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                                                                    EXHIBIT 10.4

                              RITE AID CORPORATION

                                  $200,000,000

                        4.75% Convertible Notes Due 2006

                               Purchase Agreement

                                                             New York, New York
                                                              November 13, 2001


Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York  10013

Ladies and Gentlemen:

                  Rite Aid Corporation, a corporation organized under the laws
of Delaware (the "Company"), proposes to issue and sell to the several parties
named in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives") are acting as representatives, $200,000,000 principal amount
of its 4.75% Convertible Notes Due 2006 (the "Firm Securities"), and, at the
election of the Initial Purchasers, up to an aggregate of $50,000,000 additional
principal amount thereof (the "Optional Securities") (the Firm Securities and
any Optional Securities which the Initial Purchasers elect to purchase pursuant
to this Agreement being collectively referred to as the "Securities")
convertible into Common Stock, par value $1.00 ("Stock"), of the Company.

                  The Securities are to be issued under an indenture (the
"Indenture"), to be dated as of November 19, 2001, between the Company and BNY
Midwest Trust Company, as trustee (the "Trustee"). The Securities have the
benefit of a Registration Rights Agreement (the "Registration Rights
Agreement"), to be dated as of November 19, 2001, among the Company and the
Initial Purchasers, pursuant to which the Company has agreed to file with the
United States Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein a shelf registration statement (the "Shelf
Registration Statement") pursuant to Rule 415 of the Securities Act (as defined)
relating to the resale of (i) such Securities and (ii) the shares of Stock
initially issuable upon conversion of the Securities by holders thereof, and to
use its best efforts to cause such shelf registration statement to be declared
effective.

                  To the extent there are no additional parties listed on
Schedule I other than you, the term Representatives as used herein shall mean
you as the Initial Purchasers, and the terms Representatives and Initial
Purchasers shall mean either the singular or plural as the context requires. The
use of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 16 hereof.

                  The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Act in reliance upon
exemptions from the registration requirements of the Act.



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                                                                              2

                  In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated November 12, 2001 (as amended
or supplemented at the Execution Time, including any and all exhibits thereto
and any information incorporated by reference therein, the "Preliminary
Memorandum"), and a final offering memorandum, dated November 13, 2001 (as
amended or supplemented at the Execution Time, including any and all annexes
forming a part thereof and any information incorporated by reference therein,
the "Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Securities by the Initial
Purchasers.

                  1. Representations and Warranties. The Company represents and
warrants to each Initial Purchaser as set forth below in this Section 1.

                  (a) The Preliminary Memorandum, at the date thereof, did not
         contain any untrue statement of a material fact or omit to state any
         material fact necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading. At the
         Execution Time and on the Closing Date (as defined in Section 3
         hereof), the Final Memorandum did not, and will not (and any amendment
         or supplement thereto, at the date thereof and at the Closing Date,
         will not), contain any untrue statement of a material fact or omit to
         state any material fact necessary to make the statements therein, in
         light of the circumstances under which they were made, not misleading;
         provided, however, that the Company makes no representation or warranty
         as to the information contained in or omitted from the Preliminary
         Memorandum or the Final Memorandum, or any amendment or supplement
         thereto, in reliance upon and in conformity with information furnished
         in writing to the Company by or on behalf of the Initial Purchasers
         through the Representatives specifically for inclusion therein.

                  (b) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers, as to whom the Company makes no representation) has,
         directly or indirectly, made offers or sales of any security, or
         solicited offers to buy any security, under circumstances that would
         require the registration of the Securities under the Act.

                  (c) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers, as to whom the Company makes no representation) has engaged
         in any form of general solicitation or general advertising (within the
         meaning of Regulation D) in connection with any offer or sale of the
         Securities in the United States.

                  (d) The Securities satisfy the eligibility requirements of
         Rule 144A(d)(3) under the Act.

                  (e) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers, as to whom the Company makes no representation) has engaged
         in any directed selling efforts with respect to the Securities being
         sold in reliance on Regulation S, and each of them has complied with
         the offering restrictions requirements of Regulation S. Terms used in
         this paragraph have the meanings given to them by Regulation S.



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                                                                              3

                  (f) The Company is not, and after giving effect to the
         offering and sale of the Securities and the application of the proceeds
         thereof as described in the Final Memorandum will not be, an
         "investment company" within the meaning of the Investment Company Act.

                  (g) The Company is subject to and in compliance, in all
         material respects, with the reporting requirements of Section 13 or
         Section 15(d) of the Exchange Act.

                  (h) The Company has not paid or agreed to pay to any person
         any compensation for soliciting another to purchase any Securities
         (except as contemplated by this Agreement).

                  (i) The Company has not taken, directly or indirectly, any
         action designed to or that would constitute or that might reasonably be
         expected to cause or result in, under the Exchange Act or otherwise,
         the stabilization or manipulation of the price of any security of the
         Company to facilitate the sale or resale of the Securities.

                  (j) On the Closing Date, the Indenture will conform in all
         material respects to the description thereof contained in the Final
         Memorandum.

                  (k) Each of the Company and its subsidiaries has been duly
         incorporated and is validly existing as a corporation in good standing
         under the laws of the jurisdiction in which it is chartered or
         organized with full corporate power and authority to own or lease, as
         the case may be, and to operate its properties and conduct its business
         as described in the Final Memorandum, and is duly qualified to do
         business as a foreign corporation and is in good standing under the
         laws of each jurisdiction which requires such qualification except to
         the extent that failure to be so qualified or be in good standing would
         not reasonably be expected to have a material adverse effect on the
         condition (financial or otherwise), prospects, earnings, business or
         properties of the Company and its subsidiaries, taken as a whole,
         whether or not arising from transactions in the ordinary course of
         business (a "Material Adverse Effect").

                  (l) All the outstanding shares of capital stock of each
         subsidiary have been duly and validly authorized and issued and are
         fully paid and nonassessable, and, except for Rx USA, Inc., Rite Aid
         Lease Management Corporation and Rite Aid Risk Management Corp., all
         outstanding shares of capital stock of the subsidiaries of the Company
         are owned by the Company either directly or through wholly owned
         subsidiaries free and clear of any perfected security interest or any
         other security interests, claims, liens or encumbrances.

                  (m) The Company's authorized equity capitalization is as set
         forth in the Final Memorandum and the capital stock conforms in all
         material respects to the description thereof contained in the Final
         Memorandum; the shares of Stock initially issuable upon conversion of
         the Securities have been duly and validly authorized and, when issued
         upon conversion in accordance with the terms of the Securities and the
         Indenture, will be validly issued, fully paid and nonassessable; the
         Board of Directors of the Company or a duly constituted committee
         thereof, has duly and validly adopted resolutions reserving such shares
         of Stock for issuance upon conversion; and except as set forth in the
         Final Memorandum, no options, warrants, or other rights to purchase,
         agreements or other obligations to issue, or rights to convert any
         obligations into or exchange any securities for shares of capital stock
         or ownership interest in the Company are outstanding (other than
         warrants held by J.P. Morgan Securities Inc. and its affiliates on the
         date hereof).


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                                                                              4


                  (n) There are no persons with registration rights or other
         similar rights to have any securities of the Company (other than the
         Securities) registered under the Shelf Registration Statement, other
         than the persons holding such rights under those agreements listed on
         Schedule II hereto.

                  (o) None of the holders of outstanding shares of capital stock
         of the Company and no other person has or will have any preemptive or
         other rights to purchase, subscribe for or otherwise acquire (i) the
         Securities or the shares of Stock to be issued upon conversion of the
         Securities or any rights to such shares or (ii) as a result of or in
         connection with the transactions contemplated by the Indenture, this
         Agreement or the Registration Rights Agreement, any other capital stock
         of the Company or rights thereto.

                  (p) The statements in the Final Memorandum under the headings
         "Certain United States Federal Income Tax Considerations for Non-United
         States Holders," "Description of Notes," "Description of Capital
         Stock," "Regulation," "Legal Proceedings," "Description of Other
         Indebtedness" and "Risk Factors" fairly summarize the matters therein
         described.

                  (q) This Agreement has been duly authorized, executed and
         delivered by the Company; the Indenture has been duly authorized and,
         assuming due authorization, execution and delivery thereof by the
         Trustee, when executed and delivered by the Company, will constitute a
         legal, valid and binding instrument enforceable against the Company in
         accordance with its terms (subject, as to the enforcement of remedies,
         to applicable bankruptcy, fraudulent conveyance, reorganization,
         insolvency, moratorium or other laws affecting creditors' rights
         generally from time to time in effect and to general principles of
         equity); the Securities have been duly authorized, and, when executed
         and authenticated in accordance with the provisions of the Indenture
         and delivered to and paid for by the Initial Purchasers, will have been
         duly executed and delivered by the Company and (assuming the due
         authorization, execution and delivery of the Indenture by the Trustee)
         will constitute the legal, valid and binding obligations of the Company
         entitled to the benefits of the Indenture (subject, as to the
         enforcement of remedies, to applicable bankruptcy, fraudulent
         conveyance, reorganization, insolvency, moratorium or other laws
         affecting creditors' rights generally from time to time in effect and
         to general principles of equity) and will be convertible into Stock in
         accordance with their terms; and the Registration Rights Agreement has
         been duly authorized and, when executed and delivered by the Company,
         will constitute a legal, valid and binding instrument enforceable
         against the Company in accordance with its terms (subject, as to the
         enforcement of remedies, to applicable bankruptcy, fraudulent
         conveyance, reorganization, insolvency, moratorium or other laws
         affecting creditors' rights generally from time to time in effect and
         to general principles of equity and except that the enforceability of
         any rights to contribution or indemnification may be violative of
         public policy under any law, rule or regulation).

                  (r) Subject to compliance by the Initial Purchasers with the
         representations, warranties and agreements set forth in Section 4 of
         this Agreement, no consent, approval, authorization, filing with or
         order of any court or governmental agency or body is required in
         connection with the transactions contemplated herein, in the Indenture
         or the Registration Rights Agreement, except such as will be obtained
         under the Act and the Trust Indenture Act, the securities laws of any
         jurisdiction outside the U.S. in which the Securities are offered and
         such as may be required under the blue sky laws of any jurisdiction and
         the National Association of Securities Dealers Inc. in connection with
         the purchase and distribution of the Securities by the Initial
         Purchasers in the manner contemplated herein and in the Final
         Memorandum and the Registration Rights Agreement.


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                  (s) On the Closing Date, neither the execution and delivery of
         the Indenture, this Agreement or the Registration Rights Agreement, the
         issue and sale of the Securities, nor the fulfillment of the terms
         hereof or thereof will conflict with, result in a breach or violation
         of, or imposition of any lien, charge or encumbrance upon any property
         or assets of the Company or any of its subsidiaries pursuant to, (i)
         the charter or by-laws of either of the Company or any subsidiary, (ii)
         any statute, rule, regulation or order of any governmental agency or
         body or any court, domestic or foreign, having jurisdiction over the
         Company or any subsidiary of the Company or any of their properties, as
         applicable or (iii) any agreement or instrument to which the Company or
         any such subsidiary is a party or by which the Company or any such
         subsidiary is bound or to which any of the properties of the Company or
         any of its subsidiaries is subject.

                  (t) The consolidated historical financial statements and
         schedules of the Company and its consolidated subsidiaries included in
         or incorporated by reference in the Final Memorandum present fairly in
         all material respects the financial condition, results of operations
         and cash flows of the Company as of the dates and for the periods
         indicated, comply as to form with the applicable accounting
         requirements of the Act and have been prepared in conformity with
         generally accepted accounting principles applied on a consistent basis
         throughout the periods involved (except as otherwise noted therein);
         the selected financial data set forth under the caption "Selected
         Consolidated Financial Information" in the Final Memorandum fairly
         present, on the basis stated in the Final Memorandum, the information
         included therein.

                  (u) No action, suit or proceeding by or before any court or
         governmental agency, authority or body or any arbitrator involving the
         Company or any of its subsidiaries or its or their property is pending
         or, to the best knowledge of the Company, threatened that (i) could
         reasonably be expected to have a material adverse effect on the
         performance of this Agreement, the Indenture or the Registration Rights
         Agreement, or the consummation of any of the transactions contemplated
         hereby or thereby; or (ii) could reasonably be expected to have a
         Material Adverse Effect, except as set forth in or contemplated in the
         Final Memorandum (exclusive of any amendment or supplement thereto).

                  (v) The Company and each of its subsidiaries own or lease all
         such properties as are necessary to the conduct of their respective
         operations as presently conducted, except where the failure to own or
         lease such property could not reasonably be expected to have a Material
         Adverse Effect.

                  (w) Neither the Company nor any subsidiary is in violation or
         default of (i) any provision of its charter or bylaws; (ii) the terms
         of any agreement or instrument to which it is a party or bound or to
         which its property is subject; or (iii) any statute, rule, regulation
         or order of any governmental agency or body or any court, domestic or
         foreign, having jurisdiction over the Company or any subsidiary of the
         Company or any of their properties, as applicable, except in the case
         of (ii) and (iii), such violation or default that could not reasonably
         by expected to have a Material Adverse Effect.


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                                                                              6


                  (x) Deloitte & Touche LLP, who have certified certain
         financial statements of the Company and its consolidated subsidiaries
         and delivered their report with respect to the audited consolidated
         financial statements included or incorporated by reference in the Final
         Memorandum, are, to the knowledge of the Company, independent public
         accountants with respect to the Company within the meaning of the Act
         and the applicable published rules and regulations thereunder.

                  (y) There are no stamp or other issuance or transfer taxes or
         duties or other similar fees or charges required to be paid in
         connection with the execution and delivery of this Agreement, the
         issuance or sale by the Company of the Securities or, if issued on the
         date hereof, the issuance of shares of Stock upon conversion of the
         Securities.

                  (z) The Company has filed all foreign, federal, state and
         local tax returns that are required to be filed or has requested
         extensions thereof (except in any case in which the failure so to file
         would not have a material adverse effect on the condition (financial or
         otherwise), prospects, earnings, business or properties of the Company
         and its subsidiaries, taken as a whole, whether or not arising from
         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Final Memorandum (exclusive of any amendment or
         supplement thereto)) and has paid all taxes required to be paid by it
         and any other assessment, fine or penalty levied against it, to the
         extent that any of the foregoing is due and payable, except for any
         such assessment, fine or penalty that is currently being contested in
         good faith or as would not have a material adverse effect on the
         condition (financial or otherwise), prospects, earnings, business or
         properties of the Company and its subsidiaries, taken as a whole,
         whether or not arising from transactions in the ordinary course of
         business, except as set forth in or contemplated in the Final
         Memorandum (exclusive of any amendment or supplement thereto).

                  (aa) No labor problem or dispute with the employees of the
         Company or any of its subsidiaries exists or is threatened or imminent,
         and the Company is not aware of any existing or imminent labor
         disturbance by the employees of any of its or its subsidiaries'
         principal suppliers, contractors or customers that could reasonably be
         expected to have a material adverse effect on the condition (financial
         or otherwise), prospects, earnings, business or properties of the
         Company and its subsidiaries, taken as a whole, whether or not arising
         from transactions in the ordinary course of business, except as set
         forth in or contemplated in the Final Memorandum (exclusive of any
         amendment or supplement thereto).

                  (bb) The Company and each of its subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are prudent and customary in the
         businesses in which they are engaged; the Company and its subsidiaries
         are in compliance with the terms of such policies and instruments in
         all material respects, except where noncompliance could not reasonably
         be expected to have a Material Adverse Effect; and neither the Company
         nor any such subsidiary has any reason to believe that it will not be
         able to renew its existing insurance coverage as and when such coverage
         expires or to obtain similar coverage from similar insurers as may be
         necessary to continue its business at a cost that would not have a
         material adverse effect on the condition (financial or otherwise),
         prospects, earnings, business or properties of the Company and its
         subsidiaries, taken as a whole, whether or not arising from
         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Final Memorandum (exclusive of any amendment or
         supplement thereto).


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                  (cc) No subsidiary of the Company is currently prohibited,
         directly or indirectly, from paying any dividends to the Company, from
         making any other distribution on such subsidiary's capital stock, from
         repaying to the Company any loans or advances to such subsidiary from
         the Company or from transferring any of such subsidiary's property or
         assets to the Company or any other subsidiary of the Company, except as
         described in or contemplated by the Final Memorandum.

                  (dd) The Company and its subsidiaries possess all licenses,
         certificates, permits and other authorizations issued by the
         appropriate federal, state or foreign regulatory authorities necessary
         to conduct their respective businesses, except where the failure to
         possess such licenses, certificates, permits and other authorizations
         could not reasonably be expected to have a Material Adverse Effect, and
         neither the Company nor any such subsidiary has received any notice of
         proceedings relating to the revocation or modification of any such
         certificate, authorization or permit which, singly or in the aggregate,
         if the subject of an unfavorable decision, ruling or finding, could
         reasonably be expected to have a material adverse effect on the
         condition (financial or otherwise), prospects, earnings, business or
         properties of the Company and its subsidiaries, taken as a whole,
         whether or not arising from transactions in the ordinary course of
         business, except as set forth in or contemplated in the Final
         Memorandum (exclusive of any amendment or supplement thereto).

                  (ee) The Company and its subsidiaries (i) are in compliance
         with any and all applicable foreign, federal, state and local laws and
         regulations relating to the protection of human health and safety, the
         environment or hazardous or toxic substances or wastes, pollutants or
         contaminants ("Environmental Laws"); (ii) have received and are in
         compliance with all permits, licenses or other approvals required of
         them under applicable Environmental Laws to conduct their respective
         businesses; and (iii) have not received notice of any actual or
         potential liability for the investigation or remediation of any
         disposal or release of hazardous or toxic substances or wastes,
         pollutants or contaminants, except where such non- compliance with
         Environmental Laws, failure to receive required permits, licenses or
         other approvals, or liability would not, individually or in the
         aggregate, have a material adverse change in the condition (financial
         or otherwise), prospects, earnings, business or properties of the
         Company and its subsidiaries, taken as a whole, whether or not arising
         from transactions in the ordinary course of business, except as set
         forth in or contemplated in the Final Memorandum (exclusive of any
         amendment or supplement thereto); except as set forth in the Final
         Memorandum, neither the Company nor any of the subsidiaries has been
         named as a "potentially responsible party" under the Comprehensive
         Environmental Response, Compensation, and Liability Act of 1980, as
         amended.




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                                                                              8


                  (ff) Each of the Company and its subsidiaries has fulfilled
         its obligations, if any, under the minimum funding standards of Section
         302 of the United States Employee Retirement Income Security Act of
         1974, as amended ("ERISA"), and the regulations and published
         interpretations thereunder with respect to each "plan" (as defined in
         Section 3(3) of ERISA and such regulations and published
         interpretations) in which employees of the Company and its subsidiaries
         are eligible to participate; the Company and its subsidiaries have not
         incurred any unpaid liability to the Pension Benefit Guaranty
         Corporation (other than for the payment of premiums in the ordinary
         course) or to any such plan under Title IV of ERISA.

                  (gg) The Company and its subsidiaries own, possess, license or
         have other rights to use, on reasonable terms, all patents, patent
         applications, trade and service marks, trade and service mark
         registrations, trade names, copyrights, licenses, inventions, trade
         secrets, technology, know-how and other intellectual property
         (collectively, the "Intellectual Property") necessary for the conduct
         of the Company's business as now conducted or as proposed in the Final
         Memorandum to be conducted, except where the failure to own such
         Intellectual Property could not reasonably be expected to have a
         Material Adverse Effect. Neither the Company nor any of its
         subsidiaries has received any charge, complaint, claim, demand or
         notice alleging any interference, infringement, misappropriation or
         violation of a third party's right in Intellectual Property (including
         any claim that the Company or any of its subsidiaries must license or
         refrain from using such Intellectual Property), which, if the subject
         of any unfavorable ruling, decision or finding could, individually or
         in the aggregate, reasonably be expected to have a Material Adverse
         Effect.

                  (hh) Each executive officer and director of the Company has
         entered into a written agreement with the Company in the form of
         Exhibit B hereto (each such agreement, a "Lock-up Agreement"), and
         executed originals of each Lock-up Agreement have been delivered to
         you.

                  Any certificate signed by any officer of the Company and
delivered to the Initial Representatives or counsel for the Initial Purchasers
in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each Initial Purchaser.

                  2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, (a) the
Company agrees to sell to each Initial Purchaser, and each Initial Purchaser
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 100% of the principal amount thereof, plus accrued interest, if any,
from November 19, 2001 to the Closing Date, the principal amount of Firm
Securities set forth opposite such Initial Purchaser's name on Schedule I hereto
and (b) in the event and to the extent that the Initial Purchasers shall
exercise the election to purchase Optional Securities as provided below, the
Company agrees to issue and sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at
the purchase price set forth in clause (a) of this Section 2, the aggregate
principal amount of Optional Securities as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractions of $1,000).

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                                                                              9


                  The Company hereby grants to Salomon Smith Barney Inc. the
right to purchase at their election up to $50,000,000 aggregate principal amount
of Optional Securities, at the purchase price set forth in clause (a) of this
Section 2, for the sole purpose of covering over-allotments in the sale of the
Firm Securities. Any such election to purchase Optional Securities may be
exercised only by written notice from Salomon Smith Barney Inc. to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate principal amount of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by Salomon Smith Barney Inc. but in no event earlier than the Closing
Date (as defined in Section 3 hereof) or, unless Salomon Smith Barney Inc. and
the Company otherwise agree in writing, earlier than three or later than ten
business days after the date of such notice; provided that this paragraph is
subject to the condition that either (1) the resale of Optional Securities to
investors settles within 12 days after the first date of settlement of the
initial resale of any Firm Securities to one or more investors (the "Initial
Settlement Date"), (2) the resale of Optional Securities to investors settles
within 30 days of the Initial Settlement Date and is at a price that would not
cause the Optional Securities to have original issue discount in more than a "de
minimis" amount for Federal income tax purposes if the Optional Securities were
a separate "issue" for such purposes, or (3) the Representatives have consulted
with their counsel, Cravath, Swaine & Moore, and with counsel to the Company,
Skadden, Arps, Slate, Meagher & Flom LLP, to confirm that the Firm Securities
and the Optional Securities will be treated as part of the same "issue" for
Federal income tax purposes.

                  3. Delivery and Payment. Delivery of and payment for the Firm
Securities and the Optional Securities (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third Business Day prior
to the Closing Date) shall be made at 10:00 A.M., New York City time, on
November 19, 2001, which date and time may be postponed by agreement between
Salomon Smith Barney Inc. and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the Securities being herein
called the "Closing Date"). If the option provided for in Section 2(b) hereof is
exercised after the third Business Day prior to the Closing Date, the Company
will deliver the Optional Securities (at the expense of the Company) to Salomon
Smith Barney Inc. for its account on the date specified by Salomon Smith Barney
Inc. (which shall be no fewer than three Business Days and no more than ten
Business Days after exercise of said option).
 Delivery of the Securities shall be made to the Representatives against payment
by the several Initial Purchasers through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to the account specified by the Company. Delivery of the
Securities shall be made through the facilities of The Depository Trust Company
unless Salomon Smith Barney Inc. shall otherwise instruct.

                  If settlement of the Optional Securities occurs after the
Closing Date, the Company will deliver to Salomon Smith Barney Inc. for its
account on the settlement date for the Optional Securities, and the obligation
of Salomon Smith Barney Inc. to purchase the Optional Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.

                  4. Offering by Initial Purchasers. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with the
Company that:

                  (a) It is a qualified institutional buyer (as defined in Rule
         144A under the Act) or an institutional accredited investor (as defined
         in Rule 501(a) under the Act).

                  (b) It has not offered or sold, and will not offer or sell,
         any Securities except (i) to those persons it reasonably believes to be
         qualified institutional buyers (as defined in Rule 144A under the Act)
         and that, in connection with each such sale, it has taken or will take
         reasonable steps to ensure that the purchaser of such Securities is
         aware that such sale is being made in reliance on Rule 144A; or (ii) in
         accordance with the restrictions set forth in Exhibit A hereto.


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                                                                             10

                  (c) Neither it nor any person acting on its behalf has made or
         will make offers or sales of the Securities in the United States by
         means of any form of general solicitation or general advertising
         (within the meaning of Regulation D) in the United States.

                  5.  Agreements. The Company agrees with each Initial
         Purchaser that:

                  (a) The Company will furnish to each Initial Purchaser and to
         counsel for the Initial Purchasers, without charge, during the period
         referred to in paragraph (c) below, as many copies of the Final
         Memorandum and any amendments and supplements thereto as you may
         reasonably request.

                  (b) The Company will not amend or supplement the Final
         Memorandum without the prior written consent of the Representatives,
         which consent will not be unreasonably withheld or delayed.

                  (c) If at any time prior to the completion of the sale of the
         Securities by the Initial Purchasers (as determined by the
         Representatives), any event occurs as a result of which the Final
         Memorandum, as then amended or supplemented, would include any untrue
         statement of a material fact or omit to state any material fact
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading, or if it
         shall be necessary to amend or supplement the Final Memorandum to
         comply with applicable law, the Company promptly (i) will notify the
         Representatives of any such event; (ii) subject to the requirements of
         paragraph (b) of this Section 5, will prepare an amendment or
         supplement that will correct such statement or omission or effect such
         compliance; and (iii) will supply any supplemented or amended Final
         Memorandum to the several Initial Purchasers and counsel for the
         Initial Purchasers without charge in such quantities as you may
         reasonably request.

                  (d) The Company will arrange, if necessary, for the
         qualification of the Securities for sale by the Initial Purchasers
         under the laws of such jurisdictions as the Representatives may
         designate and will maintain such qualifications in effect so long as
         required for the sale of the Securities; provided that in no event
         shall the Company be obligated to qualify to do business in any
         jurisdiction where it is not now so qualified or to take any action
         that would subject it to service of process in suits, other than those
         arising out of the offering or sale of the Securities, in any
         jurisdiction where it is not now so subject. The Company will promptly
         advise the Representatives of the receipt by the Company of any
         notification with respect to the suspension of the qualification of the
         Securities for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose.

                  (e) The Company will not, and will not permit any of its
         controlled Affiliates to, and will use its reasonable best efforts not
         to permit any of its other Affiliates to, resell any Securities or
         Stock issuable on conversion thereof that have been acquired by any of
         them.

                  (f) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers) will, directly or indirectly, make offers or sales of any
         security, or solicit offers to buy any security, under circumstances
         that would require the registration of the Securities or the Stock
         issuable on conversion thereof under the Act.



<PAGE>


                                                                             11

                  (g) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers) will engage in any form of general solicitation or general
         advertising (within the meaning of Regulation D) in connection with any
         offer or sale of the Securities in the United States.

                  (h) So long as any of the Securities or shares of Stock issued
         or issuable upon conversion of the Securities are "restricted
         securities" within the meaning of Rule 144(a)(3) under the Act, the
         Company will, during any period in which it is not subject to and in
         compliance with Section 13 or 15(d) of the Exchange Act or it is not
         exempt from such reporting requirements pursuant to and in compliance
         with Rule 12g3-2(b) under the Exchange Act, provide to each holder of
         such restricted securities and to each prospective purchaser (as
         designated by such holder) of such restricted securities, upon the
         request of such holder or prospective purchaser, any information
         required to be provided by Rule 144A(d)(4) under the Act. This covenant
         is intended to be for the benefit of the holders, and the prospective
         purchasers designated by such holders, from time to time of such
         restricted securities.

                  (i) Neither the Company, nor any of its Affiliates, nor any
         person acting on its or their behalf (other than the Initial
         Purchasers) will engage in any directed selling efforts with respect to
         the Securities, and each of them will comply with the offering
         restrictions requirements of Regulation S. Terms used in this paragraph
         have the meanings given to them by Regulation S.

                  (j) The Company will cooperate with the Representatives and
         use its best efforts to permit the Securities to be eligible for
         clearance and settlement through The Depository Trust Company.

                  (k) The Company will not for a period of 90 days following the
         Execution Time, without the prior written consent of Salomon Smith
         Barney Inc. (which consent shall not be unreasonably withheld, delayed
         or conditioned), offer, sell, contract to sell, pledge or otherwise
         dispose of, or file (or participate in the filing of) a registration
         statement with the Commission in respect of, or establish or increase a
         put equivalent position or liquidate or decrease a call equivalent
         position within the meaning of Section 16 of the Exchange Act and the
         rules and regulations of the Commission promulgated thereunder with
         respect to, any shares of capital stock of the Company or any
         securities convertible or exercisable or exchangeable for such capital
         stock, or publicly announce an intention to effect any such
         transaction; provided, however, that (i) the Company may issue common
         stock, or grant options to purchase common stock or other awards, in
         each case under its existing stock or bonus plans, to employees,
         directors and consultants of the Company or pursuant to commercial
         arrangements with partners of the Company, (ii) the Company may file
         registration statements in respect of the Securities and shares of
         common stock issuable upon conversion of the Securities and may issue
         common stock upon conversion of the Securities, (iii) the Company may
         issue common stock or securities convertible into common stock and file
         registration statements, in each case in connection with acquisitions,
         the consideration for which includes the issuance of common stock or
         securities convertible into common stock; provided that the parties
         receiving the Class A common stock in any acquisition agree to be bound
         by the foregoing restrictions, (iv) the Company may file a registration
         statement in any instance in which the Company is required to register
         shares of common stock pursuant to registration rights agreements in
         which the Company is a party thereto and (v) the Company may issue
         common stock in exchange for the preferred stock of Rite Aid Lease
         Management Corporation and the Company may file a registration
         statement with respect thereto.


<PAGE>


                                                                             12


                  (l) The Company will not take, directly or indirectly, any
         action designed to or that would constitute or that might reasonably be
         expected to cause or result in, under the Exchange Act or otherwise,
         the stabilization or manipulation of the price of any security of the
         Company to facilitate the sale or resale of the Securities.

                  (m) The Company currently has no plan or intent to be or
         become, or be or become owned by, an open-end investment company, unit
         investment trust or face-amount certificate company that is or is
         required to be registered under Section 8 of the Investment Company
         Act.

                  (n) The Company agrees to pay the costs and expenses relating
         to the following matters: (i) the preparation of the Indenture and the
         Registration Rights Agreement and the issuance of the Securities; (ii)
         the preparation, printing or reproduction of the Preliminary Memorandum
         and Final Memorandum and each amendment or supplement to either of
         them; (iii) the printing (or reproduction) and delivery (including
         postage, air freight charges and charges for counting and packaging) of
         such copies of the Preliminary Memorandum and Final Memorandum, and all
         amendments or supplements to either of them, as may, in each case, be
         reasonably requested for use in connection with the offering and sale
         of the Securities; (iv) the preparation, printing, authentication,
         issuance and delivery of certificates for the Securities, including any
         stamp or transfer taxes in connection with the original issuance and
         sale of the Securities and the shares of Stock issuable upon conversion
         thereof; (v) the printing (or reproduction) and delivery of this
         Agreement, any blue sky memorandum and all other agreements or
         documents printed (or reproduced) and delivered in connection with the
         offering of the Securities; (vi) any registration or qualification of
         the Securities for offer and sale under the securities or blue sky laws
         of the several states (including filing fees and the reasonable fees
         and expenses of counsel for the Initial Purchasers relating to such
         registration and qualification); (vii) admitting the Securities for
         trading in The Portal Market of the NASD and the listing of the shares
         of Stock issuable upon conversion of the Securities; (viii) the
         transportation and other expenses incurred by or on behalf of Company
         representatives in connection with presentations to prospective
         purchasers of the Securities; (ix) the fees and expenses of the
         Company's accountants and the fees and expenses of counsel (including
         local and special counsel) for the Company; and (x) all other costs and
         expenses incident to the performance by the Company of its and their
         obligations hereunder and under the Indenture and the Registration
         Rights Agreement. It is understood, however, that, except as provided
         in Section 5 and Sections 7 and 8 of this Agreement, the Initial
         Purchasers will pay all of their own costs and expenses, including the
         fees of their counsel.

                  (o) The Company will reserve and keep available at all times,
         free of preemptive rights, shares of Stock for the purpose of enabling
         the Company to satisfy its obligations to issue shares of Stock upon
         conversion of the Securities.

<PAGE>


                                                                             13

                  (p) The Company will refuse, and will cause all applicable
         trustees and transfer agents to refuse, to register any transfer of
         Securities or shares of Stock issued upon conversion of Securities if
         such transfer is not made in accordance with the provisions of
         Regulation S under the Securities Act, pursuant to an effective
         registration statement under the Securities Act or pursuant to an
         available exemption from the registration requirements of the
         Securities Act; provided that the provisions of this paragraph shall
         not be applicable to any Security or share of Stock which has been
         transferred pursuant to an effective registration statement Rule 144
         under the Securities Act, and, as a result of which, or otherwise, are
         no longer subject to restrictions on transfer under the Securities Act.

                  (q) All of the Securities and shares of Stock issuable upon
         conversion thereof will contain a legend to the effect that the
         transfer thereof is prohibited except in accordance with the provisions
         of Regulation S, pursuant to an effective registration statement under
         the Securities Act or pursuant to an available exemption from
         registration under the Securities Act and that hedging transactions
         involving those Securities or shares may not be conducted unless in
         compliance with the Securities Act; provided that such legend may be
         removed if such Securities or shares have been transferred pursuant to
         an effective registration statement or or when eligible for resale
         under Rule 144 under the Securities Act, and, as a result of which, or
         otherwise, is no longer subject to restrictions on transfer under the
         Securities Act.

                  (r) Between the date hereof and the Closing Date, the Company
         will not do or authorize any act or thing that would result in an
         adjustment of the conversion price.

                  (s) The Company shall duly list the shares of Stock issuable
         upon conversion of the Securities on the New York Stock Exchange,
         subject to official notice of issuance.

                  6. Conditions to the Obligations of the Initial Purchasers.
The obligations of each Initial Purchaser to purchase the Firm Securities and
the obligation of Salomon Smith Barney Inc. to purchase the Optional Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein at the Execution Time and
the Closing Date (and any settlement date with respect to the Optional
Securities), to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:

                  (a) The Initial Purchasers shall have received an opinion,
         dated the Closing Date, of Elliot S. Gerson, Esq., general counsel for
         the Company, substantially to the effect set forth below:

                           (i) each of the Company and its subsidiaries has been
                  duly incorporated and is validly existing as a corporation in
                  good standing under the laws of the jurisdiction in which it
                  is chartered or organized, with full corporate power and
                  authority to own or lease, as the case may be, and to operate
                  its properties and conduct its business as described in the
                  Final Memorandum, and is duly qualified to do business as a
                  foreign corporation and is in good standing under the laws of
                  each jurisdiction which requires such qualification, except to
                  the extent that the failure to be so qualified or in good
                  standing could not reasonably be expected to have a Material
                  Adverse Effect;

<PAGE>


                                                                             14


                           (ii) all the outstanding shares of capital stock of
                  the Company and each subsidiary have been duly and validly
                  authorized and issued and are fully paid and nonassessable,
                  and, except for Rx USA, Inc., Rite Aid Lease Management
                  Corporation and Rite Aid Risk Management Corp., all
                  outstanding shares of capital stock of the Subsidiaries are
                  owned by the Company either directly or through wholly owned
                  subsidiaries free and clear of any perfected security interest
                  and, to the knowledge of such counsel, after due inquiry, any
                  other security interests, claims, liens or encumbrances;

                           (iii) the Company's authorized capital stock is as
                  set forth in the Final Memorandum; the shares conform, as to
                  legal matters, in all material respects to the description
                  thereof contained in the Final Memorandum under the caption
                  "Description of Capital Stock"; the shares of Stock initially
                  issuable upon conversion of the Securities have been duly
                  authorized and, when issued upon conversion in accordance with
                  the Securities and the Indenture, will be validly issued,
                  fully paid and nonassessable; no holder of outstanding shares
                  of capital stock of the Company has any statutory or, to such
                  Counsel's knowledge after due inquiry, contractual preemptive
                  rights to subscribe for the Securities or the shares of Stock
                  issuable upon conversion thereof; and to such counsel's
                  knowledge after due inquiry, except as set forth in the Final
                  Memorandum, no options, warrants or other rights to purchase,
                  agreements or other obligations to issue, or rights to convert
                  any obligations into or exchange any securities for, shares of
                  capital stock or ownership interests in the Company are
                  outstanding;

                           (iv) to the knowledge of such counsel, there is no
                  pending or threatened action, suit or proceeding by or before
                  any court or governmental agency, authority or body or any
                  arbitrator involving the Company or any of its subsidiaries or
                  its or their property that would be required to be disclosed
                  in a registration statement on Form S-1 under the Act and that
                  is not adequately disclosed in the Final Memorandum, except in
                  each case for such proceedings that, if the subject of an
                  unfavorable decision, ruling or finding would not singly or in
                  the aggregate, result in a material adverse change in the
                  condition (financial or otherwise), prospects, earnings,
                  business or properties or results of operations of the Company
                  and its subsidiaries, taken as a whole;

                           (v) each of this Agreement and the Registration
                  Rights Agreement has been duly authorized, executed and
                  delivered by the Company;

                           (vi) neither the execution and delivery of the
                  Indenture, this Agreement or the Registration Rights
                  Agreement, the issue and sale of the Securities, nor the
                  fulfillment of the terms hereof or thereof will conflict with,
                  result in a breach or violation of, or imposition of any lien,
                  charge or encumbrance upon any property or asset of the
                  Company or any of its subsidiaries pursuant to, (i) the
                  charter or by-laws of the Company or any of its subsidiaries;
                  (ii) the terms of any indenture, contract, lease, mortgage,
                  deed of trust, note agreement, loan agreement or other
                  agreement, obligation, condition, covenant or instrument to
                  which the Company or any of its subsidiaries is a party or
                  bound or to which any of their respective properties is
                  subject; or (iii) any statute, law, rule, regulation,
                  judgment, order or decree applicable to the Company or any of
                  its subsidiaries of any court, regulatory body, administrative
                  agency, governmental body, arbitrator or other authority
                  having jurisdiction over the Company, any of its subsidiaries
                  or any of their respective properties, except such conflicts,
                  breaches or violations as could not reasonably be expected to
                  have a Material Adverse Effect; or could not reasonably be
                  expected to have a material adverse effect on the Company's
                  performance of this Agreement, the Indenture or the
                  Registration Rights Agreement, or the consummation of any of
                  the transactions contemplated by the Purchase Agreement or
                  such other agreements;


<PAGE>


                                                                             15


                           (vii) no consent, approval, authorization, filing
                  with or order of any court or governmental agency or body is
                  required in connection with the transactions contemplated
                  herein or in the Indenture or the Registration Rights
                  Agreement, except such as will be obtained under the Act and
                  the Trust Indenture Act in connection with the transactions
                  contemplated by the Registration Rights Agreement and such as
                  may be required under the blue sky or securities laws of any
                  jurisdiction in connection with the transactions contemplated
                  by this Agreement and the Registration Rights Agreement and
                  such other approvals (specified in such opinion) as have been
                  obtained;

                           (viii) the statements in the Final Memorandum under
                  the headings "Regulation" and "Legal Proceedings"; insofar as
                  such statements summarize legal matters, agreements, documents
                  or proceedings discussed therein, are accurate and fair
                  summaries of such legal matters, agreements, documents or
                  proceedings; and

                           (ix) other than the persons holding such rights under
                  those agreements listed on Schedule II to the Purchase
                  Agreement, no holder of any security of the Company has any
                  right (except as has been satisfied or waived) to require
                  registration of shares of Stock or any other security of the
                  Company under the Shelf Registration Statement.

                           (x) all documents filed under the Exchange Act and
                  deemed to be included in the Preliminary Memorandum, or any
                  amendment or supplement thereto and any other documents
                  incorporated by reference in the Preliminary Memorandum as
                  amended or supplemented (other than the financial statements
                  and related schedules therein, as to which such counsel need
                  express no opinion), when they were filed with the Commission,
                  complied as to form in all material respects with the
                  requirements of the Exchange Act, and the rules and
                  regulations of the Commission thereunder; and such counsel has
                  no reason to believe that any of such documents, when they
                  were so filed, contained an untrue statement of a material
                  fact or omitted to state a material fact necessary in order to
                  make the statements therein, in the light of the circumstances
                  under which they were made when such documents were so filed,
                  not misleading.

                           In addition, such counsel will state that he has
                  participated in conferences with officers and other
                  representatives of the Company, counsel for the Company,
                  representatives of the independent accountants of the Company
                  and the Initial Purchasers and its counsel at which the
                  contents of the Final Memorandum and related matters were
                  discussed; although he is not passing upon, and does not
                  assume any responsibility for, the accuracy, completeness or
                  fairness of the statements contained in the Final Memorandum
                  and has made no independent check or verification thereof, on
                  the basis of the foregoing such counsel has no reason to
                  believe that at the Execution Time and on the Closing Date the
                  Final Memorandum contained or contains any untrue statement of
                  a material fact or omitted or omits to state any material fact
                  necessary to make the statements therein, in the light of the
                  circumstances under which they were made, not misleading (in
                  each case, other than the financial statements and other
                  financial information contained therein, as to which such
                  counsel need express no opinion).


<PAGE>


                                                                             16


                  (b) The Initial Purchasers shall have received an opinion,
         dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP,
         counsel for the Company, substantially to the effect set forth below:

                           (i) Based solely on such counsel's review of
                  good-standing certificates, the Company is validly existing as
                  a corporation in good standing under the laws of the
                  jurisdiction in which it is chartered or organized, with full
                  corporate power and authority to own or lease, as the case may
                  be, and to operate its properties and conduct its business as
                  described in the Final Memorandum;

                           (ii) The shares of Stock initially issuable upon
                  conversion of the Securities have been duly authorized and the
                  resolutions of the Executive Committee of the Board of
                  Directors of the Company approving the issuance of the
                  Securities have reserved for issuance the Stock and, if and
                  when issued and delivered upon conversion of the Securities in
                  accordance with the provisions of the Securities and the
                  Indenture at conversion prices at or in excess of the par
                  value of such Stock, will be duly and validly issued and fully
                  paid and nonassessable, and the shares of common stock into
                  which the Securities are initially convertible conform to the
                  description of the common stock contained in the Final
                  Memorandum;

                           (iii) the Indenture has been duly authorized,
                  executed and delivered, and is a valid and binding agreement
                  of the Company enforceable against the Company in accordance
                  with its terms (subject, as to the enforcement of remedies, to
                  applicable bankruptcy, reorganization, insolvency, moratorium
                  or other laws affecting creditors' rights generally from time
                  to time in effect and to general principles of equity,
                  including, without limitation, concepts of materiality,
                  reasonableness, good faith and fair dealing, regardless of
                  whether considered in a proceeding in equity or at law and
                  such counsel need not express any opinion as to the
                  applicability or effect of any fraudulent transfer, preference
                  or similar law); the Securities have been duly authorized and
                  when executed by the Company and delivered to and paid for by
                  the Initial Purchasers under this Agreement (assuming due
                  execution and authentication of the Securities by the Trustee
                  under the Indenture), will constitute legal, valid and binding
                  obligations of the Company entitled to the benefits of the
                  Indenture (subject, as to the enforcement of remedies, to
                  applicable bankruptcy, reorganization, insolvency, moratorium
                  or other laws affecting creditors' rights generally from time
                  to time in effect and to general principles of equity,
                  including, without limitation, concepts of materiality,
                  reasonableness, good faith and fair dealing, regardless of
                  whether considered in a proceeding in equity or at law and
                  such counsel need not express any opinion as to the
                  applicability or effect of any fraudulent transfer, preference
                  or similar law); the Registration Rights Agreement has been
                  duly authorized, executed and delivered and is a valid and
                  binding agreement by the Company enforceable against the
                  Company in accordance with its terms (subject, as to the
                  enforcement of remedies, to applicable bankruptcy, fraudulent
                  conveyance, reorganization, insolvency, moratorium or other
                  laws affecting creditors' rights generally from time to time
                  in effect and to general principles of equity, including,
                  without limitation, concepts of materiality, reasonableness,
                  good faith and fair dealing, regardless of whether considered
                  in a proceeding in equity or at law and such counsel need not
                  express any opinion as to the applicability or effect of any
                  fraudulent transfer, preference or similar law); and the
                  statements set forth under the heading "Description of Notes"
                  and "Description of Capital Stock" in the Final Memorandum,
                  insofar as such statements purport to summarize certain terms
                  of the Securities, the common stock, the Indenture and the
                  Registration Rights Agreement, fairly summarize such
                  provisions in all material respects;



<PAGE>


                                                                             17


                           (iv) to the knowledge of such counsel, there is no
                  pending or threatened action, suit or proceeding by or before
                  any court or governmental agency, authority or body or any
                  arbitrator involving the Company or any of its subsidiaries or
                  its or their property that is not adequately disclosed in the
                  Final Memorandum, except in each case for such proceedings
                  that, if the subject of an unfavorable decision, ruling or
                  finding would not singly or in the aggregate, result in a
                  material adverse change in the condition (financial or
                  otherwise), prospects, earnings, business or properties or
                  results of operations of the Company and its subsidiaries,
                  taken as a whole; and the statements in the Final Memorandum
                  under the headings "Certain United States Federal Income Tax
                  Considerations for Non-United States Holders" and "Description
                  of Other Indebtedness"; insofar as such statements summarized
                  legal matters, agreements, documents or proceedings discussed
                  therein, are accurate and fair summaries of such legal
                  matters, agreements, documents or proceedings;

                           (v) this Agreement has been duly authorized, executed
                  and delivered by the Company;

                           (vi) the execution and delivery of the Indenture,
                  this Agreement, the Registration Rights Agreement, the issue
                  and sale of the Securities, nor the fulfillment of the terms
                  hereof or thereof will not (i) conflict with the charter or
                  by-laws of the Company; (ii) constitute a violation of, or a
                  breach or default under the terms of any Applicable Contract
                  or (iii) violate or conflict with, or result in any
                  contravention of, any Applicable Law or Applicable Order. Such
                  counsel need not express any opinion, however, as to whether
                  such execution, delivery or performance will constitute a
                  violation of, or default under, any covenant, restriction or
                  provision with respect to financial ratios or tests or any
                  aspect of the financial condition or results of operation of
                  the Company or any of its subsidiaries;

                           (vii) assuming (i) the accuracy of the
                  representations and warranties of the Company set forth in
                  Section 1 of the Purchase Agreement and of you in Section 4 of
                  the Purchase Agreement, (ii) the due performance by the
                  Company of the covenants and agreements set forth in Section 5
                  of the Purchase Agreement and the due performance by you of
                  the covenants and agreements set forth in Section 4 of the
                  Purchase Agreement, (iii) your compliance with the offering
                  and transfer procedures and restrictions described in the
                  Offering Memorandum, and (iv) the accuracy of the
                  representations and warranties made in accordance with the
                  Offering Memorandum by purchasers to whom you initially resell
                  the Securities, the offer, sale and delivery of the Securities
                  to you in the manner contemplated by the Purchase Agreement
                  and the Offering Memorandum and the initial resale of the
                  Securities by you in the manner contemplated in the Offering
                  Memorandum and the Purchase Agreement, do not require
                  registration under the Securities Act of 1933, as amended, and
                  the Indenture does not require qualification under the Trust
                  Indenture Act of 1939, as amended, it being understood that
                  such counsel does not express any opinion as to any subsequent
                  resale of any Security;


<PAGE>


                                                                             18


                           (viii) the Company is not and, after giving effect to
                  the offering and sale of the Securities and the application of
                  the proceeds thereof as described in the Final Memorandum,
                  will not be an "investment company" as defined in the
                  Investment Company Act;

                           (ix) no Governmental Approval is required in
                  connection with the transactions contemplated herein or in the
                  Indenture or the Registration Rights Agreement, except such as
                  will be obtained under the Act and the Trust Indenture Act in
                  connection with the transactions contemplated by the
                  Registration Rights Agreement;

                           (x) The specimen stock certificate evidencing the
                  common stock of the Company complies in all material respects
                  with the applicable requirements of Delaware law; and

                           (xi) such counsel will state that it has participated
                  in conferences with officers and other representatives of the
                  Company, counsel for the Company, representatives of the
                  independent accountants of the Company and you and your
                  counsel at which the contents of the Final Memorandum and
                  related matters were discussed. Although it is not passing
                  upon, and does not assume any responsibility for, the
                  accuracy, completeness or fairness of the statements contained
                  in the Final Memorandum and has made no independent check or
                  verification thereof (except to the limited extent referred to
                  above), on the basis of the foregoing, no facts have come to
                  its attention that have led it to believe that the Final
                  Memorandum, as of its date or as of Closing Date, contained or
                  contains an untrue statement of a material fact or omitted or
                  omits to state a material fact necessary in order to make the
                  statements therein, in light of the circumstances under which
                  they were made, not misleading, except that such counsel need
                  not express any opinion or belief with respect to the
                  financial statements, schedules and other financial data
                  included or excluded therefrom.

                  The following definitions apply to this paragraph (b):

                           "Applicable Contracts" means those agreements or
                  instruments identified in a schedule to the opinion reasonably
                  satisfactory to the Initial Purchasers.

<PAGE>


                                                                             19

                           "Applicable Laws" means Delaware General Corporation
                  Law (the "DGCL") and those laws, rules and regulations of the
                  State of New York and the federal laws of the United States of
                  America, in each case, which, in our experience, are normally
                  applicable to transactions of the type contemplated by the
                  Agreement, the Indenture and the Registration Rights Agreement
                  (other than the United States Federal securities laws, state
                  and foreign securities or blue sky laws, antifraud laws and
                  the rules and regulations of the National Association of
                  Securities Dealers Inc.), but without such counsel having made
                  any investigation as to any other laws, rules or regulations,
                  and which are not the subject of a specific opinion therein
                  referring expressly to a particular law or laws.

                           "Governmental Authorities" means any court,
                  regulatory body, administrative agency or governmental body of
                  the State of New York or the United States of America having
                  jurisdiction over the Company under Applicable Laws.

                           "Governmental Approval" means any consent, approval,
                  license, authorization or validation of, or filing,
                  qualification or registration with, any Governmental Authority
                  required to be made or obtained by the Company pursuant to
                  Applicable Laws.

                           "Applicable Orders" means those judgments, orders or
                  decrees, if any, of any Governmental Authority.

                  In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
jurisdiction of incorporation of the Company, the State of New York or the
Federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Initial
Purchasers; and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
References to the Final Memorandum in this Section 6(a) include any amendment or
supplement thereto at the Closing Date.

                  (c) The Representatives shall have received from Cravath,
         Swaine & Moore, counsel for the Initial Purchasers, such opinion or
         opinions, dated the Closing Date and addressed to the Representatives,
         with respect to the issuance and sale of the Securities, the Indenture,
         the Registration Rights Agreement, the Final Memorandum (as amended or
         supplemented at the Closing Date) and other related matters as the
         Representatives may reasonably require, and the Company shall have
         furnished to such counsel such documents as they reasonably request for
         the purpose of enabling them to pass upon such matters.

                  (d) The Company shall have furnished to the Representatives a
         certificate of the Company, signed by the Chairman of the Board or the
         President and the principal financial or accounting officer of the
         Company, dated the Closing Date, to the effect that the signers of such
         certificate have carefully examined the Final Memorandum, any amendment
         or supplement to the Final Memorandum and this Agreement and that:

                           (i) the representations and warranties of the Company
                  in this Agreement are true and correct on and as of the
                  Closing Date with the same effect as if made on the Closing
                  Date, and the Company has complied with all the agreements and
                  satisfied all the conditions on its part to be performed or
                  satisfied hereunder at or prior to the Closing Date; and


<PAGE>


                                                                             20

                           (ii) since the date of the most recent financial
                  statements included in the Final Memorandum (exclusive of any
                  amendment or supplement thereto), there has been no material
                  adverse change in the condition (financial or otherwise),
                  prospects, earnings, business or properties of the Company and
                  its subsidiaries, taken as a whole, whether or not arising
                  from transactions in the ordinary course of business, except
                  as set forth in or contemplated by the Final Memorandum
                  (exclusive of any amendment or supplement thereto).

                  (e) At the Execution Time and at the Closing Date, the Company
         shall have requested and caused Deloitte & Touche LLP to furnish to the
         Representatives letters, dated respectively as of the Execution Time
         and as of the Closing Date, in form and substance satisfactory to the
         Representatives, confirming that they are independent accountants
         within the meaning of the Act and the Exchange Act and the respective
         applicable rules and regulations adopted by the Commission thereunder,
         that they have performed a review of the unaudited interim financial
         information of the Company for the six-month period ended September 1,
         2001 and as at September 1, 2001, and stating in effect that:

                           (i) in their opinion the audited financial statements
                  and financial statement schedules included or incorporated by
                  reference in the Final Memorandum and reported on by them
                  comply as to form in all material respects with the applicable
                  accounting requirements of the Exchange Act and the related
                  rules and regulations adopted by the Commission thereunder
                  that would apply to the Final Memorandum if the Final
                  Memorandum were a prospectus included in a registration
                  statement on Form S-1 under the Act;

                           (ii) on the basis of a reading of the latest
                  unaudited financial statements made available by the Company
                  and its subsidiaries; their limited review, in accordance with
                  the standards established under Statement on Auditing
                  Standards No. 71, of the unaudited interim financial
                  information for the six-month period ended September 1, 2001,
                  and as at September 1, 2001; carrying out certain specified
                  procedures (but not an examination in accordance with
                  generally accepted auditing standards) which would not
                  necessarily reveal matters of significance with respect to the
                  comments set forth in such letter; a reading of the minutes of
                  the meetings of the stockholders, directors and audit,
                  executive and compensation committees of the Company and the
                  Subsidiaries; and inquiries of certain officials of the
                  Company who have responsibility for financial and accounting
                  matters of the Company and its subsidiaries as to transactions
                  and events subsequent to September 1, 2001, nothing came to
                  their attention which caused them to believe that:

                                    (1) any unaudited financial statements
                           included or incorporated in the Final Memorandum do
                           not comply in form in all material respects with
                           applicable accounting requirements and with the
                           related rules and regulations adopted by the
                           Commission with respect to financial statements
                           included or incorporated in quarterly reports on Form
                           10-Q under the Exchange Act; and said unaudited
                           financial statements are not in conformity with
                           generally accepted accounting principles applied on a
                           basis substantially consistent with that of the
                           audited financial statements included or incorporated
                           in the Final Memorandum;


<PAGE>


                                                                             21

                                    (2) with respect to the period subsequent to
                           September 1, 2001, there were any changes, at a
                           specified date not more than five days prior to the
                           date of the letter, in the long-term debt less
                           current maturities of the Company and its
                           subsidiaries or common stock of the Company or
                           decreases in the stockholders' equity (deficit) of
                           the Company as compared with the amounts shown on the
                           September 1, 2001 consolidated balance sheet included
                           or incorporated in the Final Memorandum, or for the
                           period from September 2, 2001 to such specified date
                           there were any decreases, as compared with the
                           corresponding period in the preceding year in
                           revenues, net loss or loss from continuing operations
                           before income taxes and cumulative effect of
                           accounting change or in net loss per share of the
                           Company and its subsidiaries, except in all instances
                           for changes or decreases set forth in such letter, in
                           which case the letter shall be accompanied by an
                           explanation by the Company as to the significance
                           thereof unless said explanation is not deemed
                           necessary by the Representatives; or

                                    (3) the information included in response to
                           Regulation S-K, Item 301 (Selected Financial Data),
                           Item 302 (Supplementary Financial Information), Item
                           402 (Executive Compensation) and Item 503(d) (Ratio
                           of Earnings to Fixed Charges) is not in conformity
                           with the disclosure requirements of Regulation S-K.

                              (iii) they have performed certain other specified
                  procedures as a result of which they determined that certain
                  information of an accounting, financial or statistical nature
                  (which is limited to accounting, financial or statistical
                  information derived from the general accounting records of the
                  Company and its subsidiaries) set forth in the Final
                  Memorandum, including the information set forth under the
                  captions "Offering Memorandum Summary", "Risk Factors", "Use
                  of Proceeds", "Capitalization", "Selected Consolidated
                  Financial Data", "Management's Discussion and Analysis of
                  Financial Condition and Results of Operations", "Business",
                  "Management", "Executive Officer Compensation", "Security
                  Ownership of Certain Beneficial Owners and Management",
                  "Certain Relationships and Related Transactions," "Description
                  of Capital Stock" and "Description of Other Indebtedness" in
                  the Final Memorandum, agrees with the accounting records of
                  the Company and its subsidiaries, excluding any questions of
                  legal interpretation;

                  References to the Final Memorandum in this Section 6(e)
         include any amendment or supplement thereto at the date of the
         applicable letter.

                  (f) Subsequent to the Execution Time or, if earlier, the dates
         as of which information is given in the Final Memorandum (exclusive of
         any amendment or supplement thereto), there shall not have been (i) any
         change or decrease specified in the letter or letters referred to in
         paragraph (e) of this Section 6; or (ii) any change, or any development
         involving a prospective change, in or affecting the condition
         (financial or otherwise), prospects, earnings, business or properties
         of the Company and its subsidiaries, taken as a whole, whether or not
         arising from transactions in the ordinary course of business, except as
         set forth in or contemplated in the Final Memorandum (exclusive of any
         amendment or supplement thereto) the effect of which, in any case
         referred to in clause (i) or (ii) above, is, in the sole judgment of
         the Representatives, so material and adverse as to make it impractical
         or inadvisable to market the Securities as contemplated by the Final
         Memorandum (exclusive of any amendment or supplement thereto).



<PAGE>


                                                                             22


                  (g) The Securities shall have been designated as
         Portal-eligible securities in accordance with the rules and regulations
         of the NASD, and the Securities shall be eligible for clearance and
         settlement through The Depository Trust Company.

                  (h) Subsequent to the Execution Time, there shall not have
         been any decrease in the rating of any of the Company's debt securities
         by any "nationally recognized statistical rating organization" (as
         defined for purposes of Rule 436(g) under the Act), any notice given of
         any intended or potential decrease in any such rating (including notice
         of an adverse change in the outlook for such rating) or of a possible
         change in any such rating that does not indicate the direction of the
         possible change.

                  (i) Each Lock-up Agreement shall have been duly executed and
         delivered to the Company and you and there shall have occurred no
         breach of any Lock-up Agreement.

                  (j) The shares of Stock issuable upon conversion of the
         Securities shall have been duly listed, subject to notice of issuance,
         on the New York Stock Exchange.

                  (k) Prior to the Closing Date, the Company shall have
         furnished to the Representatives such further information, certificates
         and documents as the Representatives may reasonably request.

                  If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.

                  The documents required to be delivered by this Section 6 will
be delivered at the office of counsel for the Initial Purchasers, at Cravath,
Swaine & Moore, 825 Eighth Avenue, New York, NY 10019, on the Closing Date.

                  7. Reimbursement of Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers, the Company will reimburse the Initial
Purchasers severally through Salomon Smith Barney Inc. on demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.



<PAGE>


                                                                             23

                  8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial Purchaser and each person who controls any
Initial Purchaser within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum (or in any supplement or amendment thereto), or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Memorandum or the Final Memorandum, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Initial Purchaser through the
Representatives specifically for inclusion therein; provided further, that with
respect to any untrue statement or omission of material fact made in any
Preliminary Memorandum, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any Initial Purchaser from whom the person
asserting any such loss, claim, damage or liability purchased the securities
concerned, to the extent that any such loss, claim, damage or liability of such
Initial Purchaser occurs under the circumstance where it shall have been
determined by a court of competent jurisdiction by final and nonappealable
judgment that (x) the Company had previously furnished copies of the Final
Memorandum to the Representatives, (y) the untrue statement or omission of a
material fact contained in the Preliminary Memorandum was corrected in the Final
Memorandum and (z) there was not sent or given to such person, at or prior to
the written confirmation of the sale of such securities to such person, a copy
of the Final Memorandum. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.

                  (b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Initial Purchaser, but only with reference to written
information relating to such Initial Purchaser furnished to the Company by or on
behalf of the Initial Purchaser through the Representatives specifically for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto). This indemnity agreement will be in addition
to any liability which any Initial Purchaser may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page regarding the delivery of the Securities and, under the heading "Plan of
Distribution," (i) the list of Initial Purchasers and their respective
participation in the sale of the Securities and (ii) the paragraph related to
stabilization and syndicate covering transactions in the Preliminary Memorandum
and the Final Memorandum, constitute the only information furnished in writing
by or on behalf of the Initial Purchasers for inclusion in the Preliminary
Memorandum or the Final Memorandum (or in any amendment or supplement thereto).



<PAGE>


                                                                             24

                  (c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses;
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

                  (d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Company and one or more of the Initial Purchasers may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and by the Initial Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser (except as may be provided in any agreeement among the Initial
Purchasers relating to the offering of the Securities) be responsible for any
amount in excess of the purchase discount or commission applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Initial Purchasers severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Initial Purchasers
on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations. Benefits


<PAGE>


                                                                             25

received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the Company, and
benefits received by the Initial Purchasers shall be deemed to be equal to the
total purchase discounts and commissions in each case set forth on the cover of
the Final Memorandum. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Initial Purchasers on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Initial Purchaser within the meaning
of either the Act or the Exchange Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Company within the meaning
of either the Act or the Exchange Act and each officer and director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).

                  9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names on Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth on Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser or the Company. In the event of a default by any
Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding two Business Days, as the
Representatives and the Company shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.

                  10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission, the New York Stock Exchange or the Pacific
Stock Exchange or trading in securities generally on the New York Stock Exchange
or the Pacific Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on either such Exchange; (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities; or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereto).


<PAGE>


                                                                             26


                  10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors, employees, agents or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.

                  11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to Salomon Smith Barney Inc. General Counsel (fax
no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney
Inc. at 388 Greenwich Street, New York, New York 10013, Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
Elliot S. Gerson, Esq. (fax no.: (717) 760-7867) and confirmed to Elliot S.
Gerson, Esq., Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania
17011.

                  12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and, except as expressly set forth in Section 5(h) hereof, no
other person will have any right or obligation hereunder.

                  13. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.

                  14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.

                  15. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.

                  16. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.

                  "Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.


<PAGE>


                                                                             27


                  "Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.

                  "Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in The City of New York.

                  "Commission" shall mean the Securities and Exchange
Commission.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.

                  "Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  "NASD" shall mean the National Association of Securities
Dealers, Inc.

                  "Regulation D" shall mean Regulation D under the Act.

                  "Regulation S" shall mean Regulation S under the Act.

                  "Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.



<PAGE>


                                                                             28


                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the several Initial Purchasers.

                                       Very truly yours,

                                       Rite Aid Corporation,



                                       by
                                          -----------------------------------
                                          Name:
                                          Title:





The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.

By: Salomon Smith Barney Inc.



by
   ----------------------
   Name:
   Title:

For themselves and the other several Initial
Purchasers named in Schedule I to the
foregoing Agreement


<PAGE>



                                   SCHEDULE I


<TABLE>
<CAPTION>



                                                                                            Principal Amount of
                                                                                         Optional Securities to be
                                                                                            Purchased if Over-
                                                    Principal Amount of Firm                Allotment Option is
             Initial Purchasers                    Securities to be Purchased                    Exercised
             ------------------                    --------------------------                    ---------
<S>                                                <C>                                   <C>
Salomon Smith Barney Inc............                      $168,750,000                          $50,000,000
J.P. Morgan Securities Inc.............                    $31,250,000                              $0
                                       Total              $200,000,000                          $50,000,000
                                                          ============                          ===========

</TABLE>



<PAGE>



                                   SCHEDULE II


                  1. Registration Rights Agreement dated as of October 27, 1999
by and between Rite Aid Corporation and Green Equity Investors III, L.P.

                  2. Registration Rights Agreement dated as of October 27, 1999
by and between Rite Aid Corporation and J.P. Morgan Ventures Corporation.

                  3. Registration Rights Agreement dated as of June 14, 2001, by
and among Rite Aid Corporation and the Lenders listed therein.

                  4. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation and the Exchanging Holders listed therein.

                  5. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation and the Purchasers listed therein.

                  6. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation, Transamerica Investment Management LLC, and the
Other Purchasers listed therein.


<PAGE>



                                                                      EXHIBIT A



                       Selling Restrictions for Offers and
                         Sales outside the United States


                  (1)(a) The Securities and the Stock issuable upon conversion
thereof have not been and will not be registered under the Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act or unless
registered under the Act. The Initial Purchaser represents and agrees that,
except as otherwise permitted by Section 4(a)(i) or (ii) of the Agreement to
which this is an exhibit, it has offered and sold the Securities, and will offer
and sell the Securities, (i) as part of their distribution at any time; and (ii)
otherwise until one year after the later of the commencement of the offering and
the Closing Date, only in accordance with Rule 903 of Regulation S under the
Act. Accordingly, each Initial Purchaser represents and agrees that neither it,
nor any of its Affiliates nor any person acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to the
Securities, and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that it
will not engage, directly or indirectly, in hedging transactions with regard to
the Securities or the shares of Stock issuable upon conversion thereof prior to
the expiration of one year after the later of the commencement of the offering
and the Closing Date unless in compliance with the Act. Each Initial Purchaser
agrees that, at or prior to the confirmation of sale of Securities (other than a
sale of Securities pursuant to Section 4(a)(i) or (ii) of the Agreement to which
this is an exhibit), it shall have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the one year distribution compliance period a
confirmation or notice to substantially the following effect:

                  "The Securities covered hereby have not been registered under
                  the U.S. Securities Act of 1933 (the "Act") and may not be
                  offered or sold within the United States or to, or for the
                  account or benefit of, U.S. persons (i) as part of their
                  distribution at any time or (ii) otherwise until one year
                  after the later of the commencement of the offering and
                  November 19, 2001, except in either case in accordance with
                  Regulation S or Rule 144A under the Act. Hedging transactions
                  with regard to the Securities or the shares of Stock issuable
                  upon conversion of the Securities may not be conducted,
                  directly or indirectly, prior to the expiration of one year
                  after the later of the commencement of the offering and
                  January 26, 2000 unless in compliance with the Act. Terms used
                  above have the meanings given to them by Regulation S."

                  (b) Each Initial Purchaser also represents and agrees that it
has not entered and will not enter into any contractual arrangement with any
distributor with respect to the distribution of the Securities, except with its
Affiliates or with the prior written consent of the Company.

                  (c) Terms used in this section have the meanings given to them
by Regulation S.

                  (2) Each Initial Purchaser represents and agrees that (i) it
has not offered or sold, and prior to the expiration of the period of six months
from the issue date of the Securities will not offer or sell, any Securities in
the United Kingdom, other than to persons whose ordinary business it is to buy,
hold, manage or dispose of investments (whether as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public within the meaning of the Public Offers of
Securities Regulation 1995 or the Financial Services Act 1986 of the United
Kingdom; (ii) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 of the United Kingdom with respect to anything
done by it in relation to the notes in, from or otherwise involving the United
Kingdom and (iii) it has only issued or passed on and will only issue or pass
on, in the United Kingdom, any document received by it in connection with the
issue of the notes, if that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom the document may otherwise lawfully be issued or
passed on.


                                       A-1

<PAGE>



                                                                      EXHIBIT B


                           [Form of Lock-Up Agreement]


                       [Letterhead of officer or director]


                              Rite Aid Corporation


Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
388 Greenwich Street
New York, New York  10013

Ladies and Gentlemen:

                  This letter is being delivered to you in connection with the
proposed Purchase Agreement (the "Purchase Agreement"), between Rite Aid
Corporation, a Delaware corporation (the "Company"), and you as Representatives
of the several Initial Purchasers named therein, relating to a placement of
$200,000,000 aggregate principal amount of Convertible Notes Due 2006
($250,000,000 if the over-allotment option is exercised by the Initial
Purchaser).

                  In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the undersigned will not, without the prior written consent
of Salomon Smith Barney Inc., offer, sell, contract to sell, pledge or otherwise
dispose of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) directly or indirectly, including the filing of (or participation in
the filing of)), a registration statement with the Securities and Exchange
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of common stock ("Common Stock") of the Company or
any securities convertible into, or exercisable or exchangeable for such Common
Stock, or publicly announce an intention to effect any such transaction, for a
period of 90 days after the date of the Purchase Agreement, other than shares of
Common Stock disposed of as bona fide gifts approved by Salomon Smith Barney
Inc.; provided, however, that, without such consent, the undersigned may
participate in the filing of any registration statement which the Company is
permitted to file pursuant to the Purchase Agreement.

                  If for any reason the Purchase Agreement shall be terminated
prior to the Closing Date (as defined in the Purchase Agreement), the agreement
set forth above shall likewise be terminated.

                                    Very truly yours,

                                    -----------------------------------
                                    Signature


                                    ------------------------------------
                                    Print Name



                                       B-1