AMENDMENT NUMBER ONE
TO
RIGHTS AGREEMENT
1. BACKGROUND. Longs Drug Stores Corporation, a Maryland
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "Rights Agent"), are parties to that
certain Rights Agreement dated as of August 20, 1996 (the "Rights Agreement").
Pursuant to Section 27 of the Rights Agreement, the Company may in its sole
discretion supplement or amend the Rights Agreement for as long as the "Rights"
(as defined in the Rights Agreement) are redeemable, provided that no supplement
or amendment may be made which changes the "Redemption Price" (as defined in the
Rights Agreement). On August 15, 2000, the Company determined that (i) the
Rights were redeemable and (ii) the Rights Agreement should be amended as set
forth herein.
2. AMENDMENT OF SECTION 1(a). Section 1(a) of the Rights
Agreement is amended to read in full as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares then
outstanding, but shall not include (i) (A) the Company, (B) any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary, or an entity holding Common Shares
for or pursuant to the terms of any such plan, (C) the Long
Family Members (as such term is hereinafter defined), (D) any of
the Long Family Members acting as trustee, personal
representative, attorney-in-fact, proxyholder or other
representative or agent, (E) any trustee, personal
representative, attorney-in-fact, proxyholder or other
representative or agent acting for the person or the estate of
one or more of the Long Family Members, or (F) any Person who or
which has received the approval of the Board of Directors to
become the Beneficial Owner of 15% or more of the Common Shares,
which approval may be before or after the Person becomes the
Beneficial Owner of 15% or more of the Common Shares, provided
that such approval occurs while the Rights are redeemable or (ii)
any such
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Person who has become such a Beneficial Owner solely
because (A) of a reduction in the aggregate number of Common
Shares outstanding or (B) it acquired such Beneficial Ownership
in the good faith belief that such acquisition would not (x)
cause such Beneficial Ownership to exceed 15% of the Common
Shares then outstanding and such Person relied in good faith in
computing the percentage of its Beneficial Ownership on publicly
filed reports or documents of the Company which are inaccurate or
out-of-date or (y) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a)(ii) to occur.
Notwithstanding clause (ii) of the prior sentence, if any Person
that is not an Acquiring Person due to such clause (ii) does not
reduce its percentage of Beneficial Ownership of Common Shares to
less than 15% by the Close of business on the fifth Business Day
after notice from the Company (the date of notice being the first
day) that such Person's Beneficial Ownership of Common Shares so
exceeds 15%, such Person shall, at the end of such five Business
Day period, become an Acquiring Person (and such clause (ii)
shall no longer apply to such Person). For purposes of this
definition, the determination whether any Person acted in "good
faith" shall be conclusively determined by the Board of Directors
of the Company.
3. AMENDMENT OF SECTION 2. The first sentence of Section 2 of
the Rights Agreement is amended to delete the following words:
"and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Shares)".
4. AMENDMENT OF SECTION 20(c). Section 20(c) of the Rights
Agreement is amended by adding the following words to the end of such section:
"Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage."
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5. EFFECTIVE DATE. This Amendment is effective as of August 15,
2000.
6. CONTINUING FORCE. As so amended, the Rights Agreement remains
in full force and effect.
LONGS DRUG STORES CORPORATION,
A Maryland Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
And By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
By: /s/ ▇▇▇ ▇▇▇▇
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Title: Assistant Vice President
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Attest:
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Assistant Vice President
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