Exhibit
10.3


 


 


March 18, 2003


 


 


Mr. William J. Rainey


901 Deer Run Drive


Lawrence, Kansas 66049-4731


 


Dear Bill:


 


                It is a pleasure
to confirm our offer and your acceptance of employment for the position of
Senior Vice President, General Counsel. 
This offer is based on the following mutual understanding:


 


1.                                       You will receive an annual salary of  $375,000 payable in equal bi-weekly amounts
of $14,423.08 for the first year of employment.


 


2.                                       You will receive during your first year
of employment a bonus that is targeted at 50% of your base annual salary.  For the first year, Longs will guarantee 50%
of this bonus, or $93,750. Thereafter, any bonus will be based on your
individual as well as the Company’s overall performance.


 


3.                                       You will be paid a hiring bonus of
$250,000, 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 40,000 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 Kansas will be reimbursed
per the Company’s current relocation policy.


 


6.                                       You will be reimbursed for up to six
months of reasonable temporary living expenses based on information submitted
by you to the Company in order to assist you in finding a new residence.  Reasonable travel back and forth to Kansas
as needed would be reimbursed until your relocation is completed.


 


7.                                       If you are unable to sell your residence
within six months from date of hire, 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.


 


Bill, 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 with a start date of March 24, 2003.


 


 


	
  /s/  William
  J. Rainey

  	
   

  	
  March 19, 2003

  
	
  William J. Rainey

  	
   

  	
  Date

  



 


 


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