Document:

EXECUTION COPY

                              RITE AID CORPORATION

                                  $360,000,000

                      8.125% Senior Secured Notes Due 2010

                               Purchase Agreement

                                                              New York, New York
                                                                  April 15, 2003

Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Fleet Securities, Inc.
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

          Rite Aid Corporation, a corporation organized under the laws of
Delaware (the "Company"), proposes to issue and sell to the several parties
named in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives") are acting as representatives, $360,000,000 principal amount
of its 8.125% Senior Secured Notes Due 2010 (including the guarantees thereof
described herein, the "Securities"). The Securities are to be issued under an
indenture (the "Indenture"), to be dated as of April 22, 2003, among the
Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors")
and BNY Midwest Trust Company, as trustee (the "Trustee"). The Securities have
the benefit of a Registration Rights Agreement (the "Registration Rights
Agreement"), to be dated April 22, 2003, among the Company, the Subsidiary
Guarantors and the Initial Purchasers, pursuant to which the Company and such
Subsidiary Guarantors have agreed to file with the Commission (i) a registration
statement under the Securities Act registering an issue of senior secured notes
of the Company (including the guarantees thereof described herein, the "Exchange
Notes"), which are identical in all material respects to the Securities (except
that the Exchange Notes will not contain terms with respect to transfer
restrictions) and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Securities Act. To the extent there are
no additional parties listed on Schedule I other than you, the term
Representatives as used herein shall mean you as the Initial Purchasers, and the
terms Representatives and Initial Purchasers shall mean either the singular or
plural as the context requires. The use of the neuter in this Agreement shall
include the feminine and masculine wherever appropriate. Certain terms used
herein are defined in Section 17 hereof. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Final Memorandum (as
defined below).

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

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          In connection with the sale of the Securities, the Company has
prepared a final offering memorandum, dated April 15, 2003 (as amended or
supplemented at the Execution Time, including any and all exhibits thereto and
any information incorporated by reference therein, the "Final Memorandum"),
which sets forth certain information concerning the Company and the Securities.
The Company hereby confirms that it has authorized the use of the Final
Memorandum, and any amendment or supplement thereto, in connection with the
offer and sale of the Securities by the Initial Purchasers.

          The Subsidiary Guarantors shall provide a subordinated guarantee of
the obligations under the Securities and shall grant to the holders of the
Securities a shared second priority lien, subject to permitted liens, on the
Collateral pursuant to the guarantee agreements, security agreements, mortgages,
intercreditor agreements and other similar agreements listed on Schedule II
hereto (collectively, the "Security Documents").

          For purposes of this Agreement, all references to Subsidiary
Guarantors shall mean those entities set forth on Schedule III hereto plus any
other Subsidiary Guarantor that becomes a party to this Agreement pursuant to
Sections 5(o) hereof; provided, however, that any such Subsidiary Guarantor
shall cease to be a Subsidiary Guarantor under this Agreement and the
Registration Rights Agreement at such time as such entity ceases to be a
Subsidiary Guarantor under the Security Documents.

          1. Representations and Warranties. The Company and each of the
Subsidiary Guarantors jointly and severally represent and warrant to each
Initial Purchaser as set forth below in this Section 1.

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

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

          (c) Neither the Company, nor any of its Affiliates, nor any person
     acting on its or their behalf (other than the Initial Purchasers or anyone
     acting on their behalf, as to whom the Company makes no representation) has
     engaged in any form of general solicitation or

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     general advertising (within the meaning of Regulation D) in connection with
     any offer or sale of the Securities in the United States.

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

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

          (f) Neither the Company nor any Subsidiary Guarantor is, and after
     giving effect to the offering and sale of the Securities and the
     application of the proceeds thereof as described in the Final Memorandum
     none of them will be, an "investment company" within the meaning of the
     Investment Company Act.

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

          (h) Neither the Company nor any Subsidiary Guarantor has paid or
     agreed to pay to any person any compensation for soliciting another to
     purchase any Securities (except as contemplated by this Agreement).

          (i) Neither the Company nor any Subsidiary Guarantor has taken,
     directly or indirectly, any action designed to or that would constitute or
     that might reasonably be expected to cause or result in, under the Exchange
     Act or otherwise, the stabilization or manipulation of the price of any
     security of the Company or any Subsidiary Guarantor to facilitate the sale
     or resale of the Securities.

          (j) On the Closing Date, each of the Indenture and the Security
     Documents will conform in all material respects to the descriptions thereof
     contained in the Final Memorandum.

          (k) On the Closing Date, the obligations of the Subsidiary Guarantors
     under the Subsidiary Guarantees in favor of the holders of Securities will
     be secured by, and upon issuance of the Exchange Notes the obligations of
     the Subsidiary Guarantors under the Subsidiary Guarantees in favor of the
     holders of the Exchange Notes will be secured by, valid and enforceable
     perfected second priority liens on the Collateral pursuant to the Security
     Documents for the benefit of holders of the Securities or the Exchange
     Notes, as the case may be (the "Security Interests"), and the Collateral
     will be free and clear of all liens, except for the liens on the Collateral
     created or permitted by the Indenture and the Security Documents. The
     Security Interests will be pari passu in all respects with the liens
     securing the Company's 9 1/2% Notes and 12.5% Notes.

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          (l) On the Closing Date, all filings, recordings, registrations and
     other actions necessary or desirable to preserve and protect the rights
     with respect to, and perfect and make valid and enforceable, the Security
     Interests under the Security Documents will have been taken and be in full
     force and effect.

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

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

          (o) The Company's authorized equity capitalization is as set forth in
     the Final Memorandum.

          (p) The statements in the Final Memorandum under the headings "Certain
     United States Federal Tax Considerations for Non-United States Holders",
     "Description of Notes", "Exchange Offer; Registration Rights", "Business --
     Regulation" and "Business -- Legal Proceedings", "Description of Other
     Indebtedness", "Description of Collateral and Intercreditor Arrangements"
     and "Risk Factors" fairly summarize the matters therein described.

          (q) This Agreement has been duly authorized, executed and delivered by
     the Company and each Subsidiary Guarantor; the Security Documents have been
     duly authorized and each constitute, or when executed and delivered by the
     Company and each Subsidiary Guarantor (to the extent stated therein to be a
     party thereto) will each constitute, a legal, valid and binding instrument
     enforceable against the Company and each Subsidiary Guarantor (to the
     extent a party thereto) in accordance with their terms (subject, as to the
     enforcement of remedies, to applicable bankruptcy, reorganization,
     insolvency, moratorium or other laws affecting creditors' rights generally
     from time to time in effect and to general principles of equity); the
     Indenture has been duly authorized and, assuming due authorization,
     execution and delivery thereof by the Trustee, when executed and delivered
     by the Company and each Subsidiary Guarantor, will constitute a

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

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

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

                                                                               6

     instrument to which the Company or any such subsidiary is a party or by
     which the Company or any such subsidiary is bound or to which any of the
     properties of the Company or any of its subsidiaries is subject.

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

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

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

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

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

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          (y) There are no stamp or other issuance or transfer taxes or duties
     or other similar fees or charges required to be paid in connection with the
     execution and delivery of this Agreement or Representative Supplement No. 3
     to be dated as of April 22, 2003, to the Intercreditor Agreement (the
     "Representative Supplement") (other than customary filing fees) or the
     issuance or sale by the Company of the Securities.

          (z) The Company has filed all foreign, federal, state and local tax
     returns that are required to be filed or has requested extensions thereof
     (except in any case in which the failure so to file would not have a
     Material Adverse Effect, except as set forth in or contemplated in the
     Final Memorandum (exclusive of any amendment or supplement thereto)) and
     has paid all taxes required to be paid by it and any other assessment, fine
     or penalty levied against it, to the extent that any of the foregoing is
     due and payable, except for any such assessment, fine or penalty that is
     currently being contested in good faith or as would not have a Material
     Adverse Effect, except as set forth in or contemplated in the Final
     Memorandum (exclusive of any amendment or supplement thereto).

          (aa) No labor problem or dispute with the employees of the Company or
     any of its subsidiaries exists or is threatened or imminent, and the
     Company is not aware of any existing or imminent labor disturbance by the
     employees of any of its or its subsidiaries' principal suppliers,
     contractors or customers that could reasonably be expected to have a
     Material Adverse Effect, except as set forth in or contemplated in the
     Final Memorandum (exclusive of any amendment or supplement thereto).

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

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

          (dd) The Company and its subsidiaries possess all licenses,
     certificates, permits and other authorizations issued by the appropriate
     federal, state or foreign regulatory authorities necessary to conduct their
     respective businesses, except where the failure to possess such licenses,
     certificates, permits and other authorizations could not reasonably

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     be expected to have a Material Adverse Effect, and neither the Company nor
     any such subsidiary has received any notice of proceedings relating to the
     revocation or modification of any such certificate, authorization or permit
     which, singly or in the aggregate, if the subject of an unfavorable
     decision, ruling or finding, could reasonably be expected to have a
     Material Adverse Effect, except as set forth in or contemplated in the
     Final Memorandum (exclusive of any amendment or supplement thereto).

          (ee) The Company and its subsidiaries (i) are in compliance with any
     and all applicable foreign, federal, state and local laws and regulations
     relating to the protection of human health and safety, the environment or
     hazardous or toxic substances or wastes, pollutants or contaminants
     ("Environmental Laws"); (ii) have received and are in compliance with all
     permits, licenses or other approvals required of them under applicable
     Environmental Laws to conduct their respective businesses; and (iii) have
     not received notice of any actual or potential liability for the
     investigation or remediation of any disposal or release of hazardous or
     toxic substances or wastes, pollutants or contaminants, except where such
     non-compliance with Environmental Laws, failure to receive required
     permits, licenses or other approvals, or liability would not, individually
     or in the aggregate, have a Material Adverse Effect, except as set forth in
     the Final Memorandum (exclusive of any amendment or supplement thereto);
     except as set forth in the Final Memorandum, neither the Company nor any of
     the subsidiaries has been named as a "potentially responsible party" under
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, which, if the subject of any unfavorable ruling,
     decision or finding could, individually or in the aggregate, reasonably be
     expected to have a Material Adverse Effect.

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

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

                                                                               9

     subsidiaries must license or refrain from using such Intellectual
     Property), which, if the subject of any unfavorable ruling, decision or
     finding could, individually or in the aggregate, reasonably be expected to
     have a Material Adverse Effect.

          (hh) The Company maintains, and has maintained during the periods
     covered by the Exchange Act reports incorporated by reference in the Final
     Memorandum, disclosure controls and procedures (as such term is defined in
     Rule 13a-14 under the Exchange Act) that are effective in ensuring that
     information required to be disclosed in the reports that it files or
     submits under the Exchange Act is recorded, processed, summarized and
     reported with the time periods specified in the rules and forms of the
     Commission, including, without limitation, effective controls and
     procedures designed to ensure that information required to be so described
     is accumulated and communicated to the Company's management, including its
     principal executive officer or officers, and its principal financial
     officer or officers, as appropriate to allow timely decisions regarding
     required disclosure, except as disclosed in such reports with respect to
     the Company's 1997 fiscal year and that the Company restated its financial
     statements for the 1998 and 1999 fiscal years.

          (ii) The Security Documents listed on Schedule II hereto represent all
     of the guarantee agreements, security agreements, mortgages, intercreditor
     agreements and other similar agreements necessary to effectuate the
     Subsidiary Guarantors' subordinated guarantee of the obligations under the
     Securities and grant to the holders of the Securities a shared second
     priority lien on the Collateral, other than UCC financing statements. Other
     than (i) Representative Supplement No. 1, dated as of April 4, 2002, to the
     Intercreditor Agreement, (ii) Representative Supplement No. 2, dated as of
     February 12, 2003, to the Intercreditor Agreement, (iii) Representative
     Supplement No. 3, to be dated as of April 22, 2003, to the Intercreditor
     Agreement, (iv) Amendment No. 1, dated as of April 15, 2003, to the
     Intercreditor Agreement, (v) Amendment to the Second Priority Subsidiary
     Security Agreement, dated as of February 12, 2003, and (vi) Amendment No. 1
     to Second Priority Subsidiary Security Agreement, Second Priority
     Subsidiary Guarantee and Second Priority Indemnity, Subrogation and
     Contribution Agreement, dated as of April 15, 2003, none of the Security
     Documents have been amended or otherwise modified since the date of the
     original execution thereof.

          (jj) Since June 27, 2001, neither the Company nor any Subsidiary
     Guarantor has taken any action or omitted to take any action, or entered
     into any agreement that resulted or would result in (i) the release or
     modification of any Security Interest granted under the Security Documents,
     other than in accordance with the terms of the Security Documents or (ii)
     any of the Security Documents failing to be in full force and effect.

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

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          2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
96.221% of the principal amount thereof, plus accrued interest, if any, from
April 22, 2003 to the Closing Date, the principal amount of Securities set forth
opposite such Initial Purchaser's name on Schedule I hereto.

          3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on April 22, 2003, which date
and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Initial Purchasers against payment by the several Initial
Purchasers through the Representatives of the purchase price thereof to or upon
the order of the Company by wire transfer payable in same-day funds to the
account specified by the Company (with respect to the portion of the purchase
price required to be used to prepay amounts under the Senior Credit Facility
pursuant to the amendment to the Senior Credit Facility in the form of Exhibit B
hereto, such account shall be the account to which such prepayment must be
made). Delivery of the Securities shall be made through the facilities of The
Depository Trust Company unless the Representatives shall otherwise instruct.

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

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

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

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

          5. Agreements. The Company and each of the Subsidiary Guarantors
jointly and severally agree with each Initial Purchaser that:

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

                                                                              11

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

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

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

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

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

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

                                                                              12

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

          (i) Neither the Company, nor any of its Affiliates, nor any person
     acting on its or their behalf (other than the Initial Purchasers or anyone
     acting on their behalf, as to whom the Company makes no agreement) will
     engage in any directed selling efforts with respect to the Securities, and
     each of them will comply with the offering restrictions requirements of
     Regulation S. Terms used in this paragraph have the meanings given to them
     by Regulation S.

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

          (k) The Company will not offer, sell, contract to sell, grant any
     other option to purchase or otherwise dispose of, directly or indirectly,
     or announce the offering of, or file a registration statement for, any debt
     securities issued or guaranteed by the Company or any of its direct or
     indirect subsidiaries, or enter into any agreement to do any of the
     foregoing (other than (i) the Securities and the Exchange Notes, (ii)
     exchange notes issued in exchange for the 9 1/2% Notes on the same basis,
     and having the same terms, as the 9 1/2% Notes, (iii) pursuant to any
     credit facility permitted under the Indenture, (iv) purchase money debt
     permitted under the Indenture and (v) notes on similar terms to the
     Securities or the 9 1/2% Notes in order to refinance or in exchange for the
     12.5% Notes) for a period of 90 days from the date the Securities are
     issued without the prior written consent of Citigroup Global Markets Inc.

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

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

          (n) The Company and the Subsidiary Guarantors agree to pay the costs
     and expenses relating to the following matters: (i) the preparation of the
     Indenture, the

                                                                              13

     Registration Rights Agreement and the Security Documents, the issuance of
     the Securities, the recording and perfection of security interests pursuant
     to the Security Documents and the fees of the Trustee and the collateral
     agents and trustees under the Security Documents (other than the legal fees
     and expenses of counsel to the Initial Purchasers in connection with the
     foregoing); (ii) the preparation, printing or reproduction of the Final
     Memorandum and each amendment or supplement thereto; (iii) the printing (or
     reproduction) and delivery (including postage, air freight charges and
     charges for counting and packaging) of such copies of the Final Memorandum,
     and all amendments or supplements thereto, as may be reasonably requested
     for use in connection with the offering and sale of the Securities; (iv)
     the preparation, printing, authentication, issuance and delivery of
     certificates for the Securities, including any stamp or transfer taxes in
     connection with the original issuance and sale of the Securities; (v) the
     printing (or reproduction) and delivery of this Agreement, any blue sky
     memorandum and all other agreements or documents printed (or reproduced)
     and delivered in connection with the offering of the Securities; (vi) any
     registration or qualification of the Securities for offer and sale under
     the securities or blue sky laws of the several states (including filing
     fees and the reasonable fees and expenses of counsel for the Initial
     Purchasers relating to such registration and qualification); (vii)
     admitting the Securities for trading in The Portal Market of the NASD;
     (viii) the transportation and other expenses incurred by or on behalf of
     Company representatives in connection with presentations to prospective
     purchasers of the Securities; (ix) the fees and expenses of the Company's
     accountants and the fees and expenses of counsel (including local and
     special counsel) for the Company; and (x) all other costs and expenses
     incident to the performance by the Company and the Subsidiary Guarantors of
     its and their obligations hereunder and under the Indenture, the
     Registration Rights Agreement and the Security Documents. It is understood,
     however, that, except as provided in this Section 5 and Sections 7 and 8 of
     this Agreement, the Initial Purchasers will pay all of their own costs and
     expenses, including the fees and expenses of their counsel.

          (o) The Company shall cause any entity that is a Subsidiary Guarantor
     under the Indenture on the Closing Date and not set forth on Schedule III
     hereto to become a party to this Agreement, the Registration Rights
     Agreement and the Security Documents, if not already a party to the
     Security Documents, on or prior to the Closing Date.

          (p) The Company will take all steps necessary to cure as soon as
     possible the good standing deficiency of its subsidiary Rite Aid of
     Connecticut, Inc. Within 30 days of such deficiency being cured, the
     Company shall provide the Initial Purchasers with evidence of the cure of
     such deficiency.

          6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company and each of the Subsidiary Guarantors contained herein at the Execution
Time and the Closing Date, to the accuracy of the statements of the Company and
each of the Subsidiary Guarantors made in any certificates pursuant to the
provisions hereof, to the performance by the Company and each of the Subsidiary
Guarantors of its obligations hereunder and to the following additional
conditions:

                                                                              14

          (a) The Initial Purchasers shall have received an opinion, dated the
     Closing Date, of Robert Sari, Esq., general counsel for the Company, in
     form and substance satisfactory to the Initial Purchasers, substantially in
     the form set forth in Schedule IV or as otherwise agreed to by the parties
     hereto.

          (b) The Initial Purchasers shall have received three opinions, dated
     the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
     the Company, in form and substance satisfactory to the Initial Purchasers,
     substantially in the forms set forth in Schedules V, VI and VII or as
     otherwise agreed to by the parties hereto. Such counsel shall also furnish
     to the Initial Purchasers opinions, dated the Closing Date, relating to the
     Security Interests, in form and substance satisfactory to the Initial
     Purchasers, substantially in the forms set forth in Schedules VIII and IX
     or as otherwise agreed to by the parties hereto.

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

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

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

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

          (e) On or prior to the Closing Date, each Security Document shall have
     been executed and delivered by the parties thereto and shall be in full
     force and effect and the

                                                                              15

     obligations of the Subsidiary Guarantors in respect of the Securities and,
     when issued, the Exchange Notes shall be Second Priority Debt Obligations
     having the benefit of second priority security interests in the Second
     Priority Collateral.

          (f) On or prior to the Closing Date, the Company and the Subsidiary
     Guarantors shall have caused to be delivered to the Trustee evidence
     satisfactory to the Trustee of the completion and effectiveness of all
     filings, recordings, registrations and other actions of the Security
     Documents, and such other financing statements and security documents, as
     may be necessary or, in the opinion of the Trustee, desirable to perfect
     the second priority liens created, or intended to be created, by the
     Security Documents in favor of the holders of Securities and Exchange
     Notes. All filing fees, taxes and other amounts payable in connection with
     such filings, recordings, registrations and other actions shall have been
     paid (unless such amounts payable are not accepted at the time of such
     filing, recording, registration or other action and are otherwise billed to
     the Company) and the Trustee and the Representatives shall have received
     evidence satisfactory to them of such filings, recordings, registrations
     and other actions and payments.

          (g) At the Execution Time and at the Closing Date, the Company shall
     have requested and caused Deloitte & Touche LLP to furnish to the
     Representatives letters, dated respectively as of the Execution Time and as
     of the Closing Date, in form and substance satisfactory to the
     Representatives, confirming that they are independent accountants within
     the meaning of the Securities Act and the Exchange Act and the respective
     applicable rules and regulations adopted by the Commission thereunder, and
     stating in effect that:

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

               (ii) on the basis of a reading of the latest unaudited financial
          statements made available by the Company and its subsidiaries; their
          limited review, in accordance with the standards established under
          Statement on Auditing Standards No. 100, of the unaudited interim
          financial information for the nine-month period ended November 30,
          2002, and as at November 30, 2002; carrying out certain specified
          procedures (but not an examination in accordance with generally
          accepted auditing standards) which would not necessarily reveal
          matters of significance with respect to the comments set forth in such
          letter; a reading of the minutes of the meetings of the stockholders,
          directors and audit, executive and compensation committees of the
          Company and the Subsidiaries; and inquiries of certain officials of
          the Company who have responsibility for financial and accounting
          matters of the Company and its subsidiaries as to transactions and

                                                                              16

          events subsequent to November 30, 2002, nothing came to their
          attention which caused them to believe that:

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

                    (2) with respect to the period subsequent to November 30,
               2002, there were any changes, at a specified date not more than
               five days prior to the date of the letter, in the long-term debt
               less current maturities of the Company and its subsidiaries or
               common stock of the Company or increases in the stockholders'
               deficit of the Company as compared with the amounts shown on the
               November 30, 2002 consolidated balance sheet included or
               incorporated in the Final Memorandum, or for the period from
               December 1, 2002 to such specified date there were any decreases,
               as compared with the corresponding period in the preceding year,
               in revenues, increases in net loss or loss from continuing
               operations before income taxes and cumulative effect of
               accounting change or in net loss per share of the Company and its
               subsidiaries, except in all instances for changes or decreases
               set forth in such letter, in which case the letter shall be
               accompanied by an explanation by the Company as to the
               significance thereof unless said explanation is not deemed
               necessary by the Representatives; or

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

               (iii) they have performed certain other specified procedures as a
          result of which they determined that certain information of an
          accounting, financial or statistical nature (which is limited to
          accounting, financial or statistical information derived from the
          general accounting records of the Company and its subsidiaries) set
          forth in the Final Memorandum, including the information set forth
          under the captions "Summary", "Risk Factors", "Use of Proceeds",
          "Capitalization", "Selected Consolidated Financial Information",
          "Management's Discussion and Analysis of Financial Condition and
          Results of Operations", "Business", "Management", "Security Ownership
          of Certain Beneficial Owners and Management", "Certain Relationships
          and Related Transactions",

                                                                              17

          "Description of Other Indebtedness", "Description of Collateral and
          Intercreditor Arrangements" and "Description of Notes" in the Final
          Memorandum, agrees with the accounting records of the Company and its
          subsidiaries, excluding any questions of legal interpretation;

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

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

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

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

          (k) On or prior to the Closing Date, the Registration Rights Agreement
     shall be in form and substance satisfactory to the Representatives, shall
     have been executed and delivered by the parties thereto and shall be in
     full force and effect.

          (l) On or prior to the Closing Date, Amendment No. 5 to the Senior
     Credit Facility, in the form attached as Exhibit B hereto, shall have been
     executed and delivered by the parties thereto and shall be in full force
     and effect.

          (m) On or prior to the Closing Date, the Amendment and Consent to the
     Synthetic Lease Facility, in the form attached as Exhibit C hereto, shall
     have been executed and delivered by the parties thereto and shall be in
     full force and effect.

          (n) On or prior to the Closing Date, the Representative Supplement
     shall have been duly executed and delivered by the Second Priority
     Collateral Trustee, Senior

                                                                              18

     Collateral Agent and Trustee, and all of the conditions to the Trustee
     becoming a party to the Intercreditor Agreement shall have been satisfied.

          (o) On or prior to the Closing Date, Amendment No. 1 to the
     Intercreditor Agreement, in the form attached as Exhibit D hereto, shall
     have been executed and delivered by the parties thereto and shall be in
     full force and effect.

          (p) On or prior to the Closing Date, Amendment No. 1 to the Second
     Priority Subsidiary Security Agreement, Second Priority Subsidiary
     Guarantee and Second Priority Indemnity, Subrogation and Contribution
     Agreement, in the form attached as Exhibit E hereto, shall have been
     executed and delivered by the parties thereto and shall be in full force
     and effect.

          (q) On or prior to the Closing Date, the Second Priority Credit Line
     Deed of Trust, Security Agreement and Assignment of Leases and Rents, dated
     as of April 17, 2003, from Rite Aid of West Virginia, Inc., as Trustor, to
     Carl D. Andrews, an individual, as Trustee for the benefit of the Second
     Priority Collateral Trustee (as defined therein), encumbering real property
     located at Rock Branch Industrial Park, Poca, West Virginia (Putnam
     County), shall have been executed and delivered by the parties thereto,
     shall be in full force and effect, and, upon the recordation thereof, shall
     create a valid second lien on the property covered by such mortgage, free
     and clear of all liens, defects and encumbrances except for Permitted
     Liens.

          (r) On or prior to the Closing Date, the Second Priority Credit Line
     Deed of Trust, Security Agreement and Assignment of Leases and Rents, dated
     as of April 17, 2003, from Thrifty PayLess, Inc., as Trustor, to First
     American Title Insurance Company Los Angeles, as Trustee for the benefit of
     the Second Priority Collateral Trustee (as defined therein), encumbering
     real property located at 1755 East Beamer Street, Woodland, California
     (Yolo County), shall have been executed and delivered by the parties
     thereto and shall be in full force and effect, and, upon the recordation
     thereof, shall create a valid second lien on the property covered by such
     mortgage, free and clear of all liens, defects and encumbrances except for
     Permitted Liens.

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

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

                                                                              19

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

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

          8. Indemnification and Contribution. (a) The Company and each of the
Subsidiary Guarantors jointly and severally agree to indemnify and hold harmless
each Initial Purchaser, the directors, officers, employees, affiliates and
agents of each Initial Purchaser and each person who controls any Initial
Purchaser within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Final Memorandum
(or in any supplement or amendment thereto), or arise out of or are based upon
the omission or alleged omission to state therein a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and agrees to reimburse each such indemnified party,
as incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Subsidiary
Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Final Memorandum, or in any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Initial Purchasers through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company and the Subsidiary Guarantors may otherwise
have.

          (b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers, and each person who controls the Company within the meaning of either
the Securities Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Initial Purchaser, but only with reference to
written information relating to such Initial Purchaser furnished to the Company
by or on behalf of such Initial Purchaser through the Representatives
specifically for inclusion in the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The

                                                                              20

Company acknowledges that the statements set forth in the last paragraph of the
cover page regarding the delivery of the Securities and, under the heading "Plan
of Distribution", (i) the list of Initial Purchasers and their respective
participation in the sale of the Securities; (ii) the sentences related to
concessions and reallowances; and (iii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in the Final Memorandum,
constitute the only information furnished in writing by or on behalf of the
Initial Purchasers for inclusion in the Final Memorandum (or in any amendment or
supplement thereto).

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

          (d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, each Subsidiary Guarantor and the
Initial Purchasers severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses

                                                                              21

reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Initial
Purchasers may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Subsidiary Guarantors on the
one hand and by the Initial Purchasers on the other from the offering of the
Securities; provided, however, that in no case shall any Initial Purchaser
(except as may be provided in any agreement among the Initial Purchasers
relating to the offering of the Securities) be responsible for any amount in
excess of the purchase discount or commission applicable to the Securities
purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, each
Subsidiary Guarantor and the Initial Purchasers severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Subsidiary Guarantors on the one
hand and of the Initial Purchasers on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company and the
Subsidiary Guarantors shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses) received by the Company, and benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions in each case set forth on the cover of the
Final Memorandum. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Initial Purchasers on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company, each Subsidiary Guarantor and the Initial Purchasers
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers obligation to contribute
pursuant to this Section 8(d) are several in proportion to their respective
purchase obligations and not joint. For purposes of this Section 8, each person
who controls an Initial Purchaser within the meaning of either the Securities
Act or the Exchange Act and each director, officer, employee, affiliate and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Company within the meaning
of either the Securities Act or the Exchange Act and each officer and director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).

          9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names on Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase;

                                                                              22

provided, however, that in the event that the aggregate principal amount of
Securities which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase shall exceed 10% of the aggregate principal amount of
Securities set forth on Schedule I hereto, the remaining Initial Purchasers
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Initial Purchasers do
not purchase all the Securities, this Agreement will terminate without liability
to any nondefaulting Initial Purchaser or the Company. In the event of a default
by any Initial Purchaser as set forth in this Section 9, the Closing Date shall
be postponed for such period, not exceeding two Business Days, as the
Representatives and the Company shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.

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

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

          12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to Citigroup Global Markets Inc. General Counsel (fax
no.: (212) 816-7912) and confirmed to the General Counsel, Citigroup Global
Markets Inc. at 388 Greenwich Street, New York, New York 10013, Attention:
General Counsel; or, if sent to the Company or any Subsidiary Guarantor, will be
mailed, delivered or telefaxed to Robert Sari, Esq. (fax no.: (717) 760-7867)
and confirmed to Robert Sari, Esq., Rite Aid Corporation, 30 Hunter Lane, Camp
Hill, Pennsylvania 17011.

          13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents

                                                                              23

and controlling persons referred to in Section 8 hereof, and, except as
expressly set forth in Section 5(h) hereof, no other person will have any right
or obligation hereunder.

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

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

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

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

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

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

          "Commission" shall mean the Securities and Exchange Commission.

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

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

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

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

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

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

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

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

                                                                              24

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

                                             Very truly yours,
                                             Rite Aid Corporation,

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

Each of the Subsidiary
Guarantors listed on
Schedule III hereto,

by
   ---------------------------------
   Name: Robert B. Sari
   Title: Authorized Signatory

                                                                              25

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

Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Fleet Securities, Inc.

By: Citigroup Global Markets Inc.

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

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

                                                                              26

                                   SCHEDULE I

                                              Principal
                                              Amount of
                                              Securities
         Initial Purchasers                 to be Purchased
         ------------------                 ---------------
Citigroup Global Markets Inc. ..........      $225,000,000
J.P. Morgan Securities Inc. ............      $126,000,000
Fleet Securities, Inc. .................      $  9,000,000
                                              ------------
   Total ...............................      $360,000,000

                                                                              27

                                   SCHEDULE II

                               Security Documents

          (i) Collateral Trust and Intercreditor Agreement, dated as of June 27,
2001 among Rite Aid Corporation, the Subsidiary Guarantors (as defined therein),
Wilmington Trust Company, as collateral trustee for the holders from time to
time of the Second Priority Debt Obligations (as defined therein), Citicorp USA,
Inc., as collateral agent for the Senior Secured Parties (as defined therein)
under the Senior Loan Documents (as defined therein), Citibank USA, Inc., as
agent for the Synthetic Lease Parties (as defined therein), State Street Bank
and Trust Company, as trustee under the Exchange Note Indenture (as defined
therein) for the holders of the Exchange Notes (as defined therein), and each
other Second Priority Representative (as defined therein) which from time to
time becomes a party thereto (the "Collateral Trust and Intercreditor
Agreement").

          (ii) Second Priority Subsidiary Guarantee Agreement, dated as of June
27, 2001 among the Subsidiary Guarantors (as defined therein) and Wilmington
Trust, as collateral agent.

          (iii) Second Priority Subsidiary Security Agreement, dated as of June
27, 2001 among the Subsidiary Guarantors (as defined therein) in favor of
Wilmington Trust, as collateral trustee.

          (iv) Second Priority Credit Line Deed of Trust, Security Agreement and
Assignment of Leases and Rents, dated as of April 17, 2003, from Rite Aid of
West Virginia, Inc., as Trustor, to Carl D. Andrews, an individual, as Trustee
for the benefit of the Second Priority Collateral Trustee (as defined therein),
encumbering real property located at Rock Branch Industrial Park, Poca, West
Virginia (Putnam County).

          (v) Second Priority Credit Line Deed of Trust, Security Agreement and
Assignment of Leases and Rents, dated as of April 17, 2003, from Thrifty
PayLess, Inc., as Trustor, to First American Title Insurance Company Los
Angeles, as Trustee for the benefit of the Second Priority Collateral Trustee
(as defined therein), encumbering real property located at 1755 East Beamer
Street, Woodland, California (Yolo County).

          (vi) Representative Supplement No. 3, to be dated as of April 22, 2003
to the Collateral Trust and Intercreditor Agreement.

          (vii) Amendment No. 1, dated as of April 15, 2003 to the Collateral
Trust and Intercreditor Agreement.

          (viii) Amendment to the Second Priority Subsidiary Security Agreement,
dated as of February 12, 2003.

                                                                              28

          (ix) Amendment No. 1 to Second Priority Subsidiary Security Agreement,
Second Priority Subsidiary Guarantee and Second Priority Indemnity, Subrogation
and Contribution Agreement, dated as of April 15, 2003.

                                                                              29

                                  SCHEDULE III

                              Subsidiary Guarantors

Corporations
------------
Thrifty PayLess, Inc.
Rite Aid of Vermont, Inc.
Rite Aid of Ohio, Inc.
Rite Aid of Maine, Inc.
Rite Aid of West Virginia, Inc.
The Lane Drug Company
1525 Cortyou Road - Brooklyn Inc.
3581 Carter Hill Road - Montgomery Corp.
4042 Warrensville Center Road - Warrensville Ohio, Inc.
5277 Associates, Inc.
537 Elm Street Corp.
5600 Superior Properties, Inc.
657-659 Broad St. Corp.
Apex Drug Stores, Inc.
Broadview and Wallings - Broadview Heights Ohio, Inc.
Dominion Action Four Corporation
Dominion Action One Corporation
Dominion Action Three Corporation
Dominion Action Two Corporation
Dominion Drug Stores Corp.
Drug Fair of PA, Inc.
Drug Fair, Inc.
Eagle Managed Care Corp.
England Street-Asheland Corporation
GDF, Inc.
Harco, Inc.
K&B Alabama Corporation K&B Florida Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Incorporated
K&B Tennessee Corporation
K&B Texas Corporation
K&B, Incorporated
Keystone Centers, Inc.
Lakehurst and Broadway Corporation
Ocean Acquisition Corporation
P.L.D. Enterprises, Inc.
Patton Drive and Navy Boulevard Property Corporation
PDS-1 Michigan, Inc.
Perry Distributors, Inc.

                                                                              30

Perry Drug Stores, Inc.
PL Xpress, Inc.
Portfolio Medical Services, Inc.
Rack Rite Distributors, Inc.
Ram-Utica, Inc.
RDS Detroit, Inc.
Read's Inc.
Rite Aid Drug Palace, Inc.
Rite Aid Hdqtrs. Corp
Rite Aid of Alabama, Inc.
Rite Aid of Connecticut, Inc.
Rite Aid of Delaware, Inc.
Rite Aid of Florida, Inc.
Rite Aid of Georgia, Inc.
Rite Aid of Illinois, Inc.
Rite Aid of Indiana, Inc.
Rite Aid of Kentucky, Inc.
Rite Aid of Maryland, Inc.
Rite Aid of Massachusetts, Inc.
Rite Aid of Michigan, Inc.
Rite Aid of New Hampshire, Inc.
Rite Aid of New Jersey, Inc.
Rite Aid of New York, Inc.
Rite Aid of North Carolina, Inc.
Rite Aid of Pennsylvania, Inc.
Rite Aid of South Carolina, Inc.
Rite Aid of Tennessee, Inc.
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid Realty Corp.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
Rite Aid Venturer #1, Inc.
Rite Fund, Inc.
Rite Investments Corp.
Rx Choice, Inc.
Sophie One Corp.
Super Ice Cream Suppliers, Inc.
Super Pharmacy Network, Inc.
Super Tobacco Distributors, Inc.
The Muir Company
Thrifty Corporation
Virginia Corporation
W.R.A.C., Inc.

                                                                              31

Limited Liability Companies
---------------------------
764 South Broadway - Geneva, Ohio, LLC
Eighth and Water Streets - Urichsville, Ohio, LLC
Gettysburg and Hoover-Dayton, Ohio, LLC
Mayfield & Chillicothe Roads - Chesterland, LLC
Munson & Andrews, LLC
Silver Springs Road - Baltimore, Maryland/One, LLC
Silver Springs Road - Baltimore, Maryland/Two, LLC
State Street and Hill Road-Gerard, Ohio, LLC
112 Burleigh Avenue Norfolk, LLC
1515 West State Street Boise, Idaho, LLC
1740 Associates, L.L.C.
Ann & Government Streets - Mobile, Alabama, LLC
Baltimore/Annapolis Boulevard and Governor Richie Highway -
   Glen Burnie, Maryland, LLC
Central Avenue and Main Street - Petal, MS, LLC
Fairground, L.L.C.
Gratiot & Center - Saginaw Township, Michigan, LLC
Name Rite, L.L.C.
Northline & Dix - Toledo - Southgate, LLC
Paw Paw Lake Road & Paw Paw Avenue - Coloma, Michigan, LLC
Seven Mile and Evergreen - Detroit, LLC
State & Fortification Streets - Jackson, Mississippi, LLC
Tyler and Sanders Roads, Birmingham - Alabama, LLC
Rite Aid Services, L.L.C.

                                                                              32

                                   SCHEDULE IV

          Opinion of Robert Sari, Esq., General Counsel of the Company

                                  See attached.

                                                                              33

                                   SCHEDULE V

               Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

                                  See attached.

                                                                              34

                                   SCHEDULE VI

               Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

                                  See attached.

                                                                              35

                                  SCHEDULE VII

               Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

                                  See attached.

                                                                              36

                                  SCHEDULE VIII

          Security Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

                                  See attached.

                                                                              37

                                   SCHEDULE IX

          Security Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

                                  See attached.

                                                                       EXHIBIT A

                       Selling Restrictions for Offers and
                         Sales outside the United States

          (1)(a) The Securities have not been and will not be registered under
the Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each Initial Purchaser
represents and agrees that, except as otherwise permitted by Section 4(a)(i) or
(ii) of the Agreement to which this is an exhibit, it has offered and sold the
Securities, and will offer and sell the Securities, (i) as part of their
distribution at any time; and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S under the Securities Act. Accordingly, each Initial
Purchaser represents and agrees that neither it, nor any of its Affiliates nor
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and that it and they
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Initial Purchaser agrees that, at or prior to the
confirmation of sale of Securities (other than a sale of Securities pursuant to
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit), it shall
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Securities from it during the
distribution compliance period a confirmation or notice to substantially the
following effect:

          "The Securities covered hereby have not been registered under the U.S.
          Securities Act of 1933 (the "Securities Act") and may not be offered
          or sold within the United States or to, or for the account or benefit
          of, U.S. persons (i) as part of their distribution at any time or (ii)
          otherwise until 40 days after the later of the commencement of the
          offering and April 22, 2003, except in either case in accordance with
          Regulation S or Rule 144A under the Securities Act. Terms used above
          have the meanings given to them by Regulation S."

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

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

          (2) Each Initial Purchaser represents and agrees that (i) it has not
offered or sold, and prior to the expiry of six months from the closing of the
offering of the Securities will not offer or sell, any Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding managing or disposing of investments, whether as a principal
or agent, for purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers Securities Regulations 1995;
(ii) it has only communicated or caused to be

                                      A-1

communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received
by it in connection with the issue or sale of any Securities in circumstances in
which section 21(1) of the FSMA does not apply to the Issuer; and (iii) it has
complied and will comply with applicable provisions of FSMA with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom.

                                      A-2

                                                                       EXHIBIT B

                           Form of Amendment No. 5 to
                             Senior Credit Agreement

                                  See attached.

                                      B-1

                                                                       EXHIBIT C
                              Form of Amendment to
                            Synthetic Lease Facility

                                  See attached.

                                      C-1

                                                                       EXHIBIT D

                           Form of Amendment No. 1 to
                             Intercreditor Agreement

                                  See attached.

                                      D-1

                                                                       EXHIBIT E

                           Form of Amendment No. 1 to
                 Second Priority Subsidiary Security Agreement,
                    Second Priority Subsidiary Guarantee and
                   Second Priority Indemnity, Subrogation and
                             Contribution Agreement

                                  See attached.

                                      E-1EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the 27th
day of June, 2001 (the "Effective Date") by and between Rite Aid Corporation, a
Delaware corporation (the "Company"), and Mark C. Panzer (the "Executive").

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

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

1.   Term Of Employment.

     The term of Executive's employment with the Company hereunder (the "Term")
pursuant to this Agreement shall commence on the Effective Date and, unless
earlier terminated pursuant to Section 5 below, shall continue for a period
ending on the date that is three (3) years following the Effective Date;
provided, however, that on each anniversary of the Effective Date occurring
prior to the termination of Executive's employment hereunder (each such date a
"Renewal Date"), an additional year shall be added to the Term, unless notice of
non-renewal has been delivered by one party to the other party at least 180 days
prior to such Renewal Date. For purposes of this Agreement, except as otherwise
provided herein, the phrases "year during the Term" or "during any year of the
Term" or similar language shall refer to each 12-month period commencing on the
Effective Date or applicable anniversaries thereof.

2.   Position And Duties.

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

     2.2 Duties. Subject to the supervision and control of the President and COO
of the Company (or any designee), to whom he shall report, Executive shall do
and perform all services and acts necessary or advisable to fulfill the duties
and responsibilities of his position as Executive Vice President of Store
Operations and shall render such services on the terms set forth herein. In
addition, Executive shall have such other executive and managerial powers and
duties with respect to the Company and its subsidiaries, affiliates and
strategic partners as may be assigned to him by the President and COO of the
Company or any designee. Except for sick leave, vacations (as provided in
Section 4.3 below), and excused leaves of absence, Executive shall, throughout
the Term, devote substantially all his working time, attention, knowledge and
skills faithfully and to the best of his ability, to the duties and
responsibilities of his position in

                                                                          Page 1

furtherance of the business affairs and activities of the Company and its
subsidiaries, affiliates and strategic partners. Executive shall at all times be
subject to, observe and carry out such rules, regulations, policies, directions,
and restrictions as the Company may from time to time establish for management
employees.

3.   Compensation.

     3.1 Base Salary. During the Term, as compensation for his services
hereunder, Executive shall receive a salary at the annualized rate of Three
Hundred Seventy Five Thousand Dollars ($375,000) per year ("Base Salary"), which
shall be paid in accordance with the Company's normal payroll practices and
procedures, less such deductions or offsets required by applicable law or
otherwise authorized by Executive. During the Term the Base Salary shall be
reviewed periodically by the Compensation Committee of the Board for possible
increase. Any increase in the Base Salary shall not limit or reduce any other
obligation of the Company under this Agreement. The Base Salary shall not be
reduced after any such increase, and the term "Base Salary" shall thereafter
refer to the Base Salary as from time-to-time so increased.

     3.2 Annual Performance Bonus. The Executive shall participate each fiscal
year during the Term in the Company's annual bonus plan as adopted and approved
by the Board or the Compensation Committee from time to time. The Executive's
annual target bonus opportunity pursuant to such plan (the "Annual Target
Bonus") shall equal 50% of the Base Salary in effect for the Executive at the
beginning of such fiscal year.

     3.3 Stock Awards.

          (a) Subject to approval by The Compensation Committee of the Board you
will be granted an option (the "Option") to purchase 500,000 shares of the
Company's common stock, par value $1.00 per share ("Company Stock"). The Option
shall (i) be a non-qualified stock option, (ii) have an exercise price equal to
the closing price of the Company's stock as reported on the New York Stock
Exchange on the Effective Date, (iii) have a term of ten (10) years following
the Effective Date, (iv) vest and become exercisable as to 1/3 of the shares of
Company stock subject to the Option on each of the first three (3) anniversaries
of the Effective Date, (v) be subject to the acceleration, exercise and
termination provisions set forth in Section 3.3(c) and Article 5 hereof and (vi)
otherwise be evidence by and subject to the terms of the Company's form of stock
option agreement for officers.

          (b) Subject to approval by The Compensation Committee of the Board you
will be granted 65,000 shares of restricted Company Stock (the "Restricted
Stock"). Subject to (i) the acceleration and forfeiture provision set forth in
Section 3.3 (d) and Article 5 hereof and (ii) the terms of the Company's form of
Restricted Stock Agreement for officers, the restrictions applicable to the
Restricted Stock shall lapse as to one-third of such shares on each of the first
three anniversaries of the effective date.

          (c) Upon the Change in Control of the Company prior to the termination
of Executive's employment with the Company, the Options shall immediately vest
and become

                                                                          Page 2

exercisable in full. For purposes of this Agreement "Change in Control" shall
have the meaning set forth in the attached Appendix A.

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

4.   Additional Benefits.

     4.1 Employee Benefits. During the Term, Executive shall be entitled to
participate in the employee benefit plans in which management employees of the
Company are generally eligible to participate, subject to any eligibility
requirements and the other generally applicable terms of such plans. From the
Effective Date of Executive's employment with the Company through the first
anniversary thereof and not extending beyond, the Company will pay the cost for
providing the Executive a life insurance policy in the amount of $1,000,000. It
is understood this policy is to cover the one year period following which
Executive shall be eligible for the group life insurance coverage provided for
other eligible executives under the Company's group benefit plans.

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

          During the first 90 days of Executive's employment, beginning with the
date of commencement of employment and ending 90 days thereafter, Company shall
reimburse Executive for all expenses reasonably incurred by him for commute from
his state of residence to Camp Hill, PA and return.

     4.3 Vacation. Executive shall be entitled to four (4) weeks paid vacation
during each year of the Term.

                                                                          Page 3

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

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

     4.6 Relocation Expenses

          (a) Within ninety (90) days following the Effective Date, Executive
shall relocate his principal residence from the Scottsdale, Arizona area to the
Harrisburg, Pennsylvania area. The Company shall reimburse Executive for his
reasonable expenses incurred in moving his household goods and cars from
Scottsdale to Harrisburg, in accordance with the Company's moving expense
policies applicable to executive officers generally.

          (b) The Company shall reimburse Executive for his reasonable living
expenses for a temporary residence in the Harrisburg area until the date of
relocation.

          (c) The Company shall reimburse Executive for the reasonable and
customary closing costs incurred on the purchase of a principle residence in the
Harrisburg area.

          (d) The Company shall reimburse Executive for the reasonable costs of
a reasonable number of round trip airfares for travel between Harrisburg, PA and
Scottsdale, AZ prior to the date of his relocation. The Company shall also
reimburse Executive for a reasonable number of round-trip visits between
Scottsdale and Harrisburg area by his immediate family members prior to the
relocation date, including reasonable costs for meals, lodging and
transportation during such trips.

          (e) In all other respects, Executive shall be entitled to benefits
under the Company's Executive Level relocation policy as from time to time in
effect.

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

5.   Termination.

                                                                          Page 4

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

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

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

          (b) Except as provided in Section 3.3(d), any portion of the Option or
any other then outstanding stock option that has not been exercised prior to the
date of termination shall immediately terminate as of such date, and any portion
of the Restricted Stock or any other Restricted Stock or other equity incentive
awards as to which the restrictions have not lapsed or as to which any other
conditions shall not have been satisfied prior to the date of termination shall
be forfeited as of such date.

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

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

                                                                          Page 5

          (a) Executive shall be entitled to receive (i) the Accrued Benefits,
(ii) an amount equal to two times the sum of Executive's Base Salary plus Annual
Target Bonus as of the date of termination of employment, such amount payable in
equal installments pursuant to the Company's standard payroll procedures for
management employees over a period of two years following the date of
termination of employment, and (iii) continued health insurance coverage for
Executive and his immediate family for a period of two years following the date
of termination of employment. In addition, if such termination occurs following
the start of the Company's fiscal year beginning on or about February 2001,
Executive shall also be entitled to receive a pro rata annual bonus determined
by multiplying Executive's then Annual Target Bonus by a fraction, (x) the
numerator of which is the number of days between the beginning of the then
current fiscal year of the Company (or, if later, Executive's start date) and
the date of termination of employment and (y) the denominator of which is 365.

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

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

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

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

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

          (b) the assignment to Executive of any duties or responsibilities
materially inconsistent with Executive's status as Executive Vice President of
Store Operations of the Company; or

                                                                          Page 6

          (c) any other material breach of this Agreement by the Company,
including without limitation any decrease in Executive's Base Salary or Annual
Target Bonus opportunity as set forth in Sections 3.1 and 3.2;

provided, however, that in each such case the Company shall have the right,
within ten (10) days after receipt of notice from Executive of the Company's
violation of any of the foregoing, to cure the event or circumstances giving
rise to such Good Reason, in the event of which cure such event or circumstances
shall be deemed not to constitute Good Reason hereunder.

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

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

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

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

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

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

     5.7 Excise Tax Gross-Up.

                                                                          Page 7

          (a) In the event that any payment or benefit received or to be
received by the Executive pursuant to the Terms of this Agreement or any other
plan, arrangement or agreement of the Company (or any affiliate) (collectively,
the "Payments") would be subject to the Excise Tax (the "Excise Tax") imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), as
determined as provided below, the Company shall pay to the Executive, at the
time specified in Section 5.7(b) below an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction of
the Excise Tax on payments and any federal, state and local income and
employment or other tax and the Excise Tax upon the Gross-Up Payment, and any
interest, penalties or additions to tax payable by the company Executive with
respect thereto, shall be subject to the Total payments. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amounts of such Excise Tax, (1) the total amount of the Payments shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of the
Code, and all "excise parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to
the extent that, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to Executive and selected by the accounting firm which was,
immediately prior to the event giving rise to the Payment, the Company's
independent auditor (the "Auditor"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of section 280G(b)(2) of the
Code, or such "excess parachute payments" (in whole or in part) are not subject
to the Excise Tax, (2) the amount of the Payments that shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount
of the Payments or (B) the amount of "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code (after applying clause (1) hereof),
and (3) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rates of federal income taxation applicable to individuals
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the state and locality of the Executive's
residence in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into account any limitations
applicable to individuals subject to federal income tax at the highest marginal
rates.

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

          (c) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding that the Excise Tax is less than the
amount taken into account under Section 5.7(a) hereof, the Executive shall repay
to the Company within thirty (30) days of the Executive's receipt of notice of
such final determination the portion of the Gross-Up Payment attributable to
such reduction (plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid by the Executive if and to the extent that such
repayment results in a

                                                                          Page 8

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

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

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

6.   Protection of Confidential Information.

     Executive acknowledges that during the course of his employment with the
Company, its subsidiaries, affiliates and strategic partners, he will be exposed
to documents and other information regarding the confidential affairs of the
Company, its subsidiaries, affiliates and strategic partners, including without
limitation information about their past, present and future financial condition,
the markets for their products, key personnel, past, present or future actual or
threatened litigation, trade secrets, current and prospective customer lists,
operational methods, acquisition plans, prospects, plans for future development
and other business affairs and information about the Company and its
subsidiaries, affiliates and strategic partners not readily available to the
public (the "Confidential Information"). Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing, the
Executive covenants and agrees as follows:

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

     6.2 Return of Company Property. Records and Files. Upon the termination of
Executive's employment at any time and for any reason, or at any other time the
Board may so

                                                                          Page 9

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

7.   Noncompetition and Other Matters.

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

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

                                                                         Page 10

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

8.   Rights and Remedies upon Breach.

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

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

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

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

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

                                                                         Page 11

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

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

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

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

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

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

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

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

10.  Arbitration.

     Except as necessary for the Company and its subsidiaries, affiliates,
strategic partners, successors or assigns or Executive to specifically enforce
or enjoin a breach of this Agreement (to the extent such remedies are otherwise
available), the parties agree that any and all disputes that may arise in
connection with, arising out of or relating to this Agreement, or any dispute
that relates in any way, in whole or in part, to Executive's employment with the
Company or any

                                                                         Page 12

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

11.  Assignment.

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

12.  Notices.

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

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

If to Executive:     Mark C. Panzer

                                                                         Page 13

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

13.  General.

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

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

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

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

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

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

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

                                                                         Page 14

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

     13.9 No Assignment. The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Executive to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.

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

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

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

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

                                             RITE AID CORPORATION

                                             ___________________________________

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

                                             Its:
                                                  ------------------------------

                                             EXECUTIVE

                                             ___________________________________

                                                                         Page 15

                                   APPENDIX A

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

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

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

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

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

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

                                                                         Page 16

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

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

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

                                                                         Page 17

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