Document:

First Amendment to 2006 Prime Vendor Agreement

 Exhibit 10.2 
 FIRST AMENDMENT TO 
 2006 PRIME VENDOR AGREEMENT 
 (Non-Rx Transition) 
 This is the first
amendment (“Amendment”) to the 2006 Prime Vendor Agreement (“2006 Agreement”) dated March 14, 2006 (“Agreement Effective Date”) between AmerisourceBergen Drug Corporation (“ABDC”) and Longs Drug Stores
California, Inc. (“Longs”). This Amendment is effective as of April 19, 2006 (“Amendment Effective Date”). 
 A.
Longs and ABDC entered into the 2006 Agreement to establish the terms under which ABDC will provide Products and Services to Longs as of the Agreement Effective Date. 
 B. Additionally, Longs and ABDC are parties to the RxD Warehouse and Direct Store Delivery Primary Supplier Agreement, dated February 1, 1999, as amended to date (“Prior Agreement”), which will expire
as of the Agreement Effective Date. 
 C. The parties now desire to amend the 2006 Agreement in order to amend certain terms related to
Mainland distribution of Non-Rx Products during July 2006. 
 NOW, THEREFORE, the parties agree as follows: 
  

	1.	DEFINED TERMS & EFFECT OF THIS AMENDMENT 

 Capitalized terms in this Amendment that are not otherwise defined have the meaning set forth in the 2006 Agreement. Except as otherwise set forth in this Amendment, the 2006 Agreement continues in full force in accordance with its terms.
If there is any conflict between the 2006 Agreement and any provision of this Amendment, this Amendment will control. 
  

	2.	NON-RX PRODUCTS DURING JULY 2006 

 A. Pursuant to
Section 1(C) of Exhibit 1 of the 2006 Agreement, Longs agreed to self-distribute Non-Rx Products so that ABDC would no longer be Longs’ primary supplier on the Mainland as of the Agreement Effective Date. On March 29, 2006, Longs
requested that         *        . The new effective date for Non-Rx Products on the Mainland will be the Non-Rx Transition Date. The Non-Rx Transition Date will be no
earlier than the Agreement Effective Date and no later than July 28, 2006. 
 B. ABDC has agreed to delay the Non-Rx Transition Date
beyond the Agreement Effective Date if Longs agrees to compensate ABDC for certain incremental expenses that ABDC will incur,         *         (“National
DC”). Certain such expenses may be incurred by ABDC after the Non-Rx Transition Date unless ABDC has sufficient advance notice. 
 C.
From the Agreement Effective Date until the Non-Rx Transition Date: 
 1. ABDC will continue (as under the Prior Agreement) to
be the primary supplier of Non-Rx Products on the Mainland; provided, however, that ABDC will promptly upon execution of this Amendment         *        . 
  

	*	Subject to a request for confidential treatment; Separately filed with the Commission. 

 1 

 2. If Longs notifies ABDC on or before April 24, 2006, that it will be able to begin
self-distribution of Non-Rx Products by the Agreement Effective Date,         *        . The Non-Rx Transition Date will be July 1, 2006. 
 3. (a) If Longs will need to delay the Non-Rx Transition Date, it will notify ABDC no later than the following notice dates in order
to delay the Non-Rx Transition Date as follows. 
  

							
	1st Notice	 	2nd Notice	 	3rd Notice	 	4th Notice
	 April 24, 2006
	 	 May 1, 2006
	 	 May 8, 2006
	 	 May 15, 2006

	New Non-Rx Transition Date	 		 		 	
	 July 7, 2006
 (or later)
	 	 July 14, 2006
 (or later)
	 	 July 21, 2006
 (or later)
	 	 July 28, 2006

 (b) If the Non-Rx Transition Date is July 2, 2006, or later, Longs will be
charged an amount         *        . 
 4. For
each additional week (or part of a week), Longs will pay ABDC         *         for this extension of service, which amount includes
        *         per week         *        . Such service fee may be increased if
Longs increases its Non-Rx Net Purchase volume prior to the Non-Rx Transition Date or the hold-over lease is increased. Based on the Non-Rx Transition Date, charges will be as follows. 
  

			
	 Week of
	  	 Service Charge and Lease (Estimated)

	 July 2 to July 7
	  	        *
	 July 9 to July 14
	  	        *
	 July 16 to July 21
	  	        *
	 July 23 to July 28
	  	        *

 5. Under Paragraph C(4), the Price of Goods from the Agreement Effective Date until
the Non-Rx Transition Date will be equal to the Price of Goods under the Prior Agreement (e.g.,         *         ). 
 6. Pursuant to the 2006 Agreement, ABDC has been (and will continue to) reduce Non-Rx Product inventory levels in anticipation of Longs
beginning to self-distribute Non-Rx Products. To the extent possible after notice from Longs pursuant to Paragraph C(3), ABDC will adjust its inventory reduction to reflect the new Non-Rx Transition Date. The Adjusted Service Level Commitment for
all OTC Products pursuant to Sections 1.2.3 and 1.8 of Exhibit 3 will be suspended prior to the Non-Rx Transition Date due to the effect of such inventory reductions. 
 D. Beginning on the Non-Rx Transition Date, the Price of Goods for Non-Rx Products will be equal to the Price of Goods under the 2006 Agreement (e.g.,
        *        ). If Longs exceeds the         *         by more than
        *         during the         *         period following the Non-Rx
Transition Date, ABDC may invoice Longs for the         *         during such period at the higher Price of Goods pursuant to Section 1(C)(a) of Exhibit 1. By
way of clarification, exceeding “the         *         by more than
        *        ” has the effect of increasing the         *         (as
defined in Section 1(C)(1) of Exhibit 1) to         *         for such period
        *        . As such, if Longs exceeds the         *        , any amount of
        *         during the period from the Non-Rx Transition Date until October 31, 2006, that exceeds
        *         of         *         during such period will be priced at
        *         and ABDC will 

  

	*	Subject to a request for confidential treatment; Separately filed with the Commission. 

 2 

 
invoice Longs the         *         (if any) at the end of October with
payment due         *         days from the date of         *        .
Notwithstanding the         *        , Longs must still comply with the
        *         during the initial Contract Year (as redefined in Paragraph F below). 
 E. All Non-Rx Product stocked by ABDC in the National DC until the Non-Rx Transition Date
(         *        , unless Longs has requested or approved ABDC’s making larger purchases into its inventory for sale to Longs) will be Special Purchase
Products (as defined in Section 2(C)(3)(a) of the 2006 Agreement) and Longs will purchase any excess inventory of such Special Purchase Products pursuant to the provisions of Section 2(C)(3)(a) and (b). Longs will begin accepting delivery
immediately after the Non-Rx Transition Date, will make commercially reasonable efforts to accept final delivery within two weeks, and must accept final delivery within three weeks of the Non-Rx Transition Date. Full-case quantities of such Product
will be purchased by Longs at         *         for delivery into a Longs Warehouse. ABDC will make commercially reasonable efforts to minimize such Product that is
not in full case quantities and, in turn, Longs will make reasonable efforts to purchase less-than-full-case quantities for delivery to individual Pharmacies or Other Facilities. 
 F. For purposes of Section 1(C)(1)(d) of Exhibit 1 only, the initial Contract Year (as defined in Section 1(C)(1)(d) of Exhibit 1) will be the
period from the Non-Rx Transition Date until June 30, 2007 (up to 12 months) and, as such, Longs’ purchases of         *         during the period from
the Agreement Effective Date to the Non-Rx Transition Date shall not count toward the         *        . For all other purposes, the initial Contract Year will be the
full 12 months from July 1, 2006, until June 30, 2007. In all cases, each subsequent Contract Year will be a full 12-month period from July 1 to the next June 30. 
 IN WITNESS WHEREOF, the parties have had a duly authorized officer, partner or principal execute this Amendment as of the Amendment Effective Date.

  

									
	LONGS:	 		 	ABDC:
	 Longs Drug Stores California, Inc.
	 		 	 AmerisourceBergen Drug Corporation

					
	By:	 	 /s/ Bruce E. Schwallie
	 		 	 By:
	 	 /s/ Jerry D. Cline

	 Name:
	 	 Bruce E. Schwallie
	 		 	 Name:
	 	 Jerry D. Cline

	 Title:
	 	 Executive Vice President
	 		 	 Title:
	 	 Group Vice President

  

	*	Subject to a request for confidential treatment; Separately filed with the Commission. 

 3Employment Agreement between Longs Drugs and Karen Stout

 Exhibit 10.3 
 April 21, 2006 
 Karen Stout 
 6 Grace Circle 
 Natick MA 01760 
 Dear Karen: 
 Thank you for your interest in joining Longs Drug Stores California, Inc. (the Company). It is a pleasure to confirm our offer of
employment for the position of Executive Vice President and Chief Operating Officer. This offer is based on the following mutual understanding: 
  

	1.	You will receive an annual salary of $480,000 payable in equal bi-weekly amounts of $18,461.53 for the first year of employment. 

  

	2.	You will receive during your first year of employment a bonus that is targeted at 60% of your base annual salary ($288,000 at target). For the first year, Longs will guarantee 50%
of this bonus, or $144,000. Thereafter, any bonus 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 One Hundred Seventy-five Thousand dollars ($175,000.00), less applicable payroll taxes payable within thirty days of your start
date. 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.	Subject to the approval of the Board of Directors’ Compensation Committee, you will receive a grant of 8,000 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. 

  

	5.	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 that is consistent with those amounts granted to other participants at the Executive Vice President level. This award will be subject to vesting and
other requirements. Details of the Plan and the Plan goals for FY07 will be provided under separate cover. 

  

	6.	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. 

  

	7.	 You will be placed on the Longs Executive Medical Plan effective the first of the month following twelve weeks continuous employment after your start 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.

  

	8.	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 

  

	9.	Subject to the approval of the Board of Directors’ Compensation Committee, 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 Executive and Senior Vice Presidents. 

  

	10.	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 Company policy and IRS regulations. All realtor fees associated with the sale of your Natick residence in Massachusetts will be paid by the Company per current relocation policy. In addition, Longs will pay for closing costs associated
with the purchase of your home in California (up to a maximum of one percent). 

  

	11.	A relocation allowance in the amount of $15,000 less applicable payroll taxes, for incidental expenses, will be paid within the first thirty days of your employment with Longs.

  

	12.	You will be eligible for a 3-2-1 loan buy-down program that may be offered by a mortgage lender of your selection. Under such a program, the Company would agree to pay three percent
(points) of interest in the first year directly to your mortgage lender. In the second year of your employment, the Company would pay two percent and in the third year, one percent. After three years, you would be fully responsible for the loan
amount. If you chose to leave the company during this three-year period, you would be required to repay the Company-paid portion of the interest up to the date of your separation. The Company’s obligation under this arrangement is limited to
the first $1 million of any mortgage loan you secure. 

  

	13.	Longs will pay for up to three months of temporary living expenses at Oakwood Corporate Apartments (or another provider) to assist you during your home search. We are certain that
you will work diligently with your Prudential realtor to sell your home in a timely manner. If, however, at the end of the three-month period your efforts are unsuccessful, Longs will work with you at that time to discuss additional options, such as
extending this agreement on a month-to-month basis. 

  

	14.	Subject to the approval of the Board of Directors’ Compensation Committee, you will be eligible for termination benefits provided for senior executives for involuntary
separation for any reason other than just cause, total disability or death (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
18 months of base salary, health coverage and outplacement. 

 Karen, 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
 Chairman, President and Chief Executive Officer

 I accept your offer of employment as stated in this letter. 
  

					
			
	 /s/ Karen Stout
	 		 	 April 24, 2006

	 Karen Stout
	 		 	 Date

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