AGREEMENT FOR TERMINATION BENEFITS
IN THE EVENT OF A CHANGE IN CORPORATE CONTROL
[For Selected Key Executives and Store Managers]
THIS AGREEMENT, made this ____ day of _________________, 19__, by and
between _____________________ (the "Executive") and LONGS DRUG STORES
CALIFORNIA, INC., a California corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Executive is ________________________ of the Corporation;
WHEREAS, the Corporation considers it essential to the best interests of
its shareholders to take steps to retain key personnel such as the Executive and
recognizes particularly that uncertainty might arise among personnel in the
context of any possible or actual Change in Control, as hereinafter defined,
which could result in the departure or distraction of key personnel to the
detriment of the Corporation and its shareholders; and
WHEREAS, the Corporation has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
personnel of the Corporation including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from any possible or actual Change in Control.
NOW, THEREFORE, in consideration of the covenants, terms, and conditions
contained herein, the Corporation and the Executive agree:
I. DEFINITIONS.
A. "Administrative Committee," as used in this Agreement, shall mean
the Board of Directors of Longs Drug Stores Corporation ("Parent Corporation")
or a committee appointed by such Board of Directors to administer this
Agreement.
B. "Change in Control," as used herein, shall mean (i) any change in
the ownership or effective control of the Parent Corporation or the Corporation,
or (ii) any change in the ownership of a substantial portion of the assets of
the Parent Corporation or the Corporation; all within the meaning of Section
280G of the Code, as hereinafter defined, or any successor provision thereto,
regulations (including temporary and proposed regulations) promulgated
thereunder, and judicial interpretations of Section 280G and the regulations.
C. "Code," as defined herein, shall mean the Internal Revenue Code
of 1986, as amended to date.
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D. "Involuntary Severance of Employment," as defined herein, shall
mean the termination of the Executive's employment with the Corporation (i) by
discharge by the Corporation on or within two (2) years after the date of a
Change in Control or (ii) the resignation of the Executive on or within two (2)
years after the date of a Change of Control, provided that such resignation was
preceded by a material and detrimental alteration in the Executive's position,
responsibilities, compensation or benefits from those in effect immediately
prior to the Change in Control. Despite the foregoing, neither of the following
will constitute an Involuntary Severance of Employment:
1. The termination of the Executive's employment by reason of
death.
2. The discharge of the Executive by the Corporation for gross
and willful misconduct relating to the performance by the Executive of the
Executive's duties at the Corporation, provided that if there is at least one
Change in Control before such discharge, such misconduct occurs or is discovered
at any time after the date of the last Change in Control before such discharge.
II. ADMINISTRATION.
The Administrative Committee shall administer this Agreement and shall have
the power and the duty to make all determinations necessary for the
implementation of this Agreement, including by way of example and not as a
limitation, the occurrence of a Change in Control and the date of such change.
Any such determination (i) shall be made on the basis of all information known
to the persons making the determination, after reasonable inquiry, (ii) may be
made prospectively and subject to one or more contingent events, and (iii) will
be binding on the Corporation but not the Executive. Any disagreement between
the Corporation and the Executive concerning any such determination or the
administration, implementation or interpretation of this Agreement shall be
subject to the claims procedure as provided for in Article VIII.
III. OBLIGATIONS OF THE CORPORATION.
A. Within fifteen (15) days after an Involuntary Severance of
Employment or at such earlier time as may be required by law, the Corporation
shall pay to the Executive:
1. The full amount of any earned but unpaid base salary through
the date of the Involuntary Severance of Employment, plus a cash payment for all
unused vacation time which the Executive has accrued as of the Involuntary
Involuntary Severance of Employment.
2. If and only if the Corporation has made a final and good
faith determination prior to the Involuntary Severance of Employment as to the
amount, if any, of Executive's bonus for any quarter prior to the quarter during
which the Involuntary Severance of Employment occurs (the "Severance Quarter")
but such bonus has not been paid prior to the Involuntary Severance of
Employment, a bonus equal to the amount, if any, so determined.
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3. If and only if the Corporation has not made a final and good
faith determination prior to the Involuntary Severance of Employment as to
Executive's bonus, if any, for any quarter prior to the Severance Quarter, a
bonus equal to the bonus, if any, that the Executive would have received in the
absence of an Involuntary Severance of Employment, as determined by the
Corporation in good faith.
B. Within thirty (30) days after an Involuntary Severance of
Employment, the Corporation shall pay to the Executive an amount equal to three
(3) times the average annual compensation (annualized for short or incomplete
years) earned by the Executive from the Corporation which was includible in the
Executive's gross income for federal income tax purposes during the
five-taxable-year period (or period of actual service, if less than five years)
immediately preceding the taxable year of the Change in Control, less one
dollar. The Executive shall be eligible to make contributions to the
Corporation's Section 401(k) plan from amounts payable to the Executive under
Article III.A and this paragraph.
C. Within forty-five (45) days after the end of the Severance
Quarter, the Corporation shall pay to the Executive a bonus for the Severance
Quarter in an amount equal to the bonus, if any, that the Executive would have
received in the absence of an Involuntary Severance of Employment, as determined
by the Corporation in good faith. Such bonus shall be prorated for the portion
of the Severance Quarter prior to the Involuntary Severance of Employment.
D. Within thirty (30) days after an Involuntary Severance of
Employment, the Corporation shall establish an irrevocable trust and contribute
to it an amount equal to the Executive's deferred compensation account under the
Deferred Compensation Plan of 1995 and/or under other similar or successor plans
of the Corporation (the "Plan"). The trust shall conform to the model "rabbi
trust" agreement provided by the Internal Revenue Service in Revenue Procedure
92-64, as revised from time to time, and shall be structured as an unfunded
arrangement. The trustee of the trust shall be Boston Safe Deposit and Trust
Company, or its successor in interest, or if Boston Safe Deposit and Trust
Company is unable or unwilling to serve for any reason, such other financial
institution selected mutually by the Corporation and the Executive.
E. In the event of the Executive's death after an Involuntary
Severance of Employment and prior to payment to the Executive of amounts due
under this Agreement, such payment shall be made to the Executive's surviving
spouse, issue by right of representation, or estate, in that order.
F. The Corporation shall deduct from any payments to Executive under
this Agreement amounts that the Corporation is required to withhold and pay
either to government agencies on behalf of the Executive or under court order to
any person.
IV. TERMINATION.
This Agreement shall terminate and be of no further force or effect upon
the discharge or resignation of the Executive for any reason at any time prior
to the date of a Change in Control.
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V. TERM OF AGREEMENT.
A. This Agreement shall expire at the end of three (3) years from
the date hereof; provided, however, that at each annual anniversary date of this
Agreement, the expiration date of the Agreement shall automatically be extended
for one (1) additional year unless, in the thirty (30) day period immediately
preceding any anniversary date hereof, either the Corporation or the Executive,
by written notice to the other, rejects the automatic extension of such
expiration date.
B. Notwithstanding the expiration provisions set out in Article V.A,
this Agreement shall not expire for a period of two (2) years after the date of
any Change in Control which occurs before this Agreement terminates or expires,
and if an Involuntary Severance of Employment occurs before this Agreement
terminates or expires, this Agreement will not expire until the Corporation has
complied in all respects with Article III.
VI. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and the successors and assigns of the Corporation.
VII. NON-ASSIGNMENT BY THE EXECUTIVE.
The Executive shall not assign, hypothecate, or transfer any of the rights
herein to any person. Any attempt to assign, hypothecate or transfer the rights
hereunder shall immediately terminate all of the Executive's rights under this
Agreement.
VIII. CLAIMS PROCEDURE.
A. In the event of a disagreement between the Corporation and the
Executive on any matter arising under this Agreement, the Executive, in claiming
a benefit or requesting an interpretation or ruling under this Agreement, shall
present the claim or request in writing to the Administrative Committee, which
shall respond in writing as soon as practicable.
B. If a claim or request is denied, the Administrative Committee
shall prepare and deliver to the Executive a written notice of denial which
shall state (1) the reason for denial, with specific reference to the provisions
of this Agreement on which denial is based; (ii) a description of any additional
material or information required to prevail with the claim or request and an
explanation of why it is necessary; and (iii) an explanation of the Agreement's
claim review procedure.
C. If a claim or request is denied or the Executive has not received
a response within thirty (30) days, the Executive may request a review by notice
given in writing to the Administrative Committee. Such request must be made
within sixty (60) days after receipt by the Executive of the written notice of
denial, or in the event the Executive has not received a response, within ninety
(90) days after receipt by the Administrative Committee of the Executive's claim
or request. The claim or request shall be reviewed by the Administrative
Committee which may, but
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shall not be required to, grant the Executive a hearing. On review, the
Executive may have representation, examine pertinent documents, and submit
issues and comments in writing.
D. The decision on review shall normally be made within thirty (30)
days after the Administrative Committee's receipt of the Executive's request for
a review. If an extension of time is required for a hearing or other special
circumstances, the Executive shall be notified and the time limit shall be sixty
(60) days. The decision shall be in writing and shall state the reasons and the
relevant provisions of the Agreement. Unless the Executive elects to pursue
judicial review of the Administrative Committee's decision, all decisions on
review shall be final and bind all parties concerned.
IX. ATTORNEYS' FEES.
In the event that any suit, action or proceeding (including any appeal
therefrom, but excluding any and all proceedings before the Administrative
Committee) is brought by the Executive to review any decision of the
Administrative Committee pertaining to this Agreement or to enforce any right
hereunder, the prevailing party shall be entitled to recover from the other
party reasonable attorneys' fees and other reasonable costs incurred in
connection therewith. During the pendency of any such suit, action or
proceeding, the Corporation shall promptly pay all reasonable attorneys' fees
and reasonable costs incurred by the Executive with respect to such suit, action
or proceeding, subject to the Executive's obligation hereunder to repay all such
sums (as well as the Corporation's reasonable attorneys' fees and reasonable
costs) if the court finds that the Corporation is the prevailing party in such
suit, action or proceeding.
X. PARTIAL INVALIDITY.
Invalidity of any part or provision of this Agreement shall not affect the
enforceability of any other part or provision of this Agreement.
XI. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing herein shall confer, nor shall it be construed to confer, on the
Executive any right to, guarantee of, or contract for a continued employment by
the Corporation, or in any way limit the right of the Corporation to terminate
the employment of the Executive.
XII. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, as applied to contracts executed and performed
entirely in California.
XIII. NOTICES.
Any notices given hereunder must be in writing and may be delivered in
person or by certified or registered mail, return receipt requested, postage
prepaid. Notices to Corporation should be delivered to Longs Drug Stores
California, Inc., 000 Xxxxx Xxxxx Xxxxx, Xxxxxx Xxxxx,
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XX 00000, Attn: Corporate Secretary, or to such other address as Corporation
from time to time furnishes to the Executive in a notice. Notices to Executive
should be delivered to the address shown beneath Executive's signature below, or
to such other address as the Executive from time to time furnishes to the
Corporation in a notice.
XIV. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the parties hereto.
This Agreement fully supersedes any and all prior agreements or understandings
pertaining to similar benefits.
XV. AMENDMENTS.
This Agreement may not be modified except by a writing signed by both
parties. No such writing will be binding on the Corporation unless it is signed
(a) by the signatories of this Agreement, (b) by (i) the CEO, President, or any
Vice-President of the Corporation and (ii) the Secretary or any Assistant
Secretary of the Corporation, or (c) by another person or persons whose
authority is affirmed by (i) the CEO, President, or any Vice-President of the
Corporation and (ii) the Secretary or any Assistant Secretary of the
Corporation.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first above written.
EXECUTIVE LONGS DRUG STORES CALIFORNIA, INC.
By:
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(signature) X. X. Xxxx
Chief Executive Officer
(One of Two Required and
Authorized Signatures)
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Xxxxxx Xxxxxxx
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Xxxx, Xxxxx and Zip Code And By:
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X.X. Xxxxx
Secretary
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