Exhibit 10.q


CONFIDENTIAL


SEPARATION
AGREEMENT


THIS SEPARATION AGREEMENT (this “Agreement”), is made
between Brian Kilcourse (“Employee”) and Longs Drug Stores Corporation, a
Maryland corporation (“Longs Corporation”), and Longs Drug Stores California,
Inc., a California corporation (“Longs California” and, together with Longs
Corporation, “Longs” or the “Company”) and will become effective upon the
Effective Date set forth in Section 19.


RECITALS


WHEREAS, Employee has been employed by Longs
California as Senior Vice President and Chief Information Officer, and has
served as a director of Longs California, and the parties hereto desire to end
those relationships, and to settle, fully, finally and amicably, all claims
against each other, including, but not limited to, any claims related to the
employment of Employee and the termination of that employment.


NOW, THEREFORE, in order to provide such benefits and
in consideration of the mutual promises, covenants and representations set
forth below and other good and valuable consideration, the parties agree as
follows:


1.     Relinquishment of Positions.  Employee has resigned effective September 26, 2002 from his
positions as Longs California’s Senior Vice President and Chief Information
Officer and as a Longs California director.


2.     Earned
Salary and Bonus.  Employee will be
paid his earned salary and accrued vacation through September 30, 2002.  Employee will be paid his full third quarter
fiscal year 2003 bonus on or about December 15, 2002.


3.     Payment
of Good and Valuable Consideration. 
Even though Employee is not otherwise entitled to it, in consideration
of Employee’s acceptance of this Agreement and the release contained herein,
Longs will provide the following:


(a)   Employee will be paid five hundred twenty
five thousand, six hundred and thirty five dollars ($525,635.00) as follows:
one-third (1/3) of said amount, or one hundred seventy five thousand, two
hundred eleven dollars and thirty sixty six cents ($175,211.55) on or about
December 15, 2002; one-third (1/3) of said amount, or one hundred seventy five
thousand, two hundred eleven dollars and thirty sixty six cents ($175,211.55)
on or about January 15, 2003; and one-third (1/3) of said amount, or one
hundred seventy five thousand, two hundred eleven dollars and thirty sixty six
cents ($175,211.55) on or about January 15, 2004.


(b)   Employee’s outstanding options to purchase
Company common stock under Longs’ 1995 Long-Term Incentive Plan (the “1995
Plan”) will continue to be governed by the terms of Employee’s existing stock
option agreements and the 1995 Plan. 
Employee’s resignation will be deemed to be a resignation with the prior
written consent of Longs for purposes of (i) his award of 1,800 shares of
restricted Company common stock under the 1995 Plan, which restricted stock
award was granted to him on March 17, 1998, and (ii) his award of 


 

















 


10,000 shares of
restricted Company common stock under the 1995 Plan, which restricted stock
award was granted to him on March 19, 2002.


Under the terms of the 1995 Plan, Employee will
receive 2,928 shares of the restricted stock granted to him, pro-rated to the
effective date of retirement.


Employee has 39,000 stock options as of his
retirement.  Employee has three years
from his normal retirement date to exercise these stock options awarded to him.


(c)   Any tax obligations of Employee and tax
liability therefor, including any penalties and interest based upon such tax
obligation, that arises from the benefits and payments made to him under this
Agreement will be Employee’s responsibility and liability.  Longs California will report the value of
the 2,928 shares of stock provided for in this Section 3(b) on Employee’s 2002
W-2 form as compensation received by Employee. 
The severance payments provided for in Section 3(a) will be reported on
a 1099 form each tax year in which the payment was made.


4.     No Other Benefits; No Admission of Liability.  Employee acknowledges that except as
specifically set forth in Sections 2 and 3, Employee will not be entitled to
any other payments or benefits after September 26, 2002.  Employee also acknowledges that the
Agreement for Termination Benefits in the Event of a Change in Control entered
into between Employee and Longs California will terminate as of September 26,
2002.  Notwithstanding the foregoing, in
the event there is a “Change in Control” of Longs as described in such
agreement, the payments set forth in Sections 3(a), 3(b), 3(c) and 3(d) of this
Agreement that remain unpaid will be payable within thirty (30) days following
such Change in Control.  The furnishing
of the consideration for this Agreement will not be deemed or construed at any
time or for any purpose as an admission of liability by Longs or Employee to
the other.


5.     Indemnification Against Claims.  To the fullest extent provided by law, Longs will indemnify and
hold Employee harmless from any liability, claim, demand, cost, expense and
attorneys’ fees incurred by him as a result of any actions or omissions by him
in the course of his service to the Company as an employee, officer or
director.


6.             Confidentiality and
Non-Disclosure.


(a)   Unless required or otherwise permitted by
law, Employee will keep confidential and will not disclose to others, including
present or former Longs employees, any information described below:


(i)            Longs’ “Confidential
Information”.  As used in this
Agreement, “Confidential Information” includes, but is not limited to the
following:  (a) weekly sales and
wage data, (b) profitability data, (c) financial planning and
forecasting data, (d) sales reports, including pharmacy prescription and
sales volume, (e) individual store and collective gross profit
information, (f) expense data, (g) return-on-investment data,
(h) return-on-asset data, (i) bonus plans and reports, (j) warehouse
distribution costs, (k) information regarding Longs’ NonStop Solutions
project and related data, (l) cost-benefit analysis regarding pharmacy
distribution, (m) Longs’ PRO program, (n) store and pharmacy
inventory data, (o) pharmacy purchase data, (p) information regarding
pharmacy automated dispensing system(s) and robotic 


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technology,
(q) corporate strategic planning information, (r) pharmacy
prescription processing system, (s) computer programs and know how,
(t) business and marketing plans and strategies, and (u) unpublished
financial statements, budgets, projections, prices, costs and customer lists
whether developed before or after the Effective Date;


(ii)           Longs’ “Trade secrets”, as defined
under the Uniform Trade Secrets Act, California Civil Code section 3426.1;


(iii)          Any information that affords Longs a
competitive advantage in the retail industry;


(iv)          Longs’ proprietary information
including but not limited to, supplier lists, product marketing or any other
information obtained during his employment with Longs; and


(v)           Information with respect to
acquisitions and mergers or sales or other dispositions of businesses or
material assets by, of or with Longs.


(b)   The provisions of this Section 6 will not
apply to (i) information which is generally known within the industry or
in the public domain prior to the Effective Date, (ii) information which, not
as a result of the disclosure by Employee, becomes part of the public domain,
(iii) information which is available as a matter of public record and (iv)
information which is hereafter lawfully disclosed to Employee by a third party
(other than any employees or agents of Longs).


(c)   The non-disclosure obligations of this
Section 6 will not apply to disclosures made by Employee in response to any
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar legal process (“legally compelled disclosure”) provided that
Employee complies with the  conditions
of this Section 6(c).  In the event that
Employee is requested or becomes subject to make a legally compelled disclosure
of any of the Confidential Information, Employee will first provide Longs with
prompt prior written notice of such requirement so that Longs may seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Section 6.


(d)   On or before the Effective Date, Employee
will turn over to Longs all Company confidential files, records, and other
documents.  In addition, Employee will
return all property in his possession owned by Longs.


7.     Non-Solicitation. 
Employee will not directly or indirectly, for a period of three years
after the Effective Date:


(a)   request, induce or attempt to influence any
past, current or future customer of Longs, or any current or future supplier of
goods or services to Longs, to avoid, curtail or cancel any business it
transacts with Longs; or


(b)   request, induce or attempt to influence any
current or future employee of, or independent contractor or consultant to,
Longs to terminate his or her employment with or 


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services to Longs, or
induce, entice, hire or attempt to employ or retain the services of any such
employee, independent contractor or consultant other than on behalf of Longs.


(c)   Employee will not violate section 7(a) or
7(b) if any Company or business for whom Employee may work or become affiliated
hires any present, former or future employee of Longs on its own and without
the assistance of Employee.   Further,
Employee will not violate section 7(a) or 7(b) if any Company or business for
whom Employee may work or become affiliated hires any present, former or future
supplier, independent contractor or consultant on its own and without the
assistance of Employee.


(d)   Nothing in 7(a) or 7(b) will preclude any
former, present or future employee, independent contractor, consultant,
supplier of goods and services or vendor from doing business with any Company
or business for whom Employee may work or become affiliated.


8.             Non-Disparagement.  Both Employee and Longs, through its
directors and officers, will not make any unfavorable or disparaging remarks
about the other to third parties, including, without limitation, to any current
or former employee, consultant, independent contractor, customer, supplier or
vendor of Longs.  However, the Company’s
non-disparagement obligation pursuant to this Agreement will extend solely to
the actions of Longs’ directors and officers. 
For this purpose, “officers” is defined as those persons identified by
the Board of Directors as subject to the reporting requirements of Section 16
of the Securities Exchange Act of 1934, as amended.


9.             Cooperation.  Employee will cooperate with Longs, its
attorneys or experts retained by Longs or its attorneys in connection with any
litigation matters involving Longs that are pending on the Effective Date or
that may arise thereafter from events or alleged events occurring prior to the
Effective Date.  The Company will
reimburse Employee for all reasonable expenses incurred in connection with such
cooperation and, if such cooperation is required after the date that is two (2)
years after the Effective Date, the Company will also compensate Employee for
time reasonably spent in connection with such cooperation at an hourly rate
equivalent to his salary in effect at the time of his resignation.


10.           No Other Claims.  Employee represents and warrants that he has
not filed against Longs or any of its representatives, any claim, complaint,
charge or suit with any federal, state or other agency, court, board, office or
other forum or entity, including without limitation, any application for
workers’ compensation benefits. 
Employee will not, at any time hereafter, file any such claim,
complaint, charge or suit based upon circumstances arising before the Effective
Date, other than a claim arising from a breach by the Company of this Agreement
(which will be subject to Section 12), and if any agency, court, board, office,
forum or other entity assumes jurisdiction of any such claim, complaint, charge
or suit, he will request such entity to withdraw from the matter.  A breach of this Section 10 will entitle
Longs to damages as provided by law and will relieve Longs of all obligations
to Employee as provided in this Agreement.


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11.   General
Release.


(a)   Employee, on behalf of himself and his heirs,
executors, administrators, successors and assigns, does hereby irrevocably and
unconditionally release, acquit and forever discharge Longs Corporation, Longs
California, and all of their respective affiliates, stockholders, directors,
officers, employees, representatives, successors, assigns, agents and attorneys
from any and all charges, complaints, grievances, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys’ fees and costs actually incurred), of whatever kind or nature, known
or unknown, suspected or unsuspected, joint or several (“Claims”), which
Employee has had or may hereafter claim to have had, against any such persons
or entities by reason of any matter, act, omission, cause or event whatever
that has occurred up to and including the Effective Date other than those
obligations set forth in this Agreement. 
This release and waiver of Claims specifically includes, without
limitation:  (i) all Claims arising
from or relating in any way to any act or failure to act by any employee,
officer or director of Longs, (ii) all Claims arising from or relating in
any way to the employment relationship of Employee with Longs and/or the
termination thereof, including any Claims which have been asserted or could
have been asserted against Longs, and (iii) any and all Claims which might
have been asserted by Employee in any suit, claim, or charge, for or on account
of any matter or things whatsoever that has occurred up to and including the
Effective Date, under any and all laws, constitutions, statutes, orders,
regulations, or any other claim of right(s), including without limitation, any
claim under (as amended) the Age Discrimination in Employment Act of 1967,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act, the California Fair Employment and Housing Act, the California
Labor Code, any other federal, state or local statute or law governing
employment or the termination of employment, and any Claim in contract or tort.


(b)   For the purpose of implementing a full and
complete release and discharge, Employee expressly acknowledges that this
Agreement with the general release set forth in this Section 11 is
intended to include in its effect, without limitation, all Claims which
Employee does not know or suspect to exist in his favor at the time of
execution of this Agreement, and that this Agreement and such general releases
contemplate the extinguishment of all such Claims.  Employee expressly waives and relinquishes all rights and
benefits he may have under Section 1542 of the California Civil Code which
provides:


A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.


12.           Arbitration and Equitable Relief.


(a)    Any dispute, controversy or claim
between the parties arising out of or relating to this Agreement (whether based
in contract or tort, in law or equity), or any breach 


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or asserted breach
thereof, will be determined and settled exclusively by private and confidential
arbitration in Walnut Creek, California, in accordance with the rules for
dispute resolution of JAMS/ENDISPUTE. 
Judgment on the award may be entered in any court of competent
jurisdiction, and the parties specifically reserve all rights to appeal such
judgment as if it were rendered in a court of law.


(b)   Notwithstanding Section 12(a), the parties
may apply to any court of competent jurisdiction for a temporary restraining
order, preliminary injunction or other interim or provisional relief as may be
necessary, without breach of this Agreement and without abridgment of the
powers of the arbitrator.  The parties
hereby submit themselves to the Superior Court of California in and for the
County of Contra Costa for the purpose of enforcing this Agreement.


13.           Binding Agreement.  This Agreement will be binding upon and
inure to the benefit of Employee and Longs and their respective heirs,
administrators, representatives, executors, successors and assigns.  Employee hereby designates Shannon Kilcourse
as his beneficiary under this Agreement.


14.           Attorneys’ Fees.  Each party will bear its own costs and
attorneys’ fees incurred in the achieving the settlement and release of the
matters set forth in this Agreement.  If
one party commences an action against the other to enforce or interpret the
terms of this Agreement, or to obtain a declaration of rights under this
Agreement, the prevailing party will be entitled to reasonable attorneys’ fees,
costs and expenses incurred in such action or any appeal or enforcement of such
action, in addition to any other relief to which that party may be entitled
under this Agreement.


15.           Voluntary Participation.  Each of the parties acknowledges that he or
it has read the Agreement, and that he or it enters into this Agreement freely,
voluntarily, without coercion and based on the party’s own judgment and not in
reliance upon any representations or promises made by the others, except those
contained in this Agreement.


16.   Method of Execution.  This Agreement may be executed in
counterparts and each counterpart will be deemed a duplicate original.


17.           Governing Law.  This Agreement is deemed to have been made
and entered into in the State of California and will in all respects be
interpreted, enforced and governed under the laws of the State of
California.  The language of all parts
of this Agreement will in all cases be construed as a whole according to its
fair meaning and not strictly for or against any party.


18.           Severability.  The provisions of this Agreement are
severable and should any provision of this Agreement be declared or be
determined by any arbitrator or court to be illegal or invalid, any such
provision will be stricken, and the validity of the remaining parts, terms or
provisions will not be affected.


19.           Older Workers Benefit Protection
Act.  Pursuant to the requirements
of the Older Workers Benefit Protection Act, Employee has up to twenty-one (21)
days from the date of his receipt of this Agreement to consider and sign this
Agreement, although Employee may 


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accept
it at any time within those 21 days. 
Employee hereby acknowledges that he has been advised to consult an
attorney about this Agreement.  Once
Employee accepts the terms of this Agreement and signs this Agreement, he has
seven (7) days to revoke his acceptance. 
To revoke this Agreement, Employee must send to the Secretary of Longs
Corporation a written statement of revocation by registered mail, return
receipt requested.  If he does not
revoke this Agreement, this Agreement will become effective on the eighth day
after he signs it (the “Effective Date”).


20.           Confidentiality
of Agreement.


(a)   Employee represents that he has not disclosed
the terms of this Agreement and, until such time that Longs is required by law
to publicly disclose the terms of this Agreement, Employee will keep the terms,
amounts and all other specific facts of this Agreement completely confidential
and will not disclose any information concerning this Agreement to any person
or entity, other than that which is legally required and other than to his
immediate family and professional representatives; provided, that disclosure to
his immediate family or professional representatives is conditioned on the fact
that they agree to keep such information confidential and not disclose it to
others.


(b)   In the event Employee discloses, in violation
of this Section 20, the alleged facts upon which this Agreement is based, the
amount of consideration tendered to him, or the terms of the Agreement, Longs
will be entitled to terminate any payment due under this Agreement or take any
other action legally allowable.


21.           Entire Agreement.  This Agreement sets forth the entire
agreement between the parties as to the subject matter hereof and supersedes
any and all prior agreements or understandings between the parties written or
oral.  No waiver, alteration, or
modification of any of the provisions of this Agreement will be binding unless
in writing and signed by the party against whom enforcement of the change or
modification is sought.  Failure or
delay on the part of either party to enforce any right, power, or privilege
under this Agreement will not be deemed to constitute a waiver thereof.


 


	
  Date:

  	
  12/6/2002

  	
   

  	
   

  	
   

  	
  /s/ Brian Kilcourse 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Brian Kilcourse

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/23/2002

  	
   

  	
   

  	
   

  	
  Longs Drug Stores Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Linda Watt

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/23/2002

  	
   

  	
   

  	
   

  	
  Longs Drug Stores California, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ O.D. Jones 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Authorized Signatory

  



 


 


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