Document:

Exhibit 10.1
 

EXECUTION
COPY

STOCKHOLDER
AGREEMENT

between

RITE
AID CORPORATION,

THE
JEAN COUTU GROUP (PJC) INC.,

JEAN
COUTU,

MARCELLE
COUTU,

FRANCOIS
J. COUTU,

MICHEL
COUTU,

LOUIS
COUTU,

SYLVIE
COUTU

and

MARIE-JOSÉE
COUTU

 

______________________________

Dated as of August
23, 2006

______________________________

 

   
 

 

 

TABLE
OF CONTENTS

	
  

  	
   

  	
  

  	
  Page

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  	
   

  
	
  SHARE OWNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Acquisition of Additional Voting Securities

  	
  1

  
	
  Section 1.2

  	
   

  	
  Prohibition of Certain Actions

  	
  4

  
	
  Section 1.3

  	
   

  	
  Stock Purchase Rights in a Preemptive Issuance

  	
  6

  
	
  Section 1.4

  	
   

  	
  Other Stock Purchase Rights.

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  	
   

  
	
  TRANSFER
  RESTRICTIONS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  General Transfer Restrictions

  	
  11

  
	
  Section 2.2

  	
   

  	
  Specific Restrictions on Transfer

  	
  12

  
	
  Section 2.3

  	
   

  	
  Legend on Securities

  	
  15

  
	
  Section 2.4

  	
   

  	
  Other Voting Securities

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  	
   

  
	
  CORPORATE
  GOVERNANCE

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Board Representation

  	
  16

  
	
  Section 3.2

  	
   

  	
  Board Chairs; Management

  	
  19

  
	
  Section 3.3

  	
   

  	
  Board Committee Representation

  	
  20

  
	
  Section 3.4

  	
   

  	
  Vote Required for Board Action; Board Quorum

  	
  21

  
	
  Section 3.5

  	
   

  	
  Voting Arrangements

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Conflicting Agreements

  	
  22

  
	
  Section 4.2

  	
   

  	
  Termination

  	
  23

  
	
  Section 4.3

  	
   

  	
  Representations of the Company

  	
  23

  
	
  Section 4.4

  	
   

  	
  Representations of the Stockholder

  	
  23

  
	
  Section 4.5

  	
   

  	
  Representations of the Family Members

  	
  23

  
	
  Section 4.6

  	
   

  	
  Ownership Information

  	
  23

  
	
  Section 4.7

  	
   

  	
  Adjustments to Prevent Dilution

  	
  23

  
	
  Section 4.8

  	
   

  	
  Savings Clause

  	
  24

  
	
  Section 4.9

  	
   

  	
  Amendment and Waiver

  	
  24

  
	
  Section 4.10

  	
   

  	
  Severability

  	
  24

  
	
  Section 4.11

  	
   

  	
  Entire Agreement

  	
  24

  

 i
 

 

 

	
  Section 4.12

  	
   

  	
  Successors and Assigns

  	
  24

  
	
  Section 4.13

  	
   

  	
  Counterparts

  	
  25

  
	
  Section 4.14

  	
   

  	
  Remedies

  	
  25

  
	
  Section 4.15

  	
   

  	
  Notices

  	
  25

  
	
  Section 4.16

  	
   

  	
  Governing Law

  	
  26

  
	
  Section 4.17

  	
   

  	
  Consent to Jurisdiction

  	
  27

  
	
  Section 4.18

  	
   

  	
  Interpretation

  	
  28

  
	
  Section 4.19

  	
   

  	
  Methodology for Calculations

  	
  28

  
	
  Section 4.20

  	
   

  	
  Effectiveness

  	
  28

  
	
   

  	
   

  	
   

  	
   

  

 

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

 

 ii

 

 

INDEX OF
DEFINED TERMS

	
  

  	
   

  	
  Page

  
	
  5% Spinoff Coutu
  Stockholder

  	
   

  	
  12

  
	
  5% Spinoff Stockholder

  	
   

  	
  13

  
	
  Additional Preemptive
  Securities Purchase

  	
   

  	
  7

  
	
  Affiliate

  	
   

  	
  3

  
	
  Agreement

  	
   

  	
  1

  
	
  Applicable Law

  	
   

  	
  18

  
	
  Beneficial Ownership

  	
   

  	
  3

  
	
  Beneficially Own

  	
   

  	
  3

  
	
  Beneficially Owned

  	
   

  	
  3

  
	
  Board

  	
   

  	
  2

  
	
  Board Representation
  Percentage

  	
   

  	
  18

  
	
  broad distribution

  	
   

  	
  12

  
	
  Business Day

  	
   

  	
  8

  
	
  By-laws

  	
   

  	
  19

  
	
  Capital Stock

  	
   

  	
  4

  
	
  Certificate of
  Incorporation

  	
   

  	
  21

  
	
  Closing

  	
   

  	
  1

  
	
  Commission

  	
   

  	
  3

  
	
  Company

  	
   

  	
  1

  
	
  control

  	
   

  	
  3

  
	
  Coutu Family

  	
   

  	
  14

  
	
  Coutu Stockholders

  	
   

  	
  14

  
	
  Director

  	
   

  	
  2

  
	
  Exchange Act

  	
   

  	
  3

  
	
  Family Member

  	
   

  	
  1

  
	
  Group

  	
   

  	
  3

  
	
  Independent Director

  	
   

  	
  16

  
	
  Lender

  	
   

  	
  13

  
	
  Person

  	
   

  	
  3

  
	
  Potential Total Voting
  Power

  	
   

  	
  4

  
	
  Preemptive Issuance

  	
   

  	
  6

  
	
  Preemptive Rights
  Closing Date

  	
   

  	
  7

  
	
  Preemptive Securities

  	
   

  	
  7

  
	
  Prohibited Actions

  	
   

  	
  4

  
	
  Representative

  	
   

  	
  13

  
	
  Rite Aid Common Stock

  	
   

  	
  2

  
	
  Roll Over Shares

  	
   

  	
  10

  
	
  Securities Act

  	
   

  	
  12

  
	
  Standstill Period

  	
   

  	
  2

  
	
  Stock Purchase
  Agreement

  	
   

  	
  1

  
	
  Stockholder

  	
   

  	
  1

  
	
  Stockholder Designee

  	
   

  	
  16

  

 iii
 

 

 

	
  Stockholder Pro Rata
  Distribution

  	
   

  	
  12

  
	
  Total Voting Power

  	
   

  	
  4

  
	
  Transfer

  	
   

  	
  11

  
	
  Transferee

  	
   

  	
  12

  
	
  Transferred

  	
   

  	
  12

  
	
  Transferring

  	
   

  	
  12

  
	
  Voting Power Percentage
  Ceiling

  	
   

  	
  9

  
	
  Voting Securities

  	
   

  	
  3

  
	
  Voting-Enabled
  Securities

  	
   

  	
  3

  
	
  Window Period

  	
   

  	
  11

  
	
  Window Period Election
  Deadline

  	
   

  	
  9

  
	
  Window Period Election
  Notice

  	
   

  	
  9

  
	
  Window Period Purchase Amount

  	
   

  	
  9

  

 

 iv

 

STOCKHOLDER
AGREEMENT

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

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

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

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

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

ARTICLE I

SHARE OWNERSHIP

Section
1.1       Acquisition of Additional
Voting Securities.

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

 

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

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

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

 2
 

 

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

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

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

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

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

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

 3
 

 

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

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

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

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

Section
1.2       Prohibition of Certain
Actions.

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

 4
 

 

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

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

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

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

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

 5
 

 

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

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

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

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

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

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

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

Section
1.3       Stock Purchase Rights in a
Preemptive Issuance.

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

 6
 

 

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

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

 7
 

 

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

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

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

Section
1.4       Other Stock Purchase Rights.

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

 8

 

 

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

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

 9
 

 

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

	
  Number of Shares

  	
   

  	
   

  	
   

  	
  Number of Window Periods

  	
   

  
	
  Up to 8 million

  	
   

  	
  1

  	
   

  
	
  More than 8 million
  but not more than 16 million

  	
   

  	
  2

  	
   

  
	
  More than 16
  million but not more than 24 million

  	
   

  	
  3

  	
   

  
	
  More than 24 million

  	
   

  	
  4

  	
   

  

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

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

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

 10
 

 

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

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

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

ARTICLE II

TRANSFER RESTRICTIONS

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

 11
 

 

Section
2.2       Specific Restrictions on
Transfer.

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

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

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

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

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

 12
 

 

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

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

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

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

 13
 

 

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

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

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

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

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

 14
 

 

Section
2.3       Legend on Securities.

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

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

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

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

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

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

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

 

 15

 

 

ARTICLE III

CORPORATE GOVERNANCE

Section
3.1       Board Representation.

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

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

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

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

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

 16
 

 

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

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

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

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

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

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

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

 17
 

 

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

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

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

 18
 

 

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

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

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

Section
3.2       Board Chairs; Management.

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

 19
 

 

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

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

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

Section
3.3       Board Committee Representation.

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

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

 20
 

 

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

Section
3.4       Vote Required for Board
Action; Board Quorum.

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

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

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

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

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

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

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

 21
 

 

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

Section
3.5       Voting Arrangements.

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

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

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

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

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

ARTICLE IV

MISCELLANEOUS

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

 

 22

 

 

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

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

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

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

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

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

 23
 

 

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

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

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

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

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

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

 24
 

 

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

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

Section
4.14     Remedies.

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

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

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

If to the Company:

Rite Aid Corporation

30 Hunter Lane 

Camp Hill, PA 17011

Facsimile:  (717) 760-7867

Attention:   Robert B. Sari

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

Skadden, Arps, Slate,
Meagher & Flom LLP

Four Times Square

New York, NY 10036

Facsimile:  (212) 735-2000

Attention:   Nancy A. Lieberman
                   Marc S. Gerber

 25
 

 

If to the Stockholder:

The Jean Coutu Group
(PJC) Inc.

530, Bériault Street

Longueuil QC

J4G 1S8 Canada 

Facsimile:  (450) 646-6686

Attention:   Kim Lachapelle

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

O’Melveny & Myers LLP

Times Square Tower

Seven Times Square

New York, New York 10036

Facsimile:  (212) 326-2061

Attention:   Spencer D. Klein

If to any of the Family
Members:

c/o The Jean Coutu Group
(PJC) Inc.

530, Bériault Street

Longueuil QC

J4G 1S8 Canada

Facsimile:  (450) 646-6686

Attention:   Kim Lachapelle

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

O’Melveny & Myers LLP

Times Square Tower

Seven Times Square

New York, New York 10036

Facsimile:  (212) 326-2061

Attention:   Spencer D. Klein

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

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

 26
 

 

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

Section
4.17     Consent to Jurisdiction.

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

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

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

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

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

 27
 

 

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

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

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

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

[Remainder of page intentionally left blank.]

 

 28

 

 

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

	
     

  	
   

  	
  RITE AID CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  By:

  	
   

  	
  /s/ Robert B. Sari

  
	
     

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Robert B. Sari

  
	
     

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice President and General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
  THE JEAN COUTU GROUP (PJC) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  By:

  	
   

  	
  /s/ Jean Coutu

  
	
     

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Jean Coutu

  
	
     

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Chairman of the Board, President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
  JEAN COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Jean Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  MARCELLE COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Marcelle Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  FRANCOIS J. COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Francois J. Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  MICHEL COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Michel Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
     

  	
   

  	
  LOUIS COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Louis Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  SYLVIE COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Sylvie Coutu

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  MARIE-JOSÉE COUTU

  
	
   

  	
   

  	
   

  
	
     

  	
   

  	
  /s/ Marie-Josée CoutuExhibit 10.2
  
  
  
 EXECUTION COPY
   
 

 

REGISTRATION RIGHTS AGREEMENT

by and between

Rite Aid Corporation

and

The Jean Coutu Group (PJC) Inc.

___________________

Dated as of August 23, 2006

 

   
 

 

 

TABLE OF CONTENTS

	
  1.

  	
   

  	
  DEMAND REGISTRATIONS

  	
   

  	
  1

  
	
  2.

  	
   

  	
  PIGGYBACK REGISTRATIONS

  	
   

  	
  5

  
	
  3.

  	
   

  	
  OTHER REGISTRATIONS

  	
   

  	
  7

  
	
  4.

  	
   

  	
  SELECTION OF UNDERWRITERS

  	
   

  	
  7

  
	
  5.

  	
   

  	
  HOLDBACK AGREEMENTS

  	
   

  	
  7

  
	
  6.

  	
   

  	
  PROCEDURES

  	
   

  	
  7

  
	
  7.

  	
   

  	
  REGISTRATION EXPENSES

  	
   

  	
  12

  
	
  8.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  12

  
	
  9.

  	
   

  	
  RULE 144

  	
   

  	
  14

  
	
  10.

  	
   

  	
  TRANSFER OF REGISTRATION
  RIGHTS

  	
   

  	
  15

  
	
  11.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  15

  
	
  12.

  	
   

  	
  STOCKHOLDER PRO RATA
  DISTRIBUTION

  	
   

  	
  19

  
	
  13.

  	
   

  	
  EFFECTIVENESS

  	
   

  	
  20

  

 

 i
 

 

Index of Defined Terms

	
  5% Spinoff Coutu Stockholder

  	
   

  	
  19

  
	
  Additional Preemptive
  Securities Purchase

  	
   

  	
  4

  
	
  Affiliate

  	
   

  	
  1

  
	
  Agreement

  	
   

  	
  1

  
	
  Beneficial Ownership

  	
   

  	
  19

  
	
  Blackout Period

  	
   

  	
  12

  
	
  Business Day

  	
   

  	
  7

  
	
  Closing

  	
   

  	
  7

  
	
  Company

  	
   

  	
  1

  
	
  control

  	
   

  	
  1

  
	
  controlled by

  	
   

  	
  1

  
	
  Coutu Stockholder

  	
   

  	
  20

  
	
  Demand Registration

  	
   

  	
  1

  
	
  Demand Registration
  Statement

  	
   

  	
  2

  
	
  Exchange Act

  	
   

  	
  8

  
	
  Family Member

  	
   

  	
  20

  
	
  Green

  	
   

  	
  6

  
	
  Group

  	
   

  	
  20

  
	
  Investor

  	
   

  	
  1

  
	
  Lender

  	
   

  	
  15

  
	
  LGP Registration Rights
  Agreement

  	
   

  	
  7

  
	
  Liabilities

  	
   

  	
  12

  
	
  Liability

  	
   

  	
  12

  
	
  Person

  	
   

  	
  1

  
	
  Piggyback Registration

  	
   

  	
  5

  
	
  Piggyback Registration
  Statement

  	
   

  	
  5

  
	
  Preemptive Securities

  	
   

  	
  4

  
	
  Prospectus

  	
   

  	
  4

  
	
  Registrable Securities

  	
   

  	
  4

  
	
  Registration Expenses

  	
   

  	
  12

  
	
  Registration Statement

  	
   

  	
  4

  
	
  Representative

  	
   

  	
  8

  
	
  Rite Aid Common Stock

  	
   

  	
  4

  
	
  Rule 144

  	
   

  	
  5

  
	
  SEC

  	
   

  	
  5

  
	
  Securities Act

  	
   

  	
  5

  
	
  Stock Consideration

  	
   

  	
  5

  
	
  Stock Purchase
  Agreement

  	
   

  	
  5

  
	
  Stockholder Agreement

  	
   

  	
  5

  
	
  Stockholder Pro Rata
  Distribution

  	
   

  	
  19

  
	
  Suspension Notice

  	
   

  	
  11

  
	
  Total Voting Power

  	
   

  	
  20

  
	
  under common control
  with

  	
   

  	
  1

  
	
  underwritten registration or underwritten offering

  	
   

  	
  5

  

 

 ii

 

REGISTRATION RIGHTS AGREEMENT dated as of August 23, 2006, by and
between Rite Aid Corporation, a Delaware corporation (the “Company”, which term includes any other Person (as defined below)
referred to in the second sentence of Section 11(c) hereof), and The
Jean Coutu Group (PJC) Inc., a Québec corporation (the “Investor”, which term includes any 100% owned (directly or
indirectly) Affiliates (as defined below), Lenders hereby permitted by
Section 10 of this Agreement and each 5% Spinoff Coutu Stockholder (as defined
in Section 12(a))).

“Affiliate”
means with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with, such specified Person; “control” (including
the terms “controlled
by” and “under common control with”), with respect to the relationship between or
among two or more Persons, means the possession, directly or indirectly, of the
power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or any other means.

“Agreement”
means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the foregoing,
and shall refer to this Registration Rights Agreement as the same may be in
effect at the time such reference becomes operative.

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

In consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:

1.             Demand
Registrations.

(a)           Right to Request Registration.  At any time after the Company files with the
SEC (as defined in Section 1(n) below) its Annual Report on Form 10-K for its
fiscal year ended March 3, 2007, the Investor (including a Lender permitted by
Section 10 of this Agreement, a 5% Spinoff Coutu Stockholder, or a combination
thereof) may, by written notice to the Company, request an underwritten
registration (as defined in Section 1(s) below) under the Securities Act (as defined
in Section 1(o) below) of all or part of the Registrable Securities (as defined
in Section 1(k) below); provided that either (A) the reasonably anticipated
aggregate offering price to the public of such public offering, net of
underwriting discounts and commissions, would exceed $100 million or (B) the
underwritten registration is for shares representing at least 25% of the
Registrable Securities outstanding at that time (a “Demand Registration”).

(b)           Demand Registration Statement.  The Company shall use its reasonable best
efforts to file, as soon as reasonably practicable, after the Company’s receipt
of any request for a Demand Registration, in its sole discretion, either (i) a
shelf registration statement on Form S-3 or such other form under the
Securities Act then available to the Company, registering for resale

 

such number of shares of
Registrable Securities as the Investor(s) have requested to be included in the
Demand Registration and have such shelf registration statement declared
effective as soon as reasonably practicable after receiving a request for a
Demand Registration, or (ii) a prospectus supplement covering such number of
shares of Registrable Securities as requested by the Investor(s) to be included
in the Demand Registration; provided, in the case of clause (ii), that
the Company has previously filed and there remains effective a shelf
registration statement on Form S-3 or any successor form thereto then available
to the Company that permits the Demand Registration without the filing of a new
registration statement.  Such
registration statement referred to in clause (i) and (ii) above (including the
Prospectus (as defined in Section 1(j) below), amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement)
is hereinafter referred to as a “Demand Registration Statement.”

(c)           Number of Demand Registrations.  The Investor(s) shall be entitled to request
an aggregate of six Demand Registrations pursuant to Section 1(a) hereof.  A registration shall not count as one of the
six permitted Demand Registrations (i) until (A) the related Demand
Registration Statement has become effective by the SEC in the case of Section
1(b)(i) above, or (B) the filing of the prospectus supplement contemplated in
the case of Section 1(b)(ii) above, and (ii) unless the Demand Registration
Statement remains effective for the periods set forth in Section 1(f)
herein.  The Company will not be
obligated to effect a Demand Registration more than once in any six-month period.  For the avoidance of doubt, the Company shall
not be obligated to effect more than six Demand Registrations, whether such
Demand Registrations are requested by the original Investor, Lenders permitted
by Section 10 of this Agreement, one or more 5% Spinoff Coutu Stockholders, or
a combination thereof.

(d)           Priority on Demand Registrations.  The Company and other holders of equity
securities of the Company shall have the right to participate in and include
any equity securities of the Company in any Demand Registration, subject to the
priority provisions set forth in this Section 1(d).  If the managing underwriter of any Demand
Registration shall advise the Company that in its reasonable opinion the number
of equity securities requested to be included in such Demand Registration
exceeds the number that can be sold in such offering without having an adverse
effect on such offering, including the price at which such equity securities
can be sold, then the Company shall include in such Demand Registration the
maximum number of shares of equity securities that such underwriter or agent,
as applicable, advises can be so sold without having such adverse effect,
allocated (i) first, to Registrable Securities requested by the Investor(s) to
be included in such Demand Registration allocated among such requesting
Investor(s) on a pro rata basis or in such other manner as they may agree, and
(ii) second, among all shares of equity securities of the Company requested to
be included in such Demand Registration by any other Persons (including
securities to be sold for the account of the Company) allocated among such Persons
on a pro rata basis or in such manner as they may agree.

(e)           Restrictions on Demand
Registrations.  The Company may
postpone the filing or the effectiveness of a Demand Registration Statement,
including any prospectus supplement contemplated in the case of Section
1(b)(ii) above, for a reasonable length of time, not to exceed 100 days in any
12-month period; provided, however, that such period may be
extended up to

 2
 

 

180 days in any 12-month
period if the Company’s directors and executive officers are restricted from
selling the Company’s securities during such additional period (other than
pursuant to a preexisting 10b5-1 plan) (i) if, based on the good faith judgment
of the Company’s Board of Directors, such postponement is necessary in order to
avoid premature disclosure of a matter the Company’s Board of Directors has determined
would not be in the best interest of the Company to be disclosed at such time,
(ii) if the Company cannot obtain, after using its reasonable best efforts,
financial information (or information used to prepare such information) from
any third party necessary for inclusion in such Demand Registration Statement,
including any prospectus supplement contemplated in the case of Section
1(b)(ii) above, or (iii) would materially interfere with a material financing,
merger, sale or acquisition of assets, recapitalization or other similar
corporate action of the Company that is pending or expected by the Company to
occur or be announced during the delay period; provided, however,
that the Investor(s) requesting such Demand Registration Statement, including
any prospectus supplement contemplated in the case of Section 1(b)(ii) above,
shall be entitled, at any time after receiving notice of such postponement and
before such Demand Registration Statement becomes effective, or the filing of
the prospectus supplement in the case of Section 1(b)(ii) above, to withdraw
such request and, if such request is withdrawn, such Demand Registration shall
not count as one of the permitted Demand Registrations.  The Company shall provide notice to the
requesting Investor(s) of (i) any postponement of the filing or effectiveness
of a Demand Registration Statement, including any prospectus supplement
contemplated in the case of Section 1(b)(ii) above, pursuant to this Section
1(e), (ii) the Company’s decision to file or seek effectiveness of such Demand
Registration Statement, including any prospectus supplement contemplated in the
case of Section 1(b)(ii) above, following such postponement and (iii) the
effectiveness of such Demand Registration Statement, or the filing of a
prospectus supplement in the case of Section 1(b)(ii) above, following such
postponement.  The Company may defer the
filing or effectiveness of a Demand Registration Statement, including any prospectus
supplement contemplated in the case of Section 1(b)(ii) hereof, pursuant to
this Section 1(e) no more than two times in any 12-month period.  In addition, the Company shall not be
obligated to effect, or to take any action to effect, any Demand Registration
pursuant to this Section 1 during the period starting with the date 60 days
prior to the Company’s good faith estimate of the date of filing of, and ending
six months after the effective date of, a registration statement subject to
Section 2 hereof; provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective.

(f)            Effective Period of Demand
Registrations.  After any Demand
Registration filed pursuant to this Agreement has become effective or a
prospectus supplement contemplated in the case of Section 1(b)(ii) hereof has
been filed, the Company shall use its reasonable best efforts to keep such
Demand Registration Statement continuously effective for a period of at least
90 days from the date on which the SEC declares such Demand Registration Statement
effective in the case of Section 1(b)(i) or from the date of filing of the
prospectus supplement contemplated in the case of Section 1(b)(ii) hereof, as
applicable (plus the duration of any Blackout Period (as defined in Section 6
below)), or such shorter period that shall terminate when all of the
Registrable Securities covered by such Demand Registration Statement have been
sold pursuant to such Demand Registration Statement in accordance with the plan
of distribution set forth therein.

 3
 

 

(g)           “Additional
Preemptive Securities Purchase” has
the meaning set forth in Section 1.3 of the Stockholder Agreement.

(h)           “Rite Aid Common Stock”
means the shares of common stock, par value $1.00 per share, of the Company.

(i)            “Preemptive
Securities has the meaning set forth in Section 1.3 of the Stockholder
Agreement.

(j)            “Prospectus”
means the prospectus or prospectuses included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, post-effective amendments and all material incorporated by
reference in such prospectus or prospectuses.

(k)           “Registrable Securities” means (i) any shares of Rite Aid Common Stock
issued as Stock Consideration, (ii) any Preemptive Securities purchased by the
Investor pursuant to an Additional Preemptive Securities Purchase that were not
issued pursuant to an effective registration statement or are not subject to
another registration rights agreement, (iii) any Rite Aid Common Stock
purchased by the Investor pursuant to Section 1.4 of the Stockholder Agreement
and (iv) any other security into or for which the Rite Aid Common Stock or the
Preemptive Securities referred to in clause (i), (ii) or (iii) has been
converted, substituted or exchanged, and any security issued or issuable with
respect thereto, in each case, upon any Company stock dividend or stock split
or in connection with a Company combination of shares, reclassification,
recapitalization, merger, consolidation or other reorganization.

As to any Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement registering such
Registrable Securities under the Securities Act has been declared or becomes
effective and such shares of Registrable Securities have been sold or otherwise
transferred by the holder thereof pursuant to such effective registration
statement, (ii) such Registrable Securities are sold pursuant to Rule 144 under
circumstances in which any legend borne by such shares of Registrable
Securities relating to restrictions on the transferability thereof, under the Securities
Act or otherwise, is removed by the Company, (iii) such Registrable Securities
are eligible to be sold pursuant to paragraph (k) of Rule 144, (iv) such
Registrable Securities shall cease to be outstanding, or (v) such Registrable
Securities are transferred to any (a) Person that is not a 100% owned (directly
or indirectly) Affiliate of the Investor or such Person ceases to be a 100%
owned (directly or indirectly) Affiliate of the Investor or a Person, (b)
Person that is not a permissible transferee pursuant to this Agreement, or (c)
Person in a Stockholder Pro Rata Distribution that is not a 5% Spinoff Coutu
Stockholder or such Person ceases to be a 5% Spinoff Coutu Stockholder.

(l)            “Registration Statement” means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.

 4
 

 

(m)          “Rule 144”
means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such rule.

(n)           “SEC” means the
Securities and Exchange Commission.

(o)           “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
by the SEC from time to time thereunder.

(p)           “Stock Consideration” means the
shares of Rite Aid Common Stock issued to the Investor pursuant to the Stock
Purchase Agreement.

(q)           “Stockholder Agreement” means that certain
Stockholder Agreement dated as of the date hereof, between the Company, the
Investor and certain other persons.

(r)            “Stock Purchase Agreement”
means that certain Stock Purchase Agreement, dated as of the date hereof,
between the Company and the Investor.

(s)           “underwritten registration or underwritten offering”
means an offering in which securities of the Company are sold to one or more
underwriters (as defined in Section 2(a)(ii) of the Securities Act) for resale
to the public.  For clarity purposes, an
underwritten registration shall not include the filing of a registration
statement to offer securities on a delayed or continuous basis pursuant to Rule
415 (or any successor rule) pursuant to the Securities Act.

 

2.             Piggyback
Registrations.

(a)           Right to Piggyback.  At any time after the Closing (as defined in
Section 2(f) below), whenever the Company proposes to publicly sell in an
underwritten offering (as defined in Section 1(s)) or register for sale any of
its equity securities in an underwritten registration (as defined in Section
1(s)) pursuant to a registration statement (a “Piggyback Registration Statement”) under the Securities Act (other than a
registration statement on Form S-8 or Form S-4, or, in each case, pursuant to
any similar successor forms thereto), whether for its own account or for the
account of one or more securityholders of the Company (a “Piggyback Registration”), the Company shall give written notice to the
Investor at least ten Business Days (or if such notice period is not
practicable under the circumstances, the Company shall use reasonable best
efforts to provide the maximum prior written notice as is reasonably
practicable under the circumstances) prior to the initial filing of such
Piggyback Registration Statement or the date of the commencement of any such
offering of its intention to effect such sale or registration and, subject to
Sections 2(b) and 2(c) hereof, shall include in such Piggyback
Registration Statement all Registrable Securities of the same class of the
securities that are being registered and that are the subject of the offering
with respect to which the Company has received a written request from the
Investor for inclusion therein within five Business Days (as defined in Section
2(e) below) after the date of the Company’s notice (or such shorter period if
the Company provides less than 6 Business Days notice as described in the
parenthetical above).  The Company may
postpone or withdraw the filing or the effectiveness of a Piggyback Registration
at any time in its sole discretion, without prejudice to the Investor’s right
to immediately request a Demand Registration hereunder.  The Investor’s right to participate in any
Piggyback Registration shall be conditioned on the Investor entering into an underwriting
agreement in customary form and 

 5
 

 

acting in accordance with
the terms and conditions thereof. 
Notwithstanding anything to the contrary contained herein, no 5% Spinoff
Coutu Stockholder is entitled to any rights under this Section 2.

(b)           Priority on Primary Registrations.  If a Piggyback Registration is initiated as
an underwritten primary registration on behalf of the Company, and the managing
underwriter advises the Company that in its reasonable opinion the number of
equity securities requested to be included in such registration exceeds the
number that can be sold in such offering without having an adverse effect on
such offering, including the price at which such equity securities can be sold,
then the Company shall include in such registration the maximum number of
shares that such underwriter advises can be so sold without having such adverse
effect, allocated (i) first, to the equity securities the Company proposes to
sell, (ii) second, between other equity securities (of the same class of the
securities being registered and that are the subject of the offering) requested
to be included in such Piggyback Registration by the Investor and Green Equity
Investors III, LP (“Green”), pro rata among the Investor and Green on
the basis of the percentage of the then outstanding shares requested to be registered
by them or on such basis as Green and the Investor may agree among themselves
and the Company and (iii) third, among other equity securities (of the same
class of the securities being registered and that are the subject of the
offering) requested to be included in such Piggyback Registration by other security
holders of the Company (other than the Investor and Green), pro rata among such
holder(s) on the basis of the percentage of the then outstanding shares
requested to be registered by them or on such basis as such holder(s) may agree
among themselves and the Company.

(c)           Priority on Secondary
Registrations.  If a Piggyback Registration
is initiated as a secondary underwritten registration on behalf of a holder of
the Company’s securities other than the Investor, and the managing underwriter
advises the Company that in its reasonable opinion the number of securities
requested to be included in such registration exceeds the number that can be
sold in such offering without having an adverse effect on such offering, including
the price at which such securities can be sold, then the Company shall include
in such registration the maximum number of shares that such underwriter advises
can be so sold without having such adverse effect, allocated (i) first, to the
securities requested to be included therein by the holder(s) requesting such
registration, (ii) second, among other equity securities (of the same class of
the securities being registered and that are the subject of the offering)
requested to be included in such Piggyback Registration by the Investor and
Green (provided that Green is not the requesting holder), pro rata among
the Investor and Green on the basis of the percentage of the then outstanding
shares requested to be registered by them or on such basis as Green and the
Investor may agree among themselves and the Company (iii) third, among other
equity securities (of the same class of the securities being registered and
that are the subject of the offering) requested to be included in such
registration by other security holders of the Company (other than the Investor
and Green) and the Company, pro rata among such holder(s) and the Company on
the basis of the percentage of the then outstanding shares requested to be
registered by them or on such basis as such holder(s) may agree among
themselves and the Company.

(d)           Conflicts with LGP Registration
Rights Agreement.  Notwithstanding anything
to the contrary contained in this Section 2, to the extent the provisions of
this Section 2 conflict with the terms of the LGP Registration Rights Agreement
(as defined in Section 2(g) below), the terms of the LGP

 6
 

 

Registration Rights Agreement
will control.  Section 2.2(b) of the LGP
Registration Rights Agreement prohibits holders of the Company’s securities
from having piggyback registration rights on underwritten takedowns on a shelf
registration statement filed pursuant to Section 2.1(d) of the LGP Registration
Rights Agreement.

(e)           “Business Day” means any day that is not a Saturday,
a Sunday or other day on which banks are required or authorized by law to be
closed in New York, New York.

(f)            “Closing” has the meaning set
forth in the second “Whereas” clause to the Stockholder Agreement.

(g)           “LGP
Registration Rights Agreement” means that certain Amended and
Restated Registration Rights Agreement dated as of January 31, 2005, by and
among the Company and Green.

3.             Other
Registrations.

The Company shall not enter into any agreement with respect to its
equity securities that adversely affects the priorities of the Investors in the
event of an underwriter cut-back as set forth in Sections 1(d), 2(b) and 2(c)
herein (to the extent the Investors have rights pursuant to such Sections).

4.             Selection
of Underwriters.

The Investors requesting a Demand Registration shall have the right to
select the managing underwriter(s) to administer any Demand Registration
subject to the prior approval of the Company, which approval shall not be
unreasonably withheld or delayed.

5.             Holdback
Agreements.

If requested by the Company or the managing underwriter of an
underwritten offering of the Company’s securities, each Investor (including any
Lender hereby permitted by Section 10 of this Agreement and any 5% Spinoff
Coutu Stockholder) shall agree not to sell or otherwise transfer or dispose of
any securities of the Company (other than pursuant to such registration) during
the period 5 days prior to and 90 days (or such longer or shorter period that
the managing underwriter or the Company, as the case may be, reasonably
requests) following the effective date of the Registration Statement relating
to the offering of the Company’s securities or the date of filing the prospectus
supplement in the case of a shelf takedown, as applicable, unless the managing
underwriter agrees to such sale or distribution.  At the request of the managing underwriter,
or if the Company requests the holdback agreement as set forth above, the Company
will enter into an analogous agreement of the same duration.

6.             Procedures.

(a)           Whenever
an Investor requests that any Registrable Securities be registered or sold
pursuant to this Agreement, the Company shall use its reasonable best efforts
to effect the registration and the sale of such Registrable Securities in
accordance with the intended underwritten offering, and pursuant thereto the
Company shall as soon as reasonably practicable (unless otherwise stated
below):

 7
 

 

(i)                    prepare
and file with the SEC, as applicable, (A) a Registration Statement on the
appropriate form under the Securities Act, which form shall be selected by the
Company in its sole discretion, with respect to such Registrable Securities and
use its reasonable best efforts to cause such Registration Statement to become
effective or (B) the prospectus supplement contemplated in Section 1(b)(ii)
hereof; and before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (including any prospectus supplement for a
shelf takedown but not including any report filed or furnished pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC from time to time thereunder (the “Exchange Act”)),
provide to one representative on behalf of all Investors included in such
Registration Statement (the “Representative”) and the managing
underwriter(s), copies of all such documents proposed to be filed, including
documents incorporated by reference in the Prospectus (but not including any
report filed or furnished pursuant to the Exchange Act or any exhibit to the
Registration Statement), and the Representative (and the managing
underwriter(s)) shall have the opportunity to review and comment thereon, and
the Company will make such changes and additions thereto as may be reasonably
requested by the Representative (and the managing underwriter(s)) prior to such
filing, unless the Company reasonably objects to such changes or additions;

(ii)                   prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be reasonably
necessary to keep such Registration Statement continuously effective for a
period of 90 days from the date on which the SEC declares such Registration
Statement effective or from the date of filing of the prospectus supplement
contemplated in the case of Section 1(b)(ii) hereof, as applicable (plus the
duration of any Blackout Period), or such shorter period as is necessary to
complete the distribution of the securities covered by such Registration
Statement and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended underwritten offering by the
Investor set forth in such Registration Statement or prospectus supplement;

(iii)                  furnish
to each Investor whose Registrable Securities are included in a Registration
Statement such number of copies of such Registration Statement, each amendment
and supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and such other documents as such
Investor and any managing underwriter(s) may reasonably request in order to
facilitate the disposition of the Registrable Securities; provided, however,
that the Company shall have no obligation to furnish copies of a final
prospectus if the conditions of Rule 172(c) under the Securities Act are
satisfied by the Company.

(iv)                  use
its reasonable best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions (domestic or
foreign) as the Investor(s) whose Registrable Securities are included in a
Registration Statement and any underwriter(s) reasonably requests in writing
and use its reasonable best efforts to do any and all other acts and things
that

 8
 

 

may be reasonably necessary or advisable to enable the Investor(s)
and any underwriter(s) to consummate the disposition in such jurisdictions of
the Registrable Securities (provided that the Company will not be
required to (1) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph (iv), (2)
subject itself to taxation in any such jurisdiction, (3) consent to general
service of process in any such jurisdiction or (4) make any changes to any
report filed or furnished pursuant to the Exchange Act that are incorporated by
reference into such Registration Statement);

(v)                   notify
each Investor whose Registrable Securities are included in a Registration
Statement, and any managing underwriter(s) at any time when a Prospectus
relating thereto is required to be delivered or made available under the Securities
Act, of the occurrence of any event as a result of which the Prospectus
included in such Registration Statement contains an untrue statement of a
material fact or omits any material fact necessary to make the statements
therein not misleading, and, at the reasonable request of any such Investor or
any underwriter(s), the Company shall prepare a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;

(vi)                  in
the case of an underwritten offering, (i) enter into such customary agreements
(including an underwriting agreement in customary form), (ii) take all such
other actions as the Representative or the managing underwriter(s) reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, causing senior management and other
Company personnel to reasonably cooperate with the Investor(s) whose
Registrable Securities are included in a Registration Statement and the
underwriter(s) in connection with performing due diligence) and (iii) cause its
counsel to issue opinions of counsel addressed and delivered to the
underwriter(s) in form, substance and scope as are customary in underwritten
offerings, subject to customary limitations, assumptions and exclusions;

(vii)                 in the case of an underwritten
offering, use its reasonable best efforts to cause members of senior management
of the Company to be available to participate in, and to reasonably cooperate
with the managing underwriter(s) in connection with customary marketing
activities (including select conference calls, one-on-one meetings with
prospective purchasers and road shows);

(viii)                make available for inspection by the Investor(s)
whose Registrable Securities are included in a Registration Statement, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such Investor or
underwriter, at reasonable times and in a reasonable manner, all pertinent
financial and other records, corporate documents and properties of the Company,
and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Investor, sales or placement
agent, underwriter, attorney, accountant or agent to conduct a

 9
 

 

reasonable investigation within the meaning of Section 11 of
the Securities Act in connection with such Registration Statement; provided
that the foregoing investigation and information gathering shall be coordinated
on behalf of such parties by one firm of counsel designated by and on behalf of
such parties; and provided, further, that if any such information
is identified by the Company as being confidential or proprietary, each Person
receiving such information shall agree to take such actions as are reasonably
necessary to protect the confidentiality of such information if requested by
the Company;

(ix)                   maintain
or provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such Registration Statement or prospectus
supplement, as applicable;

(x)                    if
requested by the managing underwriter(s) of an underwritten offering, use
reasonable best efforts to cause to be delivered, upon the pricing of any
underwritten offering, and at the time of closing of the sale of Registrable
Securities pursuant thereto, “comfort” letters from the Company’s independent
registered public accountants addressed to the underwriter(s) stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by “comfort” letters of the
independent registered public accountants delivered in connection with primary
underwritten public offerings;

(xi)                   cause
all Registrable Securities covered by such registration to be listed on each
securities exchange or inter-dealer quotation system on which similar
securities issued by the Company are then listed; and

(xii)                 notify the Representative
and any managing underwriter(s):

(1)           when
the Registration Statement, any pre-effective amendment, the Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
has been filed (but not including any report filed or furnished pursuant to the
Exchange Act) and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;

(2)           of
any written request by the SEC for amendments or supplements to the
Registration Statement or Prospectus;

(3)           of
the notification to the Company by the SEC of its initiation of any proceeding
with respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and

(4)           of
the receipt by the Company of any notification with respect to the suspension
of the qualification of any Registrable Securities for sale under the
applicable securities or blue sky laws of any jurisdiction.

 10

 

 

(b)           The
Company shall make available to each Investor whose Registrable Securities are
included in a Registration Statement (i) as soon as reasonably practicable
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, an executed copy of each Registration Statement and
any amendment thereto, each preliminary Prospectus and Prospectus and each
amendment or supplement thereto (other than filings pursuant to the Exchange
Act), each letter written by or on behalf of the Company to the SEC or the
staff of the SEC (or other governmental agency or self-regulatory body or other
body having jurisdiction, including any domestic or foreign securities
exchange), and each item of correspondence from the SEC or the Staff of the SEC
(or other governmental agency or self-regulatory body or other body having
jurisdiction, including any domestic or foreign securities exchange), in each
case relating to such Registration Statement, and (ii) such number of copies of
a Prospectus, including a preliminary Prospectus, and all amendments and
supplements thereto and such other documents as the Investor or any underwriter
may reasonably request in order to facilitate the disposition of the
Registrable Securities.  The Company will
as soon as reasonably practicable notify the Representative of the
effectiveness of each Registration Statement or any post-effective amendment or
the filing of the prospectus supplement contemplated in Section 1(b)(ii)
hereof.  The Company will as soon as
reasonably practicable respond to any and all comments received from the SEC or
the Staff of the SEC, with a view towards causing each Registration Statement
or any amendment thereto to be declared effective by the SEC as soon as
reasonably practicable and shall file an acceleration request as soon as
reasonably practicable following the resolution or clearance of all SEC
comments or, if applicable, following notification by the SEC that any such
Registration Statement or any amendment thereto will not be subject to
review.  The Company may require an
Investor to furnish to the Company information regarding such Investor and the
distribution of such securities as the Company reasonably determines, based on
the advice of counsel, is required or desirable to be included in any
Registration Statement or the prospectus supplement contemplated by Section
1(b)(ii) hereof.

(c)           Upon
notice from the Company of the happening of any event of the kind described in
clauses (2), (3) or (4) of Section 6(a)(xii) hereof or upon notice from the
Company of the happening of any event as a result of which the Prospectus included
in such Registration Statement (including the prospectus supplement
contemplated by Section 1(b)(ii) hereof, as applicable) contains an untrue
statement of a material fact or omits any material fact necessary to make the
statements therein not misleading (a “Suspension Notice”),
the Investor(s) will forthwith discontinue disposition of Registrable
Securities pursuant to such Registration Statement for a reasonable length of
time until the Investor(s) are advised in writing by the Company that the use
of the Prospectus may be resumed and, if necessary, is furnished with a supplemented
or amended Prospectus as contemplated by Section 6(a) hereof.  If the Company shall give the Investor(s) any
Suspension Notice, the Company shall extend the period of time during which the
Company is required to maintain the applicable Registration Statement effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such Suspension Notice to and including the
date the Investor(s) either are advised by the Company that the use of the
Prospectus may be resumed or receives the copies of the supplemented or amended
Prospectus contemplated by Section 6(a) hereof (a “Blackout Period”).  In any event, the Company shall not be
entitled to deliver more than a total of two Suspension Notices in any 12-month
period.

 11
 

 

7.             Registration
Expenses.

(a)           All
expenses incident to the Company’s performance of or compliance with this
Agreement, including, without limitation, (i) all registration and filing fees
(including SEC registration fees and National Association of Securities
Dealers, Inc. filing fees), fees and expenses incurred in connection with
compliance with securities or blue sky laws, listing application fees, printing
expenses, transfer agent’s and registrar’s fees, cost of distributing
Prospectuses in preliminary and final form as well as any supplements thereto,
and fees and disbursements of counsel for the Company and all accountants and
other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne by the Company.  In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on each
securities exchange on which they are to be listed.  Notwithstanding anything to the contrary
contained herein, Registration Expenses shall not include any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Securities.  In connection
with each registration initiated hereunder (whether a Demand Registration or a
Piggyback Registration in which an Investor elects to participate if it has
such right), the Company shall pay or reimburse the Investor(s) for the
reasonable documented fees and expenses of one law firm chosen by all of the
Investors included in such Registration Statement as their counsel; provided
that such fees and expenses as to any registration shall not exceed
$35,000.  For the avoidance of doubt, the
maximum amount of legal fees and expenses of the Investor(s) that the Company
shall be required to reimburse per registration is $35,000 whether or not more
than one Investor participates in such registration.

(b)           The
obligation of the Company to bear the expenses described in Section 7(a) hereof
shall apply irrespective of whether a registration, once properly demanded, if
applicable, becomes effective, is withdrawn or suspended, is converted to
another form of registration and irrespective of when any of the foregoing
shall occur.

8.             Indemnification.

(a)           The
Company agrees to indemnify and hold harmless each Investor, its partners,
directors, officers, Affiliates, agents and representatives and each Person who
controls (within the meaning of Section 15 of the Securities Act) each Investor
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) (each, a “Liability” and collectively, “Liabilities”),
arising out of or based upon any untrue, or allegedly untrue, statement of a
material fact contained in any Registration Statement, prospectus or
preliminary prospectus or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading under the circumstances
such statements were made, except insofar as such Liability (x) arises out of
or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission contained in such Registration Statement, preliminary

 12
 

 

prospectus
or final prospectus in reliance and in conformity with information concerning
the Investor furnished in writing to the Company by the Investor expressly for
use therein, (y) arises out of or is based upon offers or sales effected by the
Investor “by means of” (as defined in Securities Act Rule 159A) a “free writing
prospectus” (as defined in Securities Act Rule 405) that was not authorized in
writing by the Company, or (z) for any liability which was caused by the
Investor’s failure to deliver or make available to the Investor’s immediate
purchaser a copy of the Registration Statement or prospectus or any amendments
or supplements thereto (if the same was required by applicable law to be
delivered or made available); provided, however, the obligations
of the Company hereunder shall not apply to amounts paid in settlement of any
such claims, losses, damages or liabilities (or actions in respect thereof) if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld, conditioned or delayed).

(b)           In
connection with any Registration Statement in which an Investor is
participating pursuant to this Agreement, such Investor shall promptly furnish
to the Company in writing such information with respect to the Investor as the
Company may reasonably request or as may be required by law for use in
connection with any such Registration Statement or prospectus and all
information required to be disclosed in order to make the information
previously furnished to the Company by such Investor not materially misleading
or necessary to cause such Registration Statement not to omit a material fact
with respect to the Investor necessary in order to make the statements therein
not misleading.  Each Investor agrees to
indemnify and hold harmless the Company, its directors, officers, Affiliates,
agents and representatives, and each Person who controls the Company (within the
meaning of Section 15 of the Securities Act) to the same extent as the
foregoing indemnity from the Company to the Investor, but only (x) if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with information with respect to the Investor
furnished in writing to the Company by such Investor expressly for use in such
Registration Statement or prospectus, (y) for any Liability which arises out of
or is based upon offers or sales by such Investor “by means of” (as defined in
Securities Act Rule 159A) a “free writing prospectus” (as defined in Securities
Act Rule 405) that was not authorized in writing by the Company or (z) for any
liability which was caused by such Investor’s failure to deliver or make
available to such Investor’s immediate purchaser a copy of the Registration
Statement or prospectus or any amendments or supplements thereto (if the same
was required by applicable law to be delivered or made available); provided,
however, that (x) an Investor shall not be liable hereunder for any
amounts in excess of the gross proceeds received by such Investor pursuant to
such registration, and (y) the obligations of an Investor hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of such Investor (which consent shall not be unreasonably
withheld, conditioned or delayed).

(c)           Any Person
entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party’s reasonable judgment
a conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party.  If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such

 13
 

 

consent
will not be unreasonably withheld, conditioned or delayed).  An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one counsel (in addition to any local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party there
may be one or more legal or equitable defenses available to such indemnified
party that are in addition to or may conflict with those available to another
indemnified party with respect to such claim. 
Failure to give prompt written notice shall not release the indemnifying
party from its obligations hereunder.

(d)           The
indemnification provided for under this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such indemnified
party and shall survive the transfer of securities.

(e)           If the
indemnification provided for in or pursuant to this Section 8 is due in
accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations.  The
relative fault of the indemnifying party on the one hand and of the indemnified
Person on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party, and by such party’s
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

(f)            Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.

9.             Rule
144.

The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as the Investor may reasonably request to make available adequate current
public information with respect to the Company meeting the current public
information requirements of Rule 144(c) under the Securities Act, to the extent
required to enable an Investor to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC.

 14
 

 

10.          Transfer
of Registration Rights.

No Investor may transfer or assign all or any portion of its then
remaining rights under this Agreement (except by operation of law pursuant to a
merger or similar business combination) without the prior written consent of
the Company; provided that the original Investor may assign its rights
and obligations hereunder (in whole or in part) to a 100% owned (directly or
indirectly) Affiliate that agrees in writing with the Company to be bound by
this Agreement as fully as if it were an initial signatory hereto (which
Affiliate shall appoint The Corporation Trust Company as its agent to the same
extent as the original Investor is required pursuant to Section 11(e)(ii)), and
any such transferee may thereafter make corresponding assignments in accordance
with this proviso but only to other 100% owned (directly or indirectly)
Affiliates of the original Investor.  For
purposes of clarity, any assignee permitted by the preceding sentence must
remain a 100% owned (directly or indirectly) Affiliate of the original
Investor, or else it shall forfeit the rights assigned to it hereunder.  Additionally, the original Investor may
assign its rights and obligations hereunder (in whole or in part) to a
financial institution generally in the commercial lending business (a “Lender”)
to which the original Investor or any of its 100% owned (directly or
indirectly) Affiliates pledges, encumbers or hypothecates any Registrable
Securities or any interest in any Registrable Securities to secure bona fide
recourse borrowings effected in good faith so long as: (A) the Investor or any
such Affiliate notifies the Company of its intention to enter into such pledge,
encumbrance or hypothecation at least five Business Days prior thereto, (B)
such Lender is not granted any rights hereunder with respect to the Registrable
Securities prior to any foreclosure, and (C) the Lender agrees in writing with
the Investor or any such Affiliate and the Company in an agreement that
expressly provides that (x) the Company is a party to such Agreement, entitled
to enforce such agreement directly against the Lender and (y) such agreement
cannot be amended or modified in any manner which adversely affects the Company
without the written consent of the Company. 
In the event any shares of Registerable Common Stock are transferred to
one or more 100% (directly or indirectly) owned Affiliates or a Lender in a
manner permitted by this Agreement, the Investor shall notify the Company in
writing of a single Person which shall be the authorized representative to receive
notices and take all actions on behalf of the Investor and/or its permitted
100% owned (directly or indirectly) Affiliate and Lender assignees.  In addition to the foregoing, the original
Investor may transfer some or all of its remaining rights under this Agreement
in accordance with Section 12 of this Agreement.

 15
 

 

11.          Miscellaneous.

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

If to the Company:

Rite
Aid Corporation

30 Hunter Lane 

Camp Hill, PA 17011

Facsimile:  (717) 760-7867

Attention:   Robert B. Sari

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

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Facsimile:  (212) 735-2000

Attention:   Nancy A. Lieberman

                   Stacy
J. Kanter

If to the Investor:

The Jean Coutu Group (PJC) Inc.

530, Bériault Street

Longueuil QC

J4G 1S8 Canada

Facsimile:  (450) 646-6686

Attention:   Kim Lachapelle

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

O’Melveny & Myers LLP

Times Square Tower

Seven Times Square

New York, New York 10036

Facsimile:  (212) 326-2061

Attention:   Spencer D. Klein

If to a transferee Investor, to the address of such
transferee Investor set forth in the transfer documentation provided to the
Company.

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

(b)           No
Waivers.  No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise

 16
 

 

thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

(c)           Successors
and Assigns.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, subject to Sections 10 and 12
hereof.  If the outstanding Rite Aid
Common Stock or other Registrable Securities are converted into or exchanged or
substituted for other securities issued by any other Person, as a condition to
the effectiveness of the merger, consolidation, reclassification, share exchange
or other transaction pursuant to which such conversion, exchange, substitution
or other transaction takes place, such other Person shall automatically become
bound hereby with respect to such other securities constituting Registrable
Securities and, if requested by the Investor or a permitted transferee, shall
further evidence such obligation by executing and delivering to the Investor
and such transferee a written agreement to such effect in form and substance
satisfactory to the Investor.

(d)           Governing
Law.  THIS AGREEMENT, THE LEGAL
RELATIONS BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF,
SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED WHOLLY WITHIN THAT JURISDICTION, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW RULES THEREOF.

(e)           Consent
to Jurisdiction.

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

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

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

 17
 

 

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

(ii)          The
original Investor hereby irrevocably and unconditionally designates, appoints,
and empowers The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf service of any and all
legal process, summons, notices and documents that may be served in any action,
suit or proceeding brought against such Investor in any such United States
federal or state court with respect to its obligations, liabilities or any
other matter arising out of or in connection with this Agreement and that may
be made on such designee, appointee and agent in accordance with legal
procedures prescribed for such courts. 
If for any reason such designee, appointee and agent hereunder shall
cease to be available to act as such, such Investor agrees to designate a new
designee, appointee and agent in the State of Delaware on the terms and for the
purposes of this Section 11(e) reasonably satisfactory to the Company.  The original Investor further hereby
irrevocably consents and agrees to the service of any and all legal process,
summons, notices and documents in any such action, suit or proceeding against
such Investor by serving a copy thereof upon the relevant agent for service of
process referred to in this Section 11(e) (whether or not the appointment of
such agent shall for any reason prove to be ineffective or such agent shall
accept or acknowledge such service) or by sending copies thereof by a
recognized next day courier service to such Investor at its address specified
in or designated pursuant to this Agreement. 
The original Investor agrees that the failure of any such designee,
appointee and agent to give any notice of such service to them shall not impair
or affect in any way the validity of such service or any judgment rendered in
any action or proceeding based thereon.

(f)            Waiver
of Jury Trial.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

(g)           Counterparts;
Effectiveness.  This Agreement may be
executed in any number of counterparts (including by facsimile) and by
different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. 
All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.  This Agreement shall become effective when
each party hereto shall have received counterparts hereof signed by all of the
other parties hereto.

(h)           Entire
Agreement.  This Agreement and the
Stockholder Agreement (but only to the extent explicitly referenced herein)
contain the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes and replaces all other prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof.

 18
 

 

(i)            Captions.  The headings and other captions in this
Agreement are for convenience and reference only and shall not be used in
interpreting, construing or enforcing any provision of this Agreement.

(j)            Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally contemplated
to the fullest extent possible.

(k)           Amendments.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to or departures from the provisions hereof may not be
given, without the written consent of the Company and Investors that
Beneficially Own a majority of the Registrable Securities.

(l)            Equitable
Relief.  The parties hereto agree
that legal remedies may be inadequate to enforce the provisions of this Agreement
and that equitable relief, including specific performance and injunctive
relief, may be used to enforce the provisions of this Agreement.

12.          Stockholder
Pro Rata Distribution.

(a)           In
addition to the transfers permitted by Section 10 herein, the original Investor
may transfer all or some of its remaining registration rights under this
Agreement as part of a pro-rata dividend, spin-off, distribution or similar
recapitalization (a “Stockholder Pro Rata Distribution”) to a Coutu
Stockholder (as defined in Section 12(e) below) that either individually,
together with its Affiliates or as a member of a Group (as defined in Section
12(d) below) Beneficially Owns (as defined in Section 12(c) below) more than 5%
of the Total Voting Power (as defined in Section 12(f) below) after the
Stockholder Pro Rata Distribution (a “5% Spinoff Coutu Stockholder”), so
long as: (A) the original Investor notifies the Company of its intention to
consummate such Stockholder Pro Rata Distribution at least five Business Days
prior thereto, and (B) the 5% Spinoff Coutu Stockholder shall execute a
counterpart signature page to this Agreement stating that it agrees to be bound
by the terms and conditions of this Agreement and shall appoint The Corporation
Trust Company as its agent to the same extent as the original Investor is
required pursuant to Section 11(e)(ii). 
In the event any Registrable Securities are transferred to one or more
5% Spinoff Coutu Stockholders in a manner permitted by this Agreement, the 5%
Spinoff Coutu Stockholder shall notify the Company in writing of a single
Person which shall be the authorized representative to receive notices and take
all actions on behalf of such 5% Spinoff Coutu Stockholders.  The notice provided in accordance with
Section 2.2(a)(iv) of the Stockholder Agreement shall be deemed to satisfy the
foregoing notice requirement.

(b)           “Beneficial Ownership” has the meaning set forth in Section 1.1 of the
Stockholder Agreement.

 19
 

 

(c)           “Coutu Stockholder” has the meaning set forth in
Section 2.2(g) of the Stockholder Agreement.

(d)           “Family
Member” has the meaning set forth in the preamble to the Stockholder
Agreement.

(e)           “Group” has the meaning set forth in
Section 1.1 of the Stockholder Agreement.

(f)            “Total
Voting Power” has the meaning set forth in Section 1.1 of the Stockholder
Agreement.

13.          Effectiveness.

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

[Remainder of page intentionally left blank.]

 

 20

 

 

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by each of the parties hereto as of the date first written above.

	
   

  	
  RITE AID CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Robert B. Sari

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE JEAN COUTU GROUP (PJC) INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean Coutu

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Jean Coutu

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chairman of the Board, President

  
	
   

  	
   

  	
   

  	
   

  	
  and Chief Executive Officer

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