Document:

<PAGE>

                                                                   EXHIBIT 10.44

                                                                  EXECUTION COPY

                            SALOMON SMITH BARNEY INC.
                              390 GREENWICH STREET
                            NEW YORK, NEW YORK 10013

CITICORP NORTH AMERICA, INC.                          THE CHASE MANHATTAN BANK
    388 GREENWICH STREET                             J.P. MORGAN SECURITIES INC.
  NEW YORK, NEW YORK 10013                                 270 PARK AVENUE
                                                      NEW YORK, NEW YORK 10017

 CREDIT SUISSE FIRST BOSTON                           FLEET RETAIL FINANCE INC.
   ELEVEN MADISON AVENUE                               FLEET SECURITIES, INC.
  NEW YORK, NEW YORK 10010                           40 BROAD STREET, 10TH FLOOR
                                                     BOSTON, MASSACHUSETTS 02109

                                                                    May 15, 2001

Rite Aid Corporation
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Attention: Mr. Robert G. Miller
           Chairman of the Board of Directors
           and Chief Executive Officer

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                                Commitment Letter

Ladies and Gentlemen:

Rite Aid Corporation ("Rite Aid") has advised Citi/SSB, JPMorgan, CSFB and Fleet
(as defined below) that Rite Aid desires to establish the Senior Facility (as
defined in Exhibit A) in connection with the transactions described in Exhibit A
hereto (the "Transaction Description"). Capitalized terms used in this
Commitment Letter but not defined herein shall have the meanings given to them
in the Transaction Description.

Subject to the terms and conditions described in this Commitment Letter
(including Exhibits A, B and C hereto), and in the Fee Letters referred to
below, Citi/SSB, JPMorgan, CSFB and Fleet are pleased to inform Rite Aid of
their several commitments to provide the following principal amounts of the
Senior Facility:

<PAGE>

                             Citi/SSB     $475,000,000
                             JPMorgan     $475,000,000
                             CSFB         $475,000,000
                             Fleet        $475,000,000
                                        --------------
                             Total      $1,900,000,000

Each of Citi/SSB, JPMorgan, CSFB and Fleet shall be liable only for its own
commitment hereunder, and shall not have any liability with respect to the
commitment of any other party.

The commitments of each of Citi/SSB, JPMorgan, CSFB and Fleet hereunder will be
irrevocably reduced by the amount of the commitments of any other prospective
Senior Lenders (as defined below) which execute commitments relating to the
Senior Facility to the extent expressly stated in such commitment of such other
prospective Senior Lenders. Such reductions will be allocated among the
commitments of Citi/SSB, JPMorgan, CSFB and Fleet as agreed by them.

For purposes of this Commitment Letter, "Citi/SSB" shall mean Citicorp North
America, Inc. and/or any affiliate thereof, including Salomon Smith Barney Inc.
("SSBI"), as Citi/SSB shall determine to be appropriate to provide the services
contemplated herein. "CSFB" means Credit Suisse First Boston or any affiliate
thereof. "Fleet" means Fleet Retail Finance Inc. and/or any affiliate thereof,
including Fleet Securities, Inc., as Fleet Retail Finance Inc. shall determine
to be appropriate to provide the services contemplated herein. "JPMorgan" means
J.P. Morgan Securities Inc. and/or any affiliate thereof, including The Chase
Manhattan Bank, as JPMorgan shall determine to be appropriate to provide the
services contemplated herein. Citi/SSB, JPMorgan, Fleet and CFSB are referred to
collectively as the "Agents".

1.  Conditions Precedent. The commitments of Citi/SSB, JPMorgan, CSFB and Fleet
hereunder are subject to:

    (a) The Agents' completion of, and satisfaction in all respects with, the
results of its ongoing due diligence investigation of the business, assets,
operations, properties, condition (financial or otherwise), contingent
liabilities, prospects and material agreements of Rite Aid. Each of the Agents
confirms its satisfaction with the results of its due diligence investigation of
Rite Aid to date and expects that its due diligence investigation will be
completed within 30 days of the date of delivery to the Agents of Rite Aid's
Annual Report on Form 10-K for the fiscal year ended March 3, 2001.

    (b) The preparation, execution and delivery of definitive documentation with
respect to the Senior Facility, including a credit agreement, security
agreements and guarantees incorporating substantially the terms and conditions
outlined in this Commitment Letter and otherwise reasonably satisfactory to the
Agents and Citi/SSB's counsel (the "Operative Documents"), on or before August
31, 2001.

                                       2
<PAGE>

    (c) There not having occurred any material adverse change in the business,
assets, operations, properties, condition (financial or otherwise), contingent
liabilities, prospects or material agreements of Rite Aid and its subsidiaries,
taken as a whole, since March 3, 2001.

    (d) There not having occurred any disruption of or change in loan
syndication, financial, banking or capital market conditions that, in the
reasonable judgment of the Agents, could materially impair the syndication of
the Senior Facility.

    (e) The accuracy and completeness of all representations that Rite Aid and
its affiliates make to the Agents and all information that Rite Aid and its
affiliates furnish to the Agents.

    (f) The payment in full of all fees, expenses and other amounts payable
under this Commitment Letter and the Fee Letters.

    (g) The Agents' reasonable satisfaction with (i) the structure of the
Transactions and all related tax, legal and accounting matters, (ii) the
material terms of the Transactions and of all agreements and instruments to be
entered into in connection with the Transactions and (iii) the capitalization,
structure and equity ownership of Rite Aid and its subsidiaries after giving
effect to the Transactions.

    (h) The Agents' satisfaction that Rite Aid is not subject to material
contractual or other material restrictions that would be violated by the
Transactions, including the granting of perfected first priority security
interests and guarantees and the payment of dividends by subsidiaries.

    (i) The execution, delivery and compliance with the terms of (i) this
Commitment Letter and (ii) the Fee Letters.

    (j) The completion of the Additional Financings on substantially similar
terms and conditions as those described in this Commitment Letter (including
Exhibits A, B and C hereto).

    (k) There not having been any material changes to the five-year business
plan of Rite Aid which has been previously delivered to the Agents.

    (l) The Agents' receipt of valuations and appraisals of the Collateral by
independent appraisal firms satisfactory to the Agents which valuations and
appraisals shall be satisfactory to the Agents.

    (m) Citi/SSB's completion of a field examination of the Collateral, the
results of which shall be satisfactory to the Agents.

Please note that the terms and conditions of Citi/SSB's, JPMorgan's, CSFB's and
Fleet's commitments hereunder are not limited to those set forth in this
Commitment Letter and that those matters that are not covered or made clear in
this Commitment Letter are subject to mutual agreement of the parties.

                                       3
<PAGE>

2.  Commitment Termination. The commitments set forth in this Commitment Letter
will terminate on the earlier of August 31, 2001 and the date of execution and
delivery of the Operative Documents. Before such date, the Agents may terminate
this Commitment Letter if any event occurs or information becomes available
that, in their reasonable judgment, results or is likely to result in the
failure to satisfy any condition set forth in Section 1, unless, in the judgment
of the Agents, such event or condition is capable of being cured and Rite Aid is
working diligently to the satisfaction of the Agents to effect such a cure.

3.  Syndication. Each of the Agents reserves the right, before or after the
execution of the Operative Documents, to syndicate all or a portion of its
commitment to one or more other financial institutions, in consultation with
Rite Aid, that will become parties to the Operative Documents pursuant to
syndications to be managed by the Joint Lead Arrangers (as defined below) (the
financial institutions becoming parties to the Operative Documents being
collectively referred to herein as the "Senior Lenders"). Rite Aid understands
that the Joint Lead Arrangers intend to commence such syndication of the Senior
Facility promptly and that the Joint Lead Arrangers may elect to appoint one or
more syndication agents to direct such syndication efforts on their behalf.

The Joint Lead Arrangers will act as the joint lead syndication agents with
respect to the Senior Facility and will manage all aspects of the syndications
in consultation with Rite Aid and the Syndication Agents, including the timing
of all offers to potential Senior Lenders, the determination of all amounts
offered to potential Senior Lenders, the selection of Senior Lenders, the
allocation of commitments among the Senior Lenders, the assignment of any titles
and the compensation to be provided to the Senior Lenders.

Rite Aid shall take all action that the Joint Lead Arrangers may reasonably
request to assist them in forming syndicates acceptable to each of the Joint
Lead Arrangers and Rite Aid. Rite Aid's assistance in forming such syndicates
shall include but not be limited to: (i) making senior management,
representatives and advisors of Rite Aid available to participate in
informational meetings with potential Senior Lenders at such times and places as
the Joint Lead Arrangers may reasonably request; (ii) using its reasonable best
efforts to ensure that the syndication efforts benefit from Rite Aid's existing
lending relationships; (iii) assisting (including using its best efforts to
cause its affiliates and advisors to assist) in the preparation of a
confidential information memorandum for the Senior Facility and other marketing
materials to be used in connection with the syndications; and (iv) promptly
providing the Joint Lead Arrangers with all information reasonably deemed
necessary by them to successfully complete the syndications.

To ensure an orderly and effective syndication of the Senior Facility, Rite Aid
agrees that, from the date hereof until the termination of the syndications (as
determined by the Joint Lead Arrangers), it will not and will not permit any of
its affiliates to, syndicate or issue, attempt to syndicate or issue, announce
or authorize the announcement of the syndication or issuance of, or engage in
discussions concerning the syndication or issuance of, any debt security or
commercial bank or other debt facility (including any renewals thereof), without
the prior written consent of the Joint Lead Arrangers other than as contemplated
by the Transactions.

                                       4
<PAGE>

Rite Aid agrees that (a) Citicorp USA, Inc. will act as the sole administrative
agent for the Senior Facility, (b) SSBI and JPMorgan will act as joint lead
arrangers and joint book managers (the "Joint Lead Arrangers") for the Senior
Facility, and (c) JPMorgan, CSFB and Fleet will act as syndication agents for
the Senior Facility. No additional agents, co-agents, arrangers or co-
arrangers, will be appointed, or other titles conferred, without the consent of
the Joint Lead Arrangers. Rite Aid agrees that no Senior Lender will receive any
compensation of any kind for its participation in the Senior Facility, except as
expressly provided in the Fee Letters or in Exhibit A, B or C.

4.  Fees. In addition to the fees described in Exhibits B and C, Rite Aid will
pay the fees set forth in the fee letter relating to the Senior Facility dated
the date hereof between Rite Aid and the Agents (the "Senior Facility Fee
Letter") and the fee letter dated the date hereof between Rite Aid and Citi/SSB
(the "Arrangement Fee Letter" and, together with the Senior Facility Fee Letter,
the "Fee Letters"). The terms of the Senior Facility Fee Letter are an integral
part of the Agents' commitments hereunder and constitute part of this Commitment
Letter for all purposes hereof. Each of the fees described in the Fee Letters
and Exhibits B and C shall be nonrefundable when paid.

5.  Indemnification. Rite Aid agrees to indemnify and hold harmless the Agents,
each Senior Lender and each of their respective affiliates and each of their
respective officers, directors, employees, agents, advisors and representatives
(each, an "Indemnified Person") from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and disbursements of counsel), joint or several, that may be incurred by or
asserted or awarded against any Indemnified Person, (including, without
limitation, in connection with any investigation, litigation or proceeding or
the preparation of a defense in connection therewith), in each case arising out
of or in connection with or by reason of this Commitment Letter or the Operative
Documents or the Transactions contemplated hereby or thereby, or any use made or
proposed to be made with the proceeds of the Senior Facility, except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Person's gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this paragraph applies, such indemnity shall be effective, whether or not
such investigation, litigation or proceeding is brought by Rite Aid, any of its
directors, securityholders or creditors, an Indemnified Person or any other
person, or an Indemnified Person is otherwise a party thereto and whether or not
the Transactions contemplated hereby are consummated.

No Indemnified Person shall have any liability (whether in contract, tort or
otherwise) to Rite Aid or any of its directors, securityholders or creditors for
or in connection with the Transactions contemplated hereby, except for direct
damages (as opposed to special, indirect, consequential or punitive damages
including, without limitation, any loss of profits, business or anticipated
savings) determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Person's gross negligence or
willful misconduct.

If any litigation or proceeding is brought against any Indemnified Person in
respect of which indemnification may be sought against Rite Aid pursuant to this
Section 5, such Indemnified Person shall promptly notify Rite Aid in writing of

                                       5
<PAGE>

the commencement of such litigation or proceeding, but the failure so to notify
Rite Aid shall relieve Rite Aid from any liability which it may have hereunder
only if, and to the extent that, it has been materially prejudiced by such
failure and will not in any event relieve Rite Aid from any other obligation or
liability that it may have to any Indemnified Person other than under this
Commitment Letter. In case any such litigation or proceeding shall be brought
against any Indemnified Person and such Indemnified Person shall notify Rite Aid
in writing of the commencement of such litigation or proceeding, Rite Aid shall
be entitled to participate in such litigation or proceeding, and, after written
notice from Rite Aid to such Indemnified Person, to assume the defense of such
litigation or proceeding with counsel of its choice at its expense; provided,
however, that such counsel shall be satisfactory to the Indemnified Person in
the exercise of its reasonable judgment; and provided further, however, that
Rite Aid shall not have the right to assume the defense of any litigation or
proceeding related to the security interests granted in favor of the Senior
Lenders or the validity or enforceability of the documentation for the Senior
Facility. Notwithstanding the election of Rite Aid to assume the defense of such
litigation or proceeding, such Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such litigation or
proceeding, and Rite Aid shall bear the reasonable fees, costs and expenses of
such separate counsel and shall pay such fees, costs and expenses at least
quarterly (provided that with respect to any single litigation or proceeding or
with respect to several litigations or proceedings involving substantially
similar legal claims, Rite Aid shall not be required to bear the fees, costs and
expenses of more than one such counsel except where such Indemnified Person
requires local counsel, in which case Rite Aid shall also be required to bear
the fees, costs and expenses of such local counsel) if (i) the use of counsel
chosen by Rite Aid to represent such Indemnified Person would present such
counsel with a conflict of interest (based upon written advice of counsel to the
Indemnified Person), (ii) the defendants in, or targets of, any such litigation
or proceeding include both an Indemnified Person and Rite Aid, and such
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it or to other Indemnified Persons which are different
from or additional to those available to Rite Aid (in which case Rite Aid shall
not have the right to direct the defense of such action on behalf of the
Indemnified Person), (iii) Rite Aid shall not have employed counsel satisfactory
to such Indemnified Person, in the exercise of the Indemnified Person's
reasonable judgment, to represent such Indemnified Person within a reasonable
time after notice of the institution of such litigation or proceeding or (iv)
Rite Aid shall authorize in writing such Indemnified Person to employ separate
counsel at the expense of Rite Aid. In any action or proceeding the defense of
which Rite Aid assumes, the Indemnified Person shall have the right to
participate in such litigation and retain its own counsel at such Indemnified
Person's own expense. Rite Aid and each Indemnified Person agrees to use all
reasonable efforts to cooperate in the defense of any action or proceeding
pursuant to which a claim for indemnification is made under this Section 5.

No Indemnified Person seeking indemnification under this Commitment Letter
shall, without Rite Aid's prior written consent (which consent shall not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in respect of
which indemnification may be sought hereunder.

6.  Costs and Expenses. Rite Aid shall pay or reimburse Citi/SSB on demand for
all reasonable out-of-pocket costs and expenses incurred by Citi/SSB (whether
incurred before or after the date hereof), in each case in connection with the

                                       6
<PAGE>

Senior Facility and the preparation, negotiation, execution and delivery of this
Commitment Letter, the Operative Documents and any security arrangements in
connection with the Senior Facility, including valuation and appraisal of the
Collateral (which costs and expenses will be documented in reasonable detail),
and the reasonable fees and disbursements of counsel and appraisal firms
(whether incurred before or after the date hereof), whether or not any of the
Transactions contemplated hereby are consummated. Rite Aid further agrees to pay
all costs and expenses of Citi/SSB (including, without limitation, reasonable
fees and disbursements of counsel) incurred in connection with the enforcement
of any of its rights and remedies hereunder.

7.  Confidentiality. By accepting delivery of this Commitment Letter, Rite Aid
agrees that this Commitment Letter is for its confidential use only and that
neither its existence nor the terms hereof will be disclosed by it to any person
other than its officers, directors, employees, accountants, attorneys and other
advisors, and then only on a confidential and "need to know" basis in connection
with the Transactions contemplated hereby. Notwithstanding the foregoing,
following Rite Aid's acceptance of the provisions hereof and its return of an
executed counterpart of this Commitment Letter to Citi/SSB as provided below,
(i) Rite Aid may file a copy of this Commitment Letter (other than the Fee
Letters) in any public record in which it is required by law to be filed and
(ii) Rite Aid may make such other public disclosures of the terms and conditions
hereof as (a) Rite Aid is required by law, in the opinion of its counsel, to
make and (b) may be necessary or advisable in connection with the Transactions.

8.  Representations and Warranties. Rite Aid represents and warrants that (i)
all information (other than financial projections) that has been or will
hereafter be made available to the Agents, any Senior Lender or any potential
Senior Lender by or on behalf of Rite Aid or any of its representatives in
connection with the Transactions contemplated hereby is and will be complete and
correct in all material respects and does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances under which such statements were or are made and (ii) all
financial projections, if any, that have been or will be prepared by or on
behalf of Rite Aid or any of its representatives and made available to the
Agents, any Senior Lender or any potential Senior Lender have been or will be
prepared in good faith based upon assumptions that are reasonable at the time
made and at the time the related financial projections are made available to the
Agents. If, at any time from the date hereof until the execution and delivery of
the Operative Documents, any of the representations and warranties in the
preceding sentence would be incorrect if the information or financial
projections were being furnished, and such representations and warranties were
being made, at such time, then Rite Aid will promptly supplement the information
and the financial projections so that such representations and warranties will
be correct under those circumstances.

In issuing this Commitment Letter and in arranging the Senior Facility including
the syndication of the Senior Facility, the Agents will be entitled to use, and
to rely on the accuracy of, the information furnished to it by or on behalf of
Rite Aid or any of its representatives without responsibility for independent
verification thereof.

                                       7
<PAGE>

9.  No Third Party Reliance, Etc. The agreements of the Agents hereunder and of
any Senior Lender that issues a commitment to provide financing under the Senior
Facility are made solely for the benefit of Rite Aid and may not be relied upon
or enforced by any other person (other than Indemnified Persons pursuant to
Section 5). This Commitment Letter is not intended to create a fiduciary
relationship among the parties hereto.

10. Sharing Information. Rite Aid acknowledges that the Agents may provide debt
financing, equity capital or other services (including financial advisory
services) to parties whose interests regarding the Transactions described herein
and otherwise may conflict with Rite Aid's interests. Consistent with the
Agents' policy to hold in confidence the affairs of its customers, the Agents
will not furnish confidential information obtained from Rite Aid or its
affiliates to any of its other customers. Furthermore, the Agents will not use
in connection with the Transactions contemplated hereby, or furnish to Rite Aid,
confidential information obtained by the Agents from any other person.

11. Assignments. Rite Aid may not assign this Commitment Letter or the Agents'
commitments hereunder without the Agents' prior written consent, and any
attempted assignment without such consent shall be void.

12. Amendments. This Commitment Letter may not be amended or any provision
hereof waived or modified except by an instrument in writing signed by each
party hereto.

13. Governing Law, Etc. This Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York. This Commitment
Letter sets forth the entire agreement among the parties with respect to the
matters addressed herein and supersedes all prior communications, written or
oral, with respect hereto. This Commitment Letter may be executed in any number
of counterparts, each of which, when so executed, shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
Commitment Letter. Delivery of an executed counterpart of a signature page to
this Commitment Letter by telecopier shall be as effective as delivery of a
manually executed counterpart of this Commitment Letter. Sections 3 through 8,
10, 13 and 14 shall survive the expiration or termination of this Commitment
Letter whether or not the Operative Documents shall be executed and delivered,
but, after the effectiveness of the Operative Documents, only to the extent not
inconsistent with the Operative Documents.

14. Waiver of Jury Trial. Each party hereto irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Commitment
Letter or the Transactions contemplated hereby or the actions of the parties
hereto in the negotiation, performance or enforcement hereof.

Please indicate your acceptance of the provisions hereof by signing the enclosed
copy of this Commitment Letter and the Fee Letters and returning them to Richard
D. Banziger, Managing Director, Salomon Smith Barney Inc., 390 Greenwich Street,
New York, New York 10013 (telecopier: (212) 723-8544) at or before 5:00 p.m.
(New York City time) on May 15, 2001, at which time the commitment of the Agents
set forth above (if such acceptance, deposits and payments have not occurred
prior thereto) will expire.

                                       8
<PAGE>

If you elect to deliver this Commitment Letter by telecopier, please arrange for
the executed original to follow by next-day courier.

                                                   Very truly yours,

                                                   CITICORP NORTH AMERICA, INC.,

                                                   By___________________________
                                                   Name:
                                                   Title:  Vice President

                                                   SALOMON SMITH BARNEY INC.,

                                                   By___________________________
                                                   Name:
                                                   Title:   Managing Director

                                                   THE CHASE MANHATTAN BANK,

                                                   By___________________________
                                                   Name:
                                                   Title:

                                                   J.P. MORGAN SECURITIES INC.,

                                                   By___________________________
                                                   Name:
                                                   Title:

                                                   CREDIT SUISSE FIRST BOSTON,

                                                   By___________________________
                                                   Name:
                                                   Title:

                                                   FLEET RETAIL FINANCE INC.,

                                                   By___________________________
                                                   Name:
                                                   Title:

                                                   FLEET SECURITIES, INC.,

                                                   By___________________________
                                                   Name:
                                                   Title:

                                       9
<PAGE>

ACCEPTED AND AGREED on May 15, 2001:

RITE AID CORPORATION,

By_______________________
Name:
Title:

                                       10
<PAGE>

CONFIDENTIAL                                                           EXHIBIT A
May 15, 2001

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                             Transaction Description

All capitalized terms used herein but not defined herein shall have the meanings
provided in the Commitment Letter relating to this Transaction Description. The
following transactions are referred to herein as the "Transactions".

         1. Rite Aid will obtain a new senior secured credit facility in an
aggregate principal amount of $1,900,000,000 (the "Senior Facility"), which
shall be unconditionally guaranteed by its subsidiaries and secured by a first
priority security interest in the Collateral (as described in Exhibit B to the
Commitment Letter).

         2. Rite Aid will seek to raise not less than $1,050,000,000 of gross
proceeds from a combination of financings (the "Additional Financings") as
described below, in each case in form and substance, including structure and
terms, satisfactory to the Agents:

                   (a) from equity financings (other than debt for equity
         swaps), gross proceeds of at least $400,000,000 in cash (the
         "Additional Equity Financing"); and

                   (b) the balance from a combination of debt for equity swaps
         or public or private debt securities and/or real estate financings (the
         "Additional Debt Financing"); provided that at least $300,000,000 of
         such balance consists of debt for equity swaps (including those
         effected since March 3, 2001, other than those effected through the
         public exchange offer by Rite Aid in respect of its $156,000,000 5.25%
         Convertible Subordinated Notes due 2002 and $110,000,000 6.00% Dealer
         Remarketable Securities due 2003) or other equity financings.

         3. Costs and expenses (including, without limitation, all fees and
amounts payable under the Fee Letters) incurred for services actually provided
to Rite Aid in connection with the foregoing transactions will be paid in an
amount up to approximately $94,000,000 (the "Transaction Costs").

         4. The estimated sources and uses of the funds necessary to consummate
the Transactions are set forth in Annex I hereto (the "Sources and Uses of
Funds").

<PAGE>

                                                                         ANNEX I
                                                      to Transaction Description

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                            Sources and Uses of Funds

<TABLE>
<CAPTION>
                        Sources                                                         Uses*
--------------------------------------------------------     -----------------------------------------------------------
<S>                                                          <C>
Senior Facility --                                           Refinancing Existing Senior
drawn**                                  $1,400,000,000      Facility -- drawn**                          $  600,000,000

                                                             Refinancing Second Priority
Additional Financings                    $1,050,000,000      Indebtedness
                                                              RCF Facility     $730,000,000
                                                              PCS Facility      154,000,000
                                                              Exchange Debt     170,000,000
                                                              10.5% Notes       468,000,000
                                                              Synthetic Leases  213,000,000
                                                              Prudential Notes   21,000,000
                                                                               ------------

                                                                                                          $1,756,000,000
                                                             Transaction Costs and Premiums               $   94,000,000
                                         --------------                                                   --------------
TOTAL SOURCES                            $2,450,000,000      TOTAL USES                                   $2,450,000,000
                                         ==============                                                   ==============

</TABLE>

-----------
*  Reflects amounts outstanding as of March 31, 2001.
** Excludes outstanding drawings under the Revolving Facility.

<PAGE>

CONFIDENTIAL                                                           EXHIBIT B
May 15, 2001

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                    Summary of Principal Terms and Conditions

All capitalized terms used herein but not defined herein shall have the meanings
provided in the Commitment Letter and the Transaction Description relating to
this Summary of Principal Terms and Conditions.

Borrower:                     Rite Aid Corporation, a Delaware corporation.

Transactions:                 As described in the Transaction Description.

Administrative Agent:         Citicorp USA, Inc., or an affiliate thereof
                              designated by SSBI (in its individual capacity
                              "CUSA" and in its capacity as Administrative
                              Agent, the "Administrative Agent").

Collateral Agent:             CUSA (in its capacity as Collateral Agent, the
                              "Collateral Agent").

Joint Lead Arrangers and
Joint Book Managers:          Salomon Smith Barney Inc. ("SSBI") and J.P. Morgan
                              Securities Inc. ("JPMorgan" and, together with
                              SSBI, the "Joint Lead Arrangers").

Syndication Agents:           JPMorgan, Credit Suisse First Boston and Fleet
                              Retail Finance Inc. (collectively, the
                              "Syndication Agents" and, together with the
                              Administrative Agent and the Collateral Agent, the
                              "Agents").

Other Agents:                 Other Agent titles to be determined.

Senior Lenders:               A syndicate of financial institutions arranged by
                              SSBI (the "Senior Lenders").

Senior Facility:              (A) An Amortizing Senior Secured Tranche A Term
                              Loan Facility (the "Tranche A Term Facility") in
                              an aggregate principal amount of $1,400,000,000
                              less the aggregate principal amount outstanding on
                              the Senior Facility closing date of the Borrower's
                              10.5% Senior Secured Notes due 2002 (the "10.5%
                              Notes"), after giving effect to the Borrower's
                              tender therefor, such aggregate principal amount
                              of the Tranche A Term Facility to be allocated, as
                              determined by the Joint Lead

<PAGE>

                              Arrangers in their discretion, entirely to or
                              between one or more term loan facilities.

                              (B) An Amortizing Senior Secured Delayed Draw
                              Tranche B Term Loan Facility in an aggregate
                              principal amount equal to the aggregate principal
                              amount outstanding on the Senior Facility closing
                              date of the 10.5% Notes, after giving effect to
                              the Borrower's tender therefor (the "Tranche B
                              Term Facility" and, together with the Tranche A
                              Term Facility, the "Term Facilities"); provided,
                              however, that to the extent the Borrower
                              consummates debt for equity swaps in respect of,
                              or otherwise reduces the outstanding principal
                              amount of, the 10.5% Notes after the closing of
                              the Senior Facility, such financings will reduce
                              the commitments under the Tranche B Term Facility
                              on a dollar-for-dollar basis.

                              (C) A Senior Secured Revolving Credit Facility in
                              an aggregate principal amount of $500,000,000 (the
                              "Revolving Facility").

                              (D) Up to $125,000,000 of the Revolving Facility
                              will be available as a letter of credit
                              subfacility.

                              (E) Up to $100,000,000 of the Revolving Facility
                              will be available as an uncommitted swing line
                              facility. Swing line loans must be repaid not
                              later than seven days after being drawn and may
                              not be refinanced with swing line loans.

Purpose and Availability:     The Tranche A Term Facility will be fully drawn on
                              the date on which the conditions to the initial
                              borrowing specified below are satisfied (the
                              "Initial Funding Date"). The Tranche B Term
                              Facility will be available at any time on or
                              before the final maturity of the 10.5% Notes to
                              purchase the 10.5% Notes at a purchase price no
                              greater than par. The Revolving Facility will be
                              available on and after the Initial Funding Date
                              and at any time before the final maturity of the
                              Revolving Facility, in minimum principal amounts
                              to be agreed by the Agents and the Borrower.
                              Amounts borrowed under the Term Facilities that
                              are repaid or prepaid may not be reborrowed.
                              Amounts repaid under the Revolving Facility may be
                              reborrowed.

                                        2

<PAGE>

                              Amounts borrowed under the Senior Facility will be
                              utilized by the Borrower solely (1) to refinance
                              the existing senior facility and the Second
                              Priority Indebtedness identified in the Sources
                              and Uses of Funds, (2) to pay up to approximately
                              $94,000,000 of transaction costs and premiums for
                              the Transactions, (3) to refinance $24,000,000 of
                              existing standby letters of credit issued by
                              Mellon Bank and Citibank, and (4) to finance
                              working capital requirements and capital
                              expenditures and for other permitted general
                              corporate purposes. Letters of credit may be
                              issued in the ordinary course of the Borrower's
                              business for permitted general corporate purposes.
                              Certain interest rate hedging arrangements with
                              Fleet and Citibank for the benefit of the Borrower
                              and its subsidiaries will remain outstanding, and
                              will be secured by a shared first-priority lien on
                              the Collateral. Treatment of existing trade
                              letters of credit issued for the benefit of the
                              Borrower and its subsidiaries will be as agreed in
                              the Operative Documents.

Final Maturity:               The Term Facilities and the Revolving Facility
                              will mature (and all lending commitments under the
                              Revolving Facility will terminate) on the fourth
                              anniversary of the date on which definitive
                              documentation for the Senior Facility is executed
                              and delivered; provided, however, that to the
                              extent more than $20,000,000 of the Borrower's
                              $200,000,000 7.625% Debentures due April 15, 2005
                              remain outstanding on December 31, 2004, the Term
                              Facilities and the Revolving Facility will mature
                              (and all lending commitments under the Revolving
                              Facility will terminate) on March 15, 2005.

Amortization:                 [Term Facilities amortization schedules to be
                              determined by the Agents and the Borrower.]

Borrowing Base:               All loans and other extensions of credit under the
                              Senior Facility will be subject to a borrowing
                              base (the "Borrowing Base") calculated as
                              percentages to be agreed by the Agents and the
                              Borrower of Eligible Receivables and Eligible
                              Inventory pledged as Collateral. The components,
                              standards of calculation and initial advance rates
                              of the Borrowing Base will be determined at the
                              reasonable judgment and consistent with the
                              customary practices of the Agents. Availability

                                        3

<PAGE>

                              under the Borrowing Base will be reduced by (i) a
                              reserve in an amount equal to the Borrower's then-
                              current exposure upon early termination under its
                              existing and future interest rate hedging
                              agreements that have a shared security interest in
                              the collateral securing the Senior Facility and
                              (ii) a reserve in an amount equal to the aggregate
                              principal amount then outstanding of the
                              Borrower's 10.5% Notes. The Collateral Agent may
                              use its reasonable judgment to increase the
                              initial advance rates by 5%. Any increase greater
                              than that amount will be subject to a 662/3% vote
                              of the Senior Lenders and any increase in advance
                              rates above 80% of the orderly liquidation value
                              of the Eligible Inventory or 85% of the Eligible
                              Receivables will be subject to a 100% vote of the
                              Senior Lenders. The Borrowing Base will be
                              computed weekly with respect to accounts
                              receivable and store location inventory, monthly
                              with respect to distribution center inventory and
                              at other times requested by the Collateral Agent.
                              A Borrowing Base Certificate presenting the
                              Borrower's computation will be delivered to the
                              Collateral Agent not later than four business days
                              after the end of each week or the date of any such
                              request by the Collateral Agent and not later than
                              14 days after the end of each month, as
                              applicable.

Guarantee:                    All obligations of the Borrower under the Senior
                              Facility and under any interest protection or
                              other hedging arrangements entered into with a
                              Senior Lender (or any affiliate thereof) will be
                              unconditionally guaranteed (the "Guarantees") by
                              each existing and subsequently acquired or
                              organized domestic and, to the extent no adverse
                              tax consequences would result, foreign direct or
                              indirect subsidiary of the Borrower (collectively,
                              the "Subsidiary Guarantors") owning any assets
                              consisting of inventory, accounts receivable,
                              script lists, intellectual property, certain owned
                              real estate (including owned fixtures, furnishings
                              and equipment) and other assets to be agreed by
                              the Agents and the Borrower ("Specified Assets").

Collateral:                   The Senior Facility, the Guarantees, certain
                              existing and future interest protection and other
                              hedging arrangements entered into with a Senior
                              Lender (or any affiliate thereof) will be secured
                              by a first priority pledge of, or mortgages on,
                              all Specified Assets of each Subsidiary Guarantor
                              (whether existing or subsequently acquired or

                                        4

<PAGE>

                              organized) and all proceeds of the foregoing
                              (collectively, the "Collateral"). Any 10.5% Notes
                              that remain outstanding on the Senior Facility
                              closing date, after giving effect to the
                              Borrower's tender therefor (the "Remaining 10.5%
                              Notes"), may be secured on a pari passu basis by a
                              silent first priority lien on the Collateral,
                              shared with the Senior Facility. Any indebtedness
                              incurred as Additional Debt Financings may be
                              secured on a pari passu basis by a silent second
                              priority lien on the Collateral (such secured
                              Additional Debt Financings, the "Second Priority
                              Indebtedness"). Such liens will not entitle the
                              Remaining 10.5% Notes or the Second Priority
                              Indebtedness to take any action whatsoever with
                              respect to the Collateral, and the Senior Lenders
                              will at all times control all remedies or other
                              actions relating to the Collateral. The holders of
                              the obligations under the Senior Facility and the
                              Remaining 10.5% Notes will have the right to
                              receive all proceeds of any realization on the
                              Collateral pursuant to the exercise of remedies on
                              a pari passu basis until all obligations under the
                              Senior Facility and the Remaining 10.5% Notes have
                              been paid in full. The Remaining 10.5% Notes and
                              the Second Priority Indebtedness will have secured
                              claims in bankruptcy proceedings, but the
                              intercreditor provisions will provide that the
                              holders of the Remaining 10.5% Notes and the
                              Second Priority Indebtedness may not vote such
                              claims or exercise rights with respect to such
                              claims in a manner adverse to the Senior Facility.

Cash Dominion:                The Borrower will continue its current cash
                              management system. Upon the occurrence of trigger
                              events to be agreed by the Agents and the
                              Borrower, the Collateral Agent, upon its
                              determination or upon request by the Majority
                              Banks, may deliver cash sweep notices, requiring
                              funds in the blocked accounts to be swept to a
                              single concentration account. After delivery of
                              cash sweep notices, unless required to do
                              otherwise pursuant to intercreditor arrangements,
                              the Collateral Agent will use each day's proceeds
                              to reduce outstanding obligations under the
                              Revolving Facility and thereafter to deposit into
                              a cash sweep cash collateral account for the
                              benefit of the Senior Facility secured parties, as
                              collateral for the payment and performance of the
                              Senior Facility obligations. As long as no default
                              or event of default shall have occurred and be
                              continuing, the Borrower will have access to the
                              Revolving Facility during a cash sweep period. The

                                        5

<PAGE>

                              Collateral Agent may send a cash sweep notice on
                              each occasion of the occurrence of a trigger
                              event.

                              During a cash sweep period, upon the occurrence of
                              certain events to be agreed by the Agents and the
                              Borrower, the Collateral Agent shall automatically
                              rescind any Cash Sweep Notice.

Interest Rates and Fees:      As set forth in Annex I hereto and in the Senior
                              Facility Fee Letter.

Optional Prepayments and
Reductions in Commitments:    Optional prepayments of borrowings under the
                              Senior Facility, and optional reductions of the
                              unutilized portion of the Senior Facility
                              commitments, will be permitted at any time, in
                              minimum principal amounts to be agreed by the
                              Agents and the Borrower, without premium or
                              penalty, subject to reimbursement of the Senior
                              Lenders' redeployment costs in the case of a
                              prepayment of LIBOR borrowings other than on the
                              last day of the relevant interest period.

Mandatory Prepayments:        The Senior Facility will be subject to mandatory
                              prepayment as follows:

                              (a) with the net cash proceeds of sales of
                                  Specified Assets and sales of capital stock of
                                  any subsidiary of the Borrower owning any
                                  Specified Assets (other than sales in the
                                  ordinary course of business and other limited
                                  exceptions to be agreed by the Agents and the
                                  Borrower), to be applied pro rata to the
                                  Revolving Facility, the Tranche A Term
                                  Facility and the Tranche B Term Facility.

                              (b) with the net cash proceeds of certain
                                  permitted capital markets transactions, to be
                                  applied:

                                  (i)   first, to the extent that the Borrower
                                        is not in compliance with the Borrowing
                                        Base requirements, pro rata to the
                                        Revolving Facility, the Tranche A Term
                                        Facility and the Tranche B Term Facility
                                        until such noncompliance is remedied,
                                        and

                                        6

<PAGE>

                                  (ii)  second, in an amount up to $300,000,000,
                                        to the payment or defeasance of the
                                        Borrower's $156,000,000 5.25%
                                        Convertible Subordinated Notes due 2002,
                                        and $110,000,000 6.00% Dealer
                                        Remarketable Securities due 2003 (or the
                                        deposit in a cash collateral account
                                        securing the Senior Facility of an
                                        amount required to repay such securities
                                        when callable at par), with the balance,
                                        if any, of such $300,000,000 to be
                                        available to the Borrower for general
                                        corporate purposes, and

                                  (iii) third, with respect to 75% of the
                                        balance of such net cash proceeds, pro
                                        rata to the Tranche A Term Facility and
                                        the Tranche B Term Facility and, with
                                        respect to 25% of the balance of such
                                        net cash proceeds, to general corporate
                                        purposes of the Borrower.

                              Such permitted capital markets transactions may
                              consist of equity or of certain capital markets
                              debt.

                              In the case of prepayments in respect of sales of
                              Specified Assets and sales of capital stock of any
                              subsidiary of the Borrower owning any Specified
                              Assets, allocations within the Senior Facility
                              will be made pro rata based on the outstanding
                              amounts of the Tranche A Term Facility and the
                              Tranche B Term Facility and the outstanding amount
                              plus unused commitments of the Revolving Facility.
                              Funds allocated to the Revolving Facility from
                              prepayments in respect of sales of Specified
                              Assets and sales of capital stock of any
                              subsidiary of the Borrower owning any Specified
                              Assets will be applied to permanently reduce the
                              Revolving Facility commitment (with corresponding
                              prepayments of obligations under the Revolving
                              Facility). In the case of prepayments in respect
                              of permitted capital markets transactions,
                              allocations within the Senior Facility in respect
                              of prepayments required to be applied pro rata to
                              the Revolving Facility, the Tranche A Term
                              Facility and the Tranche B Term Facility will be
                              made pro rata based on the outstanding amounts of
                              the Revolving Facility, the Tranche A Term
                              Facility and the Tranche B Term Facility. Funds
                              allocated to the Revolving Facility, the Tranche A
                              Term Facility or the Tranche B Term Facility from
                              prepayments in respect of permitted capital
                              markets transactions will be applied to prepay

                                       7
<PAGE>

                              outstanding principal amounts, and, in the case of
                              the Term Facilities, will be allocated to
                              scheduled amortization payments in reverse
                              chronological order.

                              Borrowings under the Senior Facility (including
                              the face amount of outstanding letters of credit)
                              must be prepaid (or cash collateralized) on any
                              date when the aggregate principal amount thereof
                              exceeds the Borrowing Base by an amount sufficient
                              to eliminate such excess.

Letters of Credit:            Letters of credit under the Revolving Facility
                              will be issued by one or more Senior Lenders (or
                              an affiliate thereof) to be agreed (collectively,
                              the "Issuing Lender"). Each letter of credit shall
                              expire not later than the earlier of (a) 12 months
                              after its date of issuance and (b) the fifth
                              business day before the final maturity of the
                              Revolving Facility.

                              Drawings under any letter of credit shall be
                              reimbursed by the Borrower (or converted to loans
                              under the Revolving Facility) on the same business
                              day. To the extent that the Borrower does not
                              reimburse the Issuing Lender on the same business
                              day, the Senior Lenders under the Revolving
                              Facility shall be irrevocably obligated to
                              reimburse the Issuing Lender pro rata based upon
                              their respective Revolving Facility commitments,
                              with the amount of such reimbursement payment
                              being deemed to be a drawing under the Revolving
                              Facility.

                              The issuance of all letters of credit shall be
                              subject to the customary procedures of the Issuing
                              Lender.

Representations
and Warranties:               Usual for facilities and transactions of this type
                              and others appropriate to this transaction to be
                              reasonably specified by the Agents (including
                              customary exceptions and materiality thresholds),
                              including, without limitation:

                              1.  Corporate status and authority.

                              2.  Execution, delivery, and performance of loan
                                  documents and transactions contemplated
                                  thereby do not violate law or other
                                  agreements.

                                       8
<PAGE>

                              3.  No government or regulatory approvals
                                  required, other than approvals in effect.

                              4.  No litigation which would (i) have a material
                                  adverse effect on the business, financial
                                  position, results of operations or prospects
                                  of the Borrower and its subsidiaries, taken as
                                  a whole, (ii) affect the legality, validity
                                  and enforceability of the loan documents
                                  (including without limitation, the validity,
                                  enforceability or priority of security
                                  interests to be granted) or (iii) impair the
                                  Borrower's or its subsidiaries' ability to
                                  perform its or their obligations under the
                                  loan documents.

                              5.  Environmental matters.

                              6.  There not having occurred any material adverse
                                  change in the business, assets, operations,
                                  properties, condition (financial or
                                  otherwise), contingent liabilities, prospects
                                  or material agreements of Rite Aid and its
                                  subsidiaries, taken as a whole, since March 3,
                                  2001.

                              7.  Financial condition; accuracy of financial
                                  statements.

                              8.  Material compliance with laws and regulations
                                  (including ERISA, margin regulations and all
                                  applicable environmental laws and regulations)
                                  and material agreements.

                              9.  Legality, validity, binding effect and
                                  enforceability of the loan documents.

                              10. Inapplicability of the Investment Company Act
                                  and Public Utility Holding Company Act.

                              11. Solvency.

                              12. Payment of taxes.

                              13. Validity, priority and perfection of security
                                  interests in the Collateral, and location of
                                  accounts receivable, inventory, receivables,
                                  real estate and intellectual property in
                                  Subsidiary Guarantors.

                                       9
<PAGE>

                              14. No conflicts with laws, material contracts,
                                  etc.

                              15. Properties.

                              16. Insurance.

                              17. Labor matters.

                              18. Accuracy of information.

                              19. Subsidiaries.

Conditions Precedent
to Initial Borrowing:         Usual for facilities and transactions of this
                              type, including those specified in the Summary of
                              Additional Conditions Precedent attached as
                              Exhibit C to the Commitment Letter, and others
                              appropriate to this transaction to be reasonably
                              specified by the Agents.

Affirmative Covenants:        Usual for facilities and transactions of this type
                              and others appropriate to this transaction to be
                              reasonably specified by the Agents (to be
                              applicable to the Borrower and the Borrower's
                              subsidiaries), including, without limitation, and
                              subject, in each case, to customary exceptions and
                              materiality standards to be agreed by the Agents
                              and the Borrower:

                              1.  Preservation of corporate existence and
                                  maintenance of material rights.

                              2.  Material compliance with laws (including ERISA
                                  and applicable environmental laws).

                              3.  Payment of taxes.

                              4.  Payment or performance of obligations.

                              5.  Delivery of audited and unaudited financial
                                  statements.

                              6.  Other reporting requirements, including with
                                  respect to the Borrowing Base and information
                                  with respect to the Collateral and perfection
                                  of security interests, and notices of default,
                                  litigation and other adverse matters.

                                       10
<PAGE>

                              7.  Visitation rights, including Collateral and
                                  Borrowing Base reviews.

                              8.  Maintenance of books and records.

                              9.  Maintenance of properties.

                              10. Maintenance of insurance.

                              11. Use of proceeds.

Negative Covenants:           Usual for facilities and transactions of this type
                              and others appropriate to this transaction to be
                              reasonably specified by the Agents (to be
                              applicable to the Borrower and the Borrower's
                              subsidiaries), including, without limitation,
                              subject in each case to customary exceptions and
                              materiality standards to be agreed by the Agents
                              and the Borrower:

                              1.  Limitations on liens. Security interests with
                                  respect to existing trade letters of credit
                                  that continue after the closing date will be
                                  permitted.

                              2.  Limitations on incurrence of debt (including
                                  obligations in respect of foreign currency
                                  exchange and other hedging arrangements) and
                                  contingent obligations. Treatment of existing
                                  trade letter of credit arrangements will be as
                                  agreed in the Operative Documents. The Senior
                                  Facility will permit the issuance of certain
                                  capital markets debt as described below, the
                                  proceeds of which will not be required to be
                                  applied as a "Mandatory Prepayment": (a) up to
                                  $200,000,000 aggregate principal amount of
                                  secured debt, subordinated only to the Senior
                                  Facility and any Remaining 10.5% Notes, with
                                  terms and conditions satisfactory to Senior
                                  Lenders holding more than 66 2/3% of the
                                  aggregate amount of the loans and commitments
                                  under the Senior Facility and (b) an aggregate
                                  principal amount of debt with the same terms
                                  as the Additional Debt Financing described in
                                  item 1(a) of Exhibit C in an amount not in
                                  excess of (x) $300,000,000 plus (y) an amount,
                                  not in excess of $140,000,000, by which the
                                  equity financing component (including debt for
                                  equity swaps) of the Additional Financings
                                  effected on or prior to the closing of the

                                       11
<PAGE>

                                  Senior Facility exceeds $700,000,000, provided
                                  that not less than $260,000,000 of the
                                  proceeds of such debt are used to refinance
                                  outstanding debt of the Borrower.

                              3.  Limitations on dividends, redemptions and
                                  repurchases with respect to capital stock and
                                  on loans and investments.

                              4.  Limitations on prepayments, redemptions and
                                  repurchases of certain debt.

                              5.  Limitations on loans and investments.

                              6.  Limitations on capital expenditures.

                              7.  Limitations on mergers, consolidations,
                                  acquisitions, asset dispositions and
                                  sale/leaseback transactions.

                              8.  Limitations on transactions with affiliates.

                              9.  Limitations on changes in business conducted
                                  by the Borrower and its subsidiaries.

                              10. Limitations on amendment of certain debt and
                                  other material agreements.

                              11. Limitations on the issuance and sale of
                                  capital stock of subsidiaries.

                              12. Limitations on restrictions on distributions
                                  from subsidiaries.

                              13. Limitation on negative pledges granted to
                                  other creditors.

Selected Financial
Covenants:                    Usual for facilities and transactions of this
                              type, including, without limitation, minimum
                              EBITDA, a minimum interest coverage ratio and a
                              minimum fixed charge coverage ratio.

Events of Default:            Usual for facilities and transactions of this type
                              and others appropriate to this transaction to be
                              reasonably specified by the Agents, including,
                              without limitation:

                                       12
<PAGE>

                              1.  Failure to pay principal when due and interest
                                  or any other amount within five days of the
                                  due date thereof.

                              2.  Representations or warranties materially
                                  incorrect when given.

                              3.  Failure to comply with covenants (with notice
                                  and cure periods as applicable).

                              4.  Cross-default to payment defaults on principal
                                  aggregating $25,000,000, or default or event
                                  of default if the effect is to accelerate or
                                  (with lapse of time, notice or both) permit
                                  acceleration.

                              5.  Unsatisfied judgment or order in excess of
                                  $25,000,000 individually or of $25,000,000 in
                                  the aggregate.

                              6.  Bankruptcy or insolvency.

                              7.  ERISA events.

                              8.  Change of control or ownership.

                              9.  Actual invalidity, or invalidity asserted by
                                  Rite Aid or any of its subsidiaries, of any
                                  loan document.

                              10. Invalidity, non-perfection or loss of priority
                                  of any material lien (with cure periods as
                                  applicable).

Voting:                       Amendments and waivers of the loan documents will
                              require the approval of Senior Lenders holding
                              more than 50% of the aggregate amount of the loans
                              and commitments under the Senior Facility, except
                              that (a) the consent of each affected Senior
                              Lender shall be required with respect to matters
                              usual for facilities and transactions of this
                              type, including those matters set forth in the
                              existing senior facility (with such changes
                              appropriate to this transaction as may be
                              reasonably satisfactory to the Agents) and
                              including, (i) waiver of any condition precedent
                              to the initial borrowing, (ii) increases in
                              commitments of the Senior Lenders, (iii)
                              reductions of principal, interest or fees, (iv)
                              extensions of any date fixed for payment of
                              principal or interest or of final maturity, (v)
                              releases of all or substantially all of the

                                       13
<PAGE>

                              Collateral (other than in connection with any sale
                              or financing of Collateral permitted by the loan
                              documents) and (b) the consent of Senior Lenders
                              holding more than 50% of the Revolving Facility
                              and more than 50% of each adversely affected
                              tranche of the Term Facilities shall be required
                              with respect to any amendment that changes the
                              allocation between the Revolving Facility, the
                              Tranche A Term Facility and the Tranche B Term
                              Facility (or any combination thereof) of any
                              mandatory prepayments under the Senior Facility.

Assignment and Participation: The Senior Lenders will have the right to assign
                              loans and commitments to (i) their affiliates,
                              (ii) other Senior Lenders or (iii) any Federal
                              Reserve Bank, in each case without restriction, or
                              to other financial institutions, with the consent,
                              not to be unreasonably withheld, of the Agents and
                              the Borrower (but the Borrower's consent shall not
                              be required if an Event of Default shall have
                              occurred and be continuing). Minimum aggregate
                              assignment level (except other Senior Lenders) of,
                              in the case of the Revolving Facility, $5,000,000
                              and, in the case of the Term Facilities,
                              $1,000,000 and increments of $1,000,000 in excess
                              thereof. The parties to the assignment (other than
                              the Borrower) shall pay to the Administrative
                              Agent an administrative fee of $1,000.

                              Each Senior Lender will have the right to sell
                              participations in its rights and obligations under
                              the loan documents, subject to customary
                              restrictions on the participants' voting rights.

Yield Protection, Taxes
and Other Deductions:         (1) The loan documents will contain yield
                                  protection provisions, customary for
                                  facilities of this nature, protecting the
                                  Senior Lenders in the event of unavailability
                                  of funding, funding losses, reserve and
                                  capital adequacy requirements.

                              (2) All payments to be free and clear of any
                                  present or future taxes, withholdings or other
                                  deductions whatsoever (other than income taxes
                                  in the jurisdiction of the Senior Lender's
                                  applicable lending office). The Senior Lenders
                                  will use reasonable efforts to minimize to the
                                  extent possible any applicable taxes and the
                                  Borrower will indemnify the Senior Lenders and

                                       14
<PAGE>

                                  the Agents for such taxes paid by the Senior
                                  Lenders or the Agents.

Expenses:                     The Borrower will reimburse all reasonable out-of-
                              pocket expenses (including, without limitation,
                              expenses incurred in connection with due
                              diligence, Collateral and Borrowing Base
                              appraisals and fees and expenses of counsel) (a)
                              of Citi/SSB and SSBI incurred by them in
                              connection with the preparation, syndication and
                              execution of the Senior Facility and the loan
                              documents and (b) of Citi/SSB, SSBI and the Senior
                              Lenders incurred by them in connection with the
                              waiver, modification and enforcement of the Senior
                              Facility and the loan documents. Such amounts
                              shall be reimbursed by the Borrower upon
                              presentation of a statement of account, whether or
                              not the Initial Funding Date occurs or the loan
                              documents are executed and delivered.

Governing Law and Forum:      New York.

Counsel to Citi/SSB and SSBI: Cravath, Swaine & Moore.

                                       15
<PAGE>

                                                                         ANNEX I
                                                                    to Exhibit B

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                             Interest Rates and Fees

Interest Rates:               The interest rates under the Revolving Facility
                              and the Term Facility are LIBOR plus a spread of
                              3.50% or Base Rate plus a spread of 2.50%.

                              The Borrower may choose LIBOR or Base Rate pricing
                              and may elect interest periods of 7 days or 1, 1
                              1/2, 2, 3 or 6 months for LIBOR borrowings, except
                              that all swing line loans will have Base Rate
                              pricing.

                              Calculation of interest shall be on the basis of
                              actual days elapsed in a year of 360 days (or 365
                              or 366 days, as the case may be, in the case of
                              Base Rate loans).

                              Interest will be payable in arrears (a) for loans
                              accruing interest at a rate based on LIBOR, at the
                              end of each interest period (but not less
                              frequently than every 3 months) and on the
                              maturity date, (b) for loans accruing interest
                              based on the Base Rate, quarterly in arrears and
                              on the maturity date.

                              "Base Rate" means the highest of (a) Citibank,
                              N.A.'s base rate, (b) the Federal Funds Effective
                              Rate plus 1/2 of 1% and (c) the Base CD Rate plus
                              1/2 of 1%.

                              LIBOR will at all times include statutory
                              reserves.

Default Rate:                 The applicable interest rate plus 2% per annum.

Commitment Fees:              0.5% per annum on the undrawn portion of the
                              commitments in respect of the Revolving Facility,
                              payable quarterly in arrears. 0.75% per annum on
                              the undrawn portion of the commitments in respect
                              of the Tranche B Term Facility, payable quarterly
                              in arrears.

Letter of Credit Fee:         A per annum fee equal to the spread over LIBOR
                              under the Revolving Facility will accrue on the
                              aggregate face amount of outstanding letters of
                              credit under the Revolving Facility, payable
                              quarterly in arrears and on the termination of the
                              Revolving Facility, in each case for the actual
                              number of days elapsed over a 360-day year. Such

<PAGE>

                              fees shall be distributed to the Senior Lenders
                              participating in the Revolving Facility pro rata
                              in accordance with the amount of each such Senior
                              Lender's Revolving Facility commitment. In
                              addition, the Borrower shall pay to the Issuing
                              Lender, for its own account, (a) a fronting fee of
                              1/4 of 1% per annum on the aggregate face amount
                              of outstanding letters of credit, payable
                              quarterly in arrears and on the termination of the
                              Revolving Facility, in each case for the actual
                              number of days elapsed over a 360-day year, and
                              (b) customary issuance and administration fees.

                                       2
<PAGE>

CONFIDENTIAL                                                           EXHIBIT C
May 15, 2001

                              Rite Aid Corporation
                  $1,900,000,000 Senior Secured Credit Facility
                   Summary of Additional Conditions Precedent

All capitalized terms used herein but not defined herein shall have the meanings
provided in the Transaction Description and the Summary of Principal Terms and
Conditions relating to this Summary of Additional Conditions Precedent.

The initial borrowing under the Senior Facility shall be subject to the
following additional conditions precedent:

1.  Consummation of Additional Financings. The Additional Financings shall have
been consummated, and in connection therewith:

         (a) Any indebtedness incurred as Additional Debt Financing shall:

             (i)   Have a maturity date after January 1, 2006.

             (ii)  If any security is granted, be limited to a silent second
                   priority security interest in the Collateral on terms
                   acceptable to the Agents. If any real estate financings are
                   consummated, collateral therefor shall be limited to the real
                   estate financed.

             (iii) Have no rights to additional collateral.

The terms and conditions of the Additional Financings, and all documentation and
agreements relating thereto, shall be reasonably satisfactory to the Agents and
the Senior Lenders.

2.  Senior Facility Documentation. The documentation for the Senior Facility
shall have been executed and delivered and shall be reasonably satisfactory to
each of the Agents and the Senior Lenders. The holders of the Remaining 10.5%
Notes and the Second Priority Indebtedness or their representatives shall have
entered into, or otherwise become subject to, intercreditor arrangements
reasonably satisfactory to the Agents and the Senior Lenders providing for, in
the case of the Remaining 10.5% Notes, the silent first priority lien shared
with the Senior Facility on the Collateral and, in the case of the Second
Priority Indebtedness, the silent second priority lien on the Collateral, in
each case described under the heading "Collateral" in the Summary of Principal
Terms and Conditions.

3.  Collateral and Guarantees. All Specified Assets of the Borrower's
subsidiaries (other than foreign subsidiaries to the extent adverse tax
consequences would result and de minimis Specified Assets owned by the Borrower)
shall be owned by Subsidiary Guarantors and the Senior Lenders shall have a
first-priority perfected security interest in the Collateral. Notwithstanding
anything to the contrary, none of the assets of the Borrower shall be pledged as
Collateral. The Agents shall be reasonably satisfied that all material Specified
Assets acquired as of and after the Funding Date will be owned by Subsidiary

<PAGE>

Guarantors and subject to a first priority perfected security interest securing
the Senior Facility obligations and, on a silent pari passu basis, the Remaining
10.5% Notes.

4.  Business Plan. There not having been any material changes to the five-year
business plan of Rite Aid which has been previously delivered to the Agents.

5.  Borrowing Base; Valuation and Appraisal; Field Examination. The Borrowing
Base shall be sufficient to support the initial borrowings under the Senior
Facility. The Administrative Agent shall have received such valuations and
appraisals of the Borrowing Base by independent appraisal firms reasonably
satisfactory to the Administrative Agent as the Administrative Agent shall
reasonably request. The Administrative Agent shall have completed completion of
a field examination of the Collateral, the results of which shall be
satisfactory to the Senior Lenders.

6.  Environmental and Employee Health and Safety. The Agents and the Senior
Lenders shall be reasonably satisfied as to the amount and nature of any
environmental liabilities and exposures relating to the properties to be
mortgaged, and any employee health and safety liabilities and exposures to which
the Borrower and its subsidiaries may be subject and with the plans of the
Borrower with respect thereto. The Agents shall have received such information
as they may reasonably request from an environmental consulting firm
satisfactory to the Agents.

7.  Litigation. There shall be no litigation which would (i) have a material
adverse effect on the business, financial position, results of operations or
prospects of the Borrower and its subsidiaries, taken as a whole, (ii) affect
the legality, validity and enforceability of the loan documents (including
without limitation, the validity, enforceability or priority of security
interests to be granted) or (iii) impair the Borrower's or its subsidiaries'
ability to perform its or their obligations under the loan documents.

8.  Working Capital. The Agents shall be reasonably satisfied with the
sufficiency of amounts available under the Senior Facility, and immediately
following the consummation of the Transactions, actual borrowing availability
under the Revolving Facility shall be at least $200,000,000.

9.  No Conflicts. The consummation of the Transactions, including the Senior
Facility and the other transactions contemplated hereby, shall not (a) violate
any applicable law, statute, rule or regulation or (b) conflict with, or result
in a default or event of default or an acceleration of any rights or benefits
under, any material agreement of the Borrower or any of its subsidiaries, and
the Agents and the Senior Lenders shall have received one or more legal opinions
to such effect, satisfactory to the Agents, from counsel to the Borrower
satisfactory to the Agents.

10. Consents. All requisite material governmental authorities and third parties
shall have approved or consented to the transactions contemplated hereby to the
extent required, all applicable appeal periods shall have expired and there
shall be no governmental or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose burdensome conditions on
the transactions contemplated hereby.

                                       2
<PAGE>

11. Material Adverse Change. Absence of any material adverse change in the
business, assets, operations, properties, condition (financial or otherwise),
contingent liabilities, prospects or material agreements of Rite Aid and its
subsidiaries, taken as a whole, since March 3, 2001.

12. Contractual Restrictions. The Senior Lenders' satisfaction that the Borrower
and its subsidiaries are not subject to material contractual or other
restrictions that would be violated by the contemplated transactions, including
the granting of security interests and guarantees by subsidiaries.

13. Title Searches. The Collateral Agent shall have received mortgage and lien
searches with respect to the real estate Collateral reasonably satisfactory to
the Agents; provided that, in the case of real estate Collateral with respect to
which mortgage and lien searches were performed in connection with the existing
senior facility, such searches shall be limited to updates of the searches
previously performed.

14. 10.5% Notes. The 10.5% Notes shall have been redeemed or defeased or a
tender offer for any and all 10.5% Notes shall have been consummated on an any
or all basis by the Borrower, on terms reasonably satisfactory to the Agents.

15. Miscellaneous Closing Conditions. Other customary closing conditions,
including delivery of satisfactory legal opinions of the Borrower's and the
Agents' counsel, other financial information to be agreed by the Agents and the
Borrower; accuracy of representations and warranties; absence of defaults,
prepayment events or creation of liens under debt instruments or other
agreements as a result of the transactions contemplated hereby; evidence of
authority; compliance with applicable laws and regulations (including but not
limited to ERISA, margin regulations and environmental laws); payment of fees
and expenses; and obtaining of satisfactory insurance.<PAGE>

                                                                  EXHIBIT 10.45

                     EQUITY FOR BANK DEBT EXCHANGE AGREEMENT

         This Equity for Bank Debt Exchange Agreement (the "Exchange
Agreement"), dated as of April 12, 2001 (the "Effective Date"), is entered into
by and between Rite Aid Corporation, a Delaware corporation (the "Company"), and
Fir Tree Value Fund, L.P., Fir Tree Institutional Value Fund, L.P., Fir Tree
Value Partners LDC and Fir Tree Recovery Master Fund, L.P. (collectively, "Fir
Tree").

         WHEREAS, the Company desires to reduce its indebtedness; and

         WHEREAS, Fir Tree holds, or has entered into agreements to acquire,
$53,535,249 aggregate principal amount of indebtedness under the Company's RCF
Credit Facility due August 15, 2002 (the "RCF Facility"); and

         WHEREAS, Fir Tree desires to exchange $53,535,249 aggregate principal
amount of the RCF Facility (the "Bank Debt") for shares of common stock, $1.00
par value per share (the "Common Stock") of the Company (the "Exchange"); and

         WHEREAS, Fir Tree and the Company have agreed that it is in their
mutual interest to exchange the Bank Debt for shares of Common Stock;

         NOW THEREFORE, in consideration of the premises and the agreements and
representations contained herein, the parties hereto do hereby agree as follows:

                  1. Definitions.  As used herein, the following terms have the
following meanings:

                  "Average Price" means the sum of the volume weighted average
price (as calculated for the period beginning at 9:30 a.m. New York Time ("NYT")
and concluding at 4:00 p.m. NYT) per share of Common Stock on the NYSE for each
day of the Pricing Period as reported by Bloomberg Financial LP (using the AQR
function) divided by 30.

                  "Bank Debt Exchange Price" means 100% of the principal amount
of the Bank Debt.

                  "Interest Rate" means the interest rate payable to holders of
Euro-Dollar Loans pursuant to the RCF Facility provided that if the RCF
Facility has been redeemed, the last interest rate payable prior to the date of
redemption of the RCF Facility.

<PAGE>

                  "NYSE" means the New York Stock Exchange.

                  "Pricing Period" means the 30 consecutive trading days on the
NYSE, beginning April 9, 2001.

                  "Stock Exchange Price" means 96% of the Average Price during
the Pricing Period.

                  2. Exchange. Within three business days following the last day
of the Pricing Period, Fir Tree will deliver the Bank Debt (except and only to
such extent that Fir Tree is unable to close any acquisition of any Bank Debt as
a result of circumstances beyond its reasonable control) to such person or
entity as the Company and Fir Tree mutually agree (the "Escrow Agent") and the
Company will deliver to the Escrow Agent a certificate representing such number
of shares, rounded to the nearest whole number (the "Shares"), of Common Stock
and a certificate representing an equal number of shares of Class C Preferred
Stock of the Company (the "Preferred Shares") having the designations rights and
preferences set forth in the certificate of designation attached as Exhibit A
hereto, equal to the Bank Debt divided by the Stock Exchange Price. Any interest
paid on the Bank Debt while held in escrow will be paid promptly to Fir Tree.
The Company will use its best efforts to file a registration statement to cover
resales of the Shares pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). The Exchange Date shall be deemed to be the earlier of (x)
the date upon which the Shares are registered (the "Registration Date") for
resale under the Securities Act (the "Registration Exchange Date"), and, (y)
the date upon which the aggregate principal amount of the RCF Facility is repaid
in full (the "Refinancing Exchange Date"). During the Pricing Period, the
Company, Fir Tree and the Escrow Agent will enter into an escrow agreement on
terms as the parties mutually agree.

                  3. Exchange Date on or Before August 20, 2001. If the Exchange
Date occurs on or before August 20, 2001 and the Exchange Date is the
Registration Exchange Date, the Escrow Agent will deliver (a) the certificate(s)
representing the Shares to Fir Tree in such names and denominations as Fir Tree
provides in writing to the Company, and (b) the Bank Debt and a certificate
representing the Preferred Shares to the Company. If the Exchange Date occurs on
or before August 20, 2001 and the Exchange Date is the Refinancing Exchange
Date, the Escrow Agent will deliver (a) the certificate(s) representing the
Preferred Shares to Fir Tree in such names and denominations as Fir Tree
provides in writing to the Company, and (b) the Bank Debt and a certificate
representing the Shares to the

                                        2

<PAGE>

Company. On the Exchange Date, whether such Exchange Date is the Registration
Exchange Date or the Refinancing Exchange Date, the Company shall pay Fir Tree
the accrued and unpaid interest on the Bank Debt pursuant to the RCF Facility.

                  4. Exchange Date Between August 21, 2001 and November 21,
2001. If both the Exchange Date and the Registration Date occur between August
21, 2001 and November 21, 2001, in addition to the obligations set forth in
Section 3 above, the Company shall pay Fir Tree, as liquidated damages
("Liquidated Damages") for the Company's failure to cause the registration
statement covering the Shares to be declared effective by August 21, 2001, an
amount equal to 12% per annum of the Bank Debt minus the Interest Rate (the
"Liquidated Damages Rate") for each day in the period from August 21, 2001 until
the Exchange Date, provided that both the Exchange Date and the Registration
Date occur on or before November 21, 2001. Liquidated Damages shall be paid by
the Company to Fir Tree on the same dates and in the same manner as if such
payment was a payment of interest pursuant to Section 2.04 of the RCF Facility.

                  5. Exchange Date After November 21, 2001. If both the Exchange
Date and the Registration Date do not occur by November 21, 2001, then the
Liquidated Damages Rate shall increase to 18% per annum minus the Interest Rate
for each day in the period from November 22, 2001 until both the Exchange Date
and the Registration Date have occurred. Liquidated Damages shall be paid by the
Company to Fir Tree on the same dates and in the same manner as if such payment
was a payment of interest pursuant to Section 2.04 of the RCF Facility

                  6. Event of Default on RCF Facility. If prior to the Exchange
Date, an Event of Default has occurred under the RCF Facility, as defined in the
RCF Facility, then Fir Tree shall have the option not to consummate the
Exchange, and to instruct the Escrow Agent to release the Bank Debt to Fir Tree
including interest thereon, and the certificates evidencing the Shares and the
Preferred Shares shall be delivered to the Company for cancellation and this
Exchange Agreement shall be deemed null and void and neither Fir Tree nor the
Company shall have any liability to the other arising out of this Exchange
Agreement. Fir Tree must make such election within five business days notice of
such Event of Default.

                  7. Representations and Warranties. The Company represents and
warrants to Fir Tree that: (x) the issuance and delivery of the Shares or the
Preferred Shares, as the case may be, to Fir Tree will not violate: (a) the
Company's Articles of Incorporation or Bylaws, (b) any material agreement to
which the Company is a party, including any indenture; or (c) any applicable
federal or state statute,

                                        3

<PAGE>

rule or regulation that would prevent the Company from carrying out its
obligations hereunder; (y) no representation or warranty contained herein or
information appearing in any writing in connection with the transactions
contemplated hereby furnished to Fir Tree or in any document filed since October
11, 2000 with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading, (z) the Shares or the Preferred Shares, as the case
may be, when released from escrow and issued in accordance with this Exchange
Agreement, will be validly issued, fully paid and non-assessable, and (aa) this
Exchange Agreement has been validly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to standard bankruptcy and
equitable remedies exceptions.

                  8. Investment Representations. Fir Tree understands that the
Shares and the Preferred Shares have not been registered under the Securities
Act and that the certificates for the Shares and the Preferred Shares will bear
a legend to that effect. Fir Tree also understands that the Shares and the
Preferred Shares, as the case may be, are being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
their representations contained in this Exchange Agreement. Fir Tree hereby
represents and warrants as follows:

                  (a) Acquisition for Own Account. Fir Tree is acquiring the
Shares or the Preferred Shares, as the case may be, for its own account for
investment and not with a view toward distribution.

                  (b) General Solicitation. Neither Fir Tree nor anyone acting
on its behalf has made or will make offers or sales of the Shares or the
Preferred Shares in the United States by means of any form of general
solicitation or general advertising (each within the meaning of Regulation D
under the Securities Act) in the United States in violation of applicable
securities laws.

                  (c) Ability to Protect Own Interests. Fir Tree represents that
by reason of its business or financial experience, or the business and financial
experience of its management, it has the capacity to protect its own interests
in connection with the transaction contemplated in this Exchange Agreement. Fir
Tree is not a corporation formed for the specific purpose of consummating this
transaction.

                                        4

<PAGE>

                  (d) Accredited Investor. Fir Tree represents that it is an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.

                  (e) Access to Information. Fir Tree has been given access to
all publicly available Company documents, records, and other information, has
received physical delivery of all those which it has requested, and has had
adequate opportunity to ask questions of, and receive answers from, the
Company's officers, employees, agents, accountants, and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the Shares or
the Preferred Shares, as the case may be.

                  (f) Compliance with Laws. Fir Tree and its transferees will
comply with all material filing and other reporting obligations under all
applicable law which shall be applicable to it with respect to the Shares and
the Preferred Shares, as the case may be.

                  (g) Enforceability. This Exchange Agreement has been duly
authorized, and executed and delivered by Fir Tree and (assuming the due
authorization, execution and delivery thereof by the Company) constitutes a
valid and binding obligation of Fir Tree, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity).

                  9. Furnishing Information by Fir Tree. The Company may require
Fir Tree to furnish to the Company such information, including but not limited
to the names and denominations to be included in the registration statement,
regarding Fir Tree and Fir Tree's intended method of distribution of the Shares
as the Company may from time to time reasonably request in writing, Fir Tree
agrees to notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by Fir Tree to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of
a material fact regarding Fir Tree or Fir Tree's intended method of distribution
of Shares or omits to state any material fact regarding Fir Tree or Fir Tree's
intended method of distribution of Shares required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish

                                        5

<PAGE>

information so required so that such prospectus shall not contain, with respect
to Fir Tree or the distribution of such Shares, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.

                  10. Indemnity.

                  (a) The Company will indemnify Fir Tree and its officers,
directors, partners, agents, employees and representatives against all expenses,
claims, losses and liabilities arising out of or based upon any breach of any
representation, warranty or covenant contained herein, or arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document incident to the registration of the Shares, qualification or
compliance, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, and will reimburse Fir Tree for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to the Company by Fir Tree and
provided specifically for use therein.

                  (b) Fir Tree will indemnify the Company and its officers,
directors, partners, agents, employees and representatives against all
expenses, claims, losses and liabilities arising out of or based upon any breach
of any representation, warranty or covenant contained herein, or arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document incident to the registration of the Shares, qualification or
compliance, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, and will reimburse the Company for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to Fir Tree by the Company and
provided specifically for use therein.

                                        6

<PAGE>

                  (c) Each party entitled to indemnification under this Section
10 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claims as to which indemnity may be sought and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party, whose approval shall not
unreasonably be withheld or delayed, and the Indemnified Party may participate
in such defense with counsel reasonably acceptable to and paid for by the
Indemnifying Party but otherwise at the Indemnified Party's expense, and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 10 to the extent such failure is not materially prejudicial.
No Indemnifying Party in the defense of any such claim or litigation shall
except with the consent of each Indemnified Party, consent to entry of any
judgement or enter into any settlement which does not include an unconditional
release of such Indemnified Party from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

                  (d) If the indemnification provided for in this Section 10 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party of the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statements of a material fact or the omission to state
a material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' 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

                                        7

<PAGE>

Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

                  11. Governing Law. This Exchange Agreement shall be governed
by the laws of the State of New York without giving effect to the conflict of
law rules contained therein.

                  12. Amendments and Waivers. Any term of this Exchange
Agreement may be amended or modified and the observance of any term of this
Exchange Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the prior written consent
of the Company and Fir Tree.

                  13. Further Assurances. The Company and Fir Tree agree to
enter into a registration rights agreement during the Pricing Period, on
customary terms, which terms will include but not be limited to customary
black-outs, carve outs and indemnity.

                  14. Miscellaneous. This Exchange Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns and affiliates of the parties hereto, whether so expressed or not.
Except as aforesaid, this Exchange Agreement shall not inure to the benefit of
any third party. This Exchange Agreement embodies the entire agreement and
understanding between Fir Tree and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Exchange Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof. This Exchange Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.

                                        8

<PAGE>

                  15. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
or similar writing) and shall be given to such party at its address, facsimile
number or telex number set forth on the signature pages hereof. Each such
notice, request or other communication shall be effective (i) if given by telex,
when transmitted to the telex number referred to in this Section 15 and the
appropriate answer back is received, (ii) if given by facsimile, when
transmitted to the facsimile number referred to on the signature page and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address referred to in this Section.

                                        9

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Exchange Agreement to
be duly executed as of the Effective Date.

                                    FIR TREE VALUE FUND, L.P.
                                    FIR TREE INSTITUTIONAL VALUE FUND, L.P.
                                    FIR TREE VALUE PARTNERS LDC
                                    FIR TREE RECOVERY MASTER FUND, L.P.

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

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

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

                                    Address:
                                            ------------------------------------

                                    Facsimile No.:
                                                   -----------------------------

RITE AID CORPORATION

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

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

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

Address:
        ------------------------------------------------------

Facsimile No.:
               -----------------------------------------------

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