Exhibit 10.4


 


AGREEMENT FOR TERMINATION BENEFITS

IN THE EVENT OF A CHANGE IN CORPORATE CONTROL


 


This Agreement, made this
               
day of
                    ,
20    , by and between
                              
(the “Executive”) and Longs Drug Stores California, Inc., a California
corporation (the “Corporation”).


 


W I T N E S S E T H:


 


Whereas, the
Executive is
                                                      
of the Corporation;


 


Whereas, the
Corporation considers it essential to the best interests of its shareholders to
take steps to retain key personnel such as the Executive and recognizes
particularly that uncertainty might arise among personnel in the context of any
possible or actual Change in Corporate Control, as hereinafter defined, which
could result in the departure or distraction of key personnel to the detriment
of the Corporation and its shareholders; and


 


Whereas, the
Corporation has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of key personnel of the
Corporation including the Executive to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from
any possible or actual Change in Corporate Control.


 


Now, Therefore, in
consideration of the covenants, terms, and conditions contained herein, the
Corporation and the Executive agree:


 


I.                                         Definitions.


 


A.                                   “Administrative
Committee,” as used in this Agreement, shall mean the Board of Directors of
Longs Drug Stores Corporation (“Parent Corporation”) or a committee appointed
by such Board of Directors to administer this Agreement.


 


B.                                     “Change
in Corporate Control,” means the occurrence of any of the following:


 


1.                                       The
consummation of a merger or consolidation of the Parent Corporation or the
Corporation with or into another entity or any other corporate reorganization,
if more than 50% of the combined voting power of the continuing or surviving
entity’s securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who are not part of the same
controlled group of the Parent Corporation immediately prior to such merger,
consolidation or other reorganization, and who directly or indirectly in the
aggregate owned less than 25% of the Parent Corporation’s or the Corporation’s,
as the case may be, combined voting power represented by the Parent
Corporation’s or the Corporation’s, as the case may be,


 


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outstanding securities
immediately prior to such merger, consolidation or other reorganization;


 


2.                                       The
sale, transfer or other disposition of all or substantially all of the Parent
Corporation’s or the Corporation’s assets;


 


3.                                       A
change in the composition of the Board of Directors of the Parent Corporation
(the “Parent Board”) over a period of 24 consecutive months or less such that a
majority of the members of the Parent Board (rounded up to the next whole
number) cease, by reason of one or more proxy contests for the election of
directors, to be comprised of individuals who either (i) have been directors
continuously since the beginning of such period or (ii) have been elected, or
nominated for election, as directors during such period by at least a majority
of the directors described in clause (i) who were still in office at the time
such election or nomination was approved by the Parent Board;


 


4.                                       The
stockholders of the Parent Corporation approve the dissolution or liquidation
of the Parent Corporation or the commencement by or against the Parent
Corporation of a case under the federal bankruptcy laws or any other proceeding
under any other laws relating to bankruptcy, insolvency, reorganization,
arrangement, debt adjustment or debtor relief or there is an involuntary
dissolution of the Parent Corporation; or


 


5.                                       Any
transaction as a result of which any person becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (“Exchange
Act”)), directly or indirectly, of securities of the Parent Corporation or the
Corporation representing at least 50% of the total voting power represented by
the Parent Corporation’s or the Corporation’s, as the case may be, then
outstanding voting securities.  For
purposes of this Paragraph (v), the term “person” shall have the same meaning
as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude:


 


(a)                                  A
trustee or other fiduciary holding securities under an employee benefit plan of
the Parent Corporation or any “subsidiary corporation” as defined in Code
Section 424(f) or any entity of which the Parent Corporation and/or one or
more such subsidiaries own not less than 50%;


 


(b)                                 A
corporation owned directly or indirectly by the stockholders of the Parent
Corporation in substantially the same proportions as their ownership of the
common stock of the Parent Corporation;


 


(c)                                  The
Parent Corporation; and


 


(d)                                 The
Corporation.


 


A transaction
shall not constitute a Change in Corporate Control if its sole purpose is to
change the state of the Parent Corporation’s or the Corporation’s incorporation
or to create a holding company that will be owned in substantially the same 


 


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proportions by the persons who held the Parent Corporation’s or the
Corporation’s securities immediately before such transaction.


 


C.                                     “Code,”
as defined herein, shall mean the Internal Revenue Code of 1986, as amended to
date.


 


D.                                    “Severance
of Employment,” as used herein, shall mean the termination of the Executive’s
employment with the Parent Corporation and the Corporation (i) by
discharge by the Parent Corporation or the Corporation on or within two (2)
years after the date of a Change in Corporate Control, (ii) by resignation
of the Executive on or after, but less than one hundred eighty (180) days
after, the date of a Change in Corporate Control, provided that such
resignation was preceded by a material and detrimental alteration in the
Executive’s position, responsibilities, compensation or benefits from those in
effect immediately prior to the Change in Corporate Control or (iii) by
resignation of the Executive at any time within the period commencing one
hundred eighty (180) days after the date of a Change in Corporate Control and
ending two (2) years after the date of such Change in Corporate Control.  Despite the foregoing, neither of the
following will constitute a Severance of Employment:


 


1.                                       The
termination of the Executive’s employment by reason of death.


 


2.                                       The
discharge of the Executive by the Corporation for gross and willful misconduct
relating to the performance by the Executive of the Executive’s duties at the
Corporation, provided that such misconduct is discovered after the date of the
Change in Corporate Control.


 


II.                                     Administration.


 


The Administrative
Committee shall administer this Agreement and shall have the power and the duty
to make all determinations necessary for the implementation of this Agreement,
including by way of example and not as a limitation, the occurrence of a Change
in Corporate Control and the date of such change.  Any such determination (i) shall be made on the basis of all
information known to the persons making the determination, after reasonable
inquiry, (ii) may be made prospectively and subject to one or more
contingent events, and (iii) will be binding on the Corporation and the
Executive.


 


III.                                 Obligations
of the Corporation.


 


A.                                   Within
fifteen (15) days after a Severance of Employment or at such earlier time as
may be required by law, the Corporation shall pay to the Executive:


 


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1.                                       The
full amount of any earned but unpaid base salary through the date of the
Severance of Employment, plus a cash payment for all unused vacation time which
the Executive has accrued as of the Severance of Employment.


 


2.                                       If
and only if the Corporation has made a final and good faith determination prior
to the Severance of Employment as to the amount, if any, of Executive’s earned
but unpaid bonus for the performance period (or periods) prior to the
performance period during which the Severance of Employment occurs (the
“Severance Period”), an amount equal to any such amount (or amounts).


 


3.                                       If
and only if the Corporation has not made a final and good faith determination
prior to the Severance of Employment as to the amount, if any, of Executive’s
earned but unpaid bonus for the performance period (or periods) prior to the
Severance Period, an amount equal to the bonus (or bonuses) that the Executive
would have received in the absence of a Severance of Employment in respect of
such period (or periods), as determined by the Corporation in good faith.


 


B.                                     Within
thirty (30) days after a Severance of Employment, the Corporation shall pay to
the Executive an amount equal to three (3) times the average of Executive’s
annual base salary and bonus for the five-consecutive-taxable-year period (or
shorter period of actual service) that includes the taxable year of the Change
in Corporate Control, less one dollar. 
Solely for purposes of determining such average, the Executive’s bonus
shall be annualized for short or incomplete years (if the Executive shall have
received a pro-rated award) and shall be deemed to be the target amount for the
taxable year of the Change in Corporate Control. The Executive shall be
eligible to make contributions to the Corporation’s Section 401(k) plan
from amounts payable to the Executive under Article III.A and this
paragraph.


 


C.                                     Within
forty-five (45) days after a Severance of Employment, the Corporation shall pay
to the Executive a pro-rated bonus award at the target amount in respect of the
performance period in which the Severance of Employment occurs based on the
percentage of the performance period that has elapsed as of the date of the
Severance of Employment.


 


D.                                    Within
thirty (30) days after a Severance of Employment, the Corporation shall
establish an irrevocable trust and contribute to it an amount equal to the
Executive’s deferred compensation account under the Deferred Compensation Plan
of 1995 and/or under other similar or successor plans of the Corporation (the
“Plan”).  The trust shall conform to the
model “rabbi trust” agreement provided by the Internal Revenue Service in
Revenue Procedure 92-64, as revised from time to time, and shall be structured
as an unfunded arrangement.  The trustee
of the trust shall be Boston Safe Deposit and Trust Company, or its successor
in interest, or if Boston Safe Deposit and Trust Company is unable or unwilling
to serve for any reason, such other financial institution selected mutually by
the Corporation and the Executive.


 


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E.                                      In
the event of the Executive’s death after Severance of Employment and prior to
payment to the Executive of amounts due under this Agreement, such payment
shall be made to the Executive’s surviving spouse, issue by right of
representation, or estate, in that order.


 


F.                                      The
Corporation shall deduct from any payments to Executive under this Agreement
amounts that the Corporation is required to withhold and pay either to
government agencies on behalf of the Executive or under court order to any
person.


 


G.                                     The
Executive shall be entitled to full Excise Tax Restoration Payments such that
in the event that it is determined that any payment of any type to or for the
benefit of the Executive made by the Parent Corporation, by any of its
affiliates, by any person who acquires ownership or effective control or
ownership of a substantial portion of the assets of the Parent Corporation
(within the meaning of section 280G of the Code or by any affiliate of
such person, whether paid or payable pursuant to the terms of this Agreement or
otherwise, including the accelerated vesting of stock options or other
equity-based awards (the “Total Payments”), would be subject to the excise tax
imposed by section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are collectively referred to as the “Excise Tax”), then the
Executive shall be entitled to receive an additional payment (an “Excise Tax
Restoration Payment”) in an amount that shall fund the payment by the Executive
of any Excise Tax on the Total Payments as well as all income taxes imposed on
the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax
Restoration Payment and any interest or penalties imposed with respect to taxes
on the Excise Tax Restoration or any Excise Tax.


 


IV.                                 Termination.


 


This Agreement
shall terminate and be of no further force or effect upon the discharge or
resignation of the Executive for any reason at any time prior to the date of a
Change in Corporate Control.


 


V.                                     Term
of Agreement.


 


A.                                   This
Agreement shall expire at the end of three (3) years from the date hereof;
provided, however, that at each annual anniversary date of this Agreement, the
expiration date of the Agreement shall automatically be extended for one (1)
additional year unless, in the thirty (30) day period immediately preceding any
anniversary date hereof, either the Corporation or the Executive, by written
notice to the other, rejects the automatic extension of such expiration date.


 


B.                                     Notwithstanding
the expiration provisions set out in Article V.A, this Agreement shall not
expire for a period of two (2) years after the date of any Change in Corporate
Control which occurs before this Agreement terminates or expires, and if a
Severance of Employment occurs before this Agreement terminates or expires,
this Agreement will not expire until the Corporation has complied in all
respects with Article III.


 


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VI.                                 Binding
Effect.


 


This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
the successors and assigns of the Corporation.


 


VII.                             Non-Assignment
by the Executive.


 


The Executive
shall not assign, hypothecate, or transfer any of the rights herein to any
person.  Any attempt to assign,
hypothecate or transfer the rights hereunder shall immediately terminate all of
the Executive’s rights under this Agreement.


 


VIII.                         Attorneys’
Fees.


 


In the event that
any suit, action or proceeding (including any appeal therefrom, but excluding
any and all proceedings before the Administrative Committee) is brought by the
Executive to review any decision of the Administrative Committee pertaining to
this Agreement or to enforce any right hereunder, the prevailing party shall be
entitled to recover from the other party reasonable attorneys’ fees and other
reasonable costs incurred in connection therewith.  During the pendency of any such suit, action or proceeding, the
Corporation shall promptly pay all reasonable attorneys’ fees and reasonable
costs incurred by the Executive with respect to such suit, action or
proceeding, subject to the Executive’s obligation hereunder to repay all such
sums (as well as the Corporation’s reasonable attorneys’ fees and reasonable
costs) if the court finds that the Corporation is the prevailing party in such
suit, action or proceeding.


 


IX.                                Partial
Invalidity.


 


Invalidity of any
part or provision of this Agreement shall not affect the enforceability of any
other part or provision of this Agreement.


 


X.                                    No
Right to Continued Employment.


 


Nothing herein
shall confer, nor shall it be construed to confer, on the Executive any right
to, guarantee of, or contract for a continued employment by the Corporation, or
in any way limit the right of the Corporation to terminate the employment of
the Executive.


 


XI.                                Governing
Law.


 


This Agreement
shall be governed by and construed in accordance with the laws of the State of
California, as applied to contracts executed and performed entirely in
California.


 


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XII.                            Notices.


 


Any notices given
hereunder must be in writing and may be delivered in person or by certified or
registered mail, return receipt requested, postage prepaid.  Notices to Corporation should be delivered
to Longs Drug Stores California, Inc., 141 North Civic Drive, Walnut Creek,
CA  94596, Attn:  Corporate Secretary, or to such other
address as Corporation from time to time furnishes to the Executive in a
notice.  Notices to Executive should be
delivered to the address shown beneath Executive’s signature below, or to such
other address as the Executive from time to time furnishes to the Corporation
in a notice.


 


XIII.                        Entire
Agreement.


 


This Agreement sets forth the entire agreement between
the parties hereto.  This Agreement
fully supersedes any and all prior agreements or understandings pertaining to
similar benefits.


 


XIV.                        Amendments.


 


This Agreement may
not be modified except by a writing signed by both parties.  No such writing will be binding on the
Corporation unless it is signed (a) by the signatories of this Agreement,
(b) by (i) the Chairman, President, or any Vice-President of the
Corporation and (ii) the Secretary or any Assistant Secretary of the
Corporation, or (c) by another person or persons whose authority is
affirmed by (i) the Chairman, President, or any Vice-President of the
Corporation and (ii) the Secretary or any Assistant Secretary of the
Corporation.


 


In Witness
Whereof, this Agreement has been executed by the parties hereto on the day and
year first above written.


 


	
  Executive

  	
   

  	
  Longs Drug Stores California, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  (signature)

  	
   

  	
  Warren Bryant,

  
	
   

  	
   

  	
  President and

  
	
   

  	
   

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Street Address

  	
   

  	
  William J.
  Rainey,

  
	
   

  	
   

  	
  Senior Vice
  President,

  
	
   

  	
   

  	
  General Counsel
  & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City, State and Zip Code

  	
   

  	
   

  



 


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