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




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




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; 




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




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




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




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




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




                                    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


          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


          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.

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     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




     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


























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