Exhibit 10.4

 

AGREEMENT FOR TERMINATION BENEFITS
IN THE EVENT OF A CHANGE IN CORPORATE CONTROL

 

This Agreement, made this                 day of                     , 20    ,
by and between                                (the “Executive”) and Longs Drug
Stores California, Inc., a California corporation (the “Corporation”).

 

W I T N E S S E T H:

 

Whereas, the Executive is                                                       
of the Corporation;

 

Whereas, the Corporation considers it essential to the best interests of its
shareholders to take steps to retain key personnel such as the Executive and
recognizes particularly that uncertainty might arise among personnel in the
context of any possible or actual Change in Corporate Control, as hereinafter
defined, which could result in the departure or distraction of key personnel to
the detriment of the Corporation and its shareholders; and

 

Whereas, the Corporation has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of key
personnel of the Corporation including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from any possible or actual Change in Corporate Control.

 

Now, Therefore, in consideration of the covenants, terms, and conditions
contained herein, the Corporation and the Executive agree:

 

I.                                         Definitions.

 

A.                                   “Administrative Committee,” as used in this
Agreement, shall mean the Board of Directors of Longs Drug Stores Corporation
(“Parent Corporation”) or a committee appointed by such Board of Directors to
administer this Agreement.

 

B.                                     “Change in Corporate Control,” means the
occurrence of any of the following:

 

1.                                       The consummation of a merger or
consolidation of the Parent Corporation or the Corporation with or into another
entity or any other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation or other reorganization is owned by
persons who are not part of the same controlled group of the Parent Corporation
immediately prior to such merger, consolidation or other reorganization, and who
directly or indirectly in the aggregate owned less than 25% of the Parent
Corporation’s or the Corporation’s, as the case may be, combined voting power
represented by the Parent Corporation’s or the Corporation’s, as the case may
be,

 

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outstanding securities immediately prior to such merger, consolidation or other
reorganization;

 

2.                                       The sale, transfer or other disposition
of all or substantially all of the Parent Corporation’s or the Corporation’s
assets;

 

3.                                       A change in the composition of the
Board of Directors of the Parent Corporation (the “Parent Board”) over a period
of 24 consecutive months or less such that a majority of the members of the
Parent Board (rounded up to the next whole number) cease, by reason of one or
more proxy contests for the election of directors, to be comprised of
individuals who either (i) have been directors continuously since the beginning
of such period or (ii) have been elected, or nominated for election, as
directors during such period by at least a majority of the directors described
in clause (i) who were still in office at the time such election or nomination
was approved by the Parent Board;

 

4.                                       The stockholders of the Parent
Corporation approve the dissolution or liquidation of the Parent Corporation or
the commencement by or against the Parent Corporation of a case under the
federal bankruptcy laws or any other proceeding under any other laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief or there is an involuntary dissolution of the Parent Corporation; or

 

5.                                       Any transaction as a result of which
any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (“Exchange Act”)), directly or indirectly, of
securities of the Parent Corporation or the Corporation representing at least
50% of the total voting power represented by the Parent Corporation’s or the
Corporation’s, as the case may be, then outstanding voting securities.  For
purposes of this Paragraph (v), the term “person” shall have the same meaning as
when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude:

 

(a)                                  A trustee or other fiduciary holding
securities under an employee benefit plan of the Parent Corporation or any
“subsidiary corporation” as defined in Code Section 424(f) or any entity of
which the Parent Corporation and/or one or more such subsidiaries own not less
than 50%;

 

(b)                                 A corporation owned directly or indirectly
by the stockholders of the Parent Corporation in substantially the same
proportions as their ownership of the common stock of the Parent Corporation;

 

(c)                                  The Parent Corporation; and

 

(d)                                 The Corporation.

 

A transaction shall not constitute a Change in Corporate Control if its sole
purpose is to change the state of the Parent Corporation’s or the Corporation’s
incorporation or to create a holding company that will be owned in substantially
the same

 

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proportions by the persons who held the Parent Corporation’s or the
Corporation’s securities immediately before such transaction.

 

C.                                     “Code,” as defined herein, shall mean the
Internal Revenue Code of 1986, as amended to date.

 

D.                                    “Severance of Employment,” as used herein,
shall mean the termination of the Executive’s employment with the Parent
Corporation and the Corporation (i) by discharge by the Parent Corporation or
the Corporation on or within two (2) years after the date of a Change in
Corporate Control, (ii) by resignation of the Executive on or after, but less
than one hundred eighty (180) days after, the date of a Change in Corporate
Control, provided that such resignation was preceded by a material and
detrimental alteration in the Executive’s position, responsibilities,
compensation or benefits from those in effect immediately prior to the Change in
Corporate Control or (iii) by resignation of the Executive at any time within
the period commencing one hundred eighty (180) days after the date of a Change
in Corporate Control and ending two (2) years after the date of such Change in
Corporate Control.  Despite the foregoing, neither of the following will
constitute a Severance of Employment:

 

1.                                       The termination of the Executive’s
employment by reason of death.

 

2.                                       The discharge of the Executive by the
Corporation for gross and willful misconduct relating to the performance by the
Executive of the Executive’s duties at the Corporation, provided that such
misconduct is discovered after the date of the Change in Corporate Control.

 

II.                                     Administration.

 

The Administrative Committee shall administer this Agreement and shall have the
power and the duty to make all determinations necessary for the implementation
of this Agreement, including by way of example and not as a limitation, the
occurrence of a Change in Corporate Control and the date of such change.  Any
such determination (i) shall be made on the basis of all information known to
the persons making the determination, after reasonable inquiry, (ii) may be made
prospectively and subject to one or more contingent events, and (iii) will be
binding on the Corporation and the Executive.

 

III.                                 Obligations of the Corporation.

 

A.                                   Within fifteen (15) days after a Severance
of Employment or at such earlier time as may be required by law, the Corporation
shall pay to the Executive:

 

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1.                                       The full amount of any earned but
unpaid base salary through the date of the Severance of Employment, plus a cash
payment for all unused vacation time which the Executive has accrued as of the
Severance of Employment.

 

2.                                       If and only if the Corporation has made
a final and good faith determination prior to the Severance of Employment as to
the amount, if any, of Executive’s earned but unpaid bonus for the performance
period (or periods) prior to the performance period during which the Severance
of Employment occurs (the “Severance Period”), an amount equal to any such
amount (or amounts).

 

3.                                       If and only if the Corporation has not
made a final and good faith determination prior to the Severance of Employment
as to the amount, if any, of Executive’s earned but unpaid bonus for the
performance period (or periods) prior to the Severance Period, an amount equal
to the bonus (or bonuses) that the Executive would have received in the absence
of a Severance of Employment in respect of such period (or periods), as
determined by the Corporation in good faith.

 

B.                                     Within thirty (30) days after a Severance
of Employment, the Corporation shall pay to the Executive an amount equal to
three (3) times the average of Executive’s annual base salary and bonus for the
five-consecutive-taxable-year period (or shorter period of actual service) that
includes the taxable year of the Change in Corporate Control, less one dollar. 
Solely for purposes of determining such average, the Executive’s bonus shall be
annualized for short or incomplete years (if the Executive shall have received a
pro-rated award) and shall be deemed to be the target amount for the taxable
year of the Change in Corporate Control. The Executive shall be eligible to make
contributions to the Corporation’s Section 401(k) plan from amounts payable to
the Executive under Article III.A and this paragraph.

 

C.                                     Within forty-five (45) days after a
Severance of Employment, the Corporation shall pay to the Executive a pro-rated
bonus award at the target amount in respect of the performance period in which
the Severance of Employment occurs based on the percentage of the performance
period that has elapsed as of the date of the Severance of Employment.

 

D.                                    Within thirty (30) days after a Severance
of Employment, the Corporation shall establish an irrevocable trust and
contribute to it an amount equal to the Executive’s deferred compensation
account under the Deferred Compensation Plan of 1995 and/or under other similar
or successor plans of the Corporation (the “Plan”).  The trust shall conform to
the model “rabbi trust” agreement provided by the Internal Revenue Service in
Revenue Procedure 92-64, as revised from time to time, and shall be structured
as an unfunded arrangement.  The trustee of the trust shall be Boston Safe
Deposit and Trust Company, or its successor in interest, or if Boston Safe
Deposit and Trust Company is unable or unwilling to serve for any reason, such
other financial institution selected mutually by the Corporation and the
Executive.

 

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E.                                      In the event of the Executive’s death
after Severance of Employment and prior to payment to the Executive of amounts
due under this Agreement, such payment shall be made to the Executive’s
surviving spouse, issue by right of representation, or estate, in that order.

 

F.                                      The Corporation shall deduct from any
payments to Executive under this Agreement amounts that the Corporation is
required to withhold and pay either to government agencies on behalf of the
Executive or under court order to any person.

 

G.                                     The Executive shall be entitled to full
Excise Tax Restoration Payments such that in the event that it is determined
that any payment of any type to or for the benefit of the Executive made by the
Parent Corporation, by any of its affiliates, by any person who acquires
ownership or effective control or ownership of a substantial portion of the
assets of the Parent Corporation (within the meaning of section 280G of the Code
or by any affiliate of such person, whether paid or payable pursuant to the
terms of this Agreement or otherwise, including the accelerated vesting of stock
options or other equity-based awards (the “Total Payments”), would be subject to
the excise tax imposed by section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (an “Excise Tax
Restoration Payment”) in an amount that shall fund the payment by the Executive
of any Excise Tax on the Total Payments as well as all income taxes imposed on
the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax
Restoration Payment and any interest or penalties imposed with respect to taxes
on the Excise Tax Restoration or any Excise Tax.

 

IV.                                 Termination.

 

This Agreement shall terminate and be of no further force or effect upon the
discharge or resignation of the Executive for any reason at any time prior to
the date of a Change in Corporate Control.

 

V.                                     Term of Agreement.

 

A.                                   This Agreement shall expire at the end of
three (3) years from the date hereof; provided, however, that at each annual
anniversary date of this Agreement, the expiration date of the Agreement shall
automatically be extended for one (1) additional year unless, in the thirty (30)
day period immediately preceding any anniversary date hereof, either the
Corporation or the Executive, by written notice to the other, rejects the
automatic extension of such expiration date.

 

B.                                     Notwithstanding the expiration provisions
set out in Article V.A, this Agreement shall not expire for a period of two (2)
years after the date of any Change in Corporate Control which occurs before this
Agreement terminates or expires, and if a Severance of Employment occurs before
this Agreement terminates or expires, this Agreement will not expire until the
Corporation has complied in all respects with Article III.

 

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VI.                                 Binding Effect.

 

This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and the successors and assigns of the Corporation.

 

VII.                             Non-Assignment by the Executive.

 

The Executive shall not assign, hypothecate, or transfer any of the rights
herein to any person.  Any attempt to assign, hypothecate or transfer the rights
hereunder shall immediately terminate all of the Executive’s rights under this
Agreement.

 

VIII.                         Attorneys’ Fees.

 

In the event that any suit, action or proceeding (including any appeal
therefrom, but excluding any and all proceedings before the Administrative
Committee) is brought by the Executive to review any decision of the
Administrative Committee pertaining to this Agreement or to enforce any right
hereunder, the prevailing party shall be entitled to recover from the other
party reasonable attorneys’ fees and other reasonable costs incurred in
connection therewith.  During the pendency of any such suit, action or
proceeding, the Corporation shall promptly pay all reasonable attorneys’ fees
and reasonable costs incurred by the Executive with respect to such suit, action
or proceeding, subject to the Executive’s obligation hereunder to repay all such
sums (as well as the Corporation’s reasonable attorneys’ fees and reasonable
costs) if the court finds that the Corporation is the prevailing party in such
suit, action or proceeding.

 

IX.                                Partial Invalidity.

 

Invalidity of any part or provision of this Agreement shall not affect the
enforceability of any other part or provision of this Agreement.

 

X.                                    No Right to Continued Employment.

 

Nothing herein shall confer, nor shall it be construed to confer, on the
Executive any right to, guarantee of, or contract for a continued employment by
the Corporation, or in any way limit the right of the Corporation to terminate
the employment of the Executive.

 

XI.                                Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of California, as applied to contracts executed and performed entirely
in California.

 

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XII.                            Notices.

 

Any notices given hereunder must be in writing and may be delivered in person or
by certified or registered mail, return receipt requested, postage prepaid. 
Notices to Corporation should be delivered to Longs Drug Stores California,
Inc., 141 North Civic Drive, Walnut Creek, CA  94596, Attn:  Corporate
Secretary, or to such other address as Corporation from time to time furnishes
to the Executive in a notice.  Notices to Executive should be delivered to the
address shown beneath Executive’s signature below, or to such other address as
the Executive from time to time furnishes to the Corporation in a notice.

 

XIII.                        Entire Agreement.

 

This Agreement sets forth the entire agreement between the parties hereto.  This
Agreement fully supersedes any and all prior agreements or understandings
pertaining to similar benefits.

 

XIV.                        Amendments.

 

This Agreement may not be modified except by a writing signed by both parties. 
No such writing will be binding on the Corporation unless it is signed (a) by
the signatories of this Agreement, (b) by (i) the Chairman, President, or any
Vice-President of the Corporation and (ii) the Secretary or any Assistant
Secretary of the Corporation, or (c) by another person or persons whose
authority is affirmed by (i) the Chairman, President, or any Vice-President of
the Corporation and (ii) the Secretary or any Assistant Secretary of the
Corporation.

 

In Witness Whereof, this Agreement has been executed by the parties hereto on
the day and year first above written.

 

Executive

 

Longs Drug Stores California, Inc.

 

 

 

 

 

 

 

 

By:

 

(signature)

 

Warren Bryant,

 

 

President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

By:

 

Street Address

 

William J. Rainey,

 

 

Senior Vice President,

 

 

General Counsel & Secretary

 

 

 

 

 

 

City, State and Zip Code

 

 

 

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