Exhibit 10.t

 

EMPLOYMENT AGREEMENT

 

                This Employment Agreement (hereinafter “Agreement”) is entered
into as of the 1st of February, 2002, by and between Longs Drug Stores
California, Inc., a California corporation (hereinafter “Company”) and Bruce E.
Schwallie, an individual (hereinafter “Schwallie”).

 

                WHEREAS, Company desires to have Schwallie as an employee of
Company; and

 

                WHEREAS, Schwallie desires to be hired as an employee of
Company.

 

                NOW, THEREFORE, the parties agree as follows:

 

1.                                       The Position shall be Senior Vice
President — Pharmacy and Business Development (hereinafter “Position”) reporting
to the CEO.

 

2.                                       Bi-weekly pay will be Nine Thousand Six
Hundred Fifteen Dollars and Thirty-Eight Cents ($9,615.38), which is Two Hundred
Fifty Thousand Dollars ($250,000.00) per year.  During your first full year of
employment you will receive a guaranteed bonus equal to forty percent (40%) of
your base annual salary.  Any bonus thereafter will be based on your individual
as well as the Company’s overall performance.

 

3.                                       Company will provide a hiring bonus of
Fifty Thousand Dollars ($50,000.00), which will be taxable to Schwallie as
income for state and federal income tax purposes.

 

4.                                       Schwallie will begin to accrue vacation
immediately at the rate of four (4) weeks per year.

 

5.                                       Schwallie will be offered a
Non-qualified Stock Option of twenty thousand (20,000) shares within a month of
his hire date at the then current price, which shall vest in accordance with the
current Company vesting policy.

 

6.                                       Schwallie will be eligible for options
granted to the Company’s Senior Vice Presidents in conjunction with the new
option program currently scheduled to be implemented in the Company’s 2003
fiscal year.

 

7.                                       Company will provide Schwallie a
Termination Agreement commensurate with the Position.

 

 

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8.                                       Company agrees to buy Schwallie’s
current home (residence and property) in Ohio at an agreed upon price (average
of two [2] appraisals) with timing and conditions to be agreed upon.

 

9.                                       To aid in relocation and cost of the
housing difference in the Walnut Creek area, an amount will be paid equal to the
net present value of the difference in interest payments for a ten (10) year
period that is required to secure a comparable residence in Walnut Creek,
California.   It is agreed that the difference in home value is Four Hundred
Fifty Thousand Dollars ($450,000.00) and the interest rate is seven percent (7%)
and therefore the net present value of increased interest over a ten (10) year
period is Two Hundred Twenty-Eight Thousand Seven Hundred Fifty-Seven Dollars
and Eighteen Cents ($228,757.18).   This relocation allowance will be provided
as a loan for which a Promissory Note will be prepared and signed.  It is agreed
that the Company will forgive one-fifth (1/5) of this loan plus accrued interest
at the end of each of the first five (5) years of your employment.  If you
voluntarily terminate your employment with Longs within two years of your dated
Promissory Note, you will be required to reimburse the Company in full for the
balance of the relocation allowance loan including accrued interest.  If the
provisions of the Agreement for Termination Benefits in the Event of a Change in
Corporate Control entered into by the Company and Schwallie shall go into effect
under its terms and a “Severance of Employment” thereunder takes place, it is
hereby agreed that any balance remaining on the loan provided for in this
paragraph shall be forgiven by the Company as of the date of such severance.

 

10.                                 Schwallie will be reimbursed for reasonable
moving expenses based on information submitted 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 Ohio will be reimbursed per current relocation policy.

 

11.                                 Schwallie will be reimbursed for up to six
(6) months of reasonable temporary living expenses based on information
submitted to the Company in order to assist in finding a new residence. 
Reasonable travel back and forth to Ohio as needed will be reimbursed until
relocation is completed.   One month’s salary will be paid in advance of
Schwallie’s actual relocation to offset incidental costs associated with the
move.

 

12.                                 Company will immediately place Schwallie and
appropriate dependents on the Executive Medical Plan (which includes dental and
vision care).

 

 

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13.                                 Schwallie will be provided information on
and will be eligible to participate in the following programs commensurate with
his position with the Company:

 

a)              Profit sharing, life insurance, long-term disability, and 401-k
plans;

b)             Available medical insurance coverage options;

c)              Company car allowance/lease options; and

d)             Termination benefits in the event of a change in corporate
control.

 

14.                                 Company agrees that for a two (2) year
initial period of employment with the Company, that the Company shall have
limited liability for severance.  Should the work arrangements be dissolved
during this two (2) year period, the parties agree as follows:

 

a)              Should the Company choose to sever its employment relationship
with you in the first two (2) years for any reason other than for cause, the
Company will provide a cash payment equal to one year’s salary plus your
guaranteed 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 (1) year period, a settlement of the amount due to Schwallie will occur. 
The settlement will true up 90% of the estimated bonus to the actual amount if
Schwallie had been employed during that period of time.

 

b)             Should Schwallie cause his employment to be terminated by his
resignation or by being discharged for gross or willful misconduct relating to
the performance by Schwallie of his duties at the Company, all outstanding notes
would immediately become due and payable with accrued interest except as
otherwise herein provided.  No other compensation would be due, other than that
accrued to that point.

 

IN WITNESS WHEREOF, the parties have executed the Agreement as of the date first
written above.

 

Bruce E. Schwallie,

 

LONGS DRUG STORES CALIFORNIA, INC.

An Individual

 

a California Corporation

 

 

 

 

 

By

/s/ Bruce E. Schwallie

 

By

/s/ Warren F. Bryant

 

 

 

 

Warren F. Bryant

 

 

 

 

President and CEO

 

 

 

 

 

 

 

 

By

/s/ William J. Rainey

 

 

 

 

William J. Rainey

 

 

 

 

Secretary

 

 

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