**Exhibit10.2**

 

 

February 25, 2003

 

 

Mr. Michael M. Laddon

414 Faye Lane

Redondo Beach, CA  90277

 

 

Dear Mike:

 

                Thank you for yourinterest in joining Longs Drug Stores California, Inc.  It is a pleasure to confirm our revisedoffer of employment for the position of Senior Vice President, ChiefInformation Officer.  This offer isbased on the following mutual understanding:

 

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

 

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

 

3.                                       Upon relocation to the Bay Area on orabout July of 2004, you will be paid a hiring bonus of $100,000, which will betaxed for state and federal income tax purposes. Should you resign from thecompany within 3 years of your hire date, you will be required to repay aprorated 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 stockoption grant of 30,000 shares which will be valued as of the day youremployment begins with Longs Drugs according to the then current Companyvesting policy.

 

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

 

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

 

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

 

8.                                       Fifteen thousand dollars will be paid inadvance of your actual relocation to offset incidental costs associated withyour move.

 

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

 

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

 

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

 

12.                                 Information regarding the followingprograms will be sent to you under separate cover and are included as part ofyour overall employment with Longs:

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

b.              Available medical insurance coverage options

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

 

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

 

14.                                 It is mutually agreed that for a two yearinitial period of your employment with the Company, that the Company shall havelimited liability for severance.  Shouldthe work arrangements be dissolved during this two year period, the partiesmutually agree as follows:

 

A.                                   Should Longs choose to sever itsemployment relationship with you in the first two years for any reason otherthan for cause, the Company will provide a cash payment equal to one year’ssalary plus your bonus during the first year, and if in the second year, 90% ofthe estimated bonus for that year.  Forpurposes of this calculation, the estimated bonus will be based on theCompany’s operating plan.  At theconclusion of the one-year period, a settlement of the amount due to you willoccur.  The settlement will true up 90%of the estimated bonus to the actual amount if you had been employed duringthat period of time.

 

B.                                     Should you cause your employment to beterminated by your resignation or by being discharged for gross or willfulmisconduct relating to the performance by you of your duties at the Company, nocompensation will be due, other than that accrued to that point.

 

Mike, I am pleased to extend this offer and I look forward to workingwith 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 thisletter.

 

 
| /s/  Michael  M. Laddon |   | March 14, 2003 |
|------------------------------|--------|----------------|
| Michael M. Laddon            |   | Date           |

 

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