EXHIBIT 10.37




CONFIDENTIAL

                                  June 18, 1999


Peter Lynch
Acme Markets, Inc.
75 Valley Stream Parkway
Malvern, PA 19355

     Re:  Retention Bonus and Severance Agreement and Release

Dear Peter:


This  Retention   Bonus  and  Severance   Agreement  and  Release  (the  "Letter
Agreement") sets forth the terms of your employment with Albertson's Inc. or one
of its  affiliates  ("Albertson's")  commencing  on the date of  closing  of the
merger involving  American Stores Company ("ASC") and  Albertson's.  The date of
closing will occur when the certificate of merger is filed with the Secretary of
State of  Delaware  (the  "Closing  Date").  You are  referred to in this Letter
Agreement  as  "you"  or  "the  executive,"  and  American  Stores  Company  and
Albertson's are referred to collectively  as the "Company."  Congratulations  on
your joining the Albertson's team.

     1.   Duration.  The term of this Letter Agreement will begin on the Closing
          Date  and  end  three  years  later,  unless  sooner  terminated  (the
          "Employment Term").

     2.   Title.  You will be employed as Executive Vice President,  Operations.
          You will  devote  your best  efforts  and all of your  business  time,
          attention and skill to the  performance of the duties  associated with
          this  position.  You will report to The Chairman  and Chief  Executive
          Officer or his/her successor.  You will also perform such other duties
          as The Chairman and Chief Executive  Officer or his/her  successor may
          in good faith assign to you, which shall not be inconsistent with your
          position with Albertson's.  Your principal place of employment will be
          Boise, ID.

     3.   Compensation.  Your annual base salary will be $375,000, which will be
          paid to you in accordance with Albertson's normal payroll  procedures.
          You will be  eligible  to receive a target  bonus equal to 70% of your
          base salary pursuant to the Albertson's,  Inc. Officers' Bonus Plan in
          accordance  with the terms and  conditions  of that Plan.  You will be
          eligible to participate in the Albertson's  Inc.  Amended and Restated
          1995 Stock-Based Incentive Plan. Stock option grants are discretionary
          and must be approved by the Board of Directors of Albertson's  Inc. on
          an annual basis.  Under that Plan, options are typically granted on an
          annual basis and vest at the rate of  twenty percent per year based on


<PAGE>

          continued  employment with Albertson's.  For illustrative  purposes, a
          Executive  Vice President may be granted an annual option target grant
          of  approximately  $2,000,000.  This is the  equivalent  dollar amount
          "invested" in Albertson's stock through the plan. For example,  if the
          stock  price of  Albertson's  on the date of grant is  $60.00,  33,334
          shares would be granted  ($2,000,000/$60.00  per share). For the first
          year of your  employment,  the amount of option grants are expected to
          be doubled  (e.g.,  66,667  shares  assuming a $60.00 per share  stock
          price).  It is  anticipated  that the first stock option grants to you
          under the Plan will be made within  thirty days  following the closing
          of the merger. The foregoing does not obligate Albertson's to make any
          kind of option grant.

     4.   Benefits. During your employment,  you will be eligible to participate
          in the applicable  benefit plans and programs generally made available
          to other  Albertson's  executives of similar status,  primary place of
          employment  and  title to you.  You  recognize  that  these  plans and
          programs may change at any time.

     5.   Retention  Bonus.  You will be eligible for a retention bonus of up to
          $787,500  subject  to the  terms  described  below.  One third of that
          amount (i.e.,  $262,500)  will be paid to you only if you are employed
          by Albertson's on the first anniversary of the Closing Date. One third
          of  that  amount  will be paid  to you  only  if you are  employed  by
          Albertson's on the second  anniversary  of the Closing Date.  And, one
          third of that amount  will be paid to you only if you are  employed by
          Albertson's  on the third  anniversary  of the Closing Date.  All such
          amounts will be paid as soon as reasonably  practicable  following the
          respective anniversary dates.

     6.   Termination.

               (a)  If  your employment  is terminated  by  Albertson's  without
          "Cause" (as defined below) or you terminate your employment with "Good
          Reason"  (as  defined  below),  Albertson's  sole  obligation  to  you
          hereunder shall be to pay or provide to you (i) any accrued and unpaid
          base salary  earned  through the date of  termination,  (ii) an amount
          equal to $787,500, less the amount of all payments theretofore paid to
          you  pursuant  to Section 5 hereof and (iii) for the  duration  of the
          three-year  Employment  Term,  medical,   dental  and  life  insurance
          benefits  as if your  employment  had not been  terminated;  provided,
          however,  that if you become  reemployed with another employer and are
          eligible to receive  medical or other welfare  benefits  under another
          employer-provided   plan,  the  medical  and  other  welfare  benefits
          described herein shall be secondary to those provided under such other
          plan during such applicable  period of eligibility.  You may terminate
          your  employment  for  Good  Reason  only if you  provide  Albertson's
          written  notice  of  such  termination   within  ninety  days  of  the
          occurrence of Good Reason.

               (b)  If your employment with  Albertson's  terminates for "Cause"
          or you terminate  without "Good Reason,"  Albertson's  sole obligation
          to you hereunder shall be to pay to you any accrued  and  unpaid  base
          salary earned through the date of termination.


F:A\forms\RetentionBonusLetter - Tier I.doc
                                       2
<PAGE>


               For purposes of this Letter Agreement "Cause" shall mean:

                    (i)  Your   willful   and   continued   failure  to  perform
               substantially  your duties with Albertson's  (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 Chief  Executive  Officer of Albertson's  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
               Albertson's.

               For purposes of this provision,  no act or failure to act on your
          part shall be considered "willful" unless it is done, or omitted to be
          done,  by you in bad  faith or  without  reasonable  belief  that your
          action or omission was in the best interests of Albertson's.

               For purposes of this Letter Agreement "Good Reason" shall mean:

                    (i) Your base salary is reduced below $375,000;

                    (ii) Your  duties and  responsibilities  as  Executive  Vice
               President,  Operations 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 Albertson's  promptly after written notice thereof is given by
               you to Albertson's; or

                    (iii) You are  required to be based at a location  more than
               35  miles  from  the  location  where  your  employment  is based
               pursuant to this Letter Agreement.

               (c)  The  severance  pay  and   benefits  provided  for  in  this
          Section 6 shall be in lieu of any other severance pay to which you may
          be entitled under any severance policy;  employment agreement or other
          policy,  plan or program  with  Albertson's  or any of its  affiliates
          (including,  after the Closing Date,  American  Stores Company and its
          affiliates).  Your  entitlement to any  compensation or benefits other
          than as provided  herein shall be determined  in  accordance  with the
          employee  benefit plans of  Albertson's as in effect from time to time
          and as may be modified.

               (d)  Any termination by Albertson's for Cause, or by you for Good
          Reason,  shall be communicated by a Notice of Termination to the other
          party  hereto.  For  purposes of this Letter  Agreement,  a "Notice of
          Termination"  means a written  notice which (i) indicates the specific
          termination  provision in this Letter  Agreement relied upon, and (ii)
          to the extent  applicable,  sets forth in reasonable  detail the facts
          and  circumstances  claimed to provide a basis for termination of your
          employment  under the  provision so  indicated.  The failure by you or
          Albertson's  to set  forth in the  Notice of  Termination  any fact or
          circumstance  which  contributes  to a showing of Good Reason or Cause
          shall  not  waive  any  right of yours or  Albertson's,  respectively,


F:A\forms\RetentionBonusLetter - Tier I.doc
                                       3
<PAGE>

          hereunder or preclude you or Albertson's, respectively, from asserting
          such fact or  circumstance  in enforcing  yours or Albertson's  rights
          hereunder.

               (e)  You may be  entitled  to  certain  "gross  up"  payments  in
          connection with the merger  involving  Albertson's and American Stores
          Company as set forth in  Addendum A attached  hereto and  incorporated
          herein by reference.

     7.   Employment  At-Will.  At the  end of  the  three  year  term  of  this
          Agreement, you will be employed on an at-will basis, such that you may
          terminate your  employment at any time and  Albertson's  may terminate
          your employment at any time for any reason.

     8.   Entire  Agreement.   This  Letter  Agreement  sets  forth  the  entire
          agreement  of  the  parties  with  respect  to  your  employment  with
          Albertson's and any of its affiliates and the termination thereof, and
          supercedes  any and all  agreements,  oral or  written,  with  respect
          thereto,  including,  but not limited to, your  Employment  Agreements
          with American  Stores Company and your  participation  in the American
          Stores Company Employee  Severance  Policy, in which you will cease to
          participate  as of the Closing  Date,  and any offer  letters or other
          employment  terms and  conditions,  which are  hereby  superceded  and
          rendered null and void.

     9.   Effective  Date. The rights and  obligations of the parties under this
          Letter  Agreement are  conditioned  upon the occurrence of the Closing
          Date. If the Closing Date does not occur,  this Letter Agreement shall
          be null and void.

     10.  Governing  Law.  The  validity,   interpretation,   construction   and
          performance of this Letter Agreement shall in all respects be governed
          by the laws of Delaware,  without  reference to principles of conflict
          of law.

     11.  Disclosure.  From and  after  the  date of  execution  of this  Letter
          Agreement,  you will not disclose this Letter Agreement, or any of its
          contents, to any person, entity or corporation other than your spouse,
          immediate family,  attorney, tax advisor or financial advisor. You may
          discuss this Letter  Agreement with Executive  Officers in Albertson's
          Human Resources or Legal departments.

     12.  Taxes.  All payments and  benefits  hereunder  shall be subject to all
          applicable  taxes required to be withheld by  Albertson's  pursuant to
          federal, state or local laws.

     13.  Cooperation.  In the event of your  termination,  for whatever reason,
          you shall cooperate with  Albertson's  and be reasonably  available to
          Albertson's  with respect to continuing  and/or future matters arising
          out of your  employment or any other  relationship  with  Albertson's,
          whether such matters are  business-related,  legal or  otherwise.  You
          shall be compensated  for such services at hourly rates  approximately
          proportionate  to your weekly salary  divided by forty plus  expenses.
          Any testimony you give must be truthful and accurate.


F:A\forms\RetentionBonusLetter - Tier I.doc
                                       4
<PAGE>

     14.  Releases.  Within  the  later of one week  after the  Closing  Date or
          twenty-one  days after you have been provided this  Agreement for your
          consideration,  you shall execute a General Release  substantially  in
          the  form as set  forth  in  Addendum  B  hereto.  Additionally,  as a
          condition to your receipt of the final  installment  of the  retention
          bonus paid or payable under Section 5 and/or  Section 6 of this Letter
          Agreement,  you shall execute a General Release  substantially  in the
          form as set forth in Addendum B.

     15.  Non-Waiver  of  Rights.  The  failure  to  enforce  at  any  time  the
          provisions  of  this  Letter  Agreement  or to  require  at  any  time
          performance by the other party of any of the  provisions  hereof shall
          in no way be construed to be a waiver of such  provisions or to affect
          either the validity of this Letter  Agreement  or any part hereof,  or
          the right of either  party to  enforce  each and  every  provision  in
          accordance with its terms.

     16.  Solicitation of Employees.  You agree that for the one (1) year period
          following your  termination of employment with  Albertson's,  you will
          not,  either  directly or  indirectly,  alone or in  conjunction  with
          another party,  solicit,  employ, or attempt to employ, any individual
          who on the date of  termination  is, or within one year prior  thereto
          was, an employee of Albertson's.

     17.  Non-Assignment. You shall not assign all or any portion of this Letter
          Agreement without the prior written consent of Albertson's.

     18.  Modification.  No provision of this Letter  Agreement may be modified,
          altered or amended except by an instrument in writing  executed by the
          parties hereto.

     19.  Full Settlement.  Albertson's obligation to make the payments provided
          for in this Letter  Agreement and otherwise to perform its obligations
          hereunder  shall  not  be  affected  by  any  set-off,   counterclaim,
          recoupment,  defense or other claim, right or action which Albertson's
          may have against you. In no event shall you be obligated to seek other
          employment  or take  any  other  action  by way of  mitigation  of the
          amounts  payable  to you under any of the  provisions  of this  Letter
          Agreement  and such  amounts  shall not be reduced  whether or not you
          obtain other employment.

     20.  Confidential  Information.  You shall hold in a fiduciary capacity for
          the benefit of  Albertson's  all secret or  confidential  information,
          knowledge or data relating to Albertson's,  and its businesses,  which
          shall have been obtained by you during your  employment by Albertson's
          (including  American  Stores  Company and any of its  affiliates)  and
          which shall not be or become public  knowledge  (other than by acts by
          you or  representatives of you in violation of this Letter Agreement).
          After termination of your employment, you shall not, without the prior
          written  consent of Albertson's or as may otherwise be required by law
          or  legal  process,  communicate  or  divulge  any  such  information,
          knowledge  or  data  to  anyone  other  than   Albertson's  and  those
          designated  by it.  In no event  shall an  asserted  violation  of the
          provisions  of this  Section 20  constitute  a basis for  deferring or
          withholding any amounts otherwise payable to you under this Agreement.


F:A\forms\RetentionBonusLetter - Tier I.doc
                                       5
<PAGE>


     21.  Arbitration.  By signing this Agreement,  you agree that all claims or
          disputes  covered by this  Agreement  or  otherwise  arising out of or
          relating to your  employment  during the term of the Agreement must be
          submitted to binding arbitration and that this arbitration will be the
          sole and  exclusive  remedy for  resolving  any such claim or dispute.
          This promise to resolve claims by arbitration is equally  binding upon
          both you and Albertson's.

          Any  arbitration  will be  administered  by the  American  Arbitration
          Association  under its Commercial  Arbitration  Rules.  The arbitrator
          shall apply the Federal Rules of Evidence.  The arbitrator  shall have
          jurisdiction  to  hear  and  rule  on  pre-hearing   disputes  and  is
          authorized to hold  pre-hearing  conferences by telephone or in person
          as the arbitrator deems necessary.

          The Company  shall pay the costs of  arbitration  and each party shall
          bear its own expenses;  provided, that if you are the prevailing party
          in any such  proceeding,  the  Company  shall  reimburse  you for your
          reasonable costs and expenses,  including attorney's fees, incurred in
          connection with such proceeding.

If you accept the terms of this Letter Agreement, please sign below in the space
provided.


                                       Very truly yours,

                                       ALBERTSON'S,   INC.



                                       By:   /s/  Steven D. Young
                                           -------------------------------
                                           Name:  Steven D. Young
                                           Title: Executive Vice President



/s/  Peter L. Lynch
----------------------
Executive Signature



7/16/99
----------------------
Date












F:A\forms\RetentionBonusLetter - Tier I.doc
                                       6
<PAGE>


                                                                      Addendum A

                   Certain Additional Payments by the Company

          (a)  Anything  in the  Retention  Bonus and  Severance  Agreement  and
Release  dated  June  18,  1999,  (the  "Letter   Agreement")  to  the  contrary
notwithstanding  and  except  as set  forth  below,  in the  event  it  shall be
determined that any payment or distribution by the Company to or for the benefit
of the  Executive  (whether  paid or payable  or  distributed  or  distributable
pursuant  to the terms of the Letter  Agreement  or  otherwise,  but  determined
without  regard to any  additional  payments  required  under this  Addendum) (a
"Payment")  would be subject to the  excise tax  imposed by Section  4999 of the
Code or any interest or penalties are incurred by the Executive  with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are  hereinafter  collectively  referred  to as  the  "Excise  Tax"),  then  the
Executive  shall be  entitled  to receive  an  additional  payment (a  "Gross-Up
Payment")  in an amount such that after  payment by the  Executive  of all taxes
(including  any  interest or  penalties  imposed  with  respect to such  taxes),
including,  without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up  Payment,
the Executive  retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the  Payments.  Notwithstanding  the  foregoing  provisions of this
Addendum, if it shall be determined that the Executive is entitled to a Gross-Up
Payment,  but that the Payments do not exceed 110% of the  greatest  amount (the
"Reduced  Amount") that could be paid to the Executive  such that the receipt of
Payments  would not give rise to any Excise Tax, then no Gross-Up  Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.

          (b)  Subject  to the  provisions  of  (c)  below,  all  determinations
required to be made under this Addendum,  including  whether and when a Gross-Up
Payment is required and the amount of such Gross-Up  Payment and the assumptions
to be utilized in arriving at such determination,  shall be made by a nationally
recognized  certified  public  accounting  firm  as  may  be  designated  by the
Executive  (the  "Accounting  Firm")  which shall  provide  detailed  supporting
calculations  both to the Company and the  Executive  within 15 business days of
the receipt of notice from the Executive that there has been a Payment,  or such
earlier  time as is  requested  by the  Company.  All fees and  expenses  of the
Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment,  as
determined  pursuant  to this  Addendum,  shall  be paid by the  Company  to the
Executive   within   five  days  of  the  receipt  of  the   Accounting   Firm's
determination.  Any  determination  by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of  Section  4999 of the Code at the time of the  initial  determination  by the
Accounting Firm hereunder,  it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the  calculations  required  to be made  hereunder.  In the event  that the
Company exhausts its remedies pursuant to (c) below and the Executive thereafter
is  required  to make a payment of any Excise  Tax,  the  Accounting  Firm shall
determine  the  amount  of the  Underpayment  that  has  occurred  and any  such
Underpayment  shall be promptly paid by the Company to or for the benefit of the
Executive.

          (c)  The Executive shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable  but no later than ten business days after the Executive is informed
in  writing of such claim and shall  apprise  the  Company of the nature of such
claim and the date on which such claim is  requested to be paid.  The  Executive
shall not pay such  claim  prior to the  expiration  of the  thirty  day  period
following the date on which it gives such notice to the Company (or such shorter

F:A\forms\RetentionBonusLetter - Tier I.doc
                                       7
<PAGE>


period  ending on the date that any payment of taxes with  respect to such claim
is  due).  If the  Company  notifies  the  Executive  in  writing  prior  to the
expiration  of such period that it desires to contest such claim,  the Executive
shall:

          (i)  give the  Company any  information  reasonably  requested  by the
               Company relating to such claim,

          (ii) take such action in connection  with contesting such claim as the
               Company  shall  reasonably  request in writing from time to time,
               including,  without  limitation,  accepting legal  representation
               with respect to such claim by an attorney  reasonably selected by
               the Company,

          (iii)cooperate with the Company in good faith to  effectively  contest
               such claim, and

          (iv) permit the Company to participate in any proceedings  relating to
               such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such contest and shall  indemnify  and hold the Executive  harmless,  on an
after-tax  basis,  for any  Excise  Tax or income tax  (including  interest  and
penalties with respect thereto) imposed as a result of such  representation  and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section (c), the Company shall control all proceedings  taken in connection
with such  contest  and,  at its sole  option,  may pursue or forego any and all
administrative  appeals,  proceedings,  hearings and conferences with the taxing
authority  in respect of such claim and may, at its sole option,  either  direct
the  Executive  to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a  determination  before  any  administrative  tribunal,  in a court of  initial
jurisdiction  and  in  one or  more  appellate  courts,  as  the  Company  shall
determine;  provided,  however, that if the Company directs the Executive to pay
such claim and sue for a refund,  the Company  shall  advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including  interest or penalties with respect  thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further  provided that any extension of the statute of limitations  relating
to payment of such taxes for the taxable year of the  Executive  with respect to
which such  contested  amount is  claimed  to be due is  limited  solely to such
contested  amount.  Furthermore,  the Company's  control of the contest shall be
limited to issues  with  respect to which a  Gross-Up  Payment  would be payable
hereunder and the Executive shall be entitled to settle or contest,  as the case
may be, any other  issue  raised by the  Internal  Revenue  Service or any other
taxing authority.

          (d) If, after the receipt by the  Executive  of an amount  advanced by
the Company  pursuant to Section (c) above,  the Executive  becomes  entitled to
receive any refund with respect to such claim,  the Executive  shall (subject to
the Company's complying with the requirements of Section (c) above) promptly pay
to the Company the amount of such refund  (together  with any  interest  paid or
credited thereon after taxes applicable  thereto).  If, after the receipt by the
Executive of an amount advanced by the Company  pursuant to Section (c) above, a
determination  is made that the  Executive  shall not be  entitled to any refund
with  respect to such claim and the  Company  does not notify the  Executive  in
writing of its intent to contest such denial of refund  prior to the  expiration
of thirty days after such determination, then such advance shall be forgiven and

F:A\forms\RetentionBonusLetter - Tier I.doc
                                       8
<PAGE>


shall not be required to be repaid and the amount of such advance  shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

          The   provisions   of  this   Addendum   apply  to  all  payments  and
distributions  made by the  Company  for  the  benefit  of  Executive  that  are
considered  to be contingent on the "change of control" that occurs for purposes
of  Sections  280G and 4999 of the Code in  connection  with or  relating to the
merger  involving  Albertson's  and American Stores Company and under the Letter
Agreement.  It does  not  extend  to any  other  merger,  acquisition  or  other
transaction that Albertson's could enter into in the future.


























F:A\forms\RetentionBonusLetter - Tier I.doc
                                       9
<PAGE>




                                                                      Addendum B

                                 General Release


     I,  with  the  intention  of  binding  myself  and  my  heirs,   executors,
administrators  and  assigns,  do hereby  release,  remise,  acquit and  forever
discharge  Albertson's,  as it is defined in the  Retention  Bonus and Severance
Agreement and Release, dated June 18, 1999 (the "Agreement") and its present and
former officers, directors, employees, agents, attorneys, executives, affiliated
companies,  divisions,  subsidiaries,   successors,   predecessors  and  assigns
(collectively the "Released Parties"),  of and from any and all prior or current
employment contracts,  agreements,  arrangements,  practices,  policies or other
statements  or conduct;  claims;  actions;  causes of action;  demands;  rights;
damages; debts; sums of money; accounts; financial obligations; suits; expenses;
attorneys'  fees and  liabilities  of whatever kind or nature in law,  equity or
otherwise,  whether now known or unknown,  suspected  or  unsuspected,  which I,
individually  or as a member of a class,  now have,  own or hold, or have at any
time heretofore had, owned or held, arising through the date hereof, against any
Released  Parties  arising  out of or in any way  connected  with my  employment
relationship  with  American  Stores  Company  and/or  any  of  its  affiliates,
including  without  limitation,  any claims for severance or vacation  benefits,
unpaid  wages,  salary  or  incentive  payment,  breach  of  contract,  wrongful
discharge,  impairment  of  economic  opportunity,   intentional  infliction  of
emotional harm or other tort, or employment  discrimination under any applicable
federal, state or local statute,  provision,  order or regulation including, but
not limited to, any claim under Title VII of the Civil  Rights Act,  the Federal
Age  Discrimination  in Employment Act, the Americans With  Disabilities Act and
any similar or analogous state statute excepting only:

          A.   those obligations of Albertson's payable under or contemplated by
               the Letter Agreement; and

          B.   any  rights  to  indemnification  I  may  have  under  applicable
               corporate  law, the by-laws or certificate  of  incorporation  of
               American Stores Company,  Albertson's,  Inc., and/or any of their
               affiliates  or as an insured under any  Director's  and Officer's
               liability insurance policy now or previously in force.

     I acknowledge and agree that I have not, with respect to any transaction or
state of facts existing prior to the date of execution of this General  Release,
filed any complaints,  charges or lawsuits against Albertson's,  American Stores
Company and/or any of their affiliates with any governmental agency or any court
or tribunal.

     I  further  declare  and  represent  that I have  carefully  read and fully
understand the terms of this General Release and the Agreement, that I have been
given not less than twenty-one (21) days to consider this General Release,  that
I have been advised to seek,  and have had the  opportunity  to seek, the advice
and  assistance  of counsel  with  regard to this  General  Release,  and that I
knowingly and voluntarily,  of my own free will, without any duress, being fully
informed and after due  deliberate  thought and action,  accept the terms of and
sign the same as my own free act.

     To the extent applicable to me, I expressly waive and relinquish all rights
and  benefits  afforded  by  Section  1542 of the  Civil  Code of the  State  of
California,  and I do so understanding  and  acknowledging  the significance and
consequence  of that  waiver.  Section  1542 of the  Civil  Code of the State of
California states:


F:A\forms\RetentionBonusLetter - Tier I.doc
                                       10
<PAGE>



          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.

     I understand  that I may revoke this General  Release  anytime within seven
(7) days of signing it and that the terms of this  General  Release  will not be
effective until the seven (7) day revocation period expires.



/s/  Peter L. Lynch
----------------------
Executive



STATE OF Idaho     )
                   )  SS.
COUNTY OF Ada      )



     On this 16th day of July,  1999,  before me  personally  appeared  Peter L.
Lynch,  to me known to be the person  described  in and who executed the General
Release and  acknowledged  that he/she executed the same as his/her free act and
deed.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my official
seal in the Country and State aforesaid, the day and year first above written.



                                               /s/  Rose Marie Hansen
                                               -------------------------
                                               Notary Public


My Commission Expires:  12/27/04
















F:A\forms\RetentionBonusLetter - Tier I.doc
                                       11