Document:

Form of Notice of Grant and Stock Option Agreement

 Exhibit 10.3 
  
 MERCURY INTERACTIVE CORPORATION 
 AMENDED AND RESTATED 1999 STOCK OPTION PLAN 
  
 NOTICE OF STOCK OPTION GRANT 
  
 [optionee]

 [address] 
  
 You have been granted an Option, consisting of the Stock Option Agreement attached hereto as Exhibit A, Notice of Stock Option Beneficiary(ies) attached
hereto as Exhibit B and this Notice of Stock Option Grant (together, the “Option Agreement”) to purchase Common Stock of MERCURY INTERACTIVE CORPORATION (the “Company”) as follows: 
  

			
	Date of Grant	  	     [date]

		
	Vesting Commencement Date	  	     [date]

		
	Option Price Per Share	  	 $ [exercise price]

		
	Total Number of Shares Granted	  	     [shares]

		
	Total Price of Shares Granted	  	 $ [total price]

		
	Type of Option	  	  ̈   Incentive Stock
Option

		
	 	  	 x   Nonqualified Stock Option

		
	Term/Expiration Date	  	10 years/
                                        
                    

  
 Exercise
Schedule: 
  
 This Option may be exercised in whole or in
part, in accordance with the Vesting Schedule set out below. 
  
 Vesting Schedule 
  
 Monthly on the last day of
each month, 1/48 (            ) of the total number of Shares until fully vested. In the event of fractional Shares, the monthly number of Shares shall be adjusted accordingly to the
nearest whole Share. 
  
 Termination Period: 
  
 Option may be exercised for seven (7) months after termination of employment
(but in no event later than the Expiration Date). 
  
 Form of
Exercise: 
  
 Exercise of this Option shall be on a properly
executed Exercise Notice in the form provided by the Company, along with (i) cash, (ii) check or (iii) if by broker sale, delivery of such documentation as the Plan Administrator and the broker shall require to effect delivery of the sale or loan
proceeds required to pay the exercise price and any tax withholding resulting from such exercise. 

 OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THIS OPTION IS EARNED ONLY BY
CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY’S AMENDED AND RESTATED 1999 STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY
WITH HIS RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 Optionee acknowledges receipt of a copy of the Plan and certain information related to it and represents that he or she is familiar with the terms and
provisions of the Plan and this Option Agreement. Optionee accepts this Option Agreement subject to all such terms and provisions. Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Option Agreement. 
  
 By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the AMENDED AND RESTATED 1999 STOCK OPTION PLAN and the Option Agreement, each of which are attached and made a part of this document. 
  

					
	OPTIONEE:	 	 	 	 MERCURY INTERACTIVE CORPORATION,
 a Delaware
corporation

			
	 /s/

	 	By:	 	 /s/

	Signature	 	 	 	 
			
	  

	 	Title:	 	  

	Print Name	 	 	 	 
			
	Dated:	 	Dated:	 	 

  
 I am unmarried or reside in a separate
property state             . 
  
 Spousal consent attached             . 
  
 I am married and have previously filed a spousal consent with the Company             . 

 EXHIBIT A TO NOTICE OF GRANT 
  
 STOCK OPTION AGREEMENT 
  
 FOR THE MERCURY INTERACTIVE CORPORATION 
 AMENDED AND RESTATED 1999 STOCK OPTION PLAN 
  
 1.
Grant of Option. Mercury Interactive Corporation, a Delaware corporation (“the Company”), has granted to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase a total
number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”), and in all respects subject to the terms, definitions and
provisions of the Amended and Restated 1999 Stock Option Plan (the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings herein. 
  
 If designated an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. 
  
 2. Exercise of Option. This Option shall be exercisable during its term in accordance with the provisions of Section 9 of the Plan as follows:

  
 (a) Right to Exercise. 
  
 (i) Subject to subsections 2 (a) (ii), (iii) and (iv) below, this Option
shall be exercisable cumulatively, as set forth in the Notice of Grant; provided, however, that the vesting schedule shall temporarily cease during any period of time that the Optionee’s employment is subject to an approved leave of absence in
excess of thirty (30) days and recommences thereafter. This Option may be exercised in whole or in part at any time as to Shares which have not yet vested under the vesting schedule; provided, however, that the Optionee shall execute as a condition
to such exercise of this Option, the Restricted Stock Purchase Agreement attached hereto as Exhibit A. 
  
 (ii) This Option may not be exercised for a fraction of a share. 
  

(iii) In the event of Optionee’s death, disability or other termination of employment, the exercisability of the Option is governed by Sections
5, 6 and 7 below, subject to the limitations contained in subsection 2(a)(iv). 
  
 (iv) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 9 below. 
  
 (b) Method of Exercise. This Option shall be exercisable by written notice which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements with respect to such Shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon the receipt by the Company of such written notice accompanied by the Exercise Price. 
  
 No share will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock 

 exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 
  
 3. Method of Payment. 
  
 (a) Forms of Consideration Authorized. Payment of the Exercise Price shall consist of: (i) cash; (ii) check; (iii) by means of a Cashless Exercise,
as defined in this Section 3(b); or (iv) by any combination of the foregoing. 
  
 (b) A “Cashless Exercise” means the assignment in a form acceptable to the Company of the proceeds of a sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of
the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve
System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to decline to approve or terminate any such program or procedure. 
  
 4. Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the
stockholders of the company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal Regulations (“Regulation G”) as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable law or regulation. 
  
 5. Termination of Status as an Employee. In the event of termination of Optionee’s Continuous Status as an Employee, the Optionee may, but
only within seven (7) months after the date of such termination (but in no event later than the date of expiration of the term of this Option as set forth in Section 9 below), exercise this Option to the extent exercisable at the date of such
termination. To the extent this Option was not exercisable at the date of such termination, or if the Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 
  
 6. Disability of Optionee. Notwithstanding the provisions of Section 5
above, in the event of termination of Optionee’s Continuous Status as an Employee as a result of Optionee’s total and permanent disability (as defined in Section 22 (e) (3) of the Code), the Optionee may, but only within seven (7) months
from the date of termination of employment (but in no event later than the date of expiration of the term of this Option as set forth in Section 9 below), exercise this Option to the extent exercisable at the date of such termination. To the extent
that the Option was not exercisable at the date of termination, or if the Optionee does not exercise such Option within the time specified herein, the Option shall terminate. 
  
 7. Death of Optionee. In the event of the death of Optionee: 
  
 (a) during the term of this Option and while an Employee of the Company and
having been in continuous status as an Employee since the date of grant of the Option, the Option may be exercised in full even as to shares which otherwise would not have been vested, at any time within seven (7) months following the date of death
(but in no event later than the date of expiration of the term of this Option as set forth in Section 9 below), by Optionee’s estate or by a person who acquired the right to exercise; or 

 (b) within thirty days after the termination of Optionee’s Continuous Status as an Employee, the
Option may be exercised, at any time within seven (7) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 9 below), by Optionee’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise what had accrued at the date of termination. 
  
 8. Non-Transferability of Option; Successors and Assigns. This Option may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by him. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

  
 9. Term of Option. This Option may not be exercised
more than ten (10) years (five years if Optionee owns, immediately before this Option is granted, stock representing more than 10 percent of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary) from
the date of grant of this Option, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 
  
 10. Taxation Upon Exercise of Option. Optionee understands that, upon exercising a Nonstatutory Stock Option, he or she will recognize income for
tax purposes in an amount equal to the excess of the then fair market value of the Shares over the Exercise Price, and that if the Optionee is an employee, the Company will be required to withhold federal and state taxes from Optionee’s
compensation, or collect withholding taxes from Optionee at the time of exercise. Optionee understands that if the Option qualifies as an ISO, upon the exercise of the Option, the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise. Optionee acknowledges that he or she has
been given the opportunity to consult and is relying solely on tax and legal counsel of his or her own choosing with regard to the exercise of his or her Option. 
  
 11. Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of exercise, Optionee hereby agrees to notify the
Company in writing within 30 days after the date of any such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from the early disposition by
payment in cash or out of the current earnings paid to the Optionee. Optionee understands that if he disposes of such shares at any time after the expiration of such two-year and one-year holding periods, any gain on such sale will be taxed as
long-term capital gain. 
  
 12. Section 83 (b) Election For
Alternative Minimum Tax for Incentive Stock Options. Optionee hereby acknowledges that Optionee has been informed that if he or she exercises an incentive stock option as to “unvested shares,” unless an 83 (b) election is filed by the
Optionee with the Internal Revenue Service within 30 days of the purchase of the Shares, the Optionee will be required to include (for alternative minimum tax purposes only) an amount equal to the excess, if any of the fair market value of
the Shares at the time the shares vest over the Exercise Price for such shares. For this purpose, “unvested” shares include shares purchased by certain persons who are subject to Section 16 of the Securities Exchange Act of 1934 and shares
as to which the Company retains a right to repurchase unvested shares at the Optionee’s cost upon the Optionee’s termination of employment with the Company. Optionee is encouraged and advised to consult tax advisors in connection with the
purchase of the 

 Shares as to the advisability of filing an election for alternative minimum tax purposes under Section 83 (b). OPTIONEE
HEREBY ASSUMES ALL RESPONSIBILITY FOR FILING SUCH ELECTION AND PAYING ANY TAXES RESULTING FROM SUCH ELECTION OR THE VESTING LAPSE OF SUCH SHARES. 
  
 13. Designation of Beneficiary . The Employee shall have the right to appoint any individual or legal entity in writing, on Exhibit B to the Notice
of Grant, as his or her beneficiary to receive any Option (to the extent not previously exercised or forfeited) under this Agreement upon the Employee’s death. Such designation under this Agreement may be revoked by the Employee at any time and
a new beneficiary may be appointed by the Employee by execution and submission to the Stock Administration Department of the Company of a revised Exhibit B to this Agreement. In order to be effective, a designation of beneficiary must be completed
by the Employee on Exhibit B and received by the Stock Administration Department of the Company, prior to the date of the Employee’s death. In the absence of such designation, the Employee’s beneficiary shall be the person designated under
the Employee’s will or as defined by the applicable state laws of the decedent’s distribution. 
  
 OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES SUBJECT TO THIS OPTION IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE,
SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT AT ANY TIME, WITH OR WITHOUT
CAUSE.Form of stock option agreement for non-employee directors

 Exhibit 10.1 
  
 LONGS DRUG STORES CORPORATION 
  

1995 LONG TERM INCENTIVE PLAN STOCK OPTION AGREEMENT 
  
 THIS AGREEMENT, made as of the [    ] day of
[                ] 200   (the “Grant Date”), by and between LONGS DRUG STORES CORPORATION, having its principal office at 141 North
Civic Drive, Walnut Creek, California 94596 (the “Company”) and
[                                ], (the “Optionee”) an employee of
Longs Drug Stores California, Inc. (the “Subsidiary”) [a member of the Company’s Board of Directors]. 
  
 W I T N E S S E T H: 
  
 WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”) is of the opinion that the interests of
the Company will be advanced by granting an incentive to employees of the Subsidiary and the Board is also of the opinion that the interests of the Company will be advanced by granting an incentive to members of the Board by making it possible for
each of them to purchase shares of the Company’s common stock on terms which will give them a direct and continuing interest in the future success of the Company’s business; and 
  
 WHEREAS, the Company previously adopted the Longs Drug Stores Corporation 1995 Long-Term Incentive Plan (the
“Plan”); 
  
 NOW, THEREFORE, in consideration of
the foregoing and other good and valuable consideration, the parties agree as follows: 
  
 1. Grant of Options. Subject and pursuant to all terms and conditions of the Plan, the Company agrees to and does hereby grant to Optionee the right and option (the “Options”) to purchase up to
[                ] shares of common stock of the Company. The purchase price for exercise of the Options shall be
$[      .      ] per share. The Options granted under this Agreement are intended to be nonqualified stock options. 
  
 2. Exercise of Option. The Options will become exercisable in
installments as set forth in the table below: 
  

			
	 Completed
 Years of Vesting

from the Grant Date

	  	Percentage of Total
Shares Exercisable

	 Less than 1
	  	- 0 -
		
	 1, but less than 2
	  	25%
		
	 2, but less than 3
	  	50%
		
	 3, but less than 4
	  	75%
		
	 4 or more
	  	100%

 For purposes of this Section 2, 
  

“Completed Year of Vesting” shall mean 365 days of active Service as may be further modified by Section 9 of this Agreement. 
  
 In the event there is a Termination of Optionee as a result of death, disability, resignation
or otherwise, Optionee’s vested interest in the Option shall be determined as of the date his/her Termination. Notwithstanding the foregoing, in the event of (i) the Termination of Optionee at or after and on account of Normal Retirement, (ii)
the Termination of Optionee other than for Cause by the Company or any Subsidiary (and other than by reason of death) within two years after the date of a Change in Corporate Control, or (iii) Optionee’s voluntary Termination during the period
commencing on the date of a Change in Corporate Control and ending on the date One Hundred and Eighty (180) days after the date of a Change in Corporate Control, provided such Termination was preceded by a material and detrimental alteration of
Optionee’s position, responsibilities, compensation or benefits from those in effect immediately prior to the Change in Corporate Control, or (iv) Optionee’s voluntary Termination during the period commencing on the date One Hundred and
Eighty (180) days after the date of a Change in Corporate Control and ending on the date two years after the date of a Change in Corporate Control, then the Options immediately shall become fully vested and exercisable as of the date of his/her
Termination, provided that the accelerated vesting (together with any other payments and benefits the Optionee is entitled to in connection with the Change in Corporate Control) does not cause the Optionee to receive an excess parachute payment
which would subject the Optionee to an excise tax under Section 4999 of the Internal Revenue Code or any successor provision thereto. In the event the acceleration of the vesting of the Options would subject the Optionee to an excise tax under
Section 4999 of the Internal Revenue Code or any successor provision thereto, then the number of Options which receive accelerated vesting and/or any other payments or benefits that contribute to the imposition of the excise tax shall be reduced to
the extent necessary to avoid the imposition of such excise tax. The Optionee shall elect which payments, benefits or reduction of Options’ acceleration shall be reduced so that there is no imposition of excise tax. 
  
 3. Term. The Options may not be exercised beyond the day immediately
preceding the tenth (10th) anniversary of the Grant Date (the “Expiration Date”) and may be exercised during such term only in accordance with the terms and provisions of the Plan and this Agreement. In the event of Optionee’s
Termination, Optionee shall have the right to exercise the Option for the following periods after such Termination, but only to the extent that the Option was exercisable at the date of such Termination and it is exercised prior to the Expiration
Date. 
  
 (a) In the event of Termination at or after and on
account of Normal Retirement, the vested Options shall be exercisable for a period of three years after the date of his/her Termination. 
  
 (b) In the event of Optionee’s voluntary Termination or Termination by the Company or the Subsidiary without Cause, the vested Options shall be
exercisable for a period of ninety days after the date of his/her Termination. 
  

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 (c) In the event of Optionee’s Termination by the Company or the Subsidiary with Cause, the vested
Options shall cease to be exercisable on the date of his/her Termination. 
  
 (d) In the event of Optionee’s death while the Options are exercisable, the vested Options shall be exercisable for a period of one year after the date of his/her death. 
  
 (e) Notwithstanding the foregoing, in the event of (i) Optionee’s
Termination other than for Cause by the Company or any Subsidiary (and other than by reason of death) within two years after the date of a Change in Corporate Control, or (ii) voluntary Termination by Optionee within two years after the date of a
Change in Corporate Control, provided such Termination was preceded by a material and detrimental alteration of Optionee’s position, responsibilities, compensation or benefits from those in effect immediately prior to the Change in Corporate
Control, then the vested Options shall be exercisable for a period of one year after the date of Termination. 
  
 4. Payment of Purchase Price Upon Exercise. The Options granted under this Agreement may be exercised in whole or in part by Optionee delivering or
mailing to the Company at its principal office, or such other place as the Company may designate, written notice of exercise in the form prescribed by the Committee, and duly signed by Optionee. Options may be exercised only for whole shares. Such
exercise shall be effective upon (a) receipt of such written notice by the Company and (b) payment to the Company of the full purchase price in cash, in shares of Common Stock or, at the discretion of the Committee, any other form permitted under
the Plan (including, to the extent permitted by the Committee, by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board). In the event Optionee desires to pay the exercise
price with shares of Common Stock, Optionee shall deliver already-owned shares of Common Stock that either have been held for the period required to avoid a charge to the Company’s reported earnings (generally six months) or were not acquired,
directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at fair market value on the date of exercise. “Delivery” for these purposes, in the sole
discretion of the Committee at the time the option is exercised, shall include delivery to the Company of Optionee’s attestation of ownership of such shares of Common Stock in a form approved by the Committee. Notwithstanding the foregoing, the
Options may not be exercised by tender to the Company of Common Stock to the extent such tender would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. 
  
 5. Issuance and Delivery. Optionee’s written notice to the
Company shall state the number of shares of Common Stock with respect to which the Options are being exercised and specify a date, consistent with the option exercise rules established by the Committee, on which the shares of Common Stock will be
taken and payment made therefor. On the date specified in the notice of exercise, the Company shall deliver, or cause to be delivered to Optionee (or his/her personal representative, as the case may be) stock certificates for the number of shares of
Common Stock with respect to which the Options are being exercised, against receipt of payment therefor in full and delivery of, if required by the Committee, (i) a written certificate of Optionee (or his personal representative, as the case may

  

 -3- 

 be) to the effect that he/she is purchasing such shares for investment and not with a view to the sale or distribution of
any such shares. Certificates evidencing shares of Common Stock issued upon exercise of the Options may contain such legends reflecting any restrictions upon transfer of the shares evidenced thereby as in the opinion of counsel to the Company may be
necessary for the lawful and proper issuance of such certificates. Delivery of the shares of Common Stock may be made at the office of the Company or at the office of a transfer agent appointed for the transfer of shares of Common Stock. The Option
may not be exercised if the issuance of shares of Common Stock upon such exercise would constitute a violation of any applicable Federal or State securities or other law or regulation. 
  
 6. Withholding Obligations. (a) At the time the Options are exercised, in whole or in part, or at any time thereafter
as requested by the Company, Optionee hereby authorizes withholding from payroll and any other amounts payable to him/her, and otherwise agree to make adequate provision for (including, to the extent permitted by the Committee, by means of a
“same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or the
Subsidiary which arise in connection with exercise of the Options. 
  
 (b) Upon request of Optionee and subject to approval by the Committee in its sole discretion, and in compliance with any applicable conditions or restrictions of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to Optionee upon the exercise of the Options a number of shares having a fair market value, determined by the Committee as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law. If the
date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of the Options, share withholding pursuant to the preceding sentence shall not be permitted. Shares shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of the Options that are otherwise issuable to Optionee upon such exercise. Any adverse consequences to Optionee arising in connection with such share withholding procedure shall be
Optionee’s sole responsibility. 
  
 (c) The Options are not
exercisable unless the tax withholding obligations of the Company and/or the Subsidiary are satisfied. Accordingly, Optionee may not be able to exercise the Options when desired even though the Options are vested, and the Company shall have no
obligation to issue a certificate of such shares. 
  
 7.
Transferability. The Options shall not be transferable otherwise than by will or by the laws of descent and distribution. The Options shall not be subject, in whole or in part, to attachment, execution or levy of any kind. 
  
 8. Exercisability. During the lifetime of the Optionee, the Options
(to the extent Optionee’s rights are vested) shall be exercisable only by him/her and only while employed by the Company or as provided in Section 3. 
  
 9. Leave of Absence. For purposes of this Agreement, whether an authorized leave of absence or absence for military or governmental service shall
constitute a 
  

 -4- 

 Termination shall be determined by the Committee. For purposes of determining Optionee’s Completed Years of Vesting
from the Grant Date for calculating the percentage of Options exercisable in accordance with Section 2 above, no Service will be credited toward a Completed Year of Vesting while you are on an unpaid leave of absence unless (a) the Company is
required by law to give credit for such period of time or (b) the crediting of Service under the Plan during such leave of absence is approved by the written consent of the President or Senior Vice President, Human Resources of the Company.

  
 For purposes of this Section 9, 
  
 “Completed Year of Vesting” shall mean 365 days of active Service.

  
 10. Rights as a Shareholder. Neither Optionee nor
his/her beneficiary or legal representative shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any of the shares of Common Stock issuable upon the exercise of the Options, unless and until certificates
representing such shares shall have been issued and delivered to the Optionee (or his/her legal representative). 
  
 11. Recapitalization. In the event of any change in the outstanding Common Stock by reason of stock dividends, special dividends,
recapitalizations, reorganizations, mergers, consolidation, split-up, combinations or exchanges of shares and the like, the number and kind of shares under this Agreement and the purchase price per share hereof shall be appropriately adjusted
consistent with such change. The determination of the Committee as to any adjustment shall be final, binding and conclusive. 
  
 12. Continued Service. Neither this Agreement nor the Options granted hereunder shall (a) confer upon Optionee any right to continue in the employ
of the Company or the Subsidiary or to serve on the board of directors of the Company or the Subsidiary, or (b) limit in any respect the right of the Company or the Subsidiary to terminate the Service of Optionee at any time. 
  
 13. Optionee Bound by Plan. Optionee hereby acknowledges receipt of a
copy of the Plan and the Plan prospectus and agrees to be bound by all the terms and provisions in the Plan, including the terms and provisions adopted after the granting of these Options but prior to the complete exercise hereof. If there is a
conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control. The Committee’s interpretation of the Plan or this Agreement and all decisions and determinations by the Committee with respect to the Plan or this
Agreement shall be final, binding and conclusive on all parties. 
  
 14. Notices. Any notice hereunder to the Company shall be addressed to it at its offices, 141 North Civic Drive, Walnut Creek, CA 94596, Attn: Corporate Secretary and any notice hereunder to Optionee shall be addressed to him/her at
the address indicated in the Subsidiary’s personnel records, subject to the right of either party at any time hereafter to designate in writing some other address. 
  
 15. Miscellaneous. This Agreement and the Plan contain the entire understanding and agreement between the parties
relating to the Options, except as otherwise 
  

 -5- 

 referred to herein, and supersedes any prior agreement between the parties, whether written or oral, regarding the
Options. Neither this Agreement nor any provision hereof may be waived, modified, amended, changed, discharged or terminated, except by an agreement in writing signed by the party against whom enforcement of any waiver, modification, change,
amendment, discharge or termination is sought. Without the written agreement of the Optionee, this Agreement may not be modified or amended to the Optionee’s detriment. To the extent that any one or more of the provisions of this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any manner be affected or impaired thereby. Terms not defined herein shall have the
meaning specified in the Plan. This Agreement shall be governed by the laws of the State of California, without reference to the choice of law rules thereof. 
  
 *        *        *        *

  

 -6- 

 IN WITNESS WHEREOF, the parties agree to the terms and conditions stated herein by signing and
returning to the Company the attached copy hereof. 
  

			
	LONGS DRUG STORES CORPORATION
		
	By:	 	  

		
	By:	 	  

	
	OPTIONEE
		
	By:	 	  

  

 -7-

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