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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