Sample Business Contracts


Employment Agreement - Albertson's Inc. and Felicia Denault Thornton

Employment Forms

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                                       August 6, 2001


Ms. Felicia Denault Thornton
2546 Manhattan Avenue
Hermosa Beach, California  90254

Dear Felicia:

     I am pleased to confirm my verbal offer of  employment  for the position of
Executive Vice President and Chief Financial Officer (CFO) for Albertson's, Inc.
(the  "Company").  In this  assignment,  you will  report  directly  to me. Your
employment  with the Company  will  commence on August 22, 2001 (the  "Effective
Date").

     Your  initial  base salary  ("Base  Salary")  will be  $540,000  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.

     On the Effective Date, the Company shall pay to you an amount in cash equal
to $250,000 as a signing bonus, less applicable tax withholding.

     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  shall be 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") and shall not 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 60,000 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;  provided that the provisions of such grant shall not
be inconsistent with, or provide for additional obligations upon you beyond, the
terms of this letter  agreement,  and shall be subject to  reasonable  review by


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Ms. Felicia Denault Thornton
August 6, 2001
Page 2

your  counsel.  Such grant shall provide that 12,000 of such units shall vest on
the  Effective  Date,  and 12,000 of such units shall vest on each of the first,
second,  third and fourth  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 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.

     As of the Effective Date, you will be granted an option ("Initial  Option")
to  purchase  200,000  shares  of  common  stock of the  Company  at a per share
exercise price equal to the fair market value of the common stock of the Company
on the Effective  Date in accordance  with the form of grant used by the Company
for grants made to its senior executive  officers;  provided that the provisions
of such  grant  shall  not be  inconsistent  with,  or  provide  for  additional
obligations upon you beyond,  the terms of this letter  agreement,  and shall be
subject to reasonable  review by your  counsel.  Such grant will vest and become
exercisable in annual  installments  at the rate of 40,000 shares on each of the
first,  second,  third,  fourth,  and fifth  anniversaries of the Effective Date
(each such installment, an "Initial Option Installment");  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 stock option grant agreement.

     You will be  entitled  to  receive  additional  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;  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  100,000 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
(the "First  Additional  Option").  The First Additional Option grant will be in
the same form as the Initial Option.  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 also provide  reimbursement for reasonable legal and other
professional  fees and expenses you incur in connection with the negotiation and
preparation  of this letter  agreement.  The  Company  will  maintain,  for your


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Ms. Felicia Denault Thornton
August 6, 2001
Page 3

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 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  and
pension benefit 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  offers from time to time,  including the Company's  401(k) and profit
sharing 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
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  for any  reason,  within
thirty (30) days  following  the date of  termination,  you shall be entitled to
receive ("Accrued Obligations"):

     (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 the event that your  employment  is  terminated  by the Company  without
Cause (as  defined in Exhibit  "A"  hereto) or you  voluntarily  terminate  your
employment for Good Reason (as defined in Exhibit "A" hereto), you shall receive
the following severance benefits, in addition to the Accrued Obligations:


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Ms. Felicia Denault Thornton
August 6, 2001
Page 4


     (a)  Severance payments and continuation of benefits as follows:

          (i)  For  any  such  termination  which  occurs  prior  to  the  first
               anniversary  of the  Effective  Date, a lump sum payment equal to
               three (3) times the sum of Base  Salary  and  Target  Bonus,  and
               continued  participation in the Company's  welfare benefit plans,
               fringe   benefits,   and  employee   perquisites   for  a  period
               ("Continuation  Period")  of  three  (3)  years  (which  shall be
               concurrent  with any  health  care  continuation  benefits  under
               COBRA);

          (ii) For any such termination which occurs after the first anniversary
               of the Effective Date but prior to the second  anniversary of the
               Effective Date, a lump sum payment equal to two (2) times the sum
               of Base Salary and Target Bonus,  and continued  participation in
               the  Company's  welfare  benefit  plans,  fringe  benefits,   and
               employee  perquisites for a Continuation  Period of two (2) years
               (which  shall be  concurrent  with any health  care  continuation
               benefits under COBRA); and

          (iii)For  any  such   termination   which   occurs  after  the  second
               anniversary  of the  Effective  Date, a lump sum payment equal to
               one (1)  times  the sum of Base  Salary  and  Target  Bonus,  and
               continued  participation in the Company's  welfare benefit plans,
               fringe  benefits,  and employee  perquisites  for a  Continuation
               Period of one (1) year (which shall be concurrent with any health
               care continuation benefits under COBRA).

     (b)  For any such termination,  you shall be entitled to receive a pro-rata
          portion of the  amount due to you under the Annual  Bonus Plan for the
          fiscal  year in which the date of  termination  occurs,  which  amount
          shall be payable at the time of payment of bonuses  under such plan to
          senior executives of the Company;

     (c)  You shall be deemed to have earned vesting  service under all unvested
          outstanding  stock  options and all  unvested  outstanding  restricted
          stock equal to the applicable  Continuation  Period under subparagraph
          (a) above  effective  upon a termination  of  employment.  All of your
          outstanding  vested options to purchase  Company  common stock,  after
          giving  affect to additional  vesting  under the  preceding  sentence,
          shall  remain  exercisable  for  ninety  (90)  days  from  the date of
          termination;

     (d)  Any vested  Restricted Stock Unit Awards and restricted  stock,  after
          giving affect to  additional  vesting  under  subparagraph  (c) above,
          shall become nonforfeitable; and


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Ms. Felicia Denault Thornton
August 6, 2001
Page 5


     (e)  You,  to the  extent  determined  to be  nondiscriminatory  under  the
          Company's  qualified employee benefit plans, shall become fully vested
          in your benefits  under such plans,  and you shall become fully vested
          with respect to any of the  Company's  non-qualified  benefit plans in
          which you are a participant.

     In the event of a termination  of your  employment  due to your death,  you
shall receive:  (a) the Accrued  Obligations,  (b) all options to purchase stock
shall be  exercisable  by your legal  representatives  and become  vested to the
extent and in the manner prescribed under the option plan pursuant to which such
options were granted,  and (c) all restricted  stock units and restricted  stock
granted by the Company to you prior to your death shall  become  vested and paid
to the extent and in the manner  prescribed  in the plan  pursuant to which such
units or stock were awarded.

     If a Change in Control  shall occur while you are  employed by the Company,
you will be entitled to the following:

     (a)  All of your outstanding options to purchase Company common stock shall
          become  fully  vested  and  shall  be  exercisable  until  the date of
          expiration  of the  full  stated  term  of the  option  in the  manner
          prescribed  in the plan  pursuant to which such options were  awarded;
          and

     (b)  Any  Restricted  Stock  Unit  Awards  and  restricted  stock  that are
          unvested  shall become fully vested and  nonforfeitable  in the manner
          prescribed  in the plan  pursuant  to which  such  units or stock were
          awarded.

     "Change in Control"  shall have the  meaning set forth in the  Albertson's,
Inc.  1995  Stock-Based  Incentive  Plan in  effect  on the date  hereof,  or as
hereafter may be modified in a manner more favorable to you.

     If the  aggregate of all payments or benefits made or provided to you under
this letter agreement and under all other plans and programs of the Company (the
"Aggregate  Payment") is determined to constitute a parachute  payment,  as such
term is defined in Section 280G(b)(2) of the Code, the Company shall pay to you,
prior to or  coincident  with the time any excise tax imposed by Section 4999 of
the Code (the "Excise Tax") is payable with respect to such  Aggregate  Payment,
an additional amount that, after the imposition of all penalties, income, excise
and other  federal,  state and local taxes  thereon,  is equal to the sum of the
Excise Tax on the  Aggregate  Payment and  interest and  penalties  imposed with
respect to the Excise Tax and such additional amount ("Additional  Amount"). The
determination of whether the Aggregate  Payment  constitutes a Parachute Payment
and,  if so, the amount to be paid to you and the time of  payment  pursuant  to
this paragraph shall be made by an independent  auditor (the "Auditor")  jointly
selected by the Company and you and paid by the Company.  If the Company and you
cannot agree on the firm to serve as the Auditor, then the Company and you shall


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Ms. Felicia Denault Thornton
August 6, 2001
Page 6


each select one  accounting  firm and those two firms shall  jointly  select the
accounting firm to serve as the Auditor.  Notwithstanding the foregoing,  in the
event that the amount of your Excise Tax liability is subsequently determined to
be  greater  than the  Excise  Tax  liability  with  respect to which an initial
Additional  Amount has been paid to you under this paragraph,  the Company shall
pay to you a further  Additional  Amount with respect to such additional  Excise
Tax (and any  interest  and  penalties  thereon)  at the time and in the  amount
determined in the same manner as the initial Additional Amount was determined so
as to make you whole,  on an  after-tax  basis,  with respect to such Excise Tax
(and any interest and penalties  thereon) and such additional amount paid by the
Company.  In the event the amount of your Excise Tax  liability is  subsequently
determined  to be less than the Excise Tax  liability  with  respect to which an
initial  payment to you has been made, you shall, as soon as practical after the
determination  is made, pay to the Company the amount of the  overpayment by the
Company, reduced by the amount of any relevant taxes already paid by you and not
refundable,  all as  determined  by the  Auditor.  The  Company  and  you  shall
cooperate with each other in connection with any proceeding or claim relating to
the existence or amount of liability  for Excise Tax, and all expenses  incurred
by you in connection therewith shall be paid by the Company promptly upon notice
of demand from you.

     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 Albertson's  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.


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Ms. Felicia Denault Thornton
August 6, 2001
Page 7


     Felicia,  we are extremely  pleased to have you join the Albertson's  team,
and I look  forward  with great  pleasure  to our  association  with you in this
important role at Albertson's.  I anticipate benefiting from your expertise, and
I believe  you will help us  establish  a winning  formula  for  success  in the
future.

                                       Sincerely,


                                       /s/  Lawrence R. Johnston
                                            -------------------------
                                            Lawrence R. Johnston,
                                            Chief Executive Officer

Accepted and agreed to this
6th day of August, 2001




/s/  Felicia Denault Thornton
     ---------------------------
     Felicia Denault Thornton





















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Ms. Felicia Denault Thornton
August 6, 2001
Page 8



                                    EXHIBIT A


     "Cause" means the occurrence of any one or more of the following:

     (a)  That you have been  convicted  of, or plead guilty or nolo  contendere
          to, a felony involving theft or moral turpitude; or

     (b)  That you have engaged in conduct  that  constitutes  gross  neglect or
          willful gross misconduct  (including  misappropriation or embezzlement
          of  property  of,  or  fraud  with  respect  to,  the  Company  or its
          subsidiaries  or their  affiliates)  with  respect to your  employment
          duties which results in material and demonstrable harm to the Company;
          provided,  however,  that for purposes of determining  whether conduct
          constitutes  willful  gross  misconduct,  no act on your part shall be
          considered "willful" unless it is done by you in bad faith and without
          reasonable  belief that your action was in the best  interests  of the
          Company.

     Notwithstanding   the  foregoing,   the  Company  may  not  terminate  your
employment  for Cause unless (i) a  determination  that Cause exists is made and
approved  by a  majority  of the  Board,  (ii)  you are  given at least 15 days'
written  notice of the Board meeting  called to make such  determination  and an
opportunity  to cure  during such  notice  period,  and (iii) you and your legal
counsel are given the opportunity to address such meeting.

     "Good  Reason" means the  occurrence  of any one or more of the  following,
unless you have expressly consented in writing thereto:

     (a)  The assignment to you of duties  inconsistent in any material  respect
          with your position (including status,  offices,  titles, and reporting
          relationships),  authority, duties or responsibilities as contemplated
          hereunder,  or any other  action by the  Company  which  results  in a
          significant  diminution  in  such  position,   authority,   duties  or
          responsibilities,  excluding any isolated and  inadvertent  action not
          taken in bad faith and which is remedied by the Company within fifteen
          (15) days after receipt of notice thereof given by you;

     (b)  Any  failure  by the  Company  to  comply  with  any  of the  material
          provisions  of  this  letter  agreement  other  than an  isolated  and
          inadvertent  failure not  committed in bad faith and which is remedied
          by the  Company  within  fifteen  (15) days  after  receipt  of notice
          thereof given by you; and

     (c)  Your being  required to relocate  to a principal  place of  employment
          more than  fifty  (50)  miles  from your  current  principal  place of
          employment as of the Effective Date.




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