EMPLOYMENT AGREEMENT

     THIS AGREEMENT (this "Agreement") by and between Rite Aid Corporation, a
Delaware corporation (the "Company"), and Robert G. Miller (the "Executive") is
dated as of the 9th day of April, 2003 and shall become effective as of the
close of business on April 9, 2003 (the "Effective Date").

     1.   Introductory Statement

     Executive is Chairman of the Board ("Chairman") and Chief Executive Officer
of the Company under an existing employment agreement. Executive desires to
assume only the Chairman's position following the annual general meeting of
stockholders in 2003 (the close of business on such date is herein referred to
as the "2003 AGM Date"). The Company desires to secure the continued services of
the Executive as Chairman from the 2003 AGM Date through the close of business
on June 30, 2005 or such other date in June 2005 when the Company's annual
general meeting of stockholders occurs (the "2005 AGM Date"). This Agreement
shall expire on the 2005 AGM Date, subject to the terms and conditions herein.

     2.   Agreement of Employment

          (a) Except as otherwise expressly set forth herein, the terms of the
Original Employment Agreement (as defined in Section 8) between the Company and
Executive as Chairman and Chief Executive Officer shall continue in full force
and effect in accordance with the original terms thereof until the 2003 AGM
Date. Following the 2003 AGM Date, the Original Employment Agreement shall be
amended and restated as set forth or incorporated by reference herein (with this
Agreement superseding the Original Employment Agreement in its entirety from and
after the 2003 AGM Date). As of the 2003 AGM Date, Executive hereby resigns as
Chief Executive Officer, which resignation shall not constitute a breach of or
termination of employment by the Executive under the Original Employment
Agreement or this Agreement.

               During the period commencing on the 2003 AGM Date and ending on
the 2005 AGM Date (the "Employment Period"), the Executive shall serve as the
Chairman, subject to the terms hereof. As Chairman, Executive will spend such
time as reasonably necessary to assist management in setting strategic goals and
business planning; consult with the chief executive officer and other executive
officers on other matters as reasonably requested; help with strategic decisions
or business combinations; and otherwise perform duties consistent with the
position of Chairman.

          (b) During the Employment Period, and excluding any periods of
vacation and sick leave to which Executive is entitled, the Executive shall
devote such attention and time during normal business hours as he believes in
good faith shall be reasonably necessary to carry out his duties.
Notwithstanding the foregoing, the Executive may serve on corporate, industry,
civic or charitable boards and committees, may consult with other businesses
(consistent with



Section 6 hereof) and shall be permitted to make and manage his personal
investments. Nothing herein shall prohibit Executive from entering into
employment with third parties during the Employment Period, so long as it does
not reasonably interfere with Executive's duties and is consistent with Section
6 hereof.

          (c) The provisions of Section 2(c) of the Original Employment
Agreement (as defined in Section 8) shall continue to apply during the
Employment Period and are incorporated herein by reference.

     3.   Compensation

          (a) During the Employment Period, for the balance of the Company's
2004 fiscal year (i.e., through February 28, 2004) (the "Initial Term"), the
provisions of Section 3(a) ("Base Salary"), 3(b) ("Incentive Compensation"),
3(c) ("Other Benefits") and 3(d) ("Deferred Compensation; Service Credit") under
the Original Employment Agreement shall continue to apply in their entirety in
accordance with the original terms thereof, notwithstanding that Executive's
position shall have changed to Chairman from Chairman and Chief Executive
Officer. Such provisions are incorporated herein by reference. Executive shall
not be entitled to participate in any Incentive Compensation or bonus plans (or
any successor thereto) with respect to any fiscal year after fiscal 2004.

          (b) During the Employment Period, commencing after the Initial Term
through the 2005 AGM Date (the "Extended Term"), the Company shall pay Executive
an annual base salary of $350,000, in accordance with the Company's regular
payroll practice for its senior executives as in effect from time to time (but
in no event less frequently than monthly). Executive shall also be entitled in
their entirety to continued benefits as provided under Section 3(c) ("Other
Benefits") of the Original Employment Agreement and continued compensation as
provided under Section 3(d) ("Deferred Compensation; Service Credit") of the
Original Employment Agreement. Such provisions are incorporated herein by
reference.

          (c) Notwithstanding anything to the contrary herein or in the Original
Employment Agreement, following any termination for any reason of the
Executive's employment with the Company, the Company shall make an annual
payment (as previously agreed) to the Executive for his life (and thereafter to
his surviving spouse for her life) equal to the cost to the Executive of
purchasing medical coverage substantially comparable in all material respects to
the coverage provided by the Company to its senior executives (and their spouses
and dependents) immediately prior to such termination. Notwithstanding the
foregoing, the payment described in the preceding sentence shall not be made to
the Executive with respect to any period during which the Company provides such
medical coverage to the Executive and his spouse and dependents pursuant to
Section 5(a) or 5(b) hereof.

          (d) During the Employment Period, Executive shall be eligible to
receive option and restricted stock awards in accordance with the Company's
policy for members of the Board of Directors as in effect from time to time.
Subject to the terms and conditions herein, Executive's existing stock options
and shares of restricted stock shall continue to vest and be fully exercisable
for the remaining of their stated terms.


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          (e) The provisions of Section 3(f) ("Indemnification") in the Original
Employment Agreement are incorporated by reference in this Agreement as if set
forth herein with respect to the Employment Period and, with respect to D&O
insurance, for the six year period following termination hereof.

     4.   Termination of Employment

     The following provisions shall immediately take effect as of the Effective
Date (and for purposes of this Section 4 and 5 only, the term "Employment
Period" shall be deemed to include the period commencing on the Effective Date
and ending at the expiration of the Extended Term, superseding and modifying any
conflicting or inconsistent provision in the Original Employment Agreement).

          (a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Company shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that
Executive has been unable, for six consecutive months, to perform the
Executive's applicable duties under the Original Employment Agreement or this
Agreement, as applicable, as a result of physical or mental illness or injury.
The effective date of any termination of Executive's employment for Disability
is referred to herein as the "Disability Effective Date." A termination of the
Executive's employment by the Company for Disability shall be communicated to
the Executive by written notice, and shall be effective on the 30th day after
receipt of such notice by the Executive, unless the Executive returns to
required performance of the Executive's duties before the Disability Effective
Date. During any period prior to the Disability Effective Date during which
Executive is absent from the required performance of his duties with the Company
due to such physical or mental illness or injury, the Company shall continue to
pay Executive his applicable compensation under the Original Employment
Agreement or this Agreement, as applicable.

          (b) Termination by the Company. The Company may terminate the
Executive's employment at any time during the Employment Period for Cause or
without Cause. "Cause" shall mean only an act of fraud, embezzlement or
misappropriation by the Executive, in any case willfully intended by the
Executive to result in substantial personal enrichment at the expense of the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds of the non-employee members of the Board at a meeting of
the Board called and held for such purpose (after reasonable written notice to
Executive setting forth in reasonable detail the specific conduct of the
Executive upon which the Board relies in reaching its determination and an
opportunity for Executive, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Executive was
guilty of the conduct set forth in the second sentence of this Section 4(b), and
Executive shall be entitled to receive all compensation and benefits hereunder
pending the delivery of such resolution. The effective date of any termination
for Cause shall be the date such resolution is delivered to the Executive.


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          (c) Good Reason; Without Good Reason. The Executive may terminate
employment for Good Reason or without Good Reason. "Good Reason" shall mean the
occurrence of any one of the following:

               A. any (i) adverse alteration in Executive's titles, positions,
     status, duties, authorities, reporting relationships or responsibilities
     with the Company or its subsidiaries from those specified in the Original
     Employment Agreement or this Agreement, as applicable (it being understood
     that, if the Company is no longer a public company, the failure of
     Executive to hold the applicable position and duties under the Original
     Employment Agreement or this Agreement with any ultimate corporate or other
     parent of the Company or any successor shall be deemed to constitute such
     Good Reason), (ii) assignment to Executive of any duties or
     responsibilities inconsistent with Executive's status as Chairman or Chief
     Executive Officer of the Company, as applicable, or (iii) failure of
     Executive during the Employment Period to be nominated or re-elected to the
     offices of Chairman and Chief Executive Officer, as applicable, or the
     removal of Executive from either such office under any circumstances (other
     than in connection with the termination of Executive's employment hereunder
     or the resignation of Executive as Chief Executive Officer upon
     commencement of the Initial Term);

               B. any failure by the Company to comply with any provision of
     Section 3 of the Original Employment Agreement or this Agreement, as
     applicable;

               C. any failure by the Company to comply with Section 2(c) of the
     Original Employment Agreement or this Agreement, as applicable;

               D. any failure by the Company to comply with paragraph (b) of
     Section 11 of the Original Employment Agreement or the similar provisions
     incorporated by reference in this Agreement, as applicable; or

               E. any other material breach of the Original Employment Agreement
     or this Agreement, as applicable, by the Company; provided, however, that
     the Company shall have the right, within ten (10) days after receipt of
     notice from Executive of the Company's violation of any one of
     subparagraphs A, B or E, to cure in full the event or circumstances giving
     rise to such Good Reason, in the event of which cure such event or
     circumstances shall be deemed not to constitute Good Reason hereunder.

               In addition, any termination of employment by the Executive
     within the six month period commencing on the date of a Change in Control
     of the Company (as defined in Section 8) shall be treated as a non-curable
     termination of employment by the Executive for Good Reason. A termination
     of employment by the Executive for Good Reason shall be effectuated by
     giving the Company written notice ("Notice of Termination for Good Reason")
     of the termination, setting forth in reasonable detail the specific conduct
     of the Company that constitutes Good Reason and the specific provision(s)
     of this Agreement on which the Executive relies, provided, that Executive's
     continued employment shall not be deemed to constitute consent to, or a
     waiver of rights with respect to, any act, omission or other grounds
     constituting Good Reason hereunder. For clarity, it is understood that the
     requirement of setting forth such specific conduct and


                                       4



     specific provision(s) is intended (i) to permit the Company to make a
     reasonable evaluation of Executive's claim of termination for Good Reason
     and (ii) to permit the Company, where applicable, to cure such conduct, but
     not to require Executive to specify each act, omission or other grounds
     constituting Good Reason, there being no intention of the parties that
     failure to so specify will function as an estoppel with respect to any
     claim by Executive. A termination of employment by the Executive for Good
     Reason shall be effective on the latest of (i) the fifth business day
     following the expiration of the Company's cure period described above, if
     applicable, (ii) the date specified by Executive in the Notice of
     Termination for Good Reason, or (iii) 15 days following the date the Notice
     of Termination for Good Reason is delivered to the Company; provided,
     however, that no such notice period shall be required with respect to any
     such termination as to which such written notice of termination is
     delivered to the Company following a Change in Control of the Company.

               (ii) A termination of the Executive's employment by the Executive
     without Good Reason shall be effected by giving the Company at least 15
     days' written notice of such termination, and shall be effective on the
     date specified by Executive in such notice, provided, however, that no such
     notice period shall be required with respect to any such termination as to
     which such written notice of termination is delivered to the Company
     following a Change in Control of the Company.

          (d) Date of Termination. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, or the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason becomes
effective, as the case may be. On the Date of Termination, the Employment Period
shall terminate.

     5.   Obligations of the Company upon Termination.

          (a) Other Than for Cause, Disability or for Good Reason. If, during
the Employment Period, the Company terminates the Executive's employment for any
reason other than Cause or Disability, or the Executive terminates his
employment for Good Reason;

               (1) the Company shall pay to the Executive, not later than ten
          (10) days following the Date of Termination, (i) an amount equal to
          three times the sum of (x) the Executive's then current annual base
          salary (without giving effect to any future reductions thereof) plus
          (y) if applicable, the Executive's then current Annual Target Bonus
          (as defined in Section 3(b) of the Original Employment Agreement);
          (ii) (A) any accrued but unpaid amounts of the Executive's annual base
          salary through the Date of Termination, (B) if applicable, any bonus
          under any Annual Bonus Plan (as defined in Section 3(b) of the
          Original Employment Agreement) accrued but unpaid through the Date of
          Termination (including without limitation any such bonus payable on a
          date following the Date of Termination with respect to a fiscal year
          or other applicable measuring period completed prior to the Date of
          Termination), (C) any other compensation and benefits accrued (and,
          where applicable, vested) through the Date of Termination under the
          terms of the Company's compensation and benefit


                                       5



          plans, programs or arrangements (including without limitation vacation
          benefits and the deferred compensation arrangements referenced in the
          Original Employment Agreement or herein) as in effect immediately
          prior to an event constituting Good Reason) and (D) any amounts of
          reimbursable business expenses incurred through the Date of
          Termination (all of the items in this clause (ii) are hereinafter
          referred to collectively as the "Accrued Benefits"); (iii) if
          applicable, an amount equal to the product of (A) the maximum annual
          bonus that the Executive would have been eligible to earn under the
          Annual Bonus Plan for the bonus measurement period during which the
          Date of Termination occurs, and (B) a fraction, the numerator of which
          is the number of days from the first day of such period through the
          Date of Termination and the denominator of which is the total number
          of days in such measurement period, together with a similarly pro
          rated bonus with respect to any applicable long term incentive plan
          then in effective; and (iv) an amount equal to the sum of the deferred
          compensation amounts which would otherwise have been credited to the
          Executive pursuant to the New Deferred Compensation Plan had Executive
          continued employment with the Company through the end of the then
          remaining Employment Period (measured as of the Date of Termination),
          without reduction in any such case to a net or other present value;

               (2) medical coverage provided to the Executive immediately prior
          to the Date of Termination (or, at Executive's sole discretion,
          medical coverage provided to the Executive immediately prior to the
          occurrence of any event constituting Good Reason) shall continue to be
          provided by the Company to the Executive (and, if applicable, his
          spouse and dependents) for three years following the Date of
          Termination;

               (3) all of the Executive's then outstanding stock options shall
          vest and become fully exercisable as of the Date of Termination and
          such options shall remain fully vested and exercisable throughout the
          remainder of their ten-year term, without regard to any early
          termination provisions or other terms and conditions otherwise
          applicable to such options; and

               (4) all remaining restrictions applicable to all restricted stock
          awards shall immediately lapse and any performance goals or other
          conditions applicable to any other equity incentive awards shall
          immediately be deemed to have been satisfied in full (with performance
          goals being deemed to have been satisfied at targeted levels).

          (b) Death and Disability. If the Executive's employment is terminated
by reason of the Executive's death or Disability during the Employment Period;

               (1) the Company shall pay to the Executive or, in the case of the
          Executive's death, to the Executive's designated beneficiaries (or, if
          there is no such beneficiary, to the Executive's estate or legal
          representative), in a lump sum in cash within ten (10) days after the
          Date of Termination, the sum of the following amounts: (i) the Accrued
          Benefits; and (ii) if applicable, an amount


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          equal to the product of (A) the maximum annual bonus that the
          Executive would have been eligible to earn under the Annual Bonus Plan
          for the bonus measurement period during which the Date of Termination
          occurs, and (B) a fraction, the numerator of which is the number of
          days from the first day of such period through the Date of Termination
          and the denominator of which is the total number of days in such
          measurement period, together with a similarly pro rated bonus with
          respect to any applicable long term incentive plan then in effect;

               (2) medical coverage provided to the Executive immediately prior
          to the Date of Termination shall continue to be provided by the
          Company (i) in the event of Disability, to the Executive (and, if
          applicable, his spouse and dependents) or (ii) in the event of
          Executive's death, to his surviving spouse (and, if applicable, his
          dependents), for three years following the Date of Termination;

               (3) all of the Executive's then outstanding stock options shall
          vest and become fully exercisable as of the Date of Termination and
          such options shall remain fully vested and exercisable throughout the
          remainder of their ten-year term, without regard to any early
          termination provisions or other terms and conditions otherwise
          applicable to such options; and

               (4) all remaining restrictions applicable to all restricted stock
          awards shall immediately lapse and any performance goals or other
          conditions applicable to any other equity incentive awards shall
          immediately be deemed to have been satisfied in full (with performance
          goals being deemed to have been satisfied at targeted levels).

          (c) By the Company for Cause. If the Executive's employment is
terminated by the Company for Cause during the Employment Period, (1) the
Company shall pay to the Executive the Accrued Benefits within ten (10) days
after the Date of Termination; (2) any portion of any outstanding stock option
that has not vested prior to the Date of Termination shall immediately terminate
and all vested options shall remain fully vested and exercisable throughout the
remainder of their ten-year term, without regard to any early termination
provisions or other terms and conditions otherwise applicable to such options;
and (3) any portion of all restricted stock or other equity incentive awards as
to which the restrictions have not lapsed or as to which any other conditions
shall not have been satisfied prior to the Date of Termination shall be
forfeited as of the Date of Termination.

          (d) By the Executive Other Than for Good Reason. If the Executive's
employment is terminated by Executive (other than for Good Reason) during the
Employment Period;

               (1) the Company shall pay to the Executive the Accrued Benefits,
          within ten (10) days after the Date of Termination;

               (2) any portion of any then outstanding stock option that has not
          vested and become exercisable prior to the Date of Termination shall
          immediately terminate and any portion of any outstanding stock option
          that has vested and


                                       7



          become exercisable prior to the Date of Termination shall remain
          vested and become exercisable throughout the remainder of their
          ten-year term, without regard to any early termination provisions or
          other terms and conditions otherwise applicable to such options; and

               (3) the restrictions on all restricted stock shall continue to
          lapse in accordance with the terms of the applicable agreement as if
          Executive's employment with the Company had continue uninterrupted
          until such restrictions had lapsed in full.

          (e) Continued Membership on Board. Notwithstanding the provisions of
Section 5(c) or 5(d), so long as Executive remains a member of the Company's
Board of Directors, all unvested stock options shall continue to vest in
accordance with the terms thereof (and shall be exercisable for the full
ten-year term thereof).

     6.   Incorporation by Reference

     The provisions of Section 5(e) and Sections 6, 7, 8, 10, 11, 12 and 13 of
the Original Employment Agreement shall remain in full force and effect and are
incorporated by reference in this Agreement as if set forth herein with
references in provisions incorporated by reference to capitalized terms therein
having the meanings set forth in the capitalized terms herein and references to
this "Agreement" or "agreement" referring to the Original Employment Agreement
or this Agreement, as applicable, unless the context otherwise requires.

     7.   Amendment No. 1 to Employment Agreement; Stock Agreement.

     The provisions of Amendment No. 1 to Employment Agreement shall remain in
full force and effect in accordance with the terms thereof without modification
hereby and are incorporated by reference herein. The Stock Agreement (as defined
in Section 8) shall remain in full force and effect in accordance with the terms
thereof without modification hereby except that references therein to the
Employment Agreement shall be deemed to refer to this Agreement.

     8.   Defined Terms.

     As used herein, (a) the Original Employment Agreement shall mean that
certain Employment Agreement, dated as of December 5, 1999 as amended by
Amendment No. 1 to Employment Agreement, (b) Amendment No. 1 to Employment
Agreement shall mean that certain Amendment No. 1 to Employment Agreement dated
as of May 7, 2001, and (c) Change in Control shall have the meaning set forth in
Appendix A to that certain Stock and Stock Option Award Agreement (the "Stock
Agreement") dated as of December 5, 1999 between the Company and the Executive.
All other capitalized terms used or incorporated by reference herein and not
otherwise specifically defined herein shall have the meanings set forth in the
Original Employment Agreement.


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     IN WITNESS WHEREOF, the Executive has hereunder set the Executive's hand
and, pursuant to due authorization, the Company has caused this Agreement to be
executed in its name on its behalf, all as of the day and year first above
written.

                                              RITE AID CORPORATION


                                              By:
                                                 -------------------------------

                                              Name:
                                                   -----------------------------

                                              Title:
                                                    ----------------------------


                                              ----------------------------------
                                              Robert G. Miller


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