Exhibit 10.3


 


July 8, 2003


 


 


Mr. Richard W. Dreiling

1749 Via di Salerno

Pleasanton, CA  94566


 


Dear Rick:


 


Thank you for your
interest in joining Longs Drug Stores California, Inc.  It is a pleasure to confirm our offer of
employment for the position of Executive Vice President and Chief Operations
Officer.  Your start date will be
Tuesday, July 15, 2003.  This offer
is based on the following mutual understanding:


 


1.                                       You
will receive an annual salary of 
$500,000 payable in equal bi-weekly amounts of $19,230.76 for the first
year of employment.


 


2.                                       You
will receive during your first year of employment a bonus opportunity that is
targeted at 60% of your base annual salary. 
Bonuses will be based on your individual as well as the Company’s
overall performance.


 


3.                                       You
will receive a sign on bonus in the amount of Forty Thousand dollars
($40,000.00), payable within thirty days of your start date. This sign on bonus
of $40,000.00 will be grossed up for state and federal tax purposes.


 


4.                                       Subject
to the approval of the Board of Directors’ Compensation Committee, you will
receive a non-qualified option grant of 70,000 shares of common stock at the
first meeting of the Compensation Committee following commencement of your
employment with the Company.  These
shares will be subject to the vesting provisions as outlined in the Longs Drug
Stores Corporation 1995 Long-Term Incentive Plan.


 


5.                                       Subject
to the approval of the Board of Directors’ Compensation Committee, you will
receive a grant of 10,000 shares of restricted common stock at the first
meeting of the Compensation Committee following commencement of your employment
with the Company.  These shares will be
subject to the vesting provisions as outlined in the Longs Drug Stores 1995
Long-Term Incentive Plan.


 


6.                                       You
will be eligible to participate in the Performance Based Restricted Stock Grant
program currently being implemented for senior executives at Longs Drugs.  Subject to the approval of the Board of
Directors’ Compensation Committee, you will be granted a total award value of
100% of your current base salary, subject to vesting and other
requirements.  Details of the Plan and
the Plan goals for FY04 will be provided under separate cover.


 


7.                                       You
will begin to accrue vacation immediately at the rate of four weeks per
year.  During your first year of
employment your vacation balance will be credited with four weeks of vacation.


 

















 


8.                                       You
will be placed on the Executive Medical Plan including appropriate dependents
effective the first of the month after your hire date.  This plan includes dental and vision
care.  You will be reimbursed for any
COBRA payments you make prior to your effective date on the Longs Executive
Medical Plan.


 


9.                                       Information
regarding the following programs will be sent to you under separate cover and
are included as part of your overall employment with Longs:


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


b.              Available
medical insurance coverage options


 


10.                                 You
will be provided the Company’s current standard agreement for termination
benefits in the event of change in corporate control, as provided to other
Company Senior Vice Presidents.


 


11.                                 You
will be eligible for termination benefits provided for senior executives for
involuntary separation due to reduction in force, reorganization or other
involuntary separation not for cause (these benefits do not apply to a change
in control for which benefits are provided under a separate agreement).  Termination benefits for which you would be
eligible include 24 months of base salary, medical including executive medical,
outplacement, distribution of deferred compensation, 90-day period following
termination to exercise vested stock options, and pro rata vesting of
restricted stock in accordance with the terms of the grant based on original
grant date and termination date of executive.


 


 


Rick, I am pleased to
extend this offer and I look forward to working with 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 this letter.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard W. Dreiling

  	
   

  	
  July 15, 2003

  	
   

  
	
   

  	
  Richard W. Dreiling

  	
   

  	
  Date

  
							



 


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