Exhibit
10.2


 


 


February 25, 2003


 


 


Mr. Michael M. Laddon


414 Faye Lane


Redondo Beach, CA  90277


 


 


Dear Mike:


 


                Thank you for your
interest in joining Longs Drug Stores California, Inc.  It is a pleasure to confirm our revised
offer of employment for the position of Senior Vice President, Chief
Information Officer.  This offer is
based on the following mutual understanding:


 


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


 


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


 


3.                                       Upon relocation to the Bay Area on or
about July of 2004, you will be paid a hiring bonus of $100,000, which will be
taxed for state and federal income tax purposes. Should you resign from the
company within 3 years of your hire date, you will be required to repay a
prorated 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 stock
option grant of 30,000 shares which will be valued as of the day your
employment begins with Longs Drugs according to the then current Company
vesting policy.


 


5.                                       You will be reimbursed for reasonable
moving expenses based on information submitted by you 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 Redondo Beach will be
reimbursed per the Company’s current relocation policy.


 


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


 


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


 


8.                                       Fifteen thousand dollars will be paid in
advance of your actual relocation to offset incidental costs associated with
your move.


 


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


 

















 


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


 


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


 


12.                                 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


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


 


13.                                 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.


 


14.                                 It is mutually agreed that for a two year
initial period of your employment with the Company, that the Company shall have
limited liability for severance.  Should
the work arrangements be dissolved during this two year period, the parties
mutually agree as follows:


 


A.                                   Should Longs choose to sever its
employment relationship with you in the first two years for any reason other
than for cause, the Company will provide a cash payment equal to one year’s
salary plus your 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-year period, a settlement of the amount due to you will
occur.  The settlement will true up 90%
of the estimated bonus to the actual amount if you had been employed during
that period of time.


 


B.                                     Should you cause your employment to be
terminated by your resignation or by being discharged for gross or willful
misconduct relating to the performance by you of your duties at the Company, no
compensation will be due, other than that accrued to that point.


 


Mike, 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/  Michael
  M. Laddon

  	
   

  	
  March 14, 2003

  
	
  Michael M. Laddon

  	
   

  	
  Date

  



 


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