tax shall be equal to the lesser of: (i) the total amount
          of the Total Payments; or (ii) the amount of excess parachute payments
          within the meaning of Section 280G(b)(1) (after applying clause (a)
          above); and

     (c)  The value of any noncash benefits or any deferred payment or benefit
          shall be determined by the Company's independent auditors in
          accordance with the principals of Sections 280G(d)(3) and (4) of the
          Code.

          For purposes of determining the amount of the Gross-Up Payment, the
     Participant shall be deemed to pay federal income taxes at the highest
     marginal rate of federal income taxation in the calendar year in which the
     Gross-Up Payment is to be made, and state and local income taxes at the
     highest marginal rate of taxation in the state and locality of the
     Participant's residence on the Effective Date of Termination, net of the
     maximum reduction in federal income taxes which could be obtained from
     deduction of such state and local taxes.

     6.3. Subsequent Recalculation. In the event the Internal Revenue Service
adjusts the computation of the Company under Section 6.2 herein so that the
Participant did not receive the greatest net benefit, the Company shall
reimburse the Participant for the full amount necessary to make the Participant
whole, plus a market rate of interest, as determined by the Committee.

Article 7.  Form and Timing of Severance Benefits
-------------------------------------------------

     7.1  Form and Timing of Severance Benefits. The Severance Benefits
described in Sections 4.3(b), 4.3(c), 4.3(e), 5.4(a), 5.4(b), 5.4(c), 5.4(d),
and 5.4(g) herein shall be paid in cash to the Participant in a single lump sum
as soon as practicable following the Effective Date of Termination, but in no
event beyond thirty (30) days from such date.

     7.2  Withholding of Taxes. The Company shall be entitled to withhold from
any amounts payable under this Plan all taxes as legally shall be required
(including, without limitation, any United States federal taxes, and any other
state, city, or local taxes).

     7.3  Funding. The Plan shall be funded out of the general assets of the
Company as and when benefits are payable under the Plan.  All Participants shall
be solely general creditors of the Company.

Article 8.  Legal Remedies
--------------------------

     8.1. Payment of Legal Fees.  To the extent permitted by law, the Company
shall pay all legal fees, costs of litigation, prejudgment interest, and other
expenses incurred in good faith by the Participant as a result of the Company's
refusal to provide the Change-in-Control Severance Benefits to which the
Participant becomes entitled under this Plan, or as a result of the Company's
contesting the validity, enforceability, or interpretation of this Plan, or as a
result of any conflict between the parties pertaining to this Plan; provided,
however, that the Company shall be reimbursed by the Participant for all such
fees and expenses in the event the Participant fails to prevail with respect to
all material issues of dispute in connection with such legal action.

                                       12
<PAGE>

     8.2.  Arbitration.  Participants shall have the right and option to elect
(in lieu of litigation) to have any dispute or controversy arising under or in
connection with this Plan settled by arbitration, conducted before a panel of
three (3) arbitrators sitting in a location selected by the Participant within
fifty (50) miles from the location of his job with the Company, in accordance
with the rules of the American Arbitration Association then in effect.

     Judgement may be entered on the award of the arbitrator in any court having
proper jurisdiction.  All expenses of such arbitration, including the fees and
expenses of the counsel for the Participant, shall be borne by the Company;
provided, however, that the Company shall be reimbursed by the Participant for
all such fees and expenses in the event the Participant fails to prevail with
respect to all material issues of dispute in connection with such legal action.

Article 9.  Outplacement Assistance
-----------------------------------

     Following a Qualifying General Termination (as described in Section 4.2
herein) the Company shall pay for the costs of all outplacement services
obtained by the Participant within the two (2) year period after the effective
date of termination; provided, however, that the total cost shall be limited to
an amount equal to fifteen percent (15%) of the Participant's Base Salary as of
the effective date of termination.

Article 10.  Noncompetition
---------------------------

     10.1. Prohibition on Competition.  Without the prior written consent of
the Company, during any period in which benefits are paid hereunder,
Participants shall not, as an employee or an officer, engage directly or
indirectly in any business or enterprise which is "in competition" with the
Company or its successors or assigns.  For purposes of this Plan, a business or
enterprise will be deemed to be "in competition" if it is engaged in any
significant business activity similar to that of the Company or its subsidiaries
in any geographical area in which the Company does business.

     However Participants shall be allowed to purchase and hold for investment
less than three percent (3%) of the shares of any corporation whose shares are
regularly traded on a national securities exchange or in the over-the-counter
market.

     10.2. Disclosure of Information.  Participants recognize that they have
access to and knowledge of certain confidential and proprietary information of
the Company which is essential to the performance of their duties as employees
of the Company.  Participants will not, during or after the term of their
employment by the Company, in whole or in part, disclose such information to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, nor shall he make use of any such information for their own
purposes.

     10.3. Covenants Regarding Other Employees.  During the term of this Plan,
and for a period of twenty-four (24) months following the termination of a
Participant's employment, each Participant agrees not to attempt to induce any
employee of the Company to terminate his or her employment with the Company,
accept employment with any competitor of the Company, or to interfere in a
similar manner with the business of the Company.

                                       13
<PAGE>

Article 11.  Successors and Assignment
--------------------------------------

     11.1.  Successors to the Company.  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company or of
any division or subsidiary thereof to expressly assume and agree to perform the
Company's obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if no such succession had
taken place.  Failure of the Company to obtain such assumption and agreement
prior to the effective date of any such succession shall be a breach of this
Plan and shall entitle Participants to compensation from the Company in the same
amount and on the same terms as they would be entitled to hereunder if they had
terminated their employment with the Company voluntarily for Good Reason.
Except for the purposes of implementing the forgoing, the date on which any such
succession becomes effective shall be deemed the Effective Date of Termination.

     11.2.  Assignment by the Participant.  This Plan shall inure to the benefit
of and be enforceable by each Participant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees.  If a Participant dies while any amount would still be payable to him
or her hereunder had he or she continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Plan, to the Participant's Beneficiary.  If the Participant has not named a
Beneficiary, then such amounts shall be paid to the Participant's devisee,
legatee, or other designee, or if there is no such designee, to the
Participant's estate.

Article 12.  Miscellaneous
--------------------------

     12.1.  Notice of Termination.  Any termination by the Company for Cause or
by a Participant for Good reason shall be communicated by Notice of Termination.
For purposes of this Plan, a "Notice of Termination" shall mean a written notice
which shall indicate the specific termination provision in this Plan relied
upon, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Participant's employment under
the provision so indicated.

     12.2.  Employment Status.  Except as may be provided under any other
agreement between a Participant and the Company, the employment of the
Participant by the Company is "at will", and, prior to the effective date of a
Change in Control, may be terminated by either the Participant or the Company at
any time, subject to applicable law. Nothing contained herein shall constitute
an employment contract or guarantee of employment or confer any other rights
except as set forth herein.

     12.3.  Beneficiaries.  Each Participant may designate one or more persons
or entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Participant under this Plan.  Such designation must be in
the form of a signed writing acceptable to the Committee.  Participants may make
or change such designations at any time.

     12.4.  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.

                                       14
<PAGE>

     12.5.  Severability.  In the event any provision of this 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.  Further, the
captions of this Plan are not part of the provisions hereof and shall have no
force and effect.

     12.6.  Modification.  No provision of this Plan may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by each affected Participant and by authorized member of the
Committee, or by the respective parties' legal representatives and successors.

     12.7.  Applicable Law.  To the extent not preempted by the laws of the
United States, the laws of the state of California, shall be the controlling law
in all matters relating to this Plan.

     12.8.  Liability. No member of the Committee and no officer, director or
employee of the Company or any Affiliate shall be liable for any inaction with
respect to his or her functions under the Plan unless such action or inaction is
adjudged to be due to gross negligence, willful misconduct or fraud.  Further,
no member of the Committee shall be personally liable merely by virtue of any
instrument executed by him or her or on his or her behalf as a member of the
Committee.

     12.9.  Indemnification. Each Employer shall indemnify, to the full extent
permitted by law and its Certificate of Incorporation and By-laws (but only to
the extent not covered by insurance) its officers and directors (and any
employee involved in carrying out the functions of such Employer under the Plan)
and each member of the Committee against any expenses, including amounts paid in
settlement of a liability, which are reasonably incurred in connection with any
legal action to which such person is a party by reason of his or her duties or
responsibilities with respect to the Plan, except with regard to matters as to
which he or she shall be adjudged in such action  to be liable for gross
negligence, willful misconduct or fraud in the performance of his or her duties.

     12.10. Acceleration. The Company reserves the right, but has no obligation,
to accelerate any payments due hereunder and to pay such benefits at any time in
a lump sum.

     12.11. Headings.  The headings of the Plan are inserted for convenience of
reference only and shall have no effect upon the meaning  of provisions hereof.

     12.12. Incompetency. In the event that the Committee finds that a
Participant (or designated beneficiary) is unable to care for his or her affairs
because of illness or accident, then benefits payable hereunder, unless claim
has been made therefor by a duly appointed guardian, committee, or other legal
representative, may be paid in such manner as the Committee shall determine, and
the application thereof shall be a complete discharge of all liability for any
payments or benefits to which such participant (or designated beneficiary) was
or would have been otherwise entitled under this Plan.

                                       15
<PAGE>

     12.13.    Payments to a Minor. Any payments to a minor from this Plan may
be paid by the Committee in its sole and absolute discretion (a) directly to
such minor; (b) to the legal or natural guardian of such minor; or (c) to any
other person, whether or not appointed guardian of the minor, who shall have the
care and custody of such minor. The receipt by such individual shall be a
complete discharge of all liability under the Plan therefor.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed this
__________ day of _______________, 20___.

                                             SMART & FINAL INC.

                                             By     __________________________

                                             Title: __________________________

                                       16
<PAGE>

APPENDIX
========

Tier I
------
Dennis Chiavelli
Robert J. Schofield

Tier II
-------
Donald G. Alvarado
Zeke Duge
Norah Morley
Suzanne Mullins
Richard N. Phegley
Timothy M. Snee
Jeff D. Whynot

John M. Willis
Mark Cartwright
Bruce Samples

Anthony V. Bernardini
James J. Burge
Matthew J. Heslin
John J. Kosinski
Rich Link
Kenneth R. Phipps

                                       17
<PAGE>

                                   Exhibit A
                                   =========

                  SMART & FINAL INC. EXECUTIVE SEVERANCE PLAN

                            PARTICIPATION AGREEMENT

     IN CONSIDERATION of the payments and benefits as expressly stated in the
attached Smart & Final Inc. Executive Severance Plan (the "Plan"), I,
_____________________, on behalf of myself, my heirs, executors, administrators
and assigns, hereby agree that I (or my duly authorized representative) have
read the Plan and I further agree to be bound by the provisions therein.

WITNESS:

_______________________________

_______________________________  (Employee Name)

                         Participant: (Name) ________________________________

                         Title:              ________________________________

                                       18
<PAGE>

                                   Exhibit B
                                   =========
                              Excise Tax Gross Up

     (a) In the event that a Participant shall become entitled to payments
and/or benefits provided by this Plan or any other amounts in the "nature of
compensation" (whether pursuant to the terms of this Plan or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
change of ownership or effective control covered by Section 280(b) (2) of the
Code or any person affiliated with the Company or such person) as a result of
such change in ownership or effective control(collectively the "Company
Payments"), and such Company Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (and any similar tax that may
hereafter be imposed by any taxing authority) the Company shall pay to the
Participant at the time specified in subsection (d) below an additional amount
(the "Gross-up Payment") such that the net amount retained by the Participant,
after deduction of any Excise Tax on the Company Payments and any U.S. federal,
state, and for local income or payroll tax upon the Gross-up Payment provided
for by this paragraph (a), but before deduction for any U.S. federal, state, and
local income or payroll tax on the Company Payments, shall be equal to the
Company Payments.

     (b) For Purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the "Total Payments") will be subject to the
Excise Tax and the amount of such Excise Tax, (x) the Total Payments shall be
treated as "parachute payments" within the meaning of Section 280G (b) (2) of
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under Code Section 280G (b) (3) of the Code) shall be treated as subject
to the Excise Tax, unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed prior to any change
in ownership (as defined under Code Section 280G (b) (2) or tax counsel selected
by such accountants (the "Accountants") such Total Payments (in whole or in
part) either do not constitute "parachute payments," represent reasonable
compensation for services actually rendered within the meaning of Section 280G
(b) (4) of the Code in excess of the "base amount" or are otherwise not subject
to the Excise Tax, and (y) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.

     (c) For purposes of determining the amount of the Gross-up Payment, the
Participant shall be deemed to pay U.S. federal income taxes at the highest
marginal rate of U.S. federal income taxation in the calendar year in which the
Gross-up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Participant's
residence for the calendar year in which the Company Payment is to be made, net
of the maximum reduction in U.S. federal income taxes which could be obtained
from deduction of such state and local taxes if paid in such year. In the event
that the Excise Tax is subsequently determined by the Accountants to be less
than the amount taken into account hereunder at the time the Gross-up Payment is
made, the Participant shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the portion of the prior
Gross-up Payment attributable to such reduction (plus the portion of the Gross-
up Payment attributable to the Excise Tax and U.S. federal, state and local
income tax imposed on the portion of the Gross-up Payment being repaid by the
Participant if such repayment results in a reduction in Excise Tax or a U.S.
federal, state and local income tax deduction), plus interest on the amount

                                       19
<PAGE>

of such repayment at the rate provided in Section 1274 (b) (B) of the Code.
Notwithstanding the foregoing, in the event any portion of the Gross-up Payment
to be refunded to the Company has been paid to any U.S. federal, state and local
tax authority , repayment thereof (and related amounts) shall not be required
until actual refund or credit of such portion has been made to the Participant,
and interest payable to the Company shall not exceed the interest received or
credited to the Participant by such tax authority for the period it held such
portion. The Participant and the Company shall mutually agree upon the course of
action to be pursued (and the method of allocating the expense thereof) if the
Participant's claim for refund or credit is denied.

In the event that the Excise Tax is later determined by the Accountant or the
Internal Revenue Service to exceed the amount taken into account hereunder at
the time the Gross-up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-up
Payment), the Company shall make an additional Gross-up Payment in respect of
such excess )plus any interest or penalties payable with respect to such excess)
at the time that the amount of such excess is finally determined.

     (d) The Gross-up Payment or portion thereof provided for in subsection (c)
above shall be paid no later than the thirtieth (30) day following an event
occurring which subjects the Participant to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to the Participant on
such day an estimate, as determined in good faith by the Accountant, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274 (b) 2) (B) of the
Code), subject to further payments pursuant to subsection (c) hereof, as soon as
the amount thereof can reasonably be determined, but in no event subjecting the
Participant to the Excise Tax. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have due, such excess
shall constitute a loan by the Company to the Participant, payable on the fifth
day after demand by the Company(together with interest at the rate provided in
Section 1274 (b) (2) (B) of the Code).

     (e) In the event of any controversy with the Internal Revenue Service (or
other authority) with regard to the Excise Tax, the Participant shall permit the
Company to control issues related to the Excise Tax (at its expense), provided
that such issues do not potentially materially adversely affect the Participant,
but the Participant shall control any other issues. In the event the issues are
interrelated, the Participant and the Company shall in good faith cooperate so
as not to jeopardize resolution of either issue, but if the parties cannot agree
the Participant shall make the final determination with regard to the issues. In
the event of any conference with any taxing authority as to the Excise Tax or
associated income taxes, the Participant shall permit the representative of the
Company to accompany the Participant, and the Participant and the Participant's
representative shall cooperate with the Company and its representative.

     (f) The Company shall be responsible for all charges of the Accountant.

     (g) The Company and the Participant shall promptly deliver to each other
copies of any written communication, and summaries of any verbal communications,
with any taxing authority regarding the Excise Tax covered by this Exhibit B.

                                       20<PAGE>

Exhibit 10.3 to 2001 10-K

                             CONVERGYS CORPORATION

                     EXECUTIVE DEFERRED COMPENSATION PLAN

     (As amended effective October 29, 2001, except as otherwise provided)
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
SECTION 1   NAME AND PURPOSE OF PLAN.......................................   1

SECTION 2   GENERAL DEFINITIONS; GENDER AND NUMBER.........................   1

SECTION 3   DEFERRALS; COMPANY MATCH.......................................   2

SECTION 4   MAINTENANCE AND VALUATION OF ACCOUNTS..........................   5

SECTION 5   DISTRIBUTION...................................................   7

SECTION 6   ADMINISTRATION OF THE PLAN.....................................  10

SECTION 7   FUNDING OBLIGATION.............................................  11

SECTION 8   AMENDMENT AND TERMINATION......................................  11

SECTION 9   NON-ALIENATION OF BENEFITS.....................................  12

SECTION 10  MISCELLANEOUS..................................................  12
</TABLE>
<PAGE>

                             CONVERGYS CORPORATION

                     EXECUTIVE DEFERRED COMPENSATION PLAN

                                   SECTION 1
                                   ---------

                           NAME AND PURPOSE OF PLAN
                           ------------------------

         1.1   NAME. The plan set forth herein shall be known as the Convergys
Corporation Executive Deferred Compensation Plan (the "Plan").

         1.2   PURPORSE. The purpose of the Plan is to provide deferred
compensation for a select group of officers and highly compensated employees of
Convergys Corporation ("Convergys") and its affiliates.

         1.3   EFFECTIVE DATE. The Plan shall be effective on January 1, 1999
(the "Effective Date").

         1.4   PREDECESSOR PLANS. The Plan is intended to amend and supersede
the MATRIXX Marketing Inc. Executive Deferred Compensation Plan (the "MATRIXX
Plan") as of the Effective Date. The Plan also is intended to assume and
discharge all of the obligations of Cincinnati Bell Inc. ("CBI") and its
affiliates under CBI's Executive Deferred Compensation Plan (the "CBI Plan")
with respect to those employees of Convergys and its affiliates who were
participating in the CBI Plan immediately prior to the Effective Date.

                                   SECTION 2
                                   ---------

                    GENERAL DEFINITIONS; GENDER AND NUMBER
                    --------------------------------------

         2.1   GENERAL DEFINITIONS. For purposes of the Plan, the following
terms shall have the meanings hereinafter set forth unless the context otherwise
requires:

               2.1.1  "Accounts" means, collectively, all outstanding Cash
Deferral Accounts, Restricted Stock Accounts and Company Matching Accounts
maintained for a Key Employee.

               2.1.2  "Beneficiary" means the person or entity designated by a
Key Employee, on forms furnished and in the manner prescribed by the Committee,
to receive any benefit payable under the Plan after the Key Employee's death. If
a Key Employee fails to designate a beneficiary or if, for any reason, such
designation is not effective, his "Beneficiary" shall be his surviving spouse
or, if none, his estate.

                                       1
<PAGE>

               2.1.3  "Convergys Shares" means common shares of Convergys
Corporation.

               2.1.4  "Convergys Entity" means Convergys and each corporation
which is a member of a controlled group of corporations (within the meaning of
section 414(b) of the Code, as modified by section 415(h) of the Code) which
includes Convergys.

               2.1.5  "Code" means the Internal Revenue Code of 1986 as such
Code now exists or is hereafter amended.

               2.1.6  "Committee" means Convergys Employee Benefits Committee.

               2.1.7  "Employee" means any person who is an employee of a
Convergys Entity.

               2.1.8  "Key Employee" means, with respect to any calendar year,
an Employee who has been designated by the Committee as a "Key Employee" for
such calendar year.

         2.2   GENDER AND NUMBER. For purposes of the Plan, words used in any
gender shall include all other genders, words used in the singular form shall
include the plural form, and words used in the plural form shall include the
singular form, as the context may require.

                                   SECTION 3
                                   ---------

                           DEFERRALS; COMPANY MATCH
                           ------------------------

         3.1   ELECTION OF DEFERRALS.

               3.1.1  Subject to such rules as the Committee may prescribe, a
Key Employee may elect prior to January 1 of such calendar year (or such earlier
date as may be prescribed by the Committee) to defer up to 75% of his Basic
Salary for any calendar year in accordance with procedures established by the
Committee. Notwithstanding the foregoing, if an Employee first becomes a Key
Employee after the first day of a calendar year, such Key Employee may elect
within 30 days of the date on which he first becomes a Key Employee to defer a
permissible percentage of his Basic Salary for the remainder of the calendar
year in accordance with procedures prescribed by the Committee. Any election
under the preceding sentence shall be effective as of the first payroll period
beginning after the date the election is filed. For purposes of the Plan, "Basic
Salary" means the basic salary, pay in lieu of paid time off, short term
disability pay, sales incentive payments and bonuses, overtime pay, hiring
bonuses and retention bonuses payable to a Key Employee by a Convergys Entity,
but not including spot bonuses, patent

                                       2
<PAGE>

bonuses, referral bonuses, severance pay, relocation pay, imputed income, long
term incentive payments and other special forms of pay.

               3.1.2  Subject to such rules as the Committee may prescribe, a
Key Employee may elect prior to January 1 of such calendar year (or such earlier
date as may be prescribed by the Committee) to defer up to 100% (subject to
applicable withholding) or a specific dollar amount (not less than $1,000) of
any Annual Cash Incentive Award otherwise payable during the calendar year
pursuant to procedures established by the Committee. For purposes of the Plan,
"Annual Cash Incentive Award" means the annual incentive award or bonus payable
in cash to a Key Employee by a Convergys Entity.

               3.1.3  Subject to such rules as the Committee may prescribe, a
Key Employee who has received a Restricted Stock Award may elect to surrender
any of the restricted Convergys Shares as of any date permitted by the Committee
(not later than six months prior to the date on which the restrictions otherwise
applicable to such shares would lapse). For purposes of the Plan, "Restricted
Stock Award" means an award of Convergys Shares under the Convergys 1998 Long
Term Incentive Plan (the "1998 LTIP") which is in the form of restricted stock.

         3.2   CHANGING DEFERRALS. Subject to such rules as the Committee may
prescribe, a Key Employee who has elected to defer a portion of his Basic Salary
or Annual Cash Incentive Awards may change the amount of his deferral from one
permissible amount to another, effective as of any January 1, provided such
change is made prior to such January 1 (or such earlier date as may be
prescribed by the Committee).

         3.3   SUSPENDING DEFERRALS.

               3.3.1  Subject to such rules as the Committee may prescribe, a
Key Employee who has elected to defer a portion of his Basic Salary may suspend
such election, as of the first day of any payroll period, provided such election
is made prior to the first day of such payroll period. A Key Employee who has
suspended his election for deferrals in accordance with this Section 3.3.1 may
again elect to defer a portion of his Basic Salary, effective as of any January
1 following the six month period beginning on the effective date of the
suspension, provided such election is made prior to such January 1 (or such
earlier date as may be prescribed by the Committee).

               3.3.2  A Key Employee's election to defer a portion of an Annual
Cash Incentive Award or to surrender any portion of a Restricted Stock Award may
not be revoked during the calendar year.

         3.4   COMPANY MATCH.

               3.4.1  Effective January 1, 2002, as of each day on which Basic
Salary or Annual Cash Incentive Award deferrals are credited, under Section 4.1,
to the Cash

                                       3
<PAGE>

Deferral Account of a Key Employee ("Deferral Date"), there shall also be
credited to such Key Employee's Company Matching Account under Section 4.3, an
amount equal to the lesser of (a) the result obtained (not less than zero) by
subtracting the Maximum 401(m) Match from 4% of the Key Employee's Total
Compensation or (b) 100% of the first 3% of Basic Salary and Annual Cash
Incentive Awards deferred by the Key Employee and 50% of the next 2% of Basic
Salary and Annual Cash Incentive Awards deferred by the Key Employee on the
Deferral Date. For purposes of the preceding sentence, "Total Compensation"
means the total Basic Salary and Annual Cash Incentive Awards paid to the Key
Employee on a Deferral Date or which would have been paid to the Key Employee on
the Deferral Date if he had not participated in a 401(k) plan or cafeteria plan
and "Maximum 401(m) Match" means the maximum Convergys Entity match which would
have been made for the Key Employee on the Deferral Date under the Convergys
Corporation Retirement and Savings Plan (the "RSP") if the Key Employee had
elected to contribute 5% of his non-deferred compensation to the RSP on a
pre-tax basis (not in excess of the applicable dollar limitation). For purposes
of this Section 3.4.1 only, the terms "Basic Salary" and "Annual Cash Incentive
Award" shall not include an award payable under the 1998 LTIP or any other long
term incentive plan or any type of compensation (other than compensation in
excess of the applicable dollar limitation) which is excluded from the
definition of the term "Covered Compensation" under the RSP. Notwithstanding any
other provision of the Plan to the contrary, with respect to a Key Employee
hired on or after January 1, 2002, no amounts shall be credited under this
Section 3.4.1 with respect to Basic Salary or Annual Cash Incentive Award
deferrals credited to the Key Employee's Cash Deferral Account prior to the date
on which he has complete one year of Eligibility Service (as defined in the
RSP).

               3.4.2  As of any day on which the value of a Restricted Stock
Award which a Key Employee has elected to surrender is credited, under Section
4.2, to the Restricted Stock Account of such Key Employee, there shall also be
credited to such Key Employee's Company Matching Account under Section 4.3, an
amount equal to 4% of the value of the Restricted Stock Award credited to his
Restricted Stock Account.

         3.5   DEFERRALS OF SAVINGS PLAN DISTRIBUTIONS.

               3.5.1  Subject to such rules as the Committee may prescribe, a
Key Employee who has received a Required 401(k) Distribution may elect to defer
from his Basic Salary a dollar amount not greater than the dollar amount of the
Required 401(k) Distribution. Such deferral shall be made with respect to the
Basic Salary paid (1) after the Required 401(k) Distribution has been paid, (2)
prior to the date the services to which such Basic Salary relates have been
performed and (3) during the year in which the Required 401(k) Distribution is
paid. Such deferrals shall be credited to the Key Employee's Cash Deferral
Account. For purposes of this Section 3.5, "Required 401(k) Distribution" means
a distribution of employee contributions and earnings from the RSP made to
satisfy the limitations contained in section 401(k) of the Code.

                                       4
<PAGE>

               3.5.2  Subject to such rules as the Committee may prescribe, a
Key Employee who has received a Required 401(m) Distribution may elect to defer
from his Basic Salary a dollar amount not greater than the dollar amount of the
Required 401(m) Distribution. Such deferral shall be made with respect to the
Basic Salary paid (1) after the Required 401(m) Distribution has been paid, (2)
prior to the date the services to which such Basic Salary relates have been
performed and (3) during the year in which the Required 401(k) Distribution is
paid. Such deferral shall be credited to the Key Employee's Cash Deferral
Account. For purposes of this Section 3.5, "Required 401(m) Distribution" means
a distribution of company matching contributions and earnings from the RSP made
to satisfy the limitations under section 401(m) of the Code.

               3.5.3  In the case of a Key Employee who has received a Required
401(k) Distribution and who has incurred a Required 401(m) Forfeiture by reason
of such Required 401(k) Required Distribution, if a deferral of the Required
401(k) Distribution amount is made under Section 3.5.1, there also shall be
credited to such Key Employee's Company Matching Account, an amount equal to the
amount of the Required 401(m) Forfeiture associated with that Required 401(k)
Distribution. For purposes of this Section 3.5, "Required 401(m) Forfeiture"
means a forfeiture of company matching contributions and earnings under the RSP
by reason of a Required 401(k) Distribution.

                                   SECTION 4
                                   ---------

                     MAINTENANCE AND VALUATION OF ACCOUNTS
                     -------------------------------------

         4.1   CASH DEFERRAL ACCOUNTS. There shall be established for each Key
Employee who has elected to defer a portion of his Basic Salary or Annual Cash
Incentive Award under Section 3.1.1, 3.1.2, 3.5.1 or 3.5.2 a separate Account,
called a Cash Deferral Account, which shall reflect the amounts deferred by the
Key Employee and the assumed investment thereof. Subject to such rules as the
Committee may prescribe, any amount deferred by a Key Employee under Section
3.1.1, 3.1.2, 3.5.1 or 3.5.2 shall be credited to the Key Employee's Cash
Deferral Account as of the day on which such deferred amount would have
otherwise been paid to the Key Employee and shall be assumed to have been
invested as designated by the Key Employee among the investments available under
the Plan.

         4.2   RESTRICTED STOCK ACCOUNTS. There shall be established for each
Key Employee who has elected to surrender all or a portion of a Restricted Stock
Award under Section 3.1.3 a separate Account, called a Restricted Stock Account,
which shall reflect the value of the Convergys Shares surrendered by the Key
Employee under Section 3.1.3 and the assumed investment thereof. Subject to such
rules as the Committee may prescribe, an amount equal to the value of the
Convergys Shares surrendered by the Key Employee under Section 3.1.3 shall be
credited to the Key Employee's Restricted Stock Account as of the day on which
the Convergys Shares are surrendered to Convergys. Amounts credited to the Key
Employee's Restricted Stock Account on or after October

                                       5
<PAGE>

29, 2001 shall be assumed to be invested in Convergys Shares at all times.
Amounts credited to the Key Employee's Restricted Stock Account prior to October
29, 2001 shall be assumed to have been invested exclusively in Convergys Shares
until six months after the Applicable Lapse Date for the surrendered Convergys
Shares. Thereafter, such amounts shall be assumed to have been invested as
designated by the Key Employee among the investments available under the Plan.
For purposes of the Plan, "Applicable Lapse Date" means, with respect to any
Restricted Stock Award, the date on which the restrictions would have lapsed if
the restricted Convergys Shares had not been surrendered.

         4.3   COMPANY MATCHING ACCOUNTS. There shall be established for each
Key Employee who is entitled to a match under Section 3.4.1, 3.4.2 or 3.5.3 a
separate Account called a Company Matching Account, which shall reflect the
match to be credited on behalf of the Key Employee under Section 3.4.1, 3.4.2
and 3.5.3 and the assumed investment thereof. The amount of the match shall be
credited to the Key Employee's Company Matching Account as of the day on which
the deferred Basic Salary or Annual Cash Incentive Award to which the match
relates would have otherwise been paid to the Key Employee or, in the case of a
match credited pursuant to Section 3.4.2, as of the date on which the Key
Employee elected to surrender the Restricted Stock Award pursuant to Section
3.1.3. Amounts credited to the Key Employee's Company Matching Account shall be
assumed to have been invested as designated by the Key Employee, pursuant to
rules prescribed by the Committee, among the investments available under the
Plan.

         4.4   VALUATION. As soon as practical following the end of each
calendar year, and as of such other date as the Committee may prescribe, each
Key Employee or, in the event of his death, his Beneficiary, shall be furnished
a statement as of December 31 showing the balance of the Key Employee's
Accounts, the total credits to such Accounts during the preceding calendar year,
and, if amounts credited to any such Accounts are assumed to have been invested
in securities, a description of such securities including the number of shares
assumed to have been purchased by the amounts credited to such Accounts.

         4.5   PREDECESSOR PLAN ACCOUNTS. In the case of a Key Employee who had
one or more accounts under the MATRIXX Plan or the CBI Plan (the "Predecessor
Plans") immediately prior to the Effective Date, the balance credited to each
such Account shall be transferred to the corresponding Account (Cash Deferral,
Restricted Stock or Company Matching) in this Plan as of the Effective Date.
From and after such transfer, the Key Employee shall cease to have any further
rights under any Predecessor Plan. To the extent that a Predecessor Plan Account
was assumed to have been invested in common shares of CBI ("CBI Shares")
immediately prior to the Effective Date, the Key Employee's Accounts in this
Plan shall be credited with one Convergys Share and one CBI Share (adjusted in
value to reflect the Convergys Shares distributed to CBI's shareholders on the
Effective Date) for each CBI Share credited to his Predecessor Plan Accounts
immediately prior to the Effective Date and in the case of

                                       6
<PAGE>

CBI Shares credited to a Restricted Stock Account under this Plan, references to
"Convergys Shares" in Sections 4.2 and 5.2.4 shall include such CBI Shares.

         4.6   CONVERGYS  SHARES. To the extent Key Employee's Accounts are
assumed to have been invested in Convergys Shares:

               4.6.1.  Whenever any cash dividends are paid with respect to
Convergys Shares, additional amounts shall be credited to the Key Employee's
Accounts as of the dividend payment date. The additional amount to be credited
to each account shall be determined by multiplying the per share cash dividend
paid with respect to the Convergys Shares on the dividend payment date by the
number of assumed Convergys Shares credited to the Key Employee's Accounts on
the day preceding the dividend payment date. Such additional amount credited to
the Key Employee's Account shall be assumed to have been invested in additional
Convergys Shares on the day on which such dividends are paid.

               4.6.2.  If there is any change in Convergys Shares through the
declaration of a stock dividend or a stock split or through a recapitalization
resulting in a stock split, or a combination or a change in shares, the number
of shares assumed to have been purchased for each Account shall be appropriately
adjusted.

               4.6.3  Whenever Convergys Shares are to be valued for purposes of
the Plan, the value of each such share shall be the closing price of the shares
as reported on the New York Stock Exchange on the business day preceding the
date as of which the valuation is performed or, if no sales were made on that
date, on the next preceding day on which sales were made.

                                   SECTION 5
                                   ---------

                                 DISTRIBUTION
                                 ------------

         5.1   GENERAL. Except as otherwise provided in Section 5.5, no amount
shall be paid with respect to a Key Employee's Accounts while he remains an
Employee. Unless the Committee otherwise provides, all payments with respect to
a Key Employee's Accounts shall be made by the Convergys Entity which otherwise
would have paid the Basic Salary, Annual Cash Incentive Award or Restricted
Stock Award deferred by the Key Employee.

         5.2   TERMINATION OF EMPLOYMENT. A Key Employee may elect to receive
the amounts credited to his Accounts in up to ten annual installment payments or
120 monthly installment payments, commencing not earlier than the first business
day of the month following the date he ceases to be an Employee and not later
than the first business day of March of the calendar year following the calendar
year in which he ceases

                                       7
<PAGE>

to be an Employee. If a Key Employee fails to make such election, the amounts
credited to the Key Employee's Account shall be paid to the Key Employee in two
annual installments with the first installment being made on the first business
day of March of the calendar year following the calendar year in which the Key
Employee ceases to be an Employee.

               5.2.1.  The amount of each annual installment payable under this
Section 5.2 (or, in the case of monthly installments, the sum of the 12
installments paid during each 12 month period) shall be, at the election of the
Key Employee, either (1) a specific dollar amount specified by the Key Employee
(not less than $50,000), or (2) a fraction of the amounts credited to the Key
Employee's Accounts as of the installment payment date, the numerator of which
is 1 and the denominator of which is equal to the total number of installments
remaining to be paid (including the installment to be paid on the subject
installment payment date). If a Key Employee elects (2) above and the amount of
any annual installment (or, in the case of monthly installments, the sum of the
12 installments paid during each 12 month period) is less than $50,000, it shall
be increased to $50,000, as the case may be; provided that if the remaining
amount credited to the Accounts on any annual installment date is less than
$50,000, the payment shall be the amount necessary to reduce the amount credited
to the Account to $0.

               5.2.2.  Any election under this Section 5.2 must be made within
the time prescribed by the Committee but in no event later than six months prior
to the effective date of the Key Employee's termination. Distributions made
under this Section 5.2 shall be subject to the rules and procedures prescribed
by the Committee. The Committee, in its discretion and subject to such rules as
it may prescribe, may allow a Key Employee to elect another form of payment not
otherwise described in this Section 5.2.

               5.2.3.  In its discretion, the Committee may condition the right
to receive payments with respect to a portion or all of a Key Employee's Company
Matching Account on the Key Employee's completing a minimum period of service
prior to the date on which he ceases to be an Employee. To the extent that a Key
Employee has not satisfied any applicable service requirements prior to the date
on which he ceases to be an Employee (other than by reason of his death), he
shall not be entitled to receive payment with respect to his Company Matching
Account.

               5.2.4   In the case of a Restricted Stock Account and that
portion of the Company Matching Account attributable to match credited pursuant
to Section 3.4.2, such amounts credited to such Accounts shall be subject to
forfeiture at the same time and to the same extent that the Convergys Shares
surrendered would have been if such Convergys Shares had not been surrendered.
The provisions of this Section 5.2.4 shall not apply to amounts credited to the
Restricted Stock Account under Section 4.6.1 or 4.6.2.

         5.3   DEATH. Except as provided in Section 5.2.4, if a Key Employee
ceases to be an Employee by reason of his death, or if a Key Employee dies after
ceasing to be

                                       8
<PAGE>

an Employee but before the amounts credited to his Accounts have been paid, the
amounts credited to the Key Employee's Accounts shall be paid to the Key
Employee's Beneficiary in one lump sum as of the first business day of the third
calendar quarter following the calendar quarter in which the Key Employee's
death occurs; provided, however, that if the Key Employee has elected to have
his Accounts distributed in installments and if he dies after distribution has
commenced, the remaining installments shall be paid to the Beneficiary as they
become due.

         5.4   DISTRIBUTIONS DURING EMPLOYMENT. Subject to such rules and
restrictions as the Committee may prescribe, a Key Employee may elect to receive
a distribution of up to the entire balance in his Cash Deferral Account or
Restricted Stock Account (to the extent that the Restricted Stock Account is not
subject to forfeiture). Any such election must be made both prior to the first
day of the calendar year in which the distribution is to be made and at least
six months prior to the effective date of the distribution. A Key Employee who
elects to receive a distribution under this Section 5.4 shall not be permitted
to make deferrals under Section 3.1 during the year in which the distribution
occurs. Notwithstanding any other provision of the Plan to the contrary, if a
Key Employee's compensation is subject to the limitations described in Code
Section 162(m), the Compensation Committee may limit the amount a Key Employee
may elect to receive (under the terms of this Section 5.4) from that portion of
his Restricted Stock Account attributable to amounts credited to such account on
or after October 29, 2001.

         5.5   FORM OF PAYMENT. Payments of that portion of a Key Employee's
Restricted Stock Account that is attributable to amounts credited to such
account on or after October 29, 2001 shall be paid in the form of Convergys
Shares. All other payments under the Plan shall be made in cash.

         5.6   CHANGE IN CONTROL. In the event of a Change in Control on or
after January 1, 2001, the provisions of this Section 5.6 will supersede any
conflicting provisions of the Plan.

               5.6.1  In the event of a Change in Control, the full present
value of all amounts credited to Key Employee's Accounts under the Plan as of
the Change in Control, whether or not vested, shall be fully funded to the
Convergys Corporation Grantor Trust (the "Trust"), in cash or other property
acceptable to the trustee, within five business days of such Change in Control.

               5.6.2  For the purposes of this Section 5.6, a "Change in
Control" shall be deemed to have occurred if, (i) a tender offer shall be made
and consummated for the ownership of 30% or more of the outstanding voting
securities of Convergys; (ii) Convergys shall be merged or consolidated with
another corporation and as a result of such merger or consolidation less than
75% of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of
Convergys, other than affiliates (within the meaning of the Securities Exchange
Act of 1934 as in effect on the Effective Date (the "1934 Act")) of any party to

                                       9
<PAGE>

such merger or consolidation, as the same shall have existed immediately prior
to such merger or consolidation; (iii) Convergys shall sell substantially all of
its assets to another corporation which is not a wholly owned subsidiary; (iv) a
person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) of the 1934
Act, shall acquire 20% or more of the outstanding voting securities of Convergys
(whether directly, indirectly, beneficially or of record), or a person, within
the meaning of Section 3(a)(9) or Section 13(d)(3) of the 1934 Act, controls in
any manner the election of a majority of the directors of Convergys; (v) or
within any period of two consecutive years commencing on or after the Effective
Date, individuals who at the beginning of such period constitute Convergys'
Board of Directors cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period. For purposes hereof, ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(1)(i) of the 1934 Act.

               5.6.3  In the event of a Change in Control, the provisions of
Section 5.6 may not be deleted or amended on or subsequent to the Change of
Control in any manner whatsoever which would be adverse to one or more Key
Employees without the consent of each such Key Employee who would be so
affected; provided, however, the Convergys Compensation and Benefits Committee
may make minor or administrative changes to Section 5.6 or changes to conform to
applicable legal requirements. This Section 5.6.3 shall not limit the Convergys
Compensation and Benefits Committee from making any amendment to or deleting all
or any portion of Section 5.6 prior to a Change in Control.

                                    SECTION 6
                                    ---------

                           ADMINISTRATION OF THE PLAN
                           --------------------------

         6.1   GENERAL. The general administration of the Plan and the
responsibility for carrying out its provisions shall be placed in the Committee.

         6.2   EXPENSES. Expenses of administering the Plan shall be shared by
each Convergys Entity in such proportions as may be determined by the Committee.

         6.3   COMPENSATION OF COMMITTEE. The members of the Committee shall not
receive compensation for their services as such, and, except as required by law,
no bond or other security need be required of them in such capacity in any
jurisdiction.

         6.4   RULES OF PLAN. Subject to the limitations of the Plan, the
Committee may, from time to time, establish rules for the administration of the
Plan and the transaction of its business. The Committee may correct errors,
however arising, and as far as possible, adjust any benefit payments
accordingly. The determination of the Committee as to the interpretation of the
provisions of the Plan or any disputed question shall be conclusive upon all
interested parties.

                                       10
<PAGE>

         6.5   AGENTS AND EMPLOYEES. The Committee may authorize one or more
agents to execute or deliver any instrument. The Committee may appoint or employ
such agents, counsel (including counsel of any Company), auditors (including
auditors of any Company), physicians, clerical help and actuaries as in the
Committee's judgment may seem reasonable or necessary for the proper
administration of the Plan.

         6.6   INDEMNIFICATION. Each Convergys Entity shall indemnify each
member of the Committee for all expenses and liabilities (including reasonable
attorney's fees) arising out of the administration of the Plan. The foregoing
right of indemnification shall be in addition to any other rights to which the
members of the Committee may be entitled as a matter of law.

                                   SECTION 7
                                   ---------

                              FUNDING OBLIGATION
                              ------------------

         Except as provided in Section 5.6, no Convergys Entity shall have any
obligation to fund, either by the purchase of Convergys Shares or the investment
in any account or by any other means, its obligation to Key Employees hereunder.
If, however, a Convergys Entity does elect to allocate assets to provide for any
such obligation, the assets allocated for such purpose shall be assets of the
Convergys Entity subject to claims against the Convergys Entity, including
claims of the Convergys Entity's creditors, to the same extent as are other
corporate assets, and the Key Employee shall have no right or claim against the
assets so allocated, other than as general creditors of the Convergys Entity.

                                   SECTION 8
                                   ---------

                           AMENDMENT AND TERMINATION
                           -------------------------

         The Convergys Compensation and Benefits Committee may, without the
consent of any Key Employee or Beneficiary, amend or terminate the Plan at any
time; provided that no amendment shall be made or act of termination taken which
divests any Key Employee of the right to receive payments under the plan with
respect to amount heretofore credited to the Key Employee's Accounts.

                                       11
<PAGE>

                                   SECTION 9
                                   ---------

                          NON-ALIENATION OF BENEFITS
                          --------------------------

         No Key Employee or Beneficiary shall alienate, commute, anticipate,
assign, pledge, encumber or dispose of the right to receive the payments
required to be made by any Convergys Entity hereunder, which payments and the
right to receive them are expressly declared to be nonassignable and
nontransferable. In the event of any attempt to assign or transfer any such
payment or the right to receive them, no Convergys Entity shall have any further
obligation to make any payments otherwise required of it hereunder.

                                  SECTION 10
                                  ----------

                                 MISCELLANEOUS
                                 -------------

         10.1  DELEGATION. The Committee may delegate to any Convergys Entity,
person or committee certain of its rights and duties hereunder. Any such
delegation shall be valid and binding on all persons and the person or committee
to whom or which authority is delegated shall have full power to act in all
matters so delegated until the authority expires by its terms or is revoked by
the Committee, as the case may be.

         10.2  APPLICABLE LAW. The Plan shall be governed by applicable federal
law and, to the extent not preempted by applicable federal law, the laws of the
State of Ohio.

         10.3  SEPARABILITY OF PROVISIONS. If any provision of the Plan is held
invalid or unenforceable, such invalidity or unenforceabilty shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.

         10.4  HEADINGS. Headings used throughout the Plan are for convenience
only and shall not be given legal significance.

         10.5  COUNTERPARTS. The Plan may be executed in any number of
counterparts, each of which shall be deemed an original. All counterparts shall
constitute one and the same instrument, which shall be sufficiently evidenced by
any one thereof.

                                       12
<PAGE>

                                      CONVERGYS CORPORATION
                                      COMPENSATION AND BENEFITS
                                      COMMITTEE

                                      By:______________________

                                       13

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