Exhibit 10.2

 

 

February 25, 2003

 

 

Mr. Michael M. Laddon

414 Faye Lane

Redondo Beach, CA  90277

 

 

Dear Mike:

 

                Thank you for your interest in joining Longs Drug Stores
California, Inc.  It is a pleasure to confirm our revised offer of employment
for the position of Senior Vice President, Chief Information Officer.  This
offer is based on the following mutual understanding:

 

1.                                       You will receive an annual salary of 
$300,000 payable in equal bi-weekly amounts of $11,538.46 for the first year of
employment.

 

2.                                       You will receive during your first year
of employment a bonus that is targeted at 40% of your base annual salary. For
the first year, Longs will guarantee 50% of your bonus, or $60,000.  Thereafter,
your bonus will be based on your individual as well as the Company’s overall
performance.

 

3.                                       Upon relocation to the Bay Area on or
about July of 2004, you will be paid a hiring bonus of $100,000, which will be
taxed for state and federal income tax purposes. Should you resign from the
company within 3 years of your hire date, you will be required to repay a
prorated portion of this bonus as follows: 0-12 months, 100%; 13-24 months, 67%;
25-36 months, 33%.

 

4.                                       You will be granted a non-qualified
stock option grant of 30,000 shares which will be valued as of the day your
employment begins with Longs Drugs according to the then current Company vesting
policy.

 

5.                                       You will be reimbursed for reasonable
moving expenses based on information submitted by you to the Company, which will
be grossed up for state and federal income tax purposes where allowable by IRS
regulations.  All realtor fees associated with the sale of your primary
residence in Redondo Beach will be reimbursed per the Company’s current
relocation policy.

 

6.                                       During the interim living period
between your date of hire and relocation , Longs will pay for up to $30,000 in
temporary living and airline commute expenses (up to three trips per month).
This will also be grossed up for state and federal income tax purposes. Details
of this arrangement will follow.

 

7.                                       If you are unable to sell your
residence within six months from your relocation date of July, 2004,  the
Company will purchase your current residence at an agreed upon price based on
the average of no less than two appraisals by jointly approved appraisers with
the timing of the purchase to be mutually agreed upon.

 

8.                                       Fifteen thousand dollars will be paid
in advance of your actual relocation to offset incidental costs associated with
your move.

 

9.                                       You will begin to accrue vacation
immediately at the rate of four weeks per year.

 

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10.                                 You will receive a car allowance in the
amount of $710.00 per month that is payable on the second paycheck of each
month. This is considered taxable as income and will have appropriate federal
and state income taxes withheld.

 

11.                                 You will immediately be placed on the
Executive Medical Plan including appropriate dependents.  This plan includes
dental and vision care.

 

12.                                 Information regarding the following programs
will be sent to you under separate cover and are included as part of your
overall employment with Longs:

a.               Employee Savings and Profit sharing, life insurance and long
term disability

b.              Available medical insurance coverage options

c.               “Termination Benefits in the Event of a Change in Corporate
Control”

 

13.                                 You will be provided the Company’s current
standard agreement for termination benefits in the event of change in corporate
control, as provided to other Company Senior Vice Presidents.

 

14.                                 It is mutually agreed that for a two year
initial period of your employment with the Company, that the Company shall have
limited liability for severance.  Should the work arrangements be dissolved
during this two year period, the parties mutually agree as follows:

 

A.                                   Should Longs choose to sever its employment
relationship with you in the first two years for any reason other than for
cause, the Company will provide a cash payment equal to one year’s salary plus
your bonus during the first year, and if in the second year, 90% of the
estimated bonus for that year.  For purposes of this calculation, the estimated
bonus will be based on the Company’s operating plan.  At the conclusion of the
one-year period, a settlement of the amount due to you will occur.  The
settlement will true up 90% of the estimated bonus to the actual amount if you
had been employed during that period of time.

 

B.                                     Should you cause your employment to be
terminated by your resignation or by being discharged for gross or willful
misconduct relating to the performance by you of your duties at the Company, no
compensation will be due, other than that accrued to that point.

 

Mike, I am pleased to extend this offer and I look forward to working with you.

 

 

 

 

 

Sincerely,

 

 

 

 

 

 

 

 

 

LONGS DRUG STORES CALIFORNIA, INC.

 

 

 

 

 

 

 

 

 

/s/  Warren F. Bryant

 

 

 

 

Warren F. Bryant

 

 

 

 

President and Chief Executive Officer

 

I accept your offer of employment as stated in this letter.

 

 

/s/  Michael M. Laddon

 

March 14, 2003

Michael M. Laddon

 

Date

 

2

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