EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the
"Agreement") is entered into as of the 1st
day of September, 2003 (the "Effective Date")
by and between Rite Aid Corporation, a Delaware corporation (the
"Company"), and Kevin J. Twomey (the
"Executive").


WHEREAS,
Executive desires to provide the Company with his services and the
Company desires to employ Executive in the capacity of Senior Vice
President, Chief Accounting Officer on the terms and subject to the
conditions set forth herein.


NOW, THEREFORE, in
consideration of the mutual representations, warranties, covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree
as follows:

1.    Term Of Employment.

The term of
Executive's employment with the Company hereunder (the
"Term") pursuant to this Agreement shall
commence on the Effective Date and, unless earlier terminated pursuant
to Section 5 below, shall continue for a period ending on the date that
is two (2) years following the Effective Date; provided, however, that
on each anniversary of the Effective Date occurring prior to the
termination of Executive's employment hereunder (each such date a
"Renewal Date"), an additional year shall be
added to the Term, unless notice of non-renewal has been delivered by
one party to the other party at least 180 days prior to such Renewal
Date. For purposes of this Agreement, except as otherwise provided
herein, the phrases "year during the Term" or
"during any year of the Term" or similar
language shall refer to each 12-month period commencing on the
Effective Date or applicable anniversaries thereof.

2.    Position And Duties.


2.1    Position.    During the Term, Executive
shall be employed as Senior Vice President, Chief Accounting Officer.
Following termination of Executive's employment for any reason,
Executive shall immediately resign from all offices and positions he
holds with the Company or any subsidiary.


2.2    Duties.    Subject to the supervision and
control of the Executive Vice President and Chief Financial Officer of
the Company (or any designee), to whom he shall report, Executive shall
do and perform all services and acts necessary or advisable to fulfill
the duties and responsibilities of his position as Senior Vice
President, Chief Accounting Officer and shall render such services on
the terms set forth herein. In addition, Executive shall have such
other executive and managerial powers and duties with respect to the
Company and its subsidiaries, affiliates and strategic partners as may
be assigned to him by the Executive Vice President and Chief Financial
Officer the Company or any designee. Except for sick leave, vacations
(as provided in Section 4.3 below), and excused leaves of absence,
Executive shall, throughout the Term, devote substantially all his
working time, attention, knowledge and skills faithfully and to the
best of his ability, to the duties and responsibilities of his position
in furtherance of the business affairs and activities of the Company
and its subsidiaries, affiliates and strategic partners. Executive
shall at all times be subject to, observe and carry out such rules,
regulations, policies, directions, and restrictions as the Company may
from time to time establish for management employees.

3.    Compensation.


3.1    Base
Salary.    During the Term, as compensation for his services
hereunder, Executive shall receive a salary at the annualized rate of
Three Hundred Seventeen Thousand Dollars ($317,000) per year
("Base Salary"), which shall be paid in
accordance with the Company's normal payroll practices and
procedures, less such deductions or offsets required by applicable law
or otherwise authorized by Executive.


3.2    Annual
Performance Bonus.    The Executive shall participate each
fiscal year during the Term in the Company's annual bonus plan as
adopted and approved by the Board or the Compensation Committee from
time to time. The Executive's annual target bonus opportunity
pursuant to such plan (the "Annual Target
Bonus") shall equal 40% of the Base Salary in
effect for the Executive at the beginning of such fiscal year.

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3.3    Stock Awards.


(a)    The Compensation Committee of the Board on January
10, 2001 (the "Grant Date") has approved the
grant to Executive of an option (the
"Option") to purchase 200,000 shares of the
Company's common stock, par value $1.00 per share
("Company Stock"). The Option shall (i) be a
non-qualified stock option, (ii) have an exercise price equal to the
closing price of the Company's stock as reported on the New York
Stock Exchange on the Grant Date, (iii) have a term of ten (10) years
following the Grant Date, (iv) vest and become exercisable as to
 1/3 of the shares of Company stock subject to the
Option on each of the first three (3) anniversaries of the Grant Date,
(v) be subject to the acceleration, exercise and termination provisions
set forth in Section 3.3(c) and Article 5 hereof and (vi) otherwise be
evidence by and subject to the terms of the Company's form of
stock option agreement for officers.

(b)    The
Compensation Committee of the Board has awarded to Executive 25,000
shares of restricted Company Stock (the "Restricted
Stock"). Subject to (i) acceleration and forfeiture
provisions set forth in Section 3.3(c) and Article 5 hereof and (ii)
the terms of the Company's Form of Restricted Stock agreement for
officers, restrictions applicable to the Restricted Stock shall lapse
as to  1/3 of such shares on each of the first three
(3) anniversaries of the award date.

(c)    Upon the
Change in Control of the Company prior to the termination of
Executive's employment with the Company, the Restricted Stock
shall immediately vest and the Options shall immediately vest and
become exercisable in full. For purposes of this Agreement
"Change in Control" shall have the meaning
set forth in the attached Appendix A.

(d)    It is
understood and acknowledged by Executive that the securities underlying
the Option will not be subject to an effective registration statement
under the federal securities laws until some time after the Grant Date
or award date. The Company agrees that if, as of the date of
termination of Executive's employment under the circumstances
described in Sections 5.3 and 5.5, the securities underlying the then
vested and exercisable portion of the Option (or any other option to
purchase Company Stock then held by Executive) are not subject to an
effective registration statement, the 90-day periods in Section 5.3 and
5.5, as applicable, will be deemed to run from the first date such
securities become subject to an effective registration statement. The
Company further agrees that if, as of the date of Executive's
voluntary termination of employment other than for Good Reason, the
securities underlying the then vested and exercisable portion of the
Option (or any other option to purchase Company Stock then held by
Executive) are not subject to an effective registration statement,
Executive will be permitted to exercise the Option, to the extent
vested and exercisable as of the date of such termination of
employment, during the 30-day period following the first date such
securities become subject to an effective registration
statement.

4.    Additional Benefits.


4.1    Employee Benefits.    During the Term,
Executive shall be entitled to participate in the employee benefit
plans in which management employees of the Company are generally
eligible to participate, subject to any eligibility requirements and
the other generally applicable terms of such plans.


4.2    Expenses.    During the Term, the Company
shall reimburse Executive for any expenses reasonably incurred by him
in furtherance of his duties hereunder, including without limitation
travel, meals and accommodations, upon submission of vouchers or
receipts and in compliance with such rules and policies relating
thereto as the Company may from time to time adopt or as may be
required in order to permit such payments to be taken as proper
deductions by the Company or any subsidiary under the Internal Revenue
Code of 1986, as amended, and the rules and regulations adopted
pursuant thereto now or hereafter in effect.


4.3    Vacation.    Executive shall be entitled
to four weeks paid vacation during each year of the
Term.


4.4    Relocation Expenses.


(a)    The Company shall reimburse Executive for his
reasonable expenses incurred in moving his household goods and cars
from his principal residence in Lewisville, Texas to the Harrisburg,
Pennsylvania area, in accordance with the Company's moving
expense policies applicable to Executive Level employees generally.

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(b)    The Company shall
reimburse Executive for any loss incurred upon sale of his principal
Lewisville residence (measured as the excess, if any, of (i) the sum of
(A) the original purchase price of the residence plus (B) the
documented actual cost of any improvement thereto since the date of
purchase, the approximate aggregate amount of which has previously been
disclosed to the Company, plus (C) a standard real estate commission
over (ii) the sale price), such amount to be "grossed
up" to offset in full any net increase in
Executive's federal, state and local income, employment and other
taxes resulting therefrom (and from such gross-up); provided, that the
aggregate amount payable pursuant to this section 4.4(b), including any
such gross-up, shall not exceed $100,000. Executive agrees that he
shall use his best efforts to sell such residence at its fair market
value.


4.5    Automobile
Allowance.    During the Term, the Company shall provide
Executive with an automobile allowance of $750.00 per month.


4.6    Annual Financial Planning Allowance.    
During each year of the Term, the Company shall provide Executive with
an executive planning allowance in the amount of $5,000.


4.7    Indemnification.    The Company shall (a)
indemnify and hold Executive harmless, to the full extent permitted
under applicable law, for, from and against any and all losses, claims,
costs, expenses, damages, liabilities or actions (including security
holder actions, in respect thereof) relating to or arising out of the
Executive's employment with and service as an Officer of the
Company; and (b) pay all reasonable costs, expenses and
attorney's fees incurred by Executive in connection with or
relating to the defense of any such loss, claim, cost, expense, damage,
liability or action. Following any termination of the Executive's
employment or service with the Company, the Company shall cause any
Director and Officer liability insurance policies applicable to the
Executive prior to such termination to remain in effect for six (6)
years following the date of termination of employment.

5.    Termination.


5.1    Termination of
Executive's Employment by the Company for Cause.    The
Company may terminate Executive's employment hereunder for Cause
(as defined below). Such termination shall be effected by written
notice thereof delivered by the Company to Executive, indicating in
reasonable detail the facts and circumstances alleged to provide a
basis for such termination, and shall be effective as of the date of
such notice in accordance with Section 12 hereof.
"Cause" shall mean (i) Executive's
gross negligence or willful misconduct in the performance of the duties
or responsibilities of his position with the Company or any subsidiary,
or failure to timely carry out any lawful directive of the Executive
Vice President and Chief Financial Officer or any designee; (ii)
Executive's misappropriation of any funds or property of the
Company or any subsidiary; (iii) the commission by Executive of an act
of fraud or dishonesty toward the Company or any subsidiary; or (iv)
the use or imparting by Executive of any confidential or proprietary
information of the Company, or any subsidiary in violation of any
confidentiality or proprietary agreement to which Executive is a
party.


5.2    Compensation upon Termination by the
Company for Cause or by Executive without Good Reason.    In the
event of Executive's termination of employment (i) by the Company
for Cause or (ii) by Executive voluntarily without Good Reason:

(a)    Executive shall be entitled to receive (i) all
amounts of accrued but unpaid Base Salary through the effective date of
such termination, (ii) reimbursement for reasonable and necessary
expenses incurred by Executive through the date of notice of such
termination, to the extent otherwise provided under Section 4.2 above
and (iii) all other vested payments and benefits to which Executive may
otherwise be entitled pursuant to the terms of the applicable benefit
plan or arrangement through the effective date of such termination
((i), (ii) and (iii), the ("Accrued
Benefits"). All other rights of Executive (and, except as
provided in Section 5.6 below, all obligations of the Company)
hereunder or otherwise in connection with Executive's employment
with the Company shall terminate effective as of the date of such
termination of employment.

(b)    Except as provided
in Section 3.3, any portion of the Option or any other then outstanding
stock option that has not been exercised prior to the date of
termination shall immediately terminate as of such date, and any
portion of any 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
such date.

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Any termination of Executive's
employment by Executive voluntarily without Good Reason shall be
effective upon 30 days' notice to the Company.


5.3    Compensation upon Termination of
Executive's Employment by the Company Other Than for Cause or by
Executive for Good Reason.    Executive's employment
hereunder may be terminated by the Company other than for Cause or by
Executive for Good Reason. In the event that Executive's
employment hereunder is terminated by the Company other than for Cause
or by Executive for Good Reason:

(a)    Executive
shall be entitled to receive (i) the Accrued Benefits, (ii) an amount
equal to two times the sum of Executive's Base Salary plus Annual
Target Bonus as of the date of termination of employment, such amount
payable in equal installments pursuant to the Company's standard
payroll procedures for management employees over a period of two years
following the date of termination of employment, and (iii) continued
health insurance coverage for Executive and his immediate family for a
period of two years following the date of termination of employment. In
addition, if such termination occurs following the start of the
Company's fiscal year, Executive shall also be entitled to
receive a pro rata annual bonus determined by multiplying
Executive's then Annual Target Bonus by a fraction, (x) the
numerator of which is the number of days between the beginning of the
then current fiscal year of the Company (or, if later,
Executive's start date) and the date of termination of employment
and (y) the denominator of which is 365.

(b)    All
stock option awards held by Executive shall vest and become immediately
exercisable to the extent such options would otherwise have become
vested and exercisable had Executive remained in the employ of the
Company for a period of two years following the date of termination.
Except as provided in Section 3.3, such portion of Executive's
stock options (together with any portion of Executive's stock
options that have vested and become exercisable prior to the date of
termination) shall remain exercisable for a period of 90 days following
the date of termination of employment (or, if earlier, until the
expiration of the respective terms of the options), whereupon all such
options shall terminate. Any remaining portion of Executive's
stock options that have not vested as of the date of termination shall
terminate as of such date.

(c)    All restricted
stock awards held by Executive shall vest immediately to the extent
such awards would otherwise have become vested had Executive remained
in the employ of the Company for a period of two years following the
date of termination.

(d)    All other rights of
Executive (and, except as provided in Section 5.6 below, all
obligations of the Company) hereunder or otherwise in connection with
Executive's employment with the Company shall terminate effective
as of the date of such termination of employment.

Any
termination of employment pursuant to this Section 5.3 shall be
effective upon thirty (30) days notice thereof.


5.4    Definition of Good Reason.    For
purposes of this Agreement, "Good Reason"
shall mean the occurrence of any one of the following:

(a)    any material adverse alteration in
Executive's titles, positions, duties, authorities or
responsibilities with the Company or its subsidiaries from those
specified in this Agreement, as the same may be augmented from time to
time;

(b)    the assignment to Executive of any
duties or responsibilities materially inconsistent with
Executive's status as Senior Vice President, Chief Accounting
Officer of the Company (it being understood that, if the Company is no
longer a public company, the failure of Executive to hold such
positions and the attendant duties and responsibilities with any
ultimate corporate or other parent of the Company or any successor
shall be deemed to constitute such Good Reason); or

(c)    any other material breach of this Agreement by the
Company, including without limitation any decrease in Executive's
Base Salary or Annual Target Bonus opportunity as set forth in Sections
3.1 and 3.2 except to the extent such decrease is generally applicable
to all other employees of the Company having duties and
responsibilities equivalent to those of
Executive;

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provided, however, that in each such
case the Company shall have the right, within ten (10) days after
receipt of notice from Executive of the Company's violation of
any of the foregoing, to cure 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.


5.5    Compensation upon Termination of
Executive's Employment by Reason of Executive's Death or
Total Disability.    In the event that Executive's
employment with the Company is terminated by reason of
Executive's death or Total Disability (as defined below):

(a)    Executive or Executive's estate, as the case
may be, shall be entitled to receive (i) the Accrued Benefits, (ii) any
other benefits payable under the then current disability and/or death
benefit plans, as applicable, in which Executive is a participant and
(iii) continued health insurance coverage for Executive and/or his
immediate family, as applicable, for a period of two years following
the date of termination of employment.

(b)    All
stock option awards held by Executive shall vest and become immediately
exercisable to the extent such options would otherwise have become
vested and exercisable had Executive remained in the employ of the
Company for a period of two years following the date of termination.
Except as provided in Section 3.3, such portion of Executive's
stock options (together with any portion of Executive's stock
options that have vested and become exercisable prior to the date of
termination) shall remain exercisable for a period of one (1) year
following the date of termination of employment (or, if earlier, until
the expiration of the respective terms of the options), whereupon all
such options shall terminate. Any remaining portion of
Executive's stock options that have not vested as of the date of
termination shall terminate as of such date.

(c)    All restricted stock awards held by Executive
shall vest to the extent such awards would otherwise have become vested
had Executive remained in the employ of the Company for a period of two
years following the date of termination.

(d)    All
other rights of Executive (and, except as provided in Section 5.6
below, all obligations of the Company) hereunder or otherwise in
connection with Executive's employment with the Company shall
terminate effective as of the date of such termination of
employment.

"Total Disability"
shall mean any physical or mental disability that prevents Executive
from performing one or more of the essential functions of his position
for a period of not less than 90 days in any 12-month period and/or
which is expected to be of permanent duration.


5.6    Survival.    In the event of any
termination of Executive's employment for any reason, Executive
and the Company nevertheless shall continue to be bound by the terms
and conditions set forth in Sections 6 through 10 below, which shall
survive the expiration of the Term.


5.7    Excise
Tax Gross-Up.


(a)    In the event that any
payment or benefit received or to be received by the Executive pursuant
to the Terms of this Agreement or any other plan, arrangement or
agreement of the Company (or any affiliate) (collectively, the
"Payments") would be subject to the Excise
Tax (the "Excise Tax") imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), as determined as provided below, the
Company shall pay to the Executive, at the time specified in Section
5.7(b) below an additional amount (the "Gross-Up
Payment") such that the net amount retained by the
Executive, after deduction of the Excise Tax on payments and any
federal, state and local income and employment or other tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties or
additions to tax payable by the company Executive with respect thereto,
shall be subject to the Total payments. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the
amounts of such Excise Tax, (1) the total amount of the Payments shall
be treated as "parachute payments" within the
meaning of section 280G(b)(2) of the Code, and all "excise
parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
except to the extent that, in the opinion of tax counsel
("Tax Counsel") reasonably acceptable to
Executive and selected by the accounting firm which was, immediately
prior to the event giving rise to the Payment, the Company's
independent auditor (the "Auditor"), a
Payment (in whole or in part) does not constitute a
"parachute 

5



payment" within the meaning of
section 280G(b)(2) of the Code, or such "excess parachute
payments" (in whole or in part) are not subject to the
Excise Tax, (2) the amount of the Payments that shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of "excess
parachute payments" within the meaning of section
280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the
value of any noncash benefits or any deferred payment or benefit shall
be determined by the Auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rates of federal
income taxation applicable to individuals in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rates of taxation applicable to individuals as are
in effect in the state and locality of the Executive's residence
in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes that can be obtained
from deduction of such state and local taxes, taking into account any
limitations applicable to individuals subject to federal income tax at
the highest marginal rates.

(b)    The Gross-Up
Payment provided for in Section 5.7(a) hereof shall be made upon the
earlier of (i) ten days following the date of termination of
Executive's employment or (ii) the imposition upon the Executive
or payment by the Executive of any Excise Tax.

(c)    If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding that
the Excise Tax is less than the amount taken into account under Section
5.7(a) hereof, the Executive shall repay to the Company within thirty
(30) days of the Executive's receipt of notice of such final
determination the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the
portion of the Gross-Up Payment being repaid by the Executive if and to
the extent that such repayment results in a reduction in Excise Tax and
a dollar-for-dollar reduction in the Executive's taxable income
and wages for the purpose of federal, state and local income taxes)
plus any interest received by the Executive on the amount of such
repayment. If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that the Excise Tax
exceeds the amount taken into account hereunder (including without
limitation by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment pursuant to Section 5.7(a) in
respect of such excess within thirty (30) days of the Company's
receipt of notice of such final determination or proceeding. The
Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with
respect to the Payments.

(d)    In the event of any
change in, or further interpretation of, sections 280G or 4999 of the
Code and the regulations promulgated thereunder, the Executive shall be
entitled, by written notice to the Company, to request an opinion of
Tax Counsel regarding the application of such change to any of the
foregoing, and the Company shall use its best efforts to cause such
opinion to be rendered as promptly as practicable. All fees and
expenses of the Auditor and Tax Counsel incurred in connection with
this Agreement shall be borne by the Company.


5.8    No Other Severance or Termination
Benefits.    Except as expressly set forth herein, Executive
shall not be entitled to damages or to any severance or other benefits
upon termination of employment with the Company under any circumstances
and for any or no reason.

6.    Protection of Confidential
Information.

Executive acknowledges that during the course of
his employment with the Company, its subsidiaries, affiliates and
strategic partners, he will be exposed to documents and other
information regarding the confidential affairs of the Company, its
subsidiaries, affiliates and strategic partners, including without
limitation information about their past, present and future financial
condition, the markets for their products, key personnel, past, present
or future actual or threatened litigation, trade secrets, current and
prospective customer lists, operational methods, acquisition plans,
prospects, plans for future development and other business affairs and
information about the Company and its subsidiaries, affiliates and


6



strategic partners not readily available to
the public (the "Confidential Information").
Executive further acknowledges that the services to be performed under
this Agreement are of a special, unique, unusual, extraordinary and
intellectual character. In recognition of the foregoing, the Executive
covenants and agrees as follows:


6.1    No
Disclosure or Use of Confidential Information.    At no time
shall Executive ever divulge, disclose, or otherwise use any
Confidential Information, unless and until such information is readily
available in the public domain by reason other than Executive's
disclosure or use thereof in violation of the first clause of this
Section 6.1.


6.2    Return of Company Property,
Records and Files.    Upon the termination of Executive's
employment at any time and for any reason, or at any other time the
Board may so direct, Executive shall promptly deliver to the
Company's offices in Harrisburg, Pennsylvania all of the property
and equipment of the Company, its subsidiaries, affiliates and
strategic partners (including any cell phones, pagers, credit cards,
personal computers, etc.) and any and all documents, records, and
files, including any notes, memoranda, customer lists, reports or any
and all other documents, including any copies thereof, whether in hard
copy form or on a computer disk or hard drive, which relate to the
Company, its subsidiaries, affiliates, strategic partners, successors
or assigns, and/or their respective past and present officers,
directors, employees or consultants (collectively, the
"Company Property, Records and Files"); it
being expressly understood that, upon termination of Executive's
employment at any time and for any reason, Executive shall not be
authorized to retain any of the Company Property, Records and
Files.

7.    Noncompetition and Other Matters.


7.1    Noncompetition.    During the Term and,
as applicable, for the two-year period immediately following the date
of termination of Executive's employment either (x) by the
Company for Cause or (y) by Executive other than for Good Reason,
Executive shall not, directly or indirectly, in any city, town, county,
parish or other municipality in any state of the United States (the
names of each such city, town, parish, or other municipality,
including, without limitation, the name of each county in the
Commonwealth of Pennsylvania being expressly incorporated by reference
herein), or any other place in the world, where the Company, or its
subsidiaries, affiliates, strategic partners, successors, or assigns,
engages in the ownership, management and operation of retail drugstores
(i) engage in a Competing Business for Executive's own account;
(ii) enter the employ of, or render any consulting services to, any
Competing Business; or (iii) become interested in any Competing
Business in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
trustee or consultant; provided, however, Executive may own,
directly or indirectly, solely as a passive investment, securities of
any entity traded on any national securities exchange if Executive is
not a controlling person of, or a member of a group which controls,
such entity and does not, directly or indirectly, own 1% or more
of any class of securities of such entity. For purposes of this Section
7.1, the phrase "Competing Business" shall
mean any entity a majority of whose business involves the ownership and
operation of retail drug stores.


7.2    Noninterference.    During the Term and
for the two-year period immediately following the date of termination
of Executive's employment at any time and for any reason (the
"Restricted Period"), Executive shall not,
directly or indirectly, solicit, induce, or attempt to solicit or
induce any officer, director, employee, agent or consultant of the
Company or any of its subsidiaries, affiliates, strategic partners,
successors or assigns to terminate his, her or its employment or other
relationship with the Company or its subsidiaries, affiliates,
strategic partners, successors or assigns for the purpose of
associating with any competitor of the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns, or otherwise
encourage any such person or entity to leave or sever his, her or its
employment or other relationship with the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns for any other
reason.


7.3    Nonsolicitation.    During
the Restricted Period, Executive shall not, directly or indirectly,
solicit, induce, or attempt to solicit or induce any customers,
clients, vendors, suppliers or consultants then under contract to the
Company or its subsidiaries, affiliates, strategic partners, successors
or assigns, to terminate his, her or its relationship with the Company
or its subsidiaries, affiliates, strategic partners, successors or
assigns, for the purpose of associating with any competitor of the
Company or its 

7



subsidiaries, affiliates, strategic partners,
successors or assigns, or otherwise encourage such customers, clients,
vendors, suppliers or consultants then under contract to terminate his,
her or its relationship with the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns for any
reason.

8.    Rights and Remedies upon Breach.

If
Executive breaches, or threatens to commit a breach of, any of the
provisions of Sections 6 or 7 above (the "Restrictive
Covenants"), the Company and its subsidiaries, affiliates,
strategic partners, successors or assigns shall have the following
rights and remedies, each of which shall be independent of the others
and severally enforceable, and each of which shall be in addition to,
and not in lieu of, any other rights or remedies available to the
Company or its subsidiaries, affiliates, strategic partners, successors
or assigns at law or in equity.


8.1    Specific
Performance.    The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction
by injunctive decree or otherwise, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable
injury to the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns and that money damages would not
provide an adequate remedy to the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns.


8.2    Accounting.    The right and remedy to
require Executive to account for and pay over to the Company or its
subsidiaries, affiliates, strategic partners, successors or assigns, as
the case may be, all compensation, profits, monies, accruals,
increments or other benefits derived or received by Executive as a
result of any transaction or activity constituting a breach of any of
the Restrictive Covenants.


8.3    Severability of
Covenants.    Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographic and
temporal scope and in all other respects. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full force and effect without
regard to the invalid portions.


8.4    Modification
by the Court.    If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or scope of such provision, such court shall have the
power (and is hereby instructed by the parties) to reduce the duration
or scope of such provision, as the case may be (it being the intent of
the parties that any such reduction be limited to the minimum extent
necessary to render such provision enforceable), and, in its reduced
form, such provision shall then be enforceable.


8.5    Enforceability in
Jurisdictions.    Executive intends to and hereby confers
jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographic scope of such covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive
Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Executive that such determination not
bar or in any way affect the right of the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns to the relief
provided herein in the courts of any other jurisdiction within the
geographic scope of such covenants, as to breaches of such covenants in
such other respective jurisdictions, such covenants as they relate to
each jurisdiction being, for this purpose, severable into diverse and
independent covenants.


9.    No Violation of
Third-Party Rights.    Executive represents, warrants and
covenants that he:

(i)    will not, in the course of
employment, infringe upon or violate any proprietary rights of any
third party (including, without limitation, any third party
confidential relationships, patents, copyrights, mask works, trade
secrets, or other proprietary rights);

(ii)    is not a party
to any conflicting agreements with third parties, which will prevent
him from fulfilling the terms of employment and the obligations of this
Agreement;

8


(iii)    does not have in his possession
any confidential or proprietary information or documents belonging to
others and will not disclose to the Company, use, or induce the Company
to use, any confidential or proprietary information or documents of
others; and

(iv)    agrees to respect any and all valid
obligations which he may now have to prior employers or to others
relating to confidential information, inventions, discoveries or other
intellectual property which are the property of those prior employers
or others, as the case may be.

Executive has supplied to the
Company a copy of each written agreement to which Executive is subject,
which includes any obligation of confidentiality, assignment of
intellectual property or non-competition.

Executive agrees to
indemnify and save harmless the Company from any loss, claim, damage,
cost or expense of any kind (including without limitation, reasonable
attorney fees) to which the Company may be subjected by virtue of a
breach by Executive of the foregoing representations, warranties, and
covenants.

10.    Arbitration.

Except as necessary
for the Company and its subsidiaries, affiliates, strategic partners,
successors or assigns or Executive to specifically enforce or enjoin a
breach of this Agreement (to the extent such remedies are otherwise
available), the parties agree that any and all disputes that may arise
in connection with, arising out of or relating to this Agreement, or
any dispute that relates in any way, in whole or in part, to
Executive's employment with the Company or any subsidiary,
affiliate or strategic partner, the termination of that employment or
any other dispute by and between the parties or their subsidiaries,
affiliates; strategic partners, successors or assigns, shall be
submitted to binding arbitration in Harrisburg, Pennsylvania according
to the National Employment Dispute Resolution Rules and procedures of
the American Arbitration Association. The parties agree that the
parties shall each bear his or its own attorneys' fees and costs
in connection with any such arbitration. This arbitration obligation
extends to any and all claims that may arise by and between the parties
or their subsidiaries, affiliates, strategic partners, successors or
assigns, and expressly extends to, without limitation, claims or causes
of action for wrongful termination, impairment of ability to compete in
the open labor market, breach of an express or implied contract, breach
of the covenant of good faith and fair dealing, breach of fiduciary
duty, fraud, misrepresentation, defamation, slander, infliction of
emotional distress, disability, loss of future earnings, and claims
under the Pennsylvania Constitution, the United States Constitution,
and applicable state and federal fair employment laws, federal and
state equal employment opportunity laws, and federal and state labor
statutes and regulations, including, but not limited to, the Civil
Rights Act of 1964, as amended, the Fair Labor Standards Act, as
amended, the Americans With Disabilities Act of 1990, as amended, the
Rehabilitation Act of 1973, as amended, the Employee Retirement Income
Security Act of 1974, as amended, the Age Discrimination in Employment
Act of 1967, as amended, and any other state or federal law.

11.    Assignment.

Neither this Agreement, nor any of
Executive's rights or obligations hereunder, may be assigned or
otherwise subject to hypothecation by Executive. The Company may assign
its rights and obligations hereunder, in whole or in part, (i) to any
of the Company's subsidiaries, affiliates, or parent
corporations; or (ii) to any other successor or assign in connection
with the sale of all or substantially all of the Company's assets
or stock or in connection with any merger, acquisition and/or
reorganization involving the Company.

12.    Notices.

All notices and other communications under this Agreement shall be
in writing and shall be given by fax or first class mail, certified or
registered with return receipt requested, and shall be deemed to have
been duly given three (3) days after mailing or twenty-four (24) hours
after transmission of a fax to the respective persons named below:

9


		
	If to the
Company:	Rite Aid Corporation
30 Hunter
Lane
 Camp Hill, Pennsylvania 17011
 Attention: General
Counsel
 Fax: (717) 760-7867


		
	If to
Executive:	Kevin J. Twomey
802 King Ban
Drive
 Lewisville, TX 75056


Any party may change such
party's address for notices by notice duly given pursuant
hereto.

13.    General.


13.1    No
Offset or Mitigation.    The Company's obligation to make
the payments provided for in, and otherwise to perform its obligations
under; this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive or others whether in respect
of claims made under this Agreement or otherwise. In no event shall the
Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts, benefits and other
compensation payable or otherwise provided to the Executive under any
of the provisions of this Agreement, and such amounts shall not be
reduced, regardless of whether the Executive obtains other
employment.


13.2    Governing Law.    This
Agreement shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania without giving effect
to conflicts of laws principles thereof which might refer such
interpretations to the laws of a different state or jurisdiction.


13.3    Entire Agreement.    This Agreement sets
forth the entire understanding of the parties relating to
Executive's employment with the Company and cancels and
supersedes all agreements, arrangements and understandings relating
thereto made prior to the date hereof, written or oral, between the
Executive and the Company and/or any subsidiary or affiliate.


13.4    Amendments: Waivers.    This Agreement
may be amended, modified, superseded, canceled, renewed or extended,
and the terms or covenants hereof may be waived, only by a written
instrument executed by the parties, or in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No
waiver by any party of the breach of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.


13.5    Conflict with Other
Agreements.    Executive represents and warrants that neither
his execution of this Agreement nor the full and complete performance
of his obligations hereunder will violate or conflict in any respect
with any written or oral agreement or understanding with any person or
entity.


13.6    Successors and
Assigns.    This Agreement shall inure to the benefit of and
shall be binding upon the Company (and its successors and assigns) and
Executive and his heirs, executors and personal representatives.


13.7    Withholding.    Notwithstanding any
other provision of this Agreement, the Company may withhold from
amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations.


13.8    Severability.    The
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of
this Agreement. If any provision of this Agreement shall be held
invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall
remain valid and enforceable and continue in full force and effect to
the fullest extent consistent with law.


13.9    No
Assignment.    The rights and benefits of the Executive under
this Agreement may not be anticipated, assigned, alienated or subject
to attachment, garnishment, levy, execution or other legal or


10



equitable process except as required by law.
Any attempt by the Executive to anticipate, alienate, assign, sell,
transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event
of insolvency or bankruptcy.


13.10    Survival.    This Agreement shall
survive the termination of Executive's employment and the
expiration of the Term to the extent necessary to give effect to its
provisions.


13.11    Captions.    The
section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement. .


13.12    Counterparts.    This
Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original but all such counterparts together shall constitute one and
the same instrument.


IN WITNESS WHEREOF, Executive and
the Company have executed this Agreement as of the date first written
above.


		RITE AID CORPORATION





	
			
	


By: 

	
			
	


Its:

	
			
	


EXECUTIVE

	
			
	


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APPENDIX A

A
"Change in Control of the Company" shall be
deemed to have occurred if, as the result of a single transaction or a
series of transactions, the event set forth in any one of the following
paragraphs shall have occurred:

(1) any Person
is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding voting
securities; or

(2) Incumbent Directors cease
at any time and for any reason to constitute a majority of the number
of directors then serving on the Board. "Incumbent
Directors" shall mean directors who either (A) are
directors of the Company as of the Effective Date or (B) are elected,
or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors to the Board); or

(3) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapi-talization of the Company
(or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding voting securities; or

(4) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or an agreement
for the sale or dispo-sition by the Company of all or substantially all
of the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immedi-ately prior to such sale.

"Affiliate" shall have the meaning set
forth in Rule 12b-2 under Section 12 of the Exchange Act.

"Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act, except that a Person
shall not be deemed to be the Beneficial Owner of any securities which
are properly filed on a Form 13G.

"Exchange
Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

"Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii)
a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of
such securities or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions
as their ownership of stock of the
Company.

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