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Termination And Consulting Agreement

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Sectors: Retail
Governing Law: Delaware, View Delaware State Laws
Effective Date: August 02, 1998
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EXHIBIT 10.27


TERMINATION AND CONSULTING AGREEMENT


This Termination and Consulting Agreement by and among American Stores Company, a Delaware corporation (the "Company"), Albertson's, Inc., a Delaware corporation ("Parent") and Victor L. Lund (the "Executive") is dated as of the second day of August, 1998.


WHEREAS, the Company, Parent and Abacus Holdings, Inc. ("Sub") have entered into an Agreement and Plan of Merger dated as of the second day of August, 1998 (the "Merger Agreement"), pursuant to which the Company will merge with Sub (the "Merger"), becoming a wholly owned subsidiary of Parent; and


WHEREAS, the Executive and the Company are parties to an Amended and Restated Employment Agreement dated as of December 9, 1997 (the "Employment Agreement") and an Employment Agreement dated as of July 25, 1996, as amended as of December 9, 1997 (the "Change of Control Agreement"), as well as to various award agreements pursuant to the Company's 1997 Stock Option and Stock Award Plan, 1989 Stock Option and Stock Award Plan, 1985 Stock Option and Stock Award Plan and Employee Stock Purchase Plan (the "Stock Award Agreements"), and the Executive is entitled to various benefits under employee benefit plans, programs and policies of the Company (collectively, the "Employee Benefits"), including without limitation the Supplemental Executive Retirement Plan (the "SERP"); and


WHEREAS, it is acknowledged by the parties hereto that as a result of the consummation of the Merger and the other transactions contemplated by the Merger Agreement, as of the Effective Time (as defined in the Merger Agreement), the Change of Control Agreement shall have become effective and the Executive will have "Good Reason" to terminate his employment pursuant to the Change of Control Agreement; and


WHEREAS, the Company and Parent have determined that it is in the best interests of their respective shareholders to set forth, and the Executive has agreed to set forth, their mutual agreement as to the rights and entitlements of the Executive under the Employment Agreement, the Change of Control Agreement and the Employee Benefits from and after the Effective Time and to provide for the continuing availability to the Company and Parent of the Executive's services and expertise following the Effective Time, all on the terms and conditions set forth below;


NOW, THEREFORE, it is hereby agreed as follows:


1. Termination of Employment. (a) The Executive agrees not to terminate his employment before the day after the Closing Date (as defined in the Merger Agreement). Any termination of the Executive's employment after the Effective Time shall be deemed to be a termination of his employment for "Good Reason" under the Change of Control Agreement, with the result that the Executive shall be entitled to the payments and benefits set forth below in this Section 1. The date of such termination of employment is hereinafter referred to as the "Date of Termination."


Page 1


(b) The Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:


(i) the sum of (1) the Executive's Annual Base Salary (as defined
below) through the Effective Time to the extent not theretofore
paid, and (2) the product of (x) the higher of (I) the Recent
Annual Bonus (as defined below) and (II) the Annual Bonus (as
defined below) paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for
any fiscal year consisting of less than twelve full months or
during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred to
as the "Highest Annual Bonus") and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through
the Effective Time, and the denominator of which is 365; and


(ii) the amount equal to the product of (1) three and (2) the sum of
(x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus; and


(iii)the amount of the Executive's Special Long-Range Retirement Plan
"(SLRPP") benefit as required by Section VI-B of the Employment
Agreement, it being acknowledged that such benefit will become
100% vested upon the consummation of the Merger and that such
benefit will be payable in a lump sum in accordance with clause
6. of said Section VI-B.


(c) For three years after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide the Executive and/or the Executive's family with "Welfare Benefits" (as defined below); provided, however, that the benefits provided pursuant to this Section 1(c) shall not duplicate any benefits required by Section 3(e) below.


(d) To the extent not theretofore paid or provided, or otherwise specified in this Agreement, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies, including without limitation the SERP, in accordance with the terms thereof.


2. Stock Awards. The Executive's Stock Awards shall be treated as provided in the Merger Agreement, and in accordance with the terms of the Stock Awards and the plans under which they were granted.


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3. Post-Merger Services. (a) Parent shall cause the Executive to be nominated to its Board of Directors (the "Board") for a term or terms extending until the third annual meeting of Parent following the Effective Time. While the Executive is a member of the Board, he shall serve as Vice Chairman thereof.


(b) From the Date of Termination through the first anniversary thereof or such shorter period as may be provided pursuant to Section 3(g) or (h) below (the "Consulting Term"), in consideration for the compensation and benefits provided for below, the Executive shall render one thousand hours of service as follows: (i) the Executive shall make himself available to Parent and the Company, at mutually convenient times and places, for such consulting services as may be requested by the Board or the Chief Executive Officer of Parent, in connection with long-range planning, strategic direction, real estate strategy and integration and rationalization matters; and (ii) the Executive shall serve as the industry representative of Parent and the Company to the National Association of Chain Drug Stores and CIES-The Food Business Forum.


(c) Parent shall pay the Executive a fee (the "Fee") of $70,834 per month, payable monthly in advance, during the Consulting Term. In addition, during the Consulting Term, the Executive shall be entitled to such other perquisites (including expense reimbursement and transportation) as are made available to senior executive officers of the Company in accordance with the Company's policies and practices prevailing as of the date of this Agreement. Without limiting the generality of the foregoing: (i) Parent shall reimburse the Executive for all expenses incurred by him in the performance of services hereunder, within thirty days of receipt by Parent of invoices setting forth a description of the items for which reimbursement is sought together with the cost or fair market value of such items and copies of invoices, receipts, credit card statements and other supporting documentation; (ii) during the Consulting Term, the Company's corporate aircraft N718R shall remain based in Salt Lake City, and shall be available for the use of the Executive and that of Company executives on a basis consistent with the Company's practice on the date of this Agreement; and (iii) when the Executive travels in the course of performing services hereunder, he and Mrs. Lund shall be entitled to use such corporate aircraft or to first-class travel by commercial airliner.


(d) As of the Date of Termination, the Company shall transfer to the Executive title to the Company-owned vehicle that he currently uses.


Page 3


(e) The Company shall purchase medical, dental, vision and prescription drug coverage for the Executive and his spouse, Linda Lund, at least comparable to the coverage under the plans and programs in effect for active employees of the Company in which the Executive participates as of the date hereof. The premiums for such coverage shall be payable by the Company for the lifetime of the Executive and for Mrs. Lund's lifetime. To the extent any such premiums are considered taxable income to the Executive or to Mrs. Lund, the Company shall make a gross-up payment to the Executive or Mrs. Lund, as applicable, to make him or her whole on an after-tax basis. The Executive shall have the opportunity afforded to all terminating employees of the Company to convert, to the extent permitted, any group life or accident coverage to an individual policy or program following the Effective Time.


(f) From the Date of Termination through October 31, 2012 (or the date of the Executive's death, if earlier), the Company shall (i) pay the Executive $39,000 per year, increased as of each anniversary of the Date of Termination to reflect increases in the Consumer Price Index since the Date of Termination or the last such anniversary, as applicable, in lieu of providing him with an office and related occupancy expenses, as provided for in Section VI-D of the Employment Agreement, and (ii) shall employ, and shall provide the Executive with the full-time services of, Amy Stitt, his current executive assistant or, if Ms. Stitt voluntarily ceases to be an employee of the Company, with (at the Executive's election) the full-time services of another executive secretary of comparable qualifications employed by Parent and loaned to the Executive, or with reimbursement, on a net after-tax basis, of the direct and indirect costs (including without limitation for benefits) incurred by the Executive in hiring another executive secretary to render such services. During her employment with the Company pursuant to the preceding sentence, Ms. Stitt shall receive an annual salary at least equal to $55,000, increased as of each anniversary of the Date of Termination to reflect increases in the Consumer Price Index since the Date of Termination or the last such anniversary, as applicable, or, if greater, as necessary to provide her with increases at least equ
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