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Employment Agreement - Albertson's Inc. and Robert Dunst

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                                November 16, 2001




Mr. Robert Dunst
35551 Palomares Road
Castro Valley, CA  94552

Dear Bob:

     I am pleased to confirm my verbal offer of  employment  for the position of
Executive Vice  President and Chief  Technology  Officer (CTO) for  Albertson's,
Inc. (the  "Company").  In this  assignment,  you will report  directly to Larry
Johnston,   our  CEO.  Your   employment  with  the  Company  will  commence  on
November 19, 2001 (the "Effective Date").

     Your  initial  base salary  ("Base  Salary")  will be  $350,000  per annum,
payable  in  accordance  with  the  Company's   policies  relating  to  salaried
employees.  Your  Base  Salary  may be  increased  (but  not  decreased)  by the
Compensation   Committee   of  the  Board  of  Directors  of  the  Company  (the
"Compensation Committee") in its sole discretion.

     Commencing with the fiscal year of the Company ("Fiscal Year") in which the
Effective  Date occurs,  you will have the  opportunity to earn a bonus for each
Fiscal Year as recommended by the Compensation  Committee in accordance with the
Company's  annual bonus plan  applicable to the Company's  senior  officers (the
"Annual  Bonus  Plan").  The  amount of each  annual  bonus  shall be set by the
Compensation  Committee and is currently  equal to seventy percent (70%) of Base
Salary if the applicable  "target"  performance  goals (as defined in the Annual
Bonus Plan for such period) are met (the "Target Bonus"),  except that the bonus
cannot exceed one hundred five percent  (105%) of Base Salary.  The criteria for
determining  the amount of any Target Bonus and the bases upon which such Target
Bonus  shall be payable  shall be no less  favorable  to you than those used for
other senior executives of the Company, such criteria and bases to be determined
in the sole discretion of the Compensation Committee.

     As of the Effective  Date,  you will be granted 40,000 shares of deferrable
restricted  stock  units of the  Company  ("Restricted  Stock  Unit  Award")  in
accordance  with the form of grant used by the  Company  for grants  made to its
senior  executive  officers.  Such grants shall vest at twenty percent (20%) per
year on the  first,  second,  third,  fourth,  and  fifth  anniversaries  of the
Effective Date;  provided in each case that you have been continuously  employed
as a senior  executive  with the Company  from the  Effective  Date  through the
applicable  vesting date, except as otherwise  provided in this letter agreement
and in such  deferrable  restricted  stock unit  agreement.  To the extent  that
dividends are paid on Company common stock after the Effective Date and prior to
the date that the Company  common  stock that is subject to a  Restricted  Stock

<PAGE>
Mr. Robert Dunst
November 16, 2001
Page 2

Unit Award is issued to you,  you shall be entitled to receive a cash payment in
an amount equal to the dividends you would have been entitled to receive had you
been the owner of such unissued shares on the date such dividends are paid. Such
cash payment  shall be made at the same time  payment of  dividends  are made to
other shareholders of Company common stock.

     You will be entitled to receive grants of stock options to purchase  shares
of  common  stock  of the  Company  from  time  to time  as  recommended  by the
Compensation  Committee in its sole  discretion in accordance with the Company's
usual  form of grant;  provided  that not later  than  December  31,  2001,  the
Compensation Committee will grant to you an option to purchase shares of Company
common stock which has a value equal to three million dollars ($3,000,000),  the
number of shares of which shall be equal to three million  dollars  ($3,000,000)
divided by the closing New York Stock Exchange  price of the Company's  stock on
the date of such grant (which would be approximately  88,000 shares based on the
current  stock  price),  and vesting at the rate of twenty  percent (20%) of the
total  shares  granted on each of the  first,  second,  third,  fourth and fifth
anniversaries  of the  date of  such  grant.  Subsequent  annual  option  awards
otherwise  shall be subject to the terms and  conditions  as generally  apply to
stock options granted to other senior executive  officers who participate in the
Company's equity incentive plans.

     The Company will maintain, for your benefit, officer liability insurance in
a form it  maintains  for its  other  senior  executive  officers.  You  will be
indemnified  by the Company  against  liability as an officer of the Company and
any  subsidiary  or affiliate of the Company to the same extent as the Company's
other  senior  executive  officers.  Your  rights  to such  indemnification  and
insurance  will continue so long as you may be subject to liability,  whether or
not your employment may have terminated prior thereto.

     You  will be  provided  with  four  (4)  weeks  of paid  vacation  per year
beginning  with the 2002  calendar  year and sick  leave  and paid  holidays  in
accordance  with the Company's  standard  policy  regarding  these  benefits for
senior executive officers of the Company.

     You  will  also  be  eligible  to  participate  in  each  fringe,  welfare,
retirement and incentive  programs  adopted from time to time by the Company for
the  benefit  of,  and which  generally  apply to, its  highest  level of senior
executive officers from time to time,  including the Company's 401(k) and profit
sharing  plans,  in accordance  with the terms of such plans and  programs.  The
Company  will waive any  otherwise  applicable  waiting  periods for its medical
benefit and life insurance plans.

     The Company will reimburse you in accordance with the Company's  relocation
policy  provided  under its "Full  Service  Move  Program  for Senior  Executive
Officers" (the "Relocation  Program"),  a copy of which has been provided to you
previously,  in connection with your relocation to Boise, Idaho. Pursuant to the
Relocation Program, you will be entitled to a "gross-up" payment with respect to
those  reimbursement  payments  described in the Relocation Program in an amount

<PAGE>
Mr. Robert Dunst
November 16, 2001
Page 3

such that, after payment of all applicable taxes on such reimbursement  payments
and  "gross-up"  payment,  you  retain  an  amount  equal to the  amount of such
reimbursement payments.

     In the event of your  termination  of employment by the Company  within two
(2) years of the  Effective  Date for any reason other than cause,  you shall be
entitled to receive :

     (a)  Any earned, but unpaid, Base Salary;

     (b)  Any earned, but unpaid,  bonus for any Fiscal Year that ended prior to
          the Fiscal Year in which the date of termination occurs;

     (c)  The cash equivalent of any accrued, but unused, vacation; and

     (d)  Any accrued employee benefits,  subject to the terms of the applicable
          employee benefit plans.

     In addition, if your employment is terminated by the Company for any reason
other than cause, you shall be entitled to receive a lump sum severance  payment
equal to $595,000.

     Please  understand  that  this  offer  is  subject  to the  Company  having
completed to its  satisfaction any background or reference checks as it may deem
appropriate. Further, this letter shall not be construed to create an employment
contract of any kind,  express or implied,  and your employment  status shall be
and remain "employment at will";  provided,  however,  that upon termination you
shall be entitled to the benefits as set forth in this letter.

     As a condition to receipt of any severance  payments or continued  benefits
under this  letter upon your  termination  for any  reason,  you will  execute a
release agreement  reasonably  satisfactory to the Company releasing any and all
claims arising out of your employment with the Company.

     In the event of any conflict between the terms of this letter agreement and
the terms of any other agreement,  award or arrangement contemplated hereby, the
terms of this letter agreement shall control.

     If the terms outlined above reflect your understanding of our offer and you
accept  employment  based on these terms,  please  indicate  your  acceptance by
signing  the two  original  letters  provided.  Please  keep one letter for your
records and return the other to me.



<PAGE>
Mr. Robert Dunst
November 16, 2001
Page 4


     We are extremely  pleased to have you join the Albertson's team, and I look
forward to our association with you in this important role at Albertson's.

                                      Sincerely,


                                      /s/  Kathy Herbert
                                      ---------------------
                                      Kathy Herbert
                                      Executive Vice President, Human Resources

Accepted and agreed to this
19th day of November, 2001