Exhibit 10.1

EXECUTION COPY

STOCKHOLDER AGREEMENT

between

RITE AID CORPORATION,

THE JEAN COUTU GROUP (PJC) INC.,

JEAN COUTU,

MARCELLE COUTU,

FRANCOIS J. COUTU,

MICHEL COUTU,

LOUIS COUTU,

SYLVIE COUTU

and

MARIE-JOSÉE COUTU

 

______________________________

Dated as of August 23, 2006

______________________________

 

 

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TABLE OF CONTENTS

 

Page

ARTICLE I

 

 

 

 

SHARE OWNERSHIP

 

 

 

 

Section 1.1

 

Acquisition of Additional Voting Securities

1

Section 1.2

 

Prohibition of Certain Actions

4

Section 1.3

 

Stock Purchase Rights in a Preemptive Issuance

6

Section 1.4

 

Other Stock Purchase Rights.

8

 

 

 

 

ARTICLE II

 

 

 

 

TRANSFER RESTRICTIONS

 

 

 

 

Section 2.1

 

General Transfer Restrictions

11

Section 2.2

 

Specific Restrictions on Transfer

12

Section 2.3

 

Legend on Securities

15

Section 2.4

 

Other Voting Securities

15

 

 

 

 

ARTICLE III

 

 

 

 

CORPORATE GOVERNANCE

 

 

 

 

Section 3.1

 

Board Representation

16

Section 3.2

 

Board Chairs; Management

19

Section 3.3

 

Board Committee Representation

20

Section 3.4

 

Vote Required for Board Action; Board Quorum

21

Section 3.5

 

Voting Arrangements

22

 

 

 

 

ARTICLE IV

 

 

 

 

MISCELLANEOUS

 

 

 

 

Section 4.1

 

Conflicting Agreements

22

Section 4.2

 

Termination

23

Section 4.3

 

Representations of the Company

23

Section 4.4

 

Representations of the Stockholder

23

Section 4.5

 

Representations of the Family Members

23

Section 4.6

 

Ownership Information

23

Section 4.7

 

Adjustments to Prevent Dilution

23

Section 4.8

 

Savings Clause

24

Section 4.9

 

Amendment and Waiver

24

Section 4.10

 

Severability

24

Section 4.11

 

Entire Agreement

24

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Section 4.12

 

Successors and Assigns

24

Section 4.13

 

Counterparts

25

Section 4.14

 

Remedies

25

Section 4.15

 

Notices

25

Section 4.16

 

Governing Law

26

Section 4.17

 

Consent to Jurisdiction

27

Section 4.18

 

Interpretation

28

Section 4.19

 

Methodology for Calculations

28

Section 4.20

 

Effectiveness

28

 

 

 

 

 

Exhibit 3.2              Form of Amended and Restated By-laws of Rite Aid
Corporation

 

ii

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INDEX OF DEFINED TERMS

 

Page

5% Spinoff Coutu Stockholder

 

12

5% Spinoff Stockholder

 

13

Additional Preemptive Securities Purchase

 

7

Affiliate

 

3

Agreement

 

1

Applicable Law

 

18

Beneficial Ownership

 

3

Beneficially Own

 

3

Beneficially Owned

 

3

Board

 

2

Board Representation Percentage

 

18

broad distribution

 

12

Business Day

 

8

By-laws

 

19

Capital Stock

 

4

Certificate of Incorporation

 

21

Closing

 

1

Commission

 

3

Company

 

1

control

 

3

Coutu Family

 

14

Coutu Stockholders

 

14

Director

 

2

Exchange Act

 

3

Family Member

 

1

Group

 

3

Independent Director

 

16

Lender

 

13

Person

 

3

Potential Total Voting Power

 

4

Preemptive Issuance

 

6

Preemptive Rights Closing Date

 

7

Preemptive Securities

 

7

Prohibited Actions

 

4

Representative

 

13

Rite Aid Common Stock

 

2

Roll Over Shares

 

10

Securities Act

 

12

Standstill Period

 

2

Stock Purchase Agreement

 

1

Stockholder

 

1

Stockholder Designee

 

16

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Stockholder Pro Rata Distribution

 

12

Total Voting Power

 

4

Transfer

 

11

Transferee

 

12

Transferred

 

12

Transferring

 

12

Voting Power Percentage Ceiling

 

9

Voting Securities

 

3

Voting-Enabled Securities

 

3

Window Period

 

11

Window Period Election Deadline

 

9

Window Period Election Notice

 

9

Window Period Purchase Amount

 

9

 

iv

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STOCKHOLDER AGREEMENT

STOCKHOLDER AGREEMENT, dated as of August 23, 2006, between Rite Aid
Corporation, a Delaware corporation (the “Company”), The Jean Coutu Group (PJC)
Inc., a Québec corporation (the “Stockholder”), and Jean Coutu, an individual,
Marcelle Coutu, an individual, Francois J. Coutu, an individual, Michel Coutu,
an individual, Louis Coutu, an individual, Sylvie Coutu, an individual, and
Marie-Josée Coutu, an individual (each a “Family Member” and, collectively, the
“Family Members”).

WHEREAS, the Company and the Stockholder are parties to a Stock Purchase
Agreement, dated as of the date hereof (the “Stock Purchase Agreement”),
pursuant to and subject to the terms and conditions of which, among other
things, the Stockholder will sell to the Company (i) all of the issued and
outstanding common stock, par value $1.00 per share, and all of the issued and
outstanding preferred stock, par value $1.00 per share, of The Jean Coutu Group
(PJC) USA, Inc., a Delaware corporation and wholly-owned subsidiary of the
Stockholder, or (ii) if the Stockholder completes the Reorganization (as defined
in the Stock Purchase Agreement) prior to the consummation of the transactions
contemplated by the Stock Purchase Agreement, all of the membership interests in
JCG (PJC) USA, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of the Stockholder, as consideration for cash and shares of Rite Aid
Common Stock (as defined in Section 1.1(c) below);

WHEREAS, upon the closing under the Stock Purchase Agreement (the “Closing”),
the Stockholder will Beneficially Own (as defined in Section 1.1(g) below),
directly, 250 million shares of the issued and outstanding Rite Aid Common
Stock, representing approximately 30.4% of the Total Voting Power (as defined in
Section 1.1(l) below) of the Company;

WHEREAS, the parties hereto desire to enter into this Stockholder Agreement (as
it may be amended, supplemented, restated or modified from time to time, this
“Agreement”) to establish certain arrangements with respect to the shares of
Rite Aid Common Stock to be Beneficially Owned by the Stockholder following the
Closing, as well as restrictions on certain activities in respect of the Voting
Securities (as defined in Section 1.1(h) below) and certain agreements relating
to corporate governance and other related corporate matters;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
obligations hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE I

SHARE OWNERSHIP

Section 1.1       Acquisition of Additional Voting Securities.

(a)        During the Standstill Period (as defined below in this Section
1.1(a)), except (i) by way of stock dividend, stock split, reorganization,
recapitalization, merger, consolidation or other like distributions made
available to holders of Rite Aid Common Stock generally, (ii) as specifically
permitted pursuant to Section 1.3 of this Agreement, (iii) as specifically
permitted

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pursuant to Section 1.4 of this Agreement, or (iv) with the consent of a
majority of the directors (each a “Director”) of the Board of Directors of the
Company (the “Board”) not including the Stockholder Designees (as defined in
Section 3.1(a) below), the Stockholder and the Family Members covenant and agree
with the Company that they shall not, and shall not permit any of their
respective Affiliates (as defined in Section 1.1(d) below) to, directly or
indirectly, acquire, offer or propose to acquire or agree to acquire, whether by
purchase, tender or exchange offer, through the acquisition of control of
another Person (as defined in Section 1.1(e) below) (whether by way of merger,
consolidation or otherwise), by joining a partnership, syndicate or other Group
(as defined in Section 1.1(f) below) (other than a Group that includes only
Coutu Stockholders (as defined in Section 2.2(g) below) and their respective
Affiliates) or otherwise, the Beneficial Ownership (as defined in Section 1.1(g)
below) of any additional Voting Securities.  Notwithstanding the foregoing
sentence, the Stockholder may effect the acquisition of additional Voting
Securities through the acquisition of control of another Person if (i) such
other Person Beneficially Owns Voting Securities constituting no more than 2% of
the Potential Total Voting Power (as defined in Section 1.1(k) below) and (ii)
the Stockholder uses its reasonable best efforts to divest a sufficient number
of Voting Securities as promptly as practicable following such acquisition such
that the Stockholder Beneficially Owns no more Voting Securities than it would
otherwise be permitted to Beneficially Own or acquire pursuant to this Section
1.1; provided that until consummation of such divestiture, such Voting
Securities shall be subject to Section 3.5 hereof).  The term “Standstill
Period” means the period beginning at the Closing and ending on the date that
concludes a nine month period that begins on the latest of (x) the date when the
Stockholder and its Affiliates Beneficially Own Voting-Enabled Securities (as
defined in Section 1.1(i) below) constituting less than 5% of the Total Voting
Power, (y) the date when no individual Family Member together with his or her
Affiliates Beneficially Owns Voting-Enabled Securities constituting 5% or more
of the Total Voting Power, and (z) the date when no Group containing two or more
Family Members or their respective Affiliates, but only in the event that any
such Group was formed or existed during the Standstill Period, Beneficially Owns
Voting-Enabled Securities constituting 5% or more of the Total Voting Power;
provided, however, that in the event the Standstill Period continues to be in
effect due to clause (z) above, the restrictions contained in this Agreement
shall not apply to Family Members who, together with their Affiliates (other
than other Family Members and their Affiliates who comprise a Group described in
clause (z) above), Beneficially Own Voting-Enabled Securities constituting less
than 5% of the Total Voting Power and who are not, and whose Affiliates are not,
part of a Group described in clause (z) above.

(b)        Any additional Voting Securities acquired and Beneficially Owned by
the Stockholder, any Family Member or any of their respective Affiliates
following the Closing shall be subject to the restrictions contained in this
Agreement as fully as if such Voting Securities were acquired by the
Stockholder, such Family Member or such Affiliates, as the case may be, at or
prior to the Closing.

(c)        As used herein, “Rite Aid Common Stock” means the shares of common
stock, par value $1.00 per share, of the Company and any securities issued in
respect thereof, or in substitution therefor, in connection with any stock
split, dividend or combination, or any reclassification, recapitalization,
merger, consolidation, exchange or other similar reorganization.

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(d)        As used herein, “Affiliate” means, with respect to any Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, such specified
Person; “control” (including the terms “controlled by” and “under common control
with”), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or any other
means; provided, however, that with respect to any Person who is an individual,
the following Persons shall be deemed not to be controlled by such Person:  (i)
a parent of such natural Person, (ii) a sibling of such natural Person, (iii) an
adult child not sharing a home with such natural Person and (iv) an entity (x)
for which such natural Person serves solely as a director and not as an officer
or employee and (y) in which such natural Person Beneficially Owns less than 10%
of any class of voting equity securities, except that, notwithstanding this
clause (iv), directors and officers of the Stockholder, its subsidiaries and any
parent entity of the Stockholder, such as a holding company, shall be deemed
Affiliates of the Stockholder.

(e)        As used herein, “Person” means any individual, corporation, limited
liability company, limited or general partnership, association, joint-stock
company, trust, unincorporated organization, other entity, or government or any
agency or political subdivision thereof.

(f)         As used herein, “Group” shall have the meaning assigned to it in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the U.S. Securities and Exchange Commission
(the “Commission”) from time to time thereunder (the “Exchange Act”).

(g)        As used herein, “Beneficial Ownership” by a Person of any securities
includes ownership by any Person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
(i) voting power which includes the power to vote, or to direct the voting of,
such security; and/or (ii) investment power which includes the power to dispose,
or to direct the disposition, of such security; and shall otherwise be
interpreted in accordance with the term “beneficial ownership” as defined in
Rule 13d-3 adopted by the Commission under the Exchange Act, except that in no
event will the Stockholder be deemed to Beneficially Own any securities which it
has the right to acquire pursuant to Section 1.3 unless, and then only to the
extent that, it shall have actually exercised such right.  For purposes of this
Agreement, a Person shall be deemed to Beneficially Own any securities
Beneficially Owned by its Affiliates (including as Affiliates for this purpose
its officers and directors) or any Group of which such Person or any such
Affiliate is or becomes a member.  The terms “Beneficially Own” and
“Beneficially Owned” shall have correlative meanings to “Beneficial Ownership.”

(h)        As used herein, “Voting Securities” means the Voting-Enabled
Securities (as defined in Section 1.1(i) below) of the Company and any
securities convertible into or exercisable or exchangeable at the option of the
holder thereof for such shares of Voting-Enabled Securities of the Company.

(i)         As used herein, “Voting-Enabled Securities” means, at any time,
shares of any class of Capital Stock (as defined in Section 1.1(j) below) or
other securities or interests of

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the Company, including the Rite Aid Common Stock, which are then entitled to
vote generally, and not solely upon the occurrence and during the continuation
of certain specified events, in the election of Directors.

(j)         As used herein, “Capital Stock” means, with respect to any Person at
any time, any and all shares, interests, participations or other equivalents
(however designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person.

(k)        As used herein, “Potential Total Voting Power” means, at any time,
the total number of votes (i) entitled to vote generally, and not solely upon
the occurrence and during the continuation of certain specified events, in the
election of Directors by the holders of the outstanding Rite Aid Common Stock,
(ii) attributable to any other Voting-Enabled Securities and (iii) assuming the
conversion into, or exercise or exchange for, Voting-Enabled Securities,
attributable to all other Voting Securities that are not Voting-Enabled
Securities at such time. When determining the percentage of Potential Total
Voting Power Beneficially Owned by the Stockholder solely for purposes of this
Agreement, such percentage shall be determined (i) as if purchases to be made in
the future pursuant to one or more Window Period Election Notices (as defined in
Section 1.4(b) below), and not waived pursuant to Section 1.4(e), had been made
at the time of determination of such percentage and (ii) disregarding any
Voting-Enabled Securities that would trigger the purchase rights under Section
1.4 issued during the then-current fiscal quarter and, if the applicable Window
Period Election Deadline (as defined in Section 1.4(b) below) has not yet
passed, issued during the immediately preceding fiscal quarter.

(l)         “Total Voting Power” means, at any time, the total number of votes
(i) entitled to vote generally, and not solely upon the occurrence and during
the continuation of certain specified events, in the election of Directors by
the holders of the outstanding Rite Aid Common Stock and (ii) attributable to
any other Voting-Enabled Securities.  When determining the percentage of Total
Voting Power Beneficially Owned by the Stockholder solely for purposes of this
Agreement, such percentage shall be determined (i) as if purchases to be made in
the future pursuant to one or more Window Period Election Notices, and not
waived pursuant to Section 1.4(e), had been made at the time of determination of
such percentage and (ii) disregarding any Voting-Enabled Securities that would
trigger the purchase rights under Section 1.4 issued during the then-current
fiscal quarter and, if the applicable Window Period Election Deadline has not
yet passed, issued during the immediately preceding fiscal quarter.

Section 1.2       Prohibition of Certain Actions.

(a)        During the Standstill Period, except as otherwise specifically
permitted by this Agreement, the Stockholder and the Family Members will not,
directly or indirectly, through one or more intermediaries or otherwise, and
will cause each of their respective Affiliates not to, directly or indirectly,
singly or as part of a partnership, limited partnership, syndicate (as those
terms are used within the meaning of Section 13(d)(3) of the Exchange Act, which
meanings shall apply for all purposes of this Agreement) or other Group (each of
the actions referred to in the following provisions of this Section 1.2(a) being
referred to as “Prohibited Actions”):

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(i)            make, or in any way participate in, any “solicitation” of
“proxies” (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to any Voting-Enabled Securities (including by the
execution of actions by written consent), become a “participant” in any
“election contest” (as such terms are defined or used in Rule 14a-11 under the
Exchange Act) with respect to the Company or seek to advise, encourage or
influence any Person (other than an Affiliate of the Stockholder, including for
this purpose its officers and directors, or of any Coutu Stockholder) with
respect to the voting of any Voting-Enabled Securities; provided, however, that
the Stockholder shall not be prevented hereunder from being a “participant” in
support of the management of the Company, by reason of the membership of the
Stockholder Designees on the Board or the inclusion of the Stockholder Designees
on the slate of nominees for election to the Board proposed by the Company;

(ii)           initiate, propose or otherwise solicit, or participate in the
solicitation of, stockholders for the approval of one or more stockholder
proposals with respect to the Company (as described in Rule 14a-8 under the
Exchange Act) or knowingly induce any other individual or entity to initiate any
stockholder proposal relating to the Company;

(iii)          form, join or in any way participate in a Group (other than a
Group including only Coutu Stockholders and their respective Affiliates), act in
concert with any other Person or entity or otherwise take any action or actions
which would cause it to be deemed a “person” (for purposes of Section 13(d) of
the Exchange Act) (other than to the extent it is a “person” at the time of
consummation of the transactions contemplated by the Stock Purchase Agreement
and this Agreement), with respect to any Voting Securities of the Company;

(iv)          participate in or encourage the formation of any Group which seeks
or offers to acquire Beneficial Ownership of Voting Securities of the Company or
rights to acquire Voting Securities or which seeks or offers to affect control
of the Company or for the purpose of circumventing any provision of this
Agreement;

(v)           solicit, seek or offer to effect, negotiate with or provide any
information to any party with respect to, make any statement or proposal,
whether written or oral, either alone or in concert with others, to the Board,
to any Director or officer of the Company or to any other stockholder of the
Company with respect to, or otherwise formulate any plan or proposal or make any
public announcement, proposal, offer or filing under the Exchange Act, any
similar or successor statute or otherwise, or take action to cause the Company
to make any such filing, with respect to: (A) any form of business combination
or transaction involving the Company (other than transactions specifically
contemplated by this Agreement) or any Affiliate thereof (except for a Person
who is deemed to be an Affiliate of the Company solely because a Director or
executive officer of the Company is also a director or executive officer of such
Person), including, without limitation, a merger, exchange offer or liquidation
of the Company’s assets, (B) any form of restructuring, recapitalization or
similar transaction with respect to the Company or any Affiliate thereof (except
for a Person who is deemed to be an Affiliate of the Company solely because a
Director or executive officer of the Company is also a director or executive
officer of such Person), including, without limitation, a merger, exchange offer
or liquidation of the Company’s assets, (C) any acquisition or disposition of
assets material to the Company, (D) any request to amend, waive or terminate the
provisions of this Agreement, or (E) any proposal or other statement
inconsistent with the terms of this Agreement; provided,

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however, that the Stockholder, the Coutu Stockholders and their respective
Affiliates may discuss the affairs and prospects of the Company, the status of
the Stockholder’s investment in the Company and any of the matters described in
clauses (A) through (E) of this paragraph at any time, and from time to time,
with the Board, any Director or executive officer of the Company, the
Stockholder and the Coutu Stockholders and their respective Affiliates; and the
Stockholder, the Coutu Stockholders and their respective Affiliates may discuss
any matter, including any of the foregoing, with its outside legal and financial
advisors, if as a result of any such discussions the Stockholder, the Coutu
Stockholders or their respective Affiliates are not required to make, and do not
make, any public announcement or filing under the Exchange Act otherwise
prohibited by this Agreement as a result thereof;

(vi)          otherwise act, alone or in concert with others (including by
providing financing for another party), to seek or offer to control or
influence, in any manner, the management, Board or policies of the Company;
provided, however, that this provision shall not prevent the Stockholder
Designees from participating in, or otherwise seeking to affect the outcome of,
discussions and votes of the Board (or any committee thereof) with respect to
matters coming before it;

(vii)         instigate, encourage, have discussions with or enter into any
arrangements, agreements or understandings (whether written or oral) with any
third party (including acting as a joint or co-bidder with another party) to
take any of the actions prohibited by this Section 1.2(a); or

(viii)        publicly disclose any proposal regarding any of the actions
prohibited by this Section 1.2(a).

(b)        If at any time the Stockholder, the Family Members or any of their
respective Affiliates is approached by any Person requesting the Stockholder,
the Family Members or any of their respective Affiliates to instigate,
encourage, join, act in concert with or assist any Person in a Prohibited
Action, the Stockholder or the Family Members, as the case may be, will promptly
inform the Company of the nature of such contact and the parties thereto.  For
purposes of determining whether the Stockholder or Family Members have
materially breached any of their obligations or covenants under this Agreement,
the failure to promptly inform the Company pursuant to the first sentence of
this Section 1.1(b) shall not constitute a material breach.

(c)        Nothing in this Section 1.2 shall limit the ability of any Director,
including any Stockholder Designee, to vote in his or her capacity as a Director
in such manner as he or she may determine in his or her sole discretion.

(d)        The Stockholder agrees that it shall be liable for any breach of this
Agreement by any of its Affiliates.

Section 1.3       Stock Purchase Rights in a Preemptive Issuance.

(a)        From and after the Closing, for so long as the Stockholder
Beneficially Owns at least 20% of the Total Voting Power, at any time that the
Company effects an issuance solely for cash (a “Preemptive Issuance”) of
additional Voting Securities (the Voting Securities

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that are the subject of a particular Preemptive Issuance being referred to
herein as the “Preemptive Securities”) other than issuances (i) in connection
with any stock split, subdivision, stock dividend (including dividends on
existing or future preferred stock whether in the form of shares of preferred
stock or common stock) or pro rata recapitalization (including any exchange of
one or more series of preferred stock for another series of preferred stock) by
the Company, (ii) upon conversion of shares of the Company’s convertible
preferred stock (whether such convertible preferred stock is currently
outstanding or is issued in the future and whether such conversion is mandatory
or discretionary), (iii) in connection with any restricted stock, stock option,
incentive or other award of Rite Aid Common Stock pursuant to the Company’s
equity compensation plans or other employee, consultant or director compensation
arrangements approved by the Board or a duly authorized committee thereof
(whether such award was made before, or is made on or after, the date of this
Agreement), (iv) in connection with acquisitions by the Company whether by
merger, asset purchase, stock purchase or other reorganization, including
financings the proceeds of which are intended to be used to fund acquisitions,
(v) in connection with the issuance of Rite Aid Common Stock in exchange for
Company notes, debentures or other forms of indebtedness (whether such
indebtedness is currently outstanding or becomes outstanding in the future) and
(vi) in which the number of Preemptive Securities that otherwise would be issued
to the Stockholder pursuant to this Section 1.3 would require the approval of
the Company’s stockholders under the rules of the New York Stock Exchange (in
which case only the excess amount of Preemptive Securities that would trigger
such stockholder approval requirement would be excluded from the Preemptive
Securities that the Stockholder would have a right to purchase pursuant to this
Section 1.3), the Stockholder shall have the right to purchase from the Company
for cash additional Preemptive Securities (in each instance, an “Additional
Preemptive Securities Purchase”), such that following such Preemptive Issuance
and such purchase, the Stockholder and its Affiliates will Beneficially Own
Voting Securities representing the same percentage of Potential Total Voting
Power as the Stockholder Beneficially Owned immediately prior to such Preemptive
Issuance.

(b)        Prior to any Preemptive Issuance, the Company shall provide the
Stockholder with 15 Business Days’ (as defined below in this Section 1.3(b))
prior written notice (or if such notice period is not reasonably practicable
under the circumstances, the maximum prior written notice as is reasonably
practicable) of the proposed Preemptive Issuance.  The Stockholder may exercise
the Stockholder’s right to effect an Additional Preemptive Securities Purchase
by providing written notice to the Company within 10 Business Days after receipt
of the Company’s notice (and, in any event, not later than the date of pricing
in the case of an underwritten public offering (or a similar offering pursuant
to Rule 144A under the Securities Act) and the date of signing or date of public
announcement of the transaction, if earlier, in all other Preemptive
Issuances).  The Stockholder’s notice must indicate the specific amount of
Preemptive Securities that the Stockholder desires to purchase at specific
prices and may not be conditioned in any other manner not also available to
other potential purchasers of the Preemptive Issuance.  The Stockholder shall
effect the Additional Preemptive Securities Purchase that it has elected to
purchase concurrently with the Preemptive Issuance of such Preemptive Securities
(the date of consummation of such transactions is referred to as the “Preemptive
Rights Closing Date”).  If, in connection with any Preemptive Issuance, the
Stockholder gives timely notice of its intent to exercise its right under this
Section 1.3 but has not paid for and otherwise effected the Additional
Preemptive Securities Purchase at the Preemptive Rights Closing Date, then the
Stockholder shall be deemed to have waived its right to purchase

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such securities under this Section 1.3 with respect to such Preemptive Issuance;
provided, however, that the Company shall be entitled to specifically enforce
the exercise included in the Stockholder’s notice.  As used herein, “Business
Day” shall mean any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by law to be closed in New York, New York.

(c)        If the Stockholder exercises such right, the Stockholder shall pay an
equal per security amount of cash consideration in the Additional Preemptive
Securities Purchase as the purchaser or purchasers of Preemptive Securities in
such Preemptive Issuance pays in cash (in the case of an underwritten public
offering or a similar Rule 144A offering, net of any underwriting or initial
purchaser’s discount (as disclosed in any prospectus or offering memorandum for
such offering) paid in connection with such offering).

(d)        In the event that a proposed Preemptive Issuance shall be terminated
or abandoned by the Company without the issuance of any Preemptive Securities,
then the purchase rights pursuant to this Section 1.3 shall also terminate as to
such proposed Preemptive Issuance, and any funds in respect thereof paid to the
Company by the Stockholder shall be refunded in full.

Section 1.4       Other Stock Purchase Rights.

(a)        From and after the Closing, for so long as the Stockholder
Beneficially Owns at least 20% of the Total Voting Power, at any time that the
Company effects an issuance of Voting Securities and the Stockholder does not
have the right to purchase from the Company additional Voting Securities
pursuant to Section 1.3 of this Agreement because (i) the issuance is not solely
for cash, (ii) the issuance relates to the conversion of shares of the Company’s
convertible preferred stock issued after the date of this Agreement (other than
issuances or the conversion of shares of the Company’s convertible preferred
stock issued after the date of this Agreement as pay-in-kind stock dividends
with respect to shares of convertible preferred stock issued prior to the date
of this Agreement or issued as further pay-in-kind stock dividends on such
dividends), but only to the extent that the Stockholder’s right to purchase such
convertible preferred stock under Section 1.3 was limited by the terms thereof,
(iii) the issuance relates to items described in Section 1.3(a)(iii) awarded on
or after the date of this Agreement, (iv) the issuance relates to items
described in Section 1.3(a)(iv) or Section 1.3(a)(v), or (v) the issuance to the
Stockholder under Section 1.3 of Voting Securities other than convertible
preferred stock (which is addressed by clause (ii) above) was limited by
operation of Section 1.3(a)(vi), the Stockholder shall have the right,
notwithstanding Section 1.1 of this Agreement, to make open market purchases of
Rite Aid Common Stock in accordance with the terms of this Section 1.4;
provided, however, that to the extent any of the issuances described in this
Section 1.4(a) involve issuances of Voting Securities that are not
Voting-Enabled Securities, the corresponding right to make open market purchases
under this Section 1.4 shall not apply until such Voting Securities are
converted into, or exercised or exchanged for, Voting-Enabled Securities.  For
the avoidance of doubt, the “right” provided by this Section 1.4 exists relative
to and as an exception to the restrictions of Section 1.1 and does not create
any “rights” vis-à-vis any other legal or contractual limitations on such open
market purchases.

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(b)        Within 12 days following the end of each fiscal quarter, the Company
shall provide to the Stockholder a written notice listing, for the most recently
completed fiscal quarter, the issuances, if any, of Voting Securities described
in clauses (i) through (v) of Section 1.4(a) above and the Total Voting Power
outstanding as of the beginning and as of the end of the fiscal quarter.  In
order to make open market purchases of Rite Aid Common Stock in accordance with
this Section 1.4, within 10 Business Days after receipt of the Company’s notice
described in the first sentence of this Section 1.4(b) (the “Window Period
Election Deadline”), the Stockholder must provide written notice to the Company
of its election to make such purchases (a “Window Period Election Notice”),
which notice must set forth (i) the number of Voting-Enabled Securities
Beneficially Owned by the Stockholder at the beginning of the Company’s most
recently completed fiscal quarter, (ii) the number of Voting-Enabled Securities
Transferred by the Stockholder during such fiscal quarter so that they are no
longer Beneficially Owned by the Stockholder and (iii) the Stockholder’s
calculation of the Window Period Purchase Amount (as defined in the next
sentence).  The “Window Period Purchase Amount” is the number of shares of Rite
Aid Common Stock to be purchased in the open market in order to increase the
Stockholder’s percentage of Total Voting Power (calculated as of the end of the
particular fiscal quarter) to the Voting Power Percentage Ceiling (as defined in
the next sentence).  The “Voting Power Percentage Ceiling” initially shall equal
30.4% of Total Voting Power and thereafter shall be adjusted downward from time
to time (such adjustments to be cumulative) to reflect the effect of the
following events on the numerator and/or denominator in the calculation of the
percentage of Total Voting Power: (i) Transfers of Voting-Enabled Securities by
the Stockholder such that it no longer Beneficially Owns such Transferred
securities, (ii) the Stockholder’s waiver or failure to exercise its rights to
purchase Voting Securities pursuant to Section 1.3, (iii) the Stockholder’s
waiver or failure to exercise its rights to purchase Rite Aid Common Stock
pursuant to this Section 1.4, (iv) the conversion of shares of the Company’s
convertible preferred stock outstanding as of the date of this Agreement or
issued as pay-in-kind stock dividends with respect to such shares of convertible
preferred stock or as further pay-in-kind stock dividends on such dividends and
(v) the exercise of stock options and other compensatory arrangements referred
to in Section 1.3(a)(iii) awarded prior to the date of this Agreement.

(c)        In the event that the Company disagrees with the Stockholder’s
calculation of the Window Period Purchase Amount (including any disagreement
with respect to the determination of the Voting Power Percentage Ceiling) the
Company shall provide the Stockholder with written notice of such disagreement
within five Business Days of the Company’s receipt of the Window Period Election
Notice.  The Stockholder’s purchase rights under this Section 1.4 shall not
apply to any amount in dispute until such dispute is resolved.  The Company and
the Stockholder shall use good faith efforts to resolve any dispute over the
calculation of the Window Period Purchase Amount within 10 Business Days of the
Stockholder’s receipt of the Company’s notice of disagreement.  If the Company
and the Stockholder cannot resolve their dispute over the calculation of the
Window Period Purchase Amount within such 10 Business Day period, the dispute
shall be submitted to the Accountants (as defined in the Stock Purchase
Agreement), whose determination shall be final and binding on the parties and
the costs of which shall be shared equally between the Company and the
Stockholder.  The Accountants shall deliver to the Company and the Stockholder,
as promptly as practicable, but no later than 10 Business Days after the
Accountants are engaged, a written report setting forth their resolution and
their calculation of the disputed items or amounts.

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(d)        The Stockholder may make open market purchases of the number of
shares of Rite Aid Common Stock equal to the Window Period Purchase Amount
(subject to the resolution of any disputed amount pursuant to Section 1.4(c)
above and subject to Section 1.4(f) below) pursuant to the following number of
Window Periods (as defined in Section 1.4(h) below):

Number of Shares

 

 

 

Number of Window Periods

 

Up to 8 million

 

1

 

More than 8 million but not more than 16 million

 

2

 

More than 16 million but not more than 24 million

 

3

 

More than 24 million

 

4

 

commencing with the Window Period following the earnings release for the quarter
to which the Window Period Election Notice relates (or such Window Period as
immediately follows the date on which any pending dispute with respect to such
Window Period Election Notice is resolved pursuant to Section 1.4(c)) and, in
the event more than one Window Period is provided by this Section 1.4(d), those
additional Window Periods immediately succeeding that first Window Period;
provided, however, that in the event more than one Window Period is provided
pursuant to the terms of this Section 1.4(d), subject to any roll over permitted
pursuant to Section 1.4(f), such purchases must be allocated so that the first 8
million shares are purchased during the first Window Period, the second 8
million shares (or such lesser amount in excess of the first 8 million shares)
are purchased during the second Window Period and the third 8 million shares (or
such lesser amount in excess of the first 16 million shares) are purchased
during the third Window Period; and provided, further, that in the event that
any of those Window Periods are already the subject of current or future
purchases as a result of a Window Period Election Notice relating to a prior
period, the purchases resulting from the most recent Window Period Election
Notice shall commence in the next Window Period not fully subject to the prior
Window Period Election Notice and any immediately succeeding Window Periods, if
applicable.

(e)        In the event that the Stockholder fails to purchase a number of
shares of Rite Aid Common Stock equal to or greater than 95% of the full number
of shares of Rite Aid Common Stock to be purchased during a particular Window
Period, the applicable Window Period Election Notice shall be deemed to have
been withdrawn and the right to purchase the additional shares of Rite Aid
Common Stock that were the subject of such Window Period Election Notice shall
be deemed to have been waived.  In addition, where one or more additional Window
Period Election Notices were calculated on the basis that the shares to be
purchased pursuant to a withdrawn Window Period Election Notice (whether
withdrawn voluntarily or a deemed withdrawal) would have been purchased, the
Window Period Purchase Amounts contained in such notices shall be recalculated
to account for the withdrawal.

(f)         In the event that the Stockholder purchases a number of shares of
Rite Aid Common Stock equal to or greater than 95% but less than 100% of the
full number of shares of Rite Aid Common Stock to be purchased during a
particular Window Period (such number of shares of Rite Aid Common Stock
equaling the difference between the full number of shares to be purchased during
the Window Period and the amount actually purchased in such Window Period are
referred to herein as the “Roll Over Shares”), the Stockholder shall be
permitted to roll

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over to the immediately succeeding Window Period the right to purchase the Roll
Over Shares; provided, however, that if the number of shares of Rite Aid Common
Stock to be purchased during the succeeding Window Period pursuant to one or
more Window Period Election Notices together with the Roll Over Shares would
exceed 8 million shares, the number of shares in excess of 8 million shall be
rolled over to the next Window Period in which such total amount does not exceed
8 million.

(g)        The Stockholder agrees and acknowledges that the Company may make any
public disclosure, whether by filing with the Commission, press release or
otherwise, that the Company reasonably believes it is required to make in
accordance with Applicable Law, with respect to the receipt of a Window Period
Election Notice and any matters related thereto, including any deemed withdrawal
of such Window Period Election Notice pursuant to Section 1.4(e).

(h)        As used in this Agreement, “Window Period” means the period of time
following the Company’s public release of quarterly earnings results that the
Company’s directors and Section 16 officers are permitted to trade in the
Company’s securities pursuant to the Company’s policies and procedures, as they
may be amended from time to time, but shall exclude any such periods when the
Company’s directors and Section 16 officers are subject to a lockup agreement or
any other inability to purchase the Company’s securities due to the possession
of material nonpublic information, Regulation M or any other rules or
regulations of the Commission.

ARTICLE II

TRANSFER RESTRICTIONS

Section 2.1       General Transfer Restrictions.  The right of the Stockholder
and its Affiliates to Transfer (as defined below in this Section 2.1) any Voting
Securities Beneficially Owned is subject to the restrictions set forth in this
Article II, and no Transfer of Voting Securities by the Stockholder or any of
its Affiliates may be effected except in compliance with this Article II.  Any
attempted Transfer in violation of this Agreement shall be of no effect and null
and void, regardless of whether the purported transferee has any actual or
constructive knowledge of the Transfer restrictions set forth in this Agreement,
and shall not be recorded on the stock transfer books of the Company. 
“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of (by operation of law or
otherwise), either voluntarily or involuntarily, or to enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of (by
operation of law or otherwise), any Voting Securities or any interest in any
Voting Securities.  For purposes of this Agreement, the term Transfer shall
include the transfer (including by way of sale, disposition or any other means)
of an Affiliate of the Stockholder or the Stockholder’s interest in an Affiliate
which Beneficially Owns Voting Securities.  For purposes of clarity, it is
agreed that if after any Transfer of Voting Securities an entity which is an
Affiliate of the Stockholder would no longer be such an Affiliate, then prior to
the consummation of such Transfer the Stockholder shall Transfer all Voting
Securities owned by such Affiliate to another Affiliate that will remain an
Affiliate of the Stockholder after the Transfer.  “Transferring”, “Transferee”,
“Transferred” or similar words shall have correlative meanings to “Transfer.”

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Section 2.2       Specific Restrictions on Transfer.

(a)        The Stockholder shall not, and shall not permit its Affiliates to,
Transfer any Beneficially Owned Voting Securities; provided that the foregoing
restriction shall not be applicable to Transfers:

(i)            pursuant to Rule 144 under the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the Commission from time
to time thereunder (the “Securities Act”) (regardless of whether the volume and
manner of sale restrictions therein are otherwise applicable by law to the
Stockholder or its applicable Affiliate);

(ii)           pursuant to (A) a firm commitment, underwritten distribution of
Voting Securities to the public, registered under the Securities Act or (B) a
privately negotiated offering of Voting Securities exempt from the registration
requirements of the Securities Act; and with respect to either (A) or (B), in a
manner calculated to achieve a “broad distribution” of such Voting Securities,
which for purposes of this Section 2.2(a)(ii) means a distribution that, to the
knowledge of the Stockholder after due inquiry, will not result in the
acquisition of Voting Securities by any Person who after consummation of such
offering would have Beneficial Ownership of Rite Aid Common Stock representing
in the aggregate more than 5% of the outstanding shares of Rite Aid Common Stock
and which distribution and the related inquiry are reasonably acceptable to the
Company;

(iii)          to any Person, or Persons acting in a Group, who after
consummation of such Transfer, to the knowledge of the Stockholder after due
inquiry, would not have Beneficial Ownership in the aggregate of more than 5% of
the outstanding shares of Rite Aid Common Stock;

(iv)          to the stockholders of the Stockholder in a pro-rata dividend,
spin-off, distribution or similar recapitalization (a “Stockholder Pro Rata
Distribution”); provided (A) that the Stockholder shall provide at least 20
Business Days prior written notice to the Company of its intention to effect
such a Transfer, (B) the manner of the distribution shall be reasonably
acceptable to the Company, (C) that any Voting Securities Transferred to any
Coutu Stockholder shall be subject to and bound by the terms and conditions of,
and shall enjoy for so long as any such Coutu Stockholder, either individually,
together with its Affiliates or as a member of a Group with one or more Coutu
Stockholders or their respective Affiliates, Beneficially Own Voting-Enabled
Securities constituting 5% or more of the Total Voting Power (a “5% Spinoff
Coutu Stockholder”) the governance and all other rights under, this Agreement as
though such Person was the Stockholder (subject to Section 4.9 below) (but, for
the avoidance of doubt, it being understood that the governance rights under
this Agreement apply to each 5% Spinoff Coutu Stockholder that is a Group in the
aggregate and to each 5% Spinoff Coutu Stockholder not part of such a Group
individually and do not apply to each other individual Coutu Stockholder and,
further, that the rights of all such 5% Spinoff Coutu Stockholders, in the
aggregate, shall in no event exceed the rights that the Stockholder would have
had if the Stockholder Pro Rata Distribution had not occurred) and (D) that any
Voting Securities

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Transferred to any other stockholder of the Stockholder which is a Transferee in
a Stockholder Pro Rata Distribution, which shall Beneficially Own more than 5%
of the Total Voting Power after the Stockholder Pro Rata Distribution (a “5%
Spinoff Stockholder” which, for purposes of clarity, shall not include a 5%
Spinoff Coutu Stockholder), shall be subject to and bound by the terms and
conditions of this Agreement as though it were the Stockholder and such Person
shall execute a counterpart signature page to this Agreement stating that it
agrees to be bound by the terms and conditions of this Agreement as though it
were the Stockholder, but shall not receive any of the rights granted to the
Stockholder under this Agreement (for purposes of clarity, the 5% Spinoff
Stockholder shall not have any rights under Sections 1.3 (Stock Purchase Rights
in a Preemptive Issuance), 1.4 (Other Stock Purchase Rights), 3.1 (Board
Representation), 3.2 (Board Chairs; Management), 3.3 (Board Committee
Representation) and 3.4 (Vote Required for Board Action) of this Agreement);
provided, further, that each 5% Spinoff Coutu Stockholder shall notify the
Company in writing of a single Person (the “Representative”) which shall be the
authorized representative to receive notices and take actions on behalf of such
5% Spinoff Coutu Stockholder, and any rights under this Agreement may be
exercised only by such Representative for the Group and not with respect to each
individual Person comprising the Group; and provided, further, that any Group
that would otherwise have rights hereunder shall forfeit such rights in the
event such Group fails to timely file a Schedule 13D (or any successor filing)
with the Commission, to the extent required by the Exchange Act, disclosing the
formation or existence of such Group;

(v)           to a financial institution generally in the commercial lending
business (a “Lender”) to which the Stockholder or any of its Affiliates pledges,
encumbers or hypothecates any Voting Securities or any interest in any Voting
Securities to secure bona fide recourse borrowings effected in good faith so
long as: (A) the Stockholder or any such Affiliate notifies the Company of its
intention to enter into such pledge, encumbrance or hypothecation at least ten
Business Days prior thereto, (B) such Lender is not granted any voting rights
with respect to the Voting Securities prior to any foreclosure, (C) the Lender
agrees in writing with the Stockholder or any such Affiliate in an agreement
that expressly provides that (x) the Company is a party to such agreement,
entitled to enforce such agreement directly against the Lender, (y) such
agreement cannot be amended or modified in any manner which adversely affects
the Company without the written consent of the Company, and (z) the Lender shall
not receive any of the rights granted to the Stockholder or any such Affiliate
under this Agreement (for purposes of clarity, the Lender shall not have any
rights under Sections 1.3 (Stock Purchase Rights in a Preemptive Issuance), 1.4
(Other Stock Purchase Rights), 3.1 (Board Representation), 3.2 (Board Chairs;
Management), 3.3 (Board Committee Representation) and 3.4 (Vote Required for
Board Action) of this Agreement); or

(vi)          to one or more 100% (directly or indirectly) owned Affiliates of
the Stockholder, or in the event of a Stockholder Pro Rata Distribution, to one
or more 100% (directly or indirectly) owned Affiliates of a Coutu Stockholder.

(b)        If the Stockholder and/or any of its Affiliates wishes or is required
to Transfer an amount of Voting Securities constituting more than 5% of the
outstanding shares of Rite Aid Common Stock (other than Transfers pursuant to
Section 2.2(a)(iv)), the Stockholder shall coordinate with the Company regarding
optimizing the manner of distribution and sale of such shares, including whether
such sale should occur through an underwritten offering, and shall cooperate in
the marketing of any such offering.

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(c)        In the event any shares of Rite Aid Common Stock are Transferred to
one or more 100% (directly or indirectly) owned Affiliates of the Stockholder or
a 5% Spinoff Coutu Stockholder, as applicable, in a manner permitted by this
Agreement, the Stockholder or the 5% Spinoff Coutu Stockholder, as applicable,
will notify the Company in writing of a Representative which shall be the
authorized representative to receive notices and take all actions on behalf of
the Stockholder or the 5% Spinoff Coutu Stockholder, as applicable, and/or its
100% owned (directly or indirectly) Affiliates which Beneficially Own Rite Aid
Common Stock.

(d)        The Stockholder shall not, and shall not permit its Affiliates to,
directly or indirectly, loan or permit to be loaned any of the Beneficially
Owned Voting Securities or any voting rights therein.

(e)        The Stockholder shall not, and shall not permit its Affiliates to,
directly or indirectly, effect any Transfer of economic rights in Voting
Securities without Transferring the voting rights associated with such Voting
Securities or effect any Transfer of voting rights in Voting Securities without
Transferring the economic rights associated with Voting Securities, except in
connection with ordinary hedging transactions, including collars, caps, floors
or other similar transactions intended to limit the risk of adverse price
movement in the Voting Securities, entered into in good faith and not intended
for the purpose of circumventing the provisions of this Section 2.2(e).

(f)         Prior to the Transfer of any Voting Securities to any Affiliate of
the Stockholder, any Coutu Stockholders, any Affiliate of a Coutu Stockholder,
or any 5% Spinoff Stockholder otherwise permitted by this Agreement, such
Transferee shall execute a counterpart signature page to this Agreement stating
that (A) with respect to an Affiliate of the Stockholder, any Coutu Stockholder
or any Affiliate of a Coutu Stockholder, it agrees to be bound by the terms of,
and in the case of a 5% Spinoff Coutu Stockholder enjoy for so long as it
remains a 5% Spinoff Coutu Stockholder the governance and all other rights
under, this Agreement as though it was the Stockholder (but, for the avoidance
of doubt, it being understood that the governance rights under this Agreement
apply to each 5% Spinoff Coutu Stockholder that is a Group in the aggregate and
to each such 5% Spinoff Coutu Stockholder not part of such a Group individually
and do not apply to each other individual Coutu Stockholder and, further, that
the rights of all such 5% Spinoff Coutu Stockholders, in the aggregate, shall in
no event exceed the rights that the Stockholder would have had if the
Stockholder Pro Rata Distribution had not occurred) and (B) with respect to the
5% Spinoff Stockholder, it agrees to be bound by the terms of this Agreement as
though it was the Stockholder (except with respect to Sections 1.3, 1.4, 3.1,
3.2, 3.3 and 3.4 of this Agreement which shall be inapplicable to the 5% Spinoff
Stockholder).

(g)        As used herein, “Coutu Stockholders” means any of the Family Members,
any lineal descendants of any of the Family Members (together with the Family
Members, the “Coutu Family”), any estate planning vehicle that is controlled by
a member or members of the Coutu Family and any other Person that is controlled
by a member or members of the Coutu Family, that becomes a holder of record of
Voting Securities, for so long as it is both a holder of record of any Voting
Securities and a member of the Coutu Family.

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Section 2.3       Legend on Securities.

(a)        Each certificate representing Voting Securities Beneficially Owned by
the Stockholder or its Affiliates and subject to the terms of this Agreement
shall bear the following legend on the face thereof:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND CERTAIN OTHER LIMITATIONS SET FORTH IN A STOCKHOLDER AGREEMENT
DATED AS OF AUGUST 23, 2006, BETWEEN RITE AID CORPORATION (THE “COMPANY”), THE
JEAN COUTU GROUP (PJC) INC. AND CERTAIN OTHER PERSONS, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME (THE “AGREEMENT”), COPIES OF WHICH AGREEMENT ARE ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.”

(b)        Upon any acquisition by the Stockholder or any of its Affiliates of
additional Voting Securities, the Stockholder shall, or shall cause such
Affiliate to, submit the certificates representing such Voting Securities to the
Company so that the legend required by this Section 2.3 may be placed thereon
(if not so endorsed upon issuance).

(c)        The Company shall make a notation on its records or give instructions
to any transfer agents or registrars for the Voting Securities in order to
implement the restrictions on Transfer set forth in this Agreement.

(d)        In connection with any Transfer of Voting Securities pursuant to this
Agreement, the Transferring Person shall provide the Company with such customary
certificates, opinions and other documents as the Company may reasonably request
to assure that such Transfer complies fully with this Agreement and with
applicable securities and other laws.  In connection with a Transfer pursuant to
Section 2.2(a), the Company shall remove such portion of the foregoing legend as
is appropriate in the circumstances.

Section 2.4       Other Voting Securities.  In the event the Company declares a
dividend or other distribution payable in Voting Securities, any Transfer of
such Voting Securities by the Stockholder or its Affiliates shall be governed by
this Article II (including the definition of Transfer contained in Section 2.1
and the legend requirements of Section 2.3).

 

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ARTICLE III

CORPORATE GOVERNANCE

Section 3.1       Board Representation.

(a)        Upon the Closing, the Company shall increase the size of the Board by
two Directors and cause the resignation of two Directors so that upon such
increase and such resignations, (i) the Board shall consist of fourteen
Directors and (ii) the Board shall appoint as Directors to fill the four
vacancies André Belzile, Francois J. Coutu, Dennis Wood and Michel Coutu (each a
“Stockholder Designee” and, together with any Directors that may be designated
by the Stockholder pursuant to this Section 3.1, the “Stockholder Designees”) to
serve as Directors in the class of Directors whose terms expire in 2007, 2008,
2008 and 2009, respectively.  Based on information provided as of the date
hereof, the Board has determined that André Belzile, Francois J. Coutu and
Dennis Wood each qualify as an Independent Director.  As used herein,
“Independent Director” means any Director who is or would be an “independent
director” with respect to the Company pursuant to Section 303A.02 of the New
York Stock Exchange Listed Company Manual and Section l0A of the Exchange Act
(or any successor provisions), in each case as amended from time to time.

(b)        From and after the Closing, provided that the Stockholder has not
materially breached any of its obligations or covenants under this Agreement and
subject to Section 3.1(d) below:

(i)            for so long as the Stockholder Beneficially Owns at least 25% of
the Total Voting Power at the time of a meeting of the Board the agenda for
which includes nominating a slate of Directors, the Stockholder shall have the
right to designate such number of Stockholder Designees for nomination by the
Board that, together with the Stockholder Designees serving in a class or
classes of Directors whose terms are not expiring at the upcoming annual meeting
of stockholders, results in a total of four Stockholder Designees, at least two
of whom must qualify as Independent Directors, and the Board shall nominate and
recommend such Stockholder Designees for election as Directors of the Company;

(ii)           for so long as the Stockholder holds at least 17.9% but less than
25% of the Total Voting Power at the time of a meeting of the Board the agenda
for which includes nominating a slate of Directors, the Stockholder shall have
the right to designate such number of Stockholder Designees for nomination by
the Board that, together with the Stockholder Designees serving in a class or
classes of Directors whose terms are not expiring at the upcoming annual meeting
of stockholders, results in a total of three Stockholder Designees, at least one
of whom must qualify as an Independent Director, and the Board shall nominate
and recommend such Stockholder Designees for election as Directors of the
Company;

(iii)          for so long as the Stockholder holds at least 10.7% but less than
17.9% of the Total Voting Power at the time of a meeting of the Board the agenda
for which includes nominating a slate of Directors, the Stockholder shall have
the right to designate such number, if any, of Stockholder Designees for
nomination by the Board that, together with the Stockholder Designees serving in
a class or classes of Directors whose terms are not expiring at

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the upcoming annual meeting of stockholders, results in a total of two
Stockholder Designees (neither of whom must qualify as an Independent Director),
and the Board shall nominate and recommend such Stockholder Designees for
election as Directors of the Company; provided that if the Company would not
otherwise be in compliance with Section 303A.01 of the New York Stock Exchange
Listed Company Manual with respect to a majority of directors qualifying as
Independent Directors, one of the Stockholder Designees must qualify as an
Independent Director; and

(iv)          for so long as the Stockholder holds at least 5% but less than
10.7% of the Total Voting Power at the time of a meeting of the Board the agenda
for which includes nominating a slate of Directors, the Stockholder shall have
the right to designate one Stockholder Designee (who need not qualify as an
Independent Director) for nomination by the Board unless there is already one
Stockholder Designee serving in a class of Directors whose term is not expiring
at the upcoming annual meeting of stockholders, and, if applicable, the Board
shall nominate and recommend such Stockholder Designee for election as a
Director of the Company.

In every case, (x) each of the Stockholder Designees being nominated must be
reasonably acceptable to the Nominating and Governance Committee of the Board
(it being understood and agreed that the four persons identified in Section
3.1(a) are acceptable to the Nominating and Governance Committee of the Board)
and (y) the Company will use its reasonable best efforts to cause the election
of such Stockholder Designees as Directors of the Company; provided that such
efforts will not require the Company to postpone its annual meeting of
stockholders or take extraordinary solicitation efforts not taken with regard to
the other nominees to the Board, including that the Company will not be
obligated to pay extraordinary costs with regard to the election of such
Stockholder Designees as Directors.

(c)        From and after the Closing, subject to Section 3.1(d) below:

(i)            if at any time the Stockholder does not hold at least 25% of the
Total Voting Power, then the Stockholder shall cause one Stockholder Designee to
immediately resign from the Board so that three Stockholder Designees shall
remain, at least one of whom must qualify as an Independent Director;

(ii)           if at any time the Stockholder does not hold at least 17.9% of
the Total Voting Power, then the Stockholder shall cause such number of
Stockholder Designees to immediately resign from the Board so that two
Stockholder Designees shall remain, neither of whom must qualify as an
Independent Director; provided that if the resignation of such Stockholder
Designees would cause the Company to not be in compliance with Section 303A.01
of the New York Stock Exchange Listed Company Manual with respect to a majority
of directors qualifying as Independent Directors, one remaining Stockholder
Designee must qualify as an Independent Director;

(iii)          if at any time the Stockholder does not hold at least 10.7% of
the Total Voting Power, then the Stockholder shall cause such number of
Stockholder Designees to immediately resign from the Board so that one
Stockholder Designee shall remain, which Stockholder Designee need not qualify
as an Independent Director; and

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(iv)          if at any time the Stockholder does not hold at least 5% of the
Total Voting Power, then the Stockholder shall cause all of the remaining
Stockholder Designees to immediately resign from the Board.

In the event of a Stockholder Designee resignation pursuant to this Section
3.1(c), the resulting vacancy shall be filled by a Director appointed by the
Nominating and Governance Committee of the Board to the extent the Board, in its
discretion, determines to maintain the size of the Board and not reduce the
Board size to the number of directors in office immediately following such a
resignation.  In the event that a Stockholder Designee fails to deliver his or
her prompt resignation as required pursuant to this Section 3.1(c), the parties
hereto shall take all necessary action (and the Stockholder agrees to cooperate
with the Company in taking such action) permitted by Applicable Law (as defined
below) to cause such Stockholder Designee to be removed from the Board,
including seeking equitable relief such as an injunction; provided that the
Company shall be entitled to reimbursement by the Stockholder for all reasonable
expenses incurred by the Company (legal or otherwise) in connection with the
removal of such Stockholder Designee from the Board.  For purposes of clarity,
when and if the number of Stockholder Designees is reduced pursuant to this
Section 3.1(c), such reduction shall be permanent and the number of Stockholder
Designees thereafter shall not be increased up to any prior number of
Stockholder Designees.  As used herein, “Applicable Law” means any domestic or
foreign federal or state statute, law, ordinance, rule, administrative code,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree, policy, ordinance, decision, guideline or other requirement
(including those of the Commission) applicable to any of the parties to this
Agreement or any of their respective Affiliates.

(d)        In the event that the Board determines, in its discretion, to
increase or decrease the size of the Board from fourteen Directors during any
period in which the Stockholder has the right to nominate at least one Director
pursuant to this Section 3.1 and provided that the Stockholder has not
materially breached any of its obligations or covenants under this Agreement,
the Stockholder’s right to designate Stockholder Designees for nomination by the
Board shall be adjusted such that the Stockholder shall be entitled to designate
a number of Stockholder Designees equal to the Board Representation Percentage
(as defined below in this Section 3.1(d)) multiplied by the new total number of
Directors (including in this total any vacancies) on the Board (rounding to the
nearest whole number of Directors).  “Board Representation Percentage” means the
number, expressed as a percentage, determined by dividing the number of
Stockholder Designees the Stockholder was entitled to designate prior to the
change in the size of the Board by the total number of Directors that comprised
the full Board (including in this total any vacancies) prior to the change in
the size of the Board.  Subject to Applicable Law, in the event that at any time
after the Closing, the number of Stockholder Designees designated by the
Stockholder exceeds such number of Stockholder Designees entitled to be
designated by the Stockholder pursuant to this Section 3.1(d), the Stockholder
shall cause to promptly resign, and take all other action reasonably necessary
to cause the prompt removal of, that number of Stockholder Designees as required
to make the remaining number of Stockholder Designees conform to the number of
Stockholder Designees that the Stockholder has the right to designate pursuant
to this Section 3.1(d).  In the event that a Stockholder Designee fails to
deliver his or her prompt resignation, the parties hereto shall take all
necessary action (and the Stockholder agrees to cooperate with the Company in
taking such action) permitted by Applicable Law to cause such Stockholder
Designee to be removed from the Board,

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including seeking equitable relief such as an injunction; provided that the
Company shall be entitled to reimbursement by the Stockholder for all reasonable
expenses incurred by the Company (legal or otherwise) in connection with the
removal of such Stockholder Designee from the Board.  In the event that the
number of Stockholder Designees is reduced by operation of this Section 3.1(d),
the number of those Stockholder Designees who must qualify as Independent
Directors shall be determined as if the reduction in the number of Stockholder
Designees was the result of a decrease in the number of Stockholder Designees
pursuant to Section 3.1(c).

(e)        The Stockholder shall have the right to designate a replacement
Stockholder Designee, who must be reasonably acceptable to the Nominating and
Governance Committee of the Board, for a Stockholder Designee designated in
accordance with this Section 3.1 at the expiration or termination of such
Stockholder Designee’s term (provided, at such time, that the Stockholder
retains the right to designate such a Stockholder Designee) or upon death,
resignation, retirement, disqualification, removal from office or other cause;
provided that such replacement Stockholder Designee satisfies the Independent
Director requirements if the Stockholder Designee so replaced was required to
satisfy such requirements.  The Board shall appoint or nominate, as the case may
be, each Stockholder Designee so designated pursuant to this Section 3.1(e).

(f)         In the event any Stockholder Designee is required to submit his or
her resignation to the Chairman of the Board for consideration by the Nominating
and Governance Committee pursuant to the Board’s Policy on Majority Voting, the
Nominating and Governance Committee makes a recommendation to the Board
concerning the acceptance or rejection of such resignation and the Board decides
to accept such Stockholder Designee’s resignation, then (i) the Board shall not
reduce the size of the Board to eliminate the vacancy created thereby, (ii) the
Stockholder shall have the right to designate a replacement Stockholder Designee
and (iii) the Board and the Stockholder shall take such actions necessary to
appoint such replacement Stockholder Designee as a Director to fill such
vacancy; provided, however, that the replacement Stockholder Designee is
reasonably acceptable to the Nominating and Governance Committee of the Board
and the Stockholder Designee qualifies as an Independent Director if the
Stockholder Designee so replaced was required to so qualify.

Section 3.2       Board Chairs; Management.

(a)        The parties hereby agree that: (i) upon the Closing, the Stockholder
Designees shall elect one of the Stockholder Designees to become the
Non-Executive Co-Chairman of the Board, which individual (or his or her
successor elected by the Stockholder Designees at any time from and after the
Closing and prior to the second anniversary of the Closing) shall serve as
Non-Executive Co-Chairman for a period commencing upon the Closing and ending
upon the second anniversary of the Closing (provided that the Stockholder
retains the right to designate one or more Stockholder Designees during such two
year period), with the duties as Non-Executive Co-Chairman specified in the
Amended and Restated By-laws of the Company (as in effect immediately following
the Closing, the “By-laws”, the form of which is attached as Exhibit 3.2
hereto); (ii) upon the Closing, the Directors of the Company who were Directors
immediately prior to the Closing, shall elect a Chairman of the Board, which
individual (or his or her successor) shall serve as Chairman for a period
commencing upon the Closing and

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ending upon the second anniversary of the Closing, with the duties as Chairman
specified in the By-laws; and (iii) from and after the second anniversary of the
Closing, the full Board shall elect a Chairman of the Board as it determines in
its discretion who shall have the duties and authority for the Chairman
specified in the By-laws.

(b)        The parties hereby agree that upon the Closing, the Company shall
take all actions reasonably necessary to cause Pierre Legault, the current
Executive Vice President of the Stockholder, to become Senior Executive Vice
President, Chief Administrative Officer of the Company, pursuant to the terms
and conditions of such individual’s employment agreement with the Company with a
term of not less than two years from the Closing.

(c)        The parties hereby agree that upon the Closing, Mary F. Sammons, the
Company’s current Chief Executive Officer, shall remain as the Company’s Chief
Executive Officer with any future successor to be named by the Board.

Section 3.3       Board Committee Representation.

(a)        Upon the Closing, the Company shall increase the size of the
Executive Committee of the Board by one member and the Board shall appoint the
Non-Executive Co-Chairman of the Board to the Executive Committee and shall
continue to appoint such Non-Executive Co-Chairman (or his or her successor) to
the Executive Committee for the duration of his or her term.  Following the
expiration of the term of the Non-Executive Co-Chairman of the Board, for so
long as the Stockholder Beneficially Owns at least 25% of the Total Voting Power
the Stockholder shall be entitled to designate a Stockholder Designee to the
Executive Committee and the Board shall appoint such Stockholder Designee to the
Executive Committee.

(b)        Upon the Closing, the Company shall increase the size of each of the
Audit, Compensation, and Nominating and Governance Committees of the Board by
one member and the Board shall appoint as members to fill the vacancies on each
such committee one of the Stockholder Designees designated by the Stockholder;
provided that a Stockholder Designee shall not be appointed to one or more
committees of the Board if (i) the Stockholder Designee, or membership of such
Stockholder Designee on a particular committee, is not reasonably acceptable to
the Nominating and Governance Committee of the Board or (ii) counsel to the
Company advises the Stockholder and the Company that the appointment of such
Stockholder Designee to a committee of the Board would violate Applicable Law,
any rule or regulation of a stock exchange on which the Rite Aid Common Stock is
listed or the Company’s written “Corporate Governance Guidelines” and committee
charters as in effect on the date hereof (with such amendments as are required
by Applicable Law or approved by the affirmative vote of the Board); provided,
further, that, subject to the foregoing, the Stockholder shall have the right to
designate one of the other Stockholder Designees, if any, to be appointed to
such committee.  The obligation of the Board to appoint a Stockholder Designee
to each such committee of the Board shall remain for so long as the Stockholder
designates two Stockholder Designees pursuant to Section 3.1 who qualify as
Independent Directors; provided that the Stockholder has not materially breached
any of its obligations or covenants under this Agreement.  In the event that
only one Stockholder Designee qualifies as an Independent Director, such
Stockholder Designee shall be appointed by the Board as a member of one of the
three committees and one or more Stockholder Designees shall be provided
“observer status” to attend committee meetings

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(subject to the committees meeting in executive session from time to time) of
the two other committees on which the Stockholder Designee who qualifies as an
Independent Director does not then serve; provided that the Stockholder has not
materially breached any of its obligations or covenants under this Agreement.

Section 3.4       Vote Required for Board Action; Board Quorum.

(a)        Except as otherwise provided in this Section 3.4, any determination
or other action of or by the Board (other than action by unanimous written
consent in lieu of a meeting) shall require the affirmative vote or consent, at
a meeting at which a quorum is present, of a majority of Directors present at
such meeting.

(b)        For so long as the Stockholder Beneficially Owns more than 25% of the
Total Voting Power, the Company shall not enter into or effectuate any of the
following actions without the prior approval of at least two-thirds of all of
the Directors then in office, at a meeting with respect to which such
transaction was specifically described in a written notice of meeting duly
provided to the Directors in accordance with the By-Laws (as may be amended,
supplemented, restated or otherwise modified from time to time):

(i)            any increase in the number of shares of Capital Stock of the
Company authorized in the Amended and Restated Certificate of Incorporation of
the Company (as in effect immediately following the Closing and as may be
amended, supplemented, restated or otherwise modified from time to time
thereafter, the “Certificate of Incorporation”);

(ii)           any issuance of equity securities of the Company in one
transaction or a series of related transactions that would result in the
issuance of Capital Stock of the Company constituting more than 20% of the Total
Voting Power outstanding following such issuance;

(iii)          (x) any merger, reorganization, recapitalization requiring
approval of the holders of Rite Aid Common Stock, consolidation or similar
business combination involving the Company or (y) any merger, reorganization,
recapitalization, consolidation or similar business combination involving any
subsidiary of the Company and requiring approval of the holders of Rite Aid
Common Stock;

(iv)          any sale of assets by the Company, in one or a series of related
transactions in any twelve-month period, other than sales of inventory in the
ordinary course of business, with a fair market value constituting in excess of
20% of the Company’s consolidated total assets as of the date of the Company’s
most recent regularly prepared balance sheet or in excess of 20% of the
Company’s annualized consolidated revenues for the Company’s immediately
preceding fiscal year;

(v)           any filing by the Company of a voluntary petition seeking
liquidation, reorganization, arrangement or readjustment, in any form, of its
debts under Title 11 of the United States Code or any other Federal or state
insolvency law, or the Company’s filing an answer consenting to or acquiescing
in any such petition, or the making by the Company of any general assignment for
the benefit of its creditors of all or substantially all of the Company’s
assets; and

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(vi)          any amendment of the Company’s Certificate of Incorporation or
By-laws that adversely affects the rights of the Stockholder.

Section 3.5       Voting Arrangements.

(a)        The Stockholder shall, and shall cause any of its Affiliates to, vote
or act by written consent with respect to, all of the shares of the
Voting-Enabled Securities Beneficially Owned by the Stockholder and its
Affiliates in favor of each matter required to effectuate any provision of this
Agreement and against any matter the approval of which would be inconsistent
with any provision of this Agreement.

(b)        For each election of Directors occurring after the Closing through
and including the election of Directors at the annual stockholder meeting of the
Company to be held in 2011, the Stockholder shall, and shall cause any of its
Affiliates to, vote all Voting-Enabled Securities Beneficially Owned by the
Stockholder and its Affiliates for each of the Director nominees recommended by
the Board; provided that the Company is in material compliance with its
obligations pursuant to Section 3.1.

(c)        For each election of Directors occurring after the annual stockholder
meeting of the Company to be held in 2011, the Stockholder shall, and shall
cause any of its Affiliates to, vote all Voting-Enabled Securities Beneficially
Owned by the Stockholder and its Affiliates, in the sole discretion of the
Stockholder, either (i) for each of the Director nominees recommended by the
Board or, alternatively, (ii) for each of the Director nominees recommended by
the Board and for the Director nominees recommended by other Persons in the same
proportion as the votes cast by all other holders of Voting-Enabled Securities
for such Director nominees (provided that the Company is in material compliance
with its obligations pursuant to Section 3.1), and, in any case, for each
Stockholder Designee.

(d)        The Stockholder shall be, and shall cause each of its Affiliates who
hold Voting-Enabled Securities to be, present in person or represented by proxy
at all meetings of securityholders of the Company at which Directors are to be
elected to the extent necessary so that all Voting-Enabled Securities
Beneficially Owned by the Stockholder and its Affiliates shall be counted as
present for the purpose of determining the presence of a quorum at such meeting
and to vote such shares in accordance with this Section 3.5.

(e)        Except as expressly set forth in this Agreement with respect to
voting for the election of Directors, nothing in this Agreement shall limit the
ability of the Stockholder or any of its Affiliates from voting any Voting
Securities over which it has voting authority in such manner as it may determine
in its sole discretion.

ARTICLE IV

MISCELLANEOUS

Section 4.1       Conflicting Agreements.  Each party represents and warrants
that it has not granted and is not a party to any proxy, voting trust or other
agreement that is inconsistent with or conflicts with any provision of this
Agreement.

 

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Section 4.2       Termination.  Except as otherwise expressly provided in this
Agreement, this Agreement shall terminate upon the conclusion of the Standstill
Period.  Nothing in this Section 4.2 shall be deemed to release any party from
any liability for any willful and material breach of this Agreement occurring
prior to the termination hereof or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.

Section 4.3       Representations of the Company.  The Company hereby represents
and warrants to the Stockholder that (i) this Agreement has been duly and
validly authorized by the Company and all necessary and appropriate action has
been taken by the Company to execute and deliver this Agreement and to perform
its obligations hereunder and (ii) this Agreement has been duly and validly
executed and delivered by the Company and assuming the due authorization and
valid execution and delivery by the other parties hereto, this Agreement is a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally or by general equitable
principles.

Section 4.4       Representations of the Stockholder.  The Stockholder hereby
represents and warrants to the Company that (i) this Agreement has been duly and
validly authorized by the Stockholder and all necessary and appropriate action
has been taken by the Stockholder to execute and deliver this Agreement and to
perform its obligations hereunder and (ii) this Agreement has been duly and
validly executed and delivered by the Stockholder and assuming the due
authorization and valid execution and delivery by the other parties hereto, this
Agreement is a valid and binding obligation of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally or by general
equitable principles.

Section 4.5       Representations of the Family Members.  Each Family Member,
individually and not jointly, hereby represents and warrants to the Company that
(i) such Family Member has full legal capacity to execute and deliver this
Agreement and to perform his or her obligations hereunder and (ii) assuming the
due authorization and valid execution and delivery by the other parties hereto,
this Agreement is a valid and binding obligation of such Family Member,
enforceable against such Family Member in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles.

Section 4.6       Ownership Information.  For purposes of this Agreement, all
determinations of the amount of outstanding Rite Aid Common Stock,
Voting-Enabled Securities or Voting Securities shall be based on information set
forth in the most recent quarterly or annual report, and any current report
subsequent thereto, filed by the Company with the Commission, unless the Company
shall have updated such information by delivery of written notice to the
Stockholder (including any written notice pursuant to Section 1.4(b)).

Section 4.7       Adjustments to Prevent Dilution.  In the event of any
reclassification, stock split (including a reverse split), stock dividend,
reorganization,

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recapitalization or similar event affecting Rite Aid Common Stock, the number of
shares of Rite Aid Common Stock used in all formulae herein will be adjusted
appropriately to provide to the parties the same substantive effect as
contemplated by this Agreement prior to such event.

Section 4.8       Savings Clause.  No provision of this Agreement shall be
construed to require any party or its Affiliates to take any action that would
violate any Applicable Law.

Section 4.9       Amendment and Waiver.  Except as otherwise provided herein,
this Agreement may not be amended except by an instrument in writing signed on
behalf of the Company and the Stockholder; provided, however, that, in the event
of a Stockholder Pro Rata Distribution, at such time as Family Members and their
Affiliates comprise a Group Beneficially Owning more than 5% of the Total Voting
Power and having rights under this Agreement, any amendment to this Agreement
shall be effective only if signed on behalf of such Group by its
Representative.  No modification, amendment or waiver of any provision of this
Agreement, and no giving of any consent provided for hereunder, shall be
effective unless such modification, amendment, waiver or consent is approved by
a majority of the Directors not including the Stockholder Designees. The failure
of any party to enforce any of the provisions of this Agreement shall in no way
be construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.

Section 4.10     Severability.  If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.

Section 4.11     Entire Agreement.  Except as otherwise expressly set forth
herein, this Agreement, the Stock Purchase Agreement and the Registration Rights
Agreement (as defined in the Stock Purchase Agreement), together with the
several agreements and other documents and instruments referred to herein or
therein or annexed hereto or thereto or delivered in connection herewith or
therewith, embody the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, that may have related to the subject matter hereof in any way.
Without limiting the generality of the foregoing, to the extent that any of the
terms hereof are inconsistent with the rights or obligations of the Stockholder
under any other agreement with the Company, the terms of this Agreement shall
govern.

Section 4.12     Successors and Assigns.  Except as expressly provided in and in
accordance with Section 2.1 and Section 2.2, neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties (which, in the case of
the Company’s consent, shall require approval of a majority of the Directors not
including the Stockholder Designees), and any attempt to make any such
assignment without such consent shall be null and void; provided that an
assignment by the Company shall require the consent of the Stockholder only and
not of the Family Members.  Subject to the foregoing, this Agreement will be
binding upon, inure to the benefit of and be

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enforceable by, the parties and their respective successors (including any
executor or administrator of a party’s estate) and permitted assigns.

Section 4.13     Counterparts.  This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

Section 4.14     Remedies.

(a)        Each party hereto acknowledges that monetary damages would not be an
adequate remedy in the event that each and every one of the covenants or
agreements in this Agreement are not performed in accordance with their terms,
and it is therefore agreed that, in addition to and without limiting any other
remedy or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
each and every one of the terms and provisions hereof.  Each party hereto agrees
not to oppose the granting of such relief in the event a court determines that
such a breach has occurred, and to waive any requirement for the securing or
posting of any bond in connection with such remedy.

(b)        All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

Section 4.15     Notices.  All notices and other communications hereunder shall
be in writing and shall be addressed as follows (or at such other address for a
party as shall be specified by like notice):

If to the Company:

Rite Aid Corporation
30 Hunter Lane
Camp Hill, PA 17011
Facsimile:  (717) 760-7867
Attention:   Robert B. Sari

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Facsimile:  (212) 735-2000
Attention:   Nancy A. Lieberman
                   Marc S. Gerber

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If to the Stockholder:

The Jean Coutu Group (PJC) Inc.
530, Bériault Street
Longueuil QC
J4G 1S8 Canada
Facsimile:  (450) 646-6686
Attention:   Kim Lachapelle

with a copy (which shall not constitute notice) to:

O’Melveny & Myers LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Facsimile:  (212) 326-2061
Attention:   Spencer D. Klein

If to any of the Family Members:

c/o The Jean Coutu Group (PJC) Inc.
530, Bériault Street
Longueuil QC
J4G 1S8 Canada
Facsimile:  (450) 646-6686
Attention:   Kim Lachapelle

with a copy (which shall not constitute notice) to:

O’Melveny & Myers LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Facsimile:  (212) 326-2061
Attention:   Spencer D. Klein

All such notices or communications shall be deemed to have been delivered and
received:  (a) if delivered in person, on the day of such delivery, (b) if by
facsimile, on the day on which such facsimile was sent, provided that an
appropriate electronic confirmation or answerback is received, or (c) if by a
recognized next day courier service, on the first Business Day following the
date of dispatch.  Each notice, written communication, certificate, instrument
and other document required to be delivered under this Agreement shall be in the
English language, except to the extent that such notice, written communication,
certificate, instrument and other document is required by Applicable Law to be
in a language other than English.

Section 4.16     Governing Law.  THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE
PARTIES AND THE ADJUDICATION AND THE

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ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT JURISDICTION, WITHOUT
GIVING EFFECT  TO THE CONFLICTS OF LAW RULES THEREOF.

Section 4.17     Consent to Jurisdiction.

(a)           Each party to this Agreement, by its execution hereof, hereby:

(i)   irrevocably and unconditionally submits to the exclusive jurisdiction in
the Court of Chancery of the State of Delaware or any court of the United States
located in the State of Delaware, for the purpose of any and all actions, suits
or proceedings arising in whole or in part out of, related to, based upon or in
connection with this Agreement or the subject matter hereof;

(ii)  waives to the extent not prohibited by Applicable Law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
any such action brought in one of the above-named courts should be dismissed on
grounds of forum non conveniens, should be transferred to any court other than
one of the above-named courts, or should be stayed by reason of the pendency of
some other proceeding in any other court other than one of the above-named
courts, or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and

(iii) agrees not to commence any such action other than before one of the
above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such action to any court other
than one of the above-named courts whether on the grounds of forum non
conveniens or otherwise.

(b)           The Stockholder and the Family Members hereby irrevocably and
unconditionally designate, appoint, and empower The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, as
their respective designee, appointee and agent to receive, accept and
acknowledge for and on their behalf service of any and all legal process,
summons, notices and documents that may be served in any action, suit or
proceeding brought against the Stockholder or the Family Members in any such
United States federal or state court with respect to their obligations,
liabilities or any other matter arising out of or in connection with this
Agreement and that may be made on such designee, appointee and agent in
accordance with legal procedures prescribed for such courts.  If for any reason
such designee, appointee and agent hereunder shall cease to be available to act
as such, the Stockholder and the Family Members agree to designate a new
designee, appointee and agent in the State of Delaware on the terms and for the
purposes of this Section 4.17 reasonably satisfactory to the Company.  The
Stockholder and Family Members further hereby irrevocably consent and agree to
the service of any and all legal process, summons, notices and documents in any
such action, suit or proceeding against the Stockholder or the Family Members by
serving a

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copy thereof upon the relevant agent for service of process referred to in this
Section 4.17 (whether or not the appointment of such agent shall for any reason
prove to be ineffective or such agent shall accept or acknowledge such service)
or by sending copies thereof by a recognized next day courier service to the
Stockholder or the Family Members, as applicable, at their address specified in
or designated pursuant to this Agreement.  The Stockholder and the Family
Members agree that the failure of any such designee, appointee and agent to give
any notice of such service to them shall not impair or affect in any way the
validity of such service or any judgment rendered in any action or proceeding
based thereon.

Section 4.18     Interpretation.  The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”.  The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article and Section references are to this Agreement unless
otherwise specified.  The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

Section 4.19     Methodology for Calculations.  For purposes of calculating the
number of outstanding shares of Rite Aid Common Stock, Voting-Enabled Securities
or Voting Securities and the number of shares of Rite Aid Common Stock,
Voting-Enabled Securities or Voting Securities Beneficially Owned by any Person
as of any date, any shares of Rite Aid Common Stock, Voting-Enabled Securities
or Voting Securities held in the Company’s treasury or belonging to any
subsidiaries of the Company which are not entitled to be voted or counted for
purposes of determining the presence of a quorum pursuant to Section 160(c) of
the Delaware General Corporation Law (or any successor statute) shall be
disregarded.

Section 4.20     Effectiveness.  This Agreement shall become effective upon the
Closing and prior thereto shall be of no force or effect. If the Stock Purchase
Agreement shall be terminated in accordance with its terms prior to the Closing,
this Agreement and any actions or agreements contemplated hereby shall
automatically be terminated and of no force or effect.

[Remainder of page intentionally left blank.]

 

28

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholder Agreement
as of the date first written above.

  

 

RITE AID CORPORATION

 

 

 

 

 

 

  

 

By:

 

/s/ Robert B. Sari

  

 

 

 

Name:

 

Robert B. Sari

  

 

 

 

Title:

 

Executive Vice President and General Counsel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

THE JEAN COUTU GROUP (PJC) INC.

 

 

 

 

 

 

  

 

By:

 

/s/ Jean Coutu

  

 

 

 

Name:

 

Jean Coutu

  

 

 

 

Title:

 

Chairman of the Board, President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

JEAN COUTU

 

 

 

  

 

/s/ Jean Coutu

 

 

 

 

 

 

  

 

MARCELLE COUTU

 

 

 

  

 

/s/ Marcelle Coutu

 

 

 

 

 

 

  

 

FRANCOIS J. COUTU

 

 

 

  

 

/s/ Francois J. Coutu

 

 

 

 

 

 

  

 

MICHEL COUTU

 

 

 

  

 

/s/ Michel Coutu

 

 

 

 

 

 

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LOUIS COUTU

 

 

 

  

 

/s/ Louis Coutu

 

 

 

 

 

 

  

 

SYLVIE COUTU

 

 

 

  

 

/s/ Sylvie Coutu

 

 

 

 

 

 

  

 

MARIE-JOSÉE COUTU

 

 

 

  

 

/s/ Marie-Josée Coutu

 

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