Employment Agreement - Albertson's Inc. and Peter L. Lynch
January 26, 2001
Peter L. Lynch
Albertson's, Inc.
250 E. Parkcenter Blvd.
Boise, ID 83706
Dear Peter:
This letter sets forth our agreement and understanding of the terms of a
general release and certain benefits, which you are eligible to receive in the
event of the occurrence of certain conditions and circumstances as described
below. This agreement will become effective on the eighth (8th) day after the
date of its execution by you.
1. Conditioned upon your agreement to the terms set forth in this letter,
in the event Albertson's, Inc. (the "Company") terminates your
employment other than for Cause (as defined in paragraph 2. below) or
you terminate your employment with the Company for Good Reason (as
defined in paragraph 2. below) prior to December 5, 2003, you will be
entitled to the "Termination Benefits" described below. The date your
employment with the Company terminates shall be referred to as the
"Termination Date." Your receipt of the Termination Benefits is
expressly conditioned upon your execution of the Release of Claims as
contained in Exhibit A on or around your Termination Date. The
"Termination Benefits" are as follows:
(a) Upon your Termination Date, you will become vested in 100% of
your award of 138,400 deferred stock units granted to you on
December 6, 2000 (the "Stock Award") even if the performance
standard set forth in the agreement granting the Stock Award has
not been met.
(b) The Company will reimburse you for any reasonable moving expenses
you incur if you relocate your principal residence within one (1)
year of the Termination Date to the extent that you are not
otherwise entitled to be reimbursed for such expenses by a party
unrelated to the Company. In connection with such a relocation
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 2
you may cause the Company to purchase your principal residence
from you for the amount determined as (i) the average of three
(3) appraisals or (ii) the purchase price paid by you for the
principal residence, whichever is greater.
(c) Effective on the Termination Date and continuing for up to one
(1) year thereafter (unless such period is terminated prior to
such time by your taking other employment as described below),
you will be classified as a special employee of the Company and
during such period will be entitled to those benefits (and only
those benefits) specified in this letter agreement. Your status
as a special employee will terminate on the date you accept paid
employment of any kind with an employer other than the Company
(including self-employment) (the "Special Employee Status
Termination Date"). It is further understood that during such
period you will not be eligible for or entitled to any additional
salary, raises, bonuses, vacation pay, or any other compensation,
with the following exceptions:
(i) You shall be entitled to continued salary as in effect on
the Termination Date, paid in accordance with the normal
payroll practices and procedures of the Company, for a
period of one (1) year following the Termination Date. In
the event of your death or other termination of your status
as a special employee prior to the expiration of this
one-year period, any unpaid salary attributable to the
remaining portion of this one-year period shall be payable
to you or your estate, as applicable, in a lump sum as soon
as practicable thereafter.
(ii) You will be entitled to receive the entire target bonus for
the fiscal year in which the Termination Date occurs as set
forth in any bonus plan in which you were entitled to
participate immediately prior to the Termination Date.
(iii)Through the Special Employee Status Termination Date you
will (1) be entitled to participate in the Company's
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 3
medical, dental, life insurance and retirement plans and (2)
be eligible to defer salary under any deferred compensation
plan in which you were entitled to participate immediately
prior to the Termination Date.
(iv) Through the Special Employee Status Termination Date you
shall be treated as a current employee for purposes of
vesting and exercisability under the Company's stock and
deferred unit plans. Termination of your status as a special
employee shall be treated as termination of your employment
with the Company under any applicable stock, stock option or
stock incentive plans.
2. (a) For purposes of this letter agreement, "Cause" shall mean:
(i) Your willful and continued failure to perform substantially
your duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness)
which has not been cured within thirty days after a written
demand for substantial performance is delivered to you by
the Board of Directors of the Company which specifically
identifies the manner in which you have not substantially
performed your duties, or
(ii) Your willfully engaging in illegal conduct or gross
misconduct which is materially and demonstrably injurious to
the Company.
For purposes of this provision, no act or failure to act on your
part shall be considered "willful" unless it is done by you in
bad faith or without reasonable belief that your action or
omission was in the best interests of the Company.
(b) For purposes of this letter agreement, "Good Reason" shall mean:
(i) Your base salary is reduced below $600,000;
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 4
(ii) Your duties and responsibilities as President and Chief
Operating Officer are materially and adversely diminished,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is
remedied by the Company promptly after written notice
thereof is given by you to the Company; or
(iii)You are required to be based at a location more than
35 miles from the location where your employment is based as
of the date of this letter agreement.
3. Within 10 days of the Termination Date you shall return to the Company
all of the Company's personal property, including without limitation
all computers, books, records, documents, videos, cards, keys, credit
cards issued to you, and all other such personal property of every
nature and kind previously given to you by the Company.
4. In consideration of the Company's agreement to enter into this letter
agreement and the Company's other covenants and agreements contained
herein:
(a) You do hereby knowingly and voluntarily, fully and finally
release and forever discharge the Company, including its related
or affiliated companies, partnerships, subsidiaries or other
business entities, and its and their present and former
respective officers, directors, shareholders, members, owners,
agents, consultants, employees, representatives, insurers,
successors and assigns (hereinafter referred to collectively as
the "Released Parties"), from any and all claims, charges,
complaints, liens, demands, causes of action, obligations,
damages and liabilities, known or unknown, suspected or
unsuspected, that you had, now have, or may hereafter claim to
have against the Released Parties, arising out of or relating in
any way to your employment with or separation from the Company or
otherwise relating to any of the Released Parties from the
beginning of time through the date you sign this agreement. This
release specifically extends to, without limitation, claims or
causes of action under any local, state and federal laws
governing employment relations, including but not limited to
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 5
federal equal employment opportunity laws and federal and state
labor statutes and regulations, including, but not limited to,
Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, and the Employee Retirement Income
Security Act of 1974, all as amended from time to time.
With respect to the Released Parties, you expressly waive all
rights afforded by any provision under Idaho or Delaware law
which generally provides that a general release does not extend
to claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor.
Notwithstanding any such foregoing provision or comparable
provision, you understand and agree that this agreement is
intended to include all claims, if any, which you may have and
which you do not now know or suspect to exist in your favor
against the Released Parties and that this release extinguishes
those claims.
(b) Notwithstanding anything to the contrary contained in this
agreement, you are not releasing any of your rights to the
following:
(i) To indemnification as an officer or director pursuant to
Section 145 of the Delaware General Corporation Law;
(ii) To exercise and obtain, in accordance with the terms of such
options, any and all the benefits appurtenant to the options
to purchase the Company's common stock held by you on the
Termination Date; or
(iii)Any of your rights to enforce this agreement or your
Retention Bonus and Severance Agreement and Release dated
June 18, 1999.
(c) You acknowledge that the Company has advised you that you may
consult with an attorney of your choosing prior to signing this
agreement and that you have been given at least twenty-one days
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 6
during which to review and consider the provisions of this
agreement before signing, although you may sign and return it
sooner if you so desire. You further acknowledge that you have
been advised by the Company that you have the right to revoke
this agreement for a period of seven days after signing it and
that this agreement shall not become effective or enforceable
until such seven-day revocation period has expired. You
acknowledge and agree that if you wish to revoke this agreement,
you must do so in writing, and that such revocation must be
signed by you and received by Steven D. Young, Executive Vice
President, Human Resources at Albertson's Inc., 250 E.
Parkcenter, Blvd., Boise, Idaho 83706 no later than 5:00 p.m.
Mountain Standard Time on the seventh day after you have signed
this agreement. You acknowledge and agree that, in the event that
you revoke this agreement, you shall have no right to receive the
Termination Benefits described above.
5. You represent and agree that neither you nor anyone acting on your
behalf has assigned or transferred, or attempted to assign or
transfer, to any person or entity, any of the claims you are releasing
in this agreement.
6. It is agreed and understood that nothing in this agreement shall be
construed as an admission of liability by the Company or you; rather,
we are resolving any and all matters and disputes regarding your
employment with the Company up to the date hereof.
7. All controversies, claims, or disputes arising out of or related to
this agreement, or to any alleged prior or subsequent oral promises or
assurances relating to this agreement, shall be settled by a binding
arbitration in Boise, Idaho under the rules of the American
Arbitration Association then in effect in the State of Idaho, as the
sole and exclusive remedy of either party, and judgment upon such
award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction.
8. Any notices or other communications permitted or required hereunder
shall be in writing and shall be deemed conclusively to have been
given upon personal delivery at, two (2) business days following the
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 7
date of mailing by first class, registered or certified mail, postage
prepaid, and return receipt requested to:
To you: Mr. Peter L. Lynch
9401 Riverside Drive
Boise, Idaho 83703
To the Company: Albertson's, Inc.
250 E. Parkcenter Blvd.
Boise, Idaho 83706
Attn: General Counsel
9. If any provision of this agreement shall be determined under
applicable law to be overly broad in duration, geographical coverage,
substantive scope, or otherwise, such provision shall be deemed
narrowed to the broadest term permitted by applicable law and shall be
enforced as so narrowed. If any provision of this agreement
nevertheless shall be unlawful, void, or unenforceable, it shall be
deemed severable from and shall in no way affect the validity or
enforceability of the remaining provisions of this agreement. This
agreement will survive the performance of the specific arrangements
herein. This agreement is binding on and shall inure to the benefit of
the Company and you and each of our respective heirs, executors,
administrators, successors and assigns.
10. This agreement and attached exhibits provide the entire agreement
relating to the matters set forth herein between us and supercedes any
and all other agreements, understandings, negotiations, or
discussions, either oral or writing, express or implied, between us,
other than (i) agreements relating to stock option and deferred unit
awards, which agreements shall remain in full force and effect subject
to the modifications, if any, set forth herein and (ii) your Retention
Bonus and Severance Agreement and Release dated June 18, 1999, which
shall remain in full force and effect. We each acknowledge that no
representations, inducements, promises, agreements or warranties, oral
or otherwise, have been made by us, or anyone acting on our behalf,
which are not embodied in this agreement, and that we have not
executed this agreement in reliance on any such representation,
inducement, promise, agreement or warranty, and that no such
216603.06-Los Angeles Server 1A
<PAGE>
Peter L. Lynch
January 26, 2001
Page 8
representation, inducement, promise, agreement or warranty not
contained in this agreement, including, but not limited to, any
purported supplements, modifications, waivers or terminations of this
agreement, shall be valid or binding, unless executed in writing by
both you and the Company.
11. The validity, interpretation, construction and performance of this
agreement shall in all respects be governed by the laws of Delaware,
without reference to principles of conflict of law.
12. This agreement may be executed in one or more counterparts, or
duplicates of originals, all of which, taken together, shall
constitute one and the same instrument.
If this statement of the Company's understanding conforms to your
understanding, please execute and return the enclosed copy of this letter to me
no later than February 5, 2001.
Very truly yours,
ALBERTSON'S, INC.
/s/ Michael F. Reuling
Michael F. Reuling
Vice Chairman of the Company
By signing this letter, I acknowledge that I have had the opportunity to
seek the advice of an attorney in connection with the negotiation and execution
of this agreement; that I have read this agreement and understand its terms;
that I have had sufficient time within which to consider the provisions of this
agreement, and that I entered into this agreement freely, voluntarily, and
without coercion.
Agreed and accepted this 1st day of February 2001 in Boise, Idaho.
/s/ Peter L. Lynch
___________________________
Peter L. Lynch
216603.06-Los Angeles Server 1A
<PAGE>
EXHIBIT A
RELEASE OF CLAIMS
In consideration of the Termination Benefits payable pursuant to the
letter agreement between you and the Company dated January 26, 2001 (the "Letter
Agreement"), you agree to the following terms and conditions as a condition of
receiving such Termination Benefits.
Terms not defined herein shall have the meaning set forth in the
Letter Agreement.
1. You do hereby knowingly and voluntarily, fully and finally release and
forever discharge the Company, including its related or affiliated
companies, partnerships, subsidiaries or other business entities, and
its and their present and former respective officers, directors,
shareholders, members, owners, agents, consultants, employees,
representatives, insurers, successors and assigns (hereinafter
referred to collectively as the "Released Parties"), from any and all
claims, charges, complaints, liens, demands, causes of action,
obligations, damages and liabilities, known or unknown, suspected or
unsuspected, that you had, now have, or may hereafter claim to have
against the Released Parties, arising out of or relating in any way to
your employment with or separation from the Company or otherwise
relating to any of the Released Parties from the beginning of time
through the date you sign this agreement. This release specifically
extends to, without limitation, claims or causes of action under any
local, state and federal laws governing employment relations,
including but not limited to federal equal employment opportunity laws
and federal and state labor statutes and regulations, including, but
not limited to, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, and the Employee Retirement
Income Security Act of 1974, all as amended from time to time.
With respect to the Released Parties, you expressly waive all rights
afforded by any provision under Idaho or Delaware law, which generally
provides that a general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
1
216603.06-Los Angeles Server 1A
<PAGE>
affected his settlement with the debtor. Notwithstanding any such
foregoing provision or comparable provision, you understand and agree
that this agreement is intended to include all claims, if any, which
you may have and which you do not now know or suspect to exist in your
favor against the Released Parties and that this agreement
extinguishes those claims.
2. Notwithstanding anything to the contrary contained in this release,
you are not releasing any of your rights to the following:
(a) To indemnification as an officer or director pursuant to Section
145 of the Delaware General Corporation Law.
(b) To exercise and obtain, in accordance with the terms of such
options, any and all the benefits appurtenant to the options to
purchase the Company's common stock held by you on the
Termination Date; or
(c) To continuation coverage, at your expense, as provided under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
and any other continuation coverage as provided under applicable
state law.
(d) Any of your rights to enforce the Letter Agreement or your
Retention Bonus and Severance Agreement and Release dated June
18, 1999.
3. You acknowledge that the Company has advised you that you may consult
with an attorney of your choosing prior to signing this agreement and
that you have been given at least twenty-one days during which to
review and consider the provisions of this agreement before signing,
although you may sign and return it sooner if you so desire. You
further acknowledge that you have been advised by the Company that you
have the right to revoke this agreement for a period of seven days
after signing it and that this agreement shall not become effective or
enforceable until such seven-day revocation period has expired. You
acknowledge and agree that if you wish to revoke this agreement, you
must do so in writing, and that such revocation must be signed by you
and received by Steven D. Young, Executive Vice President, Human
Resources at Albertson's Inc., 250 E. Parkcenter, Blvd., Boise, Idaho
83706 no later than 5:00 p.m. Mountain Standard Time on the seventh
2
216603.06-Los Angeles Server 1A
<PAGE>
day after you have signed this agreement. You acknowledge and agree
that, in the event that you revoke this agreement, you shall have no
right to receive the Termination Benefits as described in the Letter
Agreement.
4. You agree that you shall not publish or cause to be published any
public or private statement disparaging the Company, its related or
affiliated companies, partnerships, subsidiaries or other business
entities, and its and their present and former respective officers,
directors, members, shareholders, owners, agents, consultants, or
employees. The Company agrees not to make any public or private
statements disparaging you.
5. You shall cooperate with the Company, its affiliates, and each of
their respective attorneys or other legal representatives
(collectively, the "Company attorneys") in connection with any claim,
litigation, or judicial or arbitral proceeding which is now pending or
may hereinafter be brought against the Company and/or its affiliates
by any third party. Your duty of cooperation shall include, but not be
limited to, (a) meeting with the Company attorneys by telephone or in
person at mutually convenient times and places in order to state
truthfully your knowledge of matters at issue and recollection of
events; (b) appearance by you (that does not conflict with the needs
or requirements of your then-current employer) as a witness at
depositions or trials, without necessity of a subpoena, in order to
state truthfully your knowledge of matters at issue; and (c) signing,
upon the Company attorneys' request, declarations or affidavits that
truthfully state matters of which you have knowledge. The Company
shall promptly reimburse you for your actual and reasonable travel or
other expenses that you may incur in cooperating with the Company in
this Paragraph 5. You shall provide such other cooperation as the
Company may reasonably request to assist the Company in the
administration of its business, it being expressly agreed that
requests for such cooperation which do not require more than four (4)
hours of your time in any 30-day period are reasonable. You further
agree that you will immediately forward to the Company's Chief
Executive Officer any business information related to the Company that
inadvertently has been directed to you. The Company agrees that it
will immediately forward to you any mail addressed to you at the
Company's offices which does not relate to the Company's business or
affairs.
3
216603.06-Los Angeles Server 1A
<PAGE>
6. Without the express prior written consent of the Company, you shall
never disclose, communicate, divulge, furnish, make accessible to any
person, firm, partnership, corporation or other entity, or use for
your own benefit or purposes, any information of a confidential or
proprietary nature obtained from or pertaining to the Company, its
assets or business, including information concerning the Company's
current or future proposed business plans, processes, operational
methods, customer lists, trade secrets, suppliers, employees'
personnel files and compensation, financial affairs or marketing
strategies.
7. You represent and agree that neither you nor anyone acting on your
behalf has assigned or transferred, or attempted to assign or
transfer, to any person or entity, any of the claims you are releasing
in this agreement.
8. You represent that you have not filed, initiated, or caused to be
filed or initiated, any legal action covering any claim released in
this agreement and hereby agree and promise that you will never file,
initiate, or cause to be filed or initiated, at any time subsequent to
the execution of this agreement, any claim, suit, complaint, action,
or cause of action, in any state or federal court, based in whole or
in part on the matters herein released, except to the extent such
waiver is prohibited by law, order or regulation. You further agree
not to seek any recovery arising out of, based upon, or relating to
matters released hereunder, and agree you will not voluntarily
participate, assist, or cooperate in any suit, action, or proceeding
against or regarding the Released Parties, or any of them, unless
compelled by law or except to the extent such waiver is prohibited by
law, order or regulation.
9. You acknowledge that you might hereafter discover facts different
from, or in addition to, those you now know or believe to be true with
respect to a claim or claims released herein, and you expressly agree
to assume the risk of possible discovery of additional or different
facts, and agree that this agreement shall be and remain effective, in
all respects, regardless of such additional or different discovered
facts.
4
216603.06-Los Angeles Server 1A
<PAGE>
By signing this agreement, I acknowledge that I have had the opportunity to
seek the advice of an attorney in connection with the negotiation and execution
of this agreement; that I have read this agreement and understand its terms;
that I have had sufficient time within which to consider the provisions of this
agreement, and that I entered into this agreement freely, voluntarily, and
without coercion.
Agreed and accepted this ___ day of __________ 20__ in Boise, Idaho.
----------------------------
Peter L. Lynch
5
216603.06-Los Angeles Server 1A