Employment Agreement - Albertson's Inc. and Gary G. Michael
December 22, 2000
Gary G. Michael
Albertson's, Inc.
250 E. Parkcenter Blvd.
Boise, Idaho 83706
Dear Gary:
This will confirm your retirement from the positions of Chairman of the
Board and Chief Executive Officer of Albertson's, Inc. (the "Company") and sets
forth our mutual understanding of the terms of your severance agreement and
general release. This agreement will become effective on the eighth (8th) day
after the date of its execution by you (the "Effective Date").
1. Your employment as Chairman of the Board and Chief Executive Officer
of the Company will end on the Termination Date. (As used herein, the
term "Termination Date" shall mean (i) the date the Company asks you
to resign, or (ii) the close of business on the date of the Company's
Annual Meeting of Stockholders in 2001, or (iii) June 30, 2001, or
(iv) your death, whichever date shall first occur.
2. Conditioned upon your agreement to the terms set forth herein, the
Company agrees to pay to you within 10 days after the Termination Date
a lump sum, in cash, equal to $3,000,000 less any legally required
payroll tax withholdings and deductions ("Termination Pay"). In the
event of your death, the Termination Pay will be paid to your
surviving spouse, or in the event of her death, to your estate.
3. Notwithstanding anything to the contrary contained in this agreement
but conditioned upon your agreement to the terms set forth herein, you
shall be entitled to the compensation, benefits and perquisites listed
below during the period from the Effective Date until the Retirement
Date. (As used herein, the term "Retirement Date" shall mean the close
of business on the date of the Company's Annual Meeting of
Stockholders in 2001 or June 30, 2001, whichever shall first occur.)
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Gary G. Michael
December 22, 2000
Page 2
(a) To receive salary at the rate in effect on the Effective Date
from the Effective Date until the Retirement Date (whether or not
the Termination Date occurs prior to the Retirement Date) in
accordance with practices and policies in effect on the Effective
Date;
(b) To receive any bonus earned for fiscal year 2000 under the terms
of the Company's fiscal year 2000 Officer's Bonus Program (but
not for any period thereafter), payable in accordance with the
terms of such Program;
(c) To participate in the Company's medical, dental, and life
insurance plans;
(d) To be eligible to defer salary under the 2000 Deferred
Compensation Plan;
(e) To be treated in the same manner as officers of the Company with
regard to the Company automobile policy, subject to any changes
in the existing policy;
(f) To receive benefits in accordance with the terms and provisions
of the Company's qualified and non-qualified retirement plans
accrued with respect to your service through the Retirement Date;
(g) In the event of your death prior to the payment of all monies and
benefits to which you are entitled under this agreement, any
remaining payments and/or benefits, including a lump-sum payment
of your salary through the Retirement Date, will be paid to your
surviving spouse, or in the event of her death, to your estate;
and
(h) If the Company asks you to resign, you will be classified as a
special employee of the Company from the date you resign through
the Retirement Date. As a special employee, you will continue to
receive your salary at the rate in effect on the Effective Date
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Gary G. Michael
December 22, 2000
Page 3
until the Retirement Date and accrue vesting service as if you
were a regular full-time employee.
4. 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.
5. 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 and separation from the Company.
6. You agree that you shall not publish or cause to be published any
public or private statement disparaging the Company or its present or
former officers, directors or employees. The Company agrees not to
make any public or private statements disparaging you.
7. 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, including your appearance as a witness at
depositions or trials, without necessity of a subpoena, in order to
state truthfully your knowledge of matters at issue. 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 7. 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
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Gary G. Michael
December 22, 2000
Page 4
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.
8. 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.
9. Without the express prior written consent of the Company, you shall
not, at any time during the two-year period immediately following the
Termination Date, directly or indirectly, own, manage, control or
participate in the ownership, management or control of, or be related
or otherwise affiliated in any manner with, any business identical or
similar to that engaged in by the Company on the Termination Date in
any Metropolitan Statistical Area ("MSA") in which such business is
carried on at the Termination Date; provided, however, that the
forgoing shall not prohibit you from owning as a passive investment 5%
or less of the equity of any publicly-traded entity. During the
two-year period immediately following the Termination Date, you shall
not, directly or indirectly, solicit for employment or hire any
employee of the Company or any subsidiary of the Company without the
prior express written consent of the Company.
10. You agree that during the period commencing on the date you execute
this agreement and ending on the fifth (5th) anniversary of the
Retirement Date, you will not, directly or indirectly:
(a) Make, or in any way participate in any Solicitation of Proxies to
vote, solicit any consent or communicate with or seek to advise
or influence any person or entity with respect to the voting of
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Gary G. Michael
December 22, 2000
Page 5
any Common Stock or become a Participant in any Election Contest
with respect to the Company;
(b) Solicit, seek to effect, negotiate with or provide any
information to any other party with respect to, or make any
statement or proposal, whether written or oral, to the Board of
Directors of the Company or any director or officer of the
Company or otherwise make any public announcement or proposal
whatsoever with respect to, any form of business combination
transaction involving the Company, including, without limitation,
a merger, exchange offer or liquidation of the Company's assets,
or any restructuring, recapitalization or similar transaction
with respect to the Company; or
(c) Otherwise act to seek to control, disrupt or influence the
management, policies or affairs, of the Company, or instigate or
encourage any third party to take any action described in this
Paragraph 10.
Defined terms used in this Paragraph 10 shall have the following
meanings:
"Common Stock" shall mean the common stock of the Company, par value
$1.00 per share; "Election Contest" shall have the meaning ascribed to
it in Rule 14a-11 under the 1934 Act; "1934 Act" shall mean the
Securities Exchange Act of 1934, as amended; "Participant" shall have
the meaning ascribed to it in Rule 14a-11 under the 1934 Act; "Proxy"
shall have the meaning ascribed to it in Rule 14a-1 under the 1934
Act; "Solicitation" shall have the meaning ascribed to it in Rule
14a-1 under the 1934 Act.
11. In consideration of the payment made pursuant to Paragraph 2 above 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
<PAGE>
Gary G. Michael
December 22, 2000
Page 6
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 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
forgoing 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:
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Gary G. Michael
December 22, 2000
Page 7
(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
Effective Date and listed on Exhibit A hereto;
(iii)To continuation coverage, at the Company's expense, as
provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) and any other
continuation coverage as provided under applicable state
law; or
(iv) Any of your rights to enforce this agreement.
(c) You acknowledge that the Company has advised you that you may
consult, at the Company's expense, 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. Pacific Standard Time on the seventh day after you have
signed this agreement. You acknowledge and agree that, in the
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Gary G. Michael
December 22, 2000
Page 8
event that you revoke this agreement, you shall have no right to
receive the payment described in Paragraph 2 above.
12. 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.
13. All controversies, claims, or disputes arising out of or related to
this agreement, or to any 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.
14. 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
date of mailing by first class, registered or certified mail, postage
prepaid, and return receipt requested to:
To you: Mr. Gary G. Michael
2010 Silvercreek Lane
Boise, Idaho 83606
To the Company: Albertson's, Inc.
250 E. Parkcenter Blvd.
Boise, Idaho 83706
Attn: General Counsel
15. 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
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Gary G. Michael
December 22, 2000
Page 9
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.
16. This agreement and Exhibit A 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. 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 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.
17. This agreement is made and entered into in the State of Idaho and
shall in all respects be interpreted, enforced and governed under the
laws of said state without respect to its conflicts of laws
principles.
18. 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.
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Gary G. Michael
December 22, 2000
Page 10
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 December 31, 2000.
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 22nd day of December, 2000 in Boise, Idaho.
/s/ Gary G. Michael
---------------
Gary G. Michael
<PAGE>
EXHIBIT A
A list of Gary G. Michael's options to purchase the common stock of Albertson's
Inc. held by him on the date of his execution of this agreement is set forth
below:
<TABLE>
<CAPTION>
Date Granted Number of Shares Price per Share
------------ ---------------- ---------------
<S> <C> <C>
12/04/95 50,000 $31.8750
12/01/97 100,000 $45.6875
06/24/99 390,721 $51.1875
12/06/99 550,820 $30.5000
12/06/00 645,534 $21.6875
</TABLE>