Document:

Exhibit 10.6

                           TERTIARY PURCHASE AGREEMENT

                         Dated as of September 21, 2004

                                      Among

                               RITE AID FUNDING I,

                                   as Seller,

                              RITE AID FUNDING II,

                                as Purchaser, and

                         RITE AID HDQTRS. FUNDING, INC.,

                               as Collection Agent

                                                 TABLE OF CONTENTS
                                                                                                          Page
                                                                                                          ----

PRELIMINARY STATEMENTS......................................................................................1

ARTICLE I   DEFINITIONS.....................................................................................1
     SECTION 1.01.  Certain Defined Terms...................................................................1
     SECTION 1.02.  Other Terms............................................................................14

ARTICLE II  AMOUNTS AND TERMS OF PURCHASES.................................................................14
     SECTION 2.01.  Facility...............................................................................14
     SECTION 2.02.  Making Purchases.......................................................................14
     SECTION 2.03.  Collections............................................................................16
     SECTION 2.04.  Settlement Procedures..................................................................16
     SECTION 2.05.  Payments and Computations, Etc.........................................................16

ARTICLE III CONDITIONS OF PURCHASES........................................................................17
         SECTION 3.01.  Conditions Precedent to Initial Purchase from the Seller...........................17
         SECTION 3.02.  Conditions Precedent to All Purchases..............................................18

ARTICLE IV  REPRESENTATIONS AND WARRANTIES.................................................................19
         SECTION 4.01.  Representations and Warranties of the Seller.......................................19

ARTICLE V   COVENANTS .....................................................................................22
         SECTION 5.01.  Covenants of the Seller............................................................22
         SECTION 5.02.  Grant of Security Interest.........................................................27

ARTICLE VI  ADMINISTRATION AND COLLECTION..................................................................28
         SECTION 6.01.  Designation of Collection Agent....................................................28
         SECTION 6.02.  Duties of Collection Agent.........................................................28
         SECTION 6.03.  Collection Agent Fee...............................................................29
         SECTION 6.04.  Certain Rights of the Purchaser....................................................29
         SECTION 6.05.  Rights and Remedies. ..............................................................30
         SECTION 6.06.  Transfer of Records to Purchaser...................................................31

ARTICLE VII     EVENTS OF TERMINATION......................................................................31
         SECTION 7.01.  Events of Termination..............................................................31

ARTICLE VIII    INDEMNIFICATION............................................................................34
         SECTION 8.01.  Indemnities by the Seller..........................................................34

ARTICLE IX  MISCELLANEOUS..................................................................................36

                                        i

                                                                                                         Page
                                                                                                         ----

         SECTION 9.01.  Amendments, Etc....................................................................36
         SECTION 9.02.  Notices, Etc.......................................................................36
         SECTION 9.03.  Binding Effect; Assignability......................................................36
         SECTION 9.04.  Costs, Expenses and Taxes..........................................................37
         SECTION 9.05.  No Proceedings.....................................................................37
         SECTION 9.06.  Confidentiality....................................................................37
         SECTION 9.07.  GOVERNING LAW......................................................................38
         SECTION 9.08.  Third Party Beneficiary............................................................38
         SECTION 9.09.  Execution in Counterparts..........................................................38
         SECTION 9.10.  Consent to Jurisdiction............................................................38
         SECTION 9.11.  WAIVER OF JURY TRIAL...............................................................39
         SECTION 9.12.  Judgment...........................................................................39

SCHEDULE 1      Intentionally Omitted

SCHEDULE 2      MONTHS

EXHIBIT A       CREDIT AND COLLECTION POLICY

EXHIBIT B       DEPOSIT BANKS, LOCK BOXES AND DEPOSIT ACCOUNTS;
                ACCOUNT BANKS AND GOVERNMENTAL ENTITY
                RECEIVABLES ACCOUNTS

EXHIBIT C       Intentionally Omitted

EXHIBIT D       ADDRESSES

                                       ii

                           TERTIARY PURCHASE AGREEMENT

                         Dated as of September 21, 2004

                  Rite Aid Funding I, a Cayman Islands exempted company
incorporated with limited liability on August 11, 2004 under the name Cayman
Resources (21) Ltd. (registration number 138720) (the "Seller"), Rite Aid
Funding II, a Cayman Islands exempted company incorporated with limited
liability on August 11, 2004 under the name Cayman Resources (22) Ltd.
(registration number 138722) (the "Purchaser") and Rite Aid Hdqtrs. Funding,
Inc., a Delaware corporation (the "Collection Agent"), agree as follows:

                  PRELIMINARY STATEMENTS.

                  (1)   Certain terms which are capitalized and used throughout
this Agreement (in addition to those defined above) are defined in Article I of
this Agreement.

                  (2)   The Seller has Receivables (or interests therein) that
it wishes to sell to the Purchaser, and the Purchaser is prepared to purchase
such Receivables (or interests therein) on the terms set forth in this Tertiary
Purchase Agreement (this "Agreement").

                  NOW, THEREFORE, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

                  "Account Bank" has the meaning given to such term in the
         definition of Governmental Entity Receivables Agreement.

                  "Adverse Claim" means a lien, security interest, or other
         charge or encumbrance, or any other type of preferential arrangement.

                  "Affiliate" means, as to any Person, any other Person that,
         directly or indirectly, is in control of, is controlled by or is under
         common control with such Person or is a director or officer of such
         Person.

                  "Alternate Base Rate" means a fluctuating interest rate per
         annum as shall be in effect from time to time, which rate shall be at
         all times equal to the highest of:

                           (a)   the rate of interest announced publicly by
                  Citibank, N.A. in New York, New York, from time to time as
                  Citibank, N.A.'s base rate; and

                           (b)   1/2 of one percent above the Federal Funds
                  Rate.

                  "Business Day" means any day on which banks are not authorized
         or required to close in New York City.

                  "Capital Lease" means any lease of (or other arrangement
         conveying the right to use) real or personal property, or a combination
         thereof, which, in accordance with GAAP, should be capitalized on the
         lessee's balance sheet.

                  "Capital Lease Obligation" of any Person means the obligations
         of such Person to pay rent or other amounts under any Capital Lease,
         which obligations should be classified and accounted for as capital
         leases on a balance sheet of such Person under GAAP, and the amount of
         such obligations shall be the capitalized amount thereof determined in
         accordance with GAAP.

                  "CHAMPUS" means the Civilian Health and Medical Program of the
         Uniformed Service, a program of medical benefits covering former and
         active members of the uniformed services and certain of their
         dependents, financed and administered by the United States Departments
         of Defense, Health and Human Services and Transportation and
         established pursuant to 10 U.S.C. ss.ss. 1071-1106, and all regulations
         promulgated thereunder including without limitation (a) all federal
         statutes (whether set forth in 10 U.S.C. ss.ss. 1071-1106 or elsewhere)
         affecting CHAMPUS and (b) all rules, regulations (including 32 CFR
         199), manuals, orders and administrative, reimbursement and other
         guidelines of all Governmental Entities (including, without limitation,
         the Department of Health and Human Services, the Department of Defense,
         the Department of Transportation, the Assistant Secretary of Defense
         (Health Affairs) and the Office of CHAMPUS, or any Person or entity
         succeeding to the functions of any of the foregoing) promulgated
         pursuant to or in connection with any of the foregoing (whether or not
         having the force of law) in each case, as amended, supplemented or
         otherwise modified from time to time.

                  "CMS" means Centers for Medicare & Medicaid Services of the
         Department of Health and Human Services, and any successor agency.

                  "Collection Agent" means at any time the Person then
         authorized pursuant to Section 6.01 to service, administer and collect
         Purchased Assets.

                  "Collection Agent Fee" has the meaning specified in Section
         6.03.

                                        2

                  "Collections" means, (a) with respect to any Receivable, all
         cash collections and other cash proceeds of such Receivable, including,
         without limitation, all cash proceeds of Related Security with respect
         to such Receivable, and all funds deemed to have been received by the
         applicable Originator, the Collection Agent, the Seller or any other
         Person as a Collection pursuant to Section 2.04, and (b) with respect
         to any Participation Interest, all cash collections and other cash
         proceeds of the Government Receivable underlying such Participation
         Interest, including, without limitation, all cash proceeds of Related
         Security with respect to such Participation Interest, and all funds
         deemed to have been received by the applicable Originator, the Seller,
         the Collection Agent or any other Person as a Collection pursuant to
         Section 2.04.

                  "Contract" means an agreement between an Originator and a
         Person, or between a PBM and a Contract Payor, pursuant to or under
         which such Person or Contract Payor shall be obligated to pay for
         pharmaceutical merchandise sold by such Originator or its Affiliates
         from time to time.

                  "Contract Payor" means a Person who is required under its
         agreement with a PBM to make payments to such PBM who, in turn, pays
         such amounts to an Originator on such Person's behalf.

                  "Credit and Collection Policy" means those receivables credit
         and collection policies and practices of the Seller, the Collection
         Agent and the Originators in effect on the date of this Agreement
         applicable to the Receivables and described in Exhibit A hereto, as
         modified in compliance with this Agreement.

                  "Debt" of any Person means, without duplication, (a) all
         obligations of such Person for borrowed money or with respect to
         deposits or advances of any kind, (b) all obligations of such Person
         evidenced by bonds, debentures, notes or similar instruments, (c) all
         obligations of such Person under conditional sale or other title
         retention agreements relating to property acquired by such Person, (d)
         all obligations of such Person in respect of the deferred purchase
         price of property or services (excluding current accounts payable
         incurred in the ordinary course of business), (e) all Debt of others
         secured by (or for which the holder of such Debt has an existing right,
         contingent or otherwise, to be secured by) any Adverse Claim on
         property owned or acquired by such Person, whether or not the Debt
         secured thereby has been assumed, (f) all Guarantees by such Person of
         Debt of others, (g) all Capital Lease Obligations of such Person, (h)
         all obligations, contingent or otherwise, of such Person as an account
         party in respect of letters of credit and letters of guaranty and (i)
         all obligations, contingent or otherwise, of such Person in respect of
         bankers' acceptances. The Debt of any Person shall include the Debt of
         any other entity (including any partnership in which such Person is a
         general partner) to the extent such Person is liable therefor as a
         result of such Person's ownership interest in or other relationship
         with such entity, except to the extent of the terms of such Debt
         provide that such Person is not liable therefor.

                                        3

                  "Defaulted Participation Interest" means a Participation
         Interest in a Government Receivable which is a Defaulted Receivable.

                  "Defaulted Receivable" means a Receivable:

                          (i)   as to which any payment, or part thereof,
                   remains unpaid for [120] or more days from the original date
                   of service relating to such Receivable;

                          (ii)  as to which the Obligor thereof or any other
                  Person obligated thereon or owning any Related Security in
                  respect thereof has taken any action, or suffered any event to
                  occur, of the type described in Section 7.01(g);

                          (iii) which, consistent with the Credit and
                  Collection Policy, would be written off as uncollectible; or

                          (iv)  as to which the applicable Originator, the
                  Collection Agent or the Seller has (or consistent with the
                  Credit and Collection Policy should have) established a
                  specific reserve for non-payment.

                  "Deposit Account" means an account maintained at a Deposit
         Bank into which (i) Collections in the form of checks and other items
         are deposited that have been sent to one or more related Lock Boxes by
         Obligors (other than the Contract Payors paying a PBM) and/or (ii)
         Collections in the form of electronic funds transfers and other items
         are paid directly by Obligors (other than the Contract Payors paying a
         PBM) and (iii) which is subject to a Deposit Account Agreement.

                  "Deposit Account Agreement" means an agreement among an
         Originator, HQ (or its assignees or designees) and any Deposit Bank in
         form and substance satisfactory to the Purchaser (or its assignees or
         designees).

                  "Deposit Bank" means any of the banks holding one or more
         Deposit Accounts.

                  "Designated Obligor" means, at any time, each Obligor;
         provided, however, that any Obligor shall cease to be a Designated
         Obligor upon three Business Days' notice by the Purchaser (or its
         assignees or designees) to the applicable Seller.

                  "Determination Date" means the seventh Business Day after the
         end of each Month, provided that if an Event of Termination has
         occurred and is continuing, the Seller or the Purchaser may designate
         more frequent Determination Dates.

                  "Diluted Participation Interest" means a Participation
         Interest in a Government Receivable which is a Diluted Receivable.

                                        4

                  "Diluted Receivable" means that portion (and only that
         portion) of any Receivable which is either (a) reduced or canceled as a
         result of (i) any defective, rejected or returned merchandise or
         services or any failure by an Originator to deliver any merchandise or
         provide any services or otherwise to perform under the underlying
         Contract, (ii) any change in the terms of or cancellation of, a
         Contract or any cash discount, discount for quick payment or other
         adjustment by an Originator which reduces the amount payable by the
         Obligor on the related Receivable (except any such change or
         cancellation resulting from or relating to the financial inability to
         pay or insolvency of the Obligor of such Receivable) or (iii) any
         set-off by an Obligor in respect of any claim by such Obligor as to
         amounts owed by it on the related Receivable (whether such claim arises
         out of the same or a related transaction or an unrelated transaction)
         or (b) subject to any specific dispute, offset, counterclaim or defense
         whatsoever (except the discharge in bankruptcy of the Obligor thereof);
         provided that Diluted Receivables are calculated assuming that all
         chargebacks are resolved in the Obligor's favor.

                  "Discount" means, in respect of each Purchase, 2.00% of the
         Outstanding Balance of the Receivables that are the subject of such
         Purchase; provided, however, the foregoing Discount may be revised
         prospectively by request of the Seller or the Purchaser to reflect
         changes in recent experience with respect to write-offs, timing and
         cost of Collections and cost of funds, provided that such revision is
         consented to by the Seller and the Purchaser (it being understood that
         each party agrees to duly consider such request but shall have no
         obligation to give such consent).

                  "Eligible Receivable" means a Receivable:

                          (i)   the Obligor of which is a United States
                  resident, is not an Affiliate of the Parent, and is not a
                  Governmental Entity, except to the extent payment of such
                  Receivable is governed under the Social Security Act (42
                  U.S.C. ss. 1395, et seq.), including payments under Medicaid
                  and CHAMPUS or regulated by CMS;

                          (ii)  the Obligor of which, at the time of the
                  transfer of such Receivable under this Agreement, is a
                  Designated Obligor;

                          (iii) which, at the time of the transfer thereof to
                  the Purchaser under this Agreement, is not a Defaulted
                  Receivable;

                          (iv)  the Obligor of which, at the time of the
                  transfer of such Receivable under this Agreement, is not the
                  Obligor of any Defaulted Receivables which in the aggregate
                  constitute 50% or more of the aggregate Outstanding Balance of
                  all Receivables of such Obligor;

                                        5

                          (v)     which has been billed and, according to the
                  Contract related thereto, is required to be paid in full
                  within 60 days of the original billing date therefor;

                          (vi)    which is an obligation representing all or
                  part of the sales price of merchandise, insurance or
                  services within the meaning of Section 3(c)(5) of the
                  Investment Company Act of 1940, as amended, and the nature
                  of which is such that its purchase with the proceeds of
                  notes would constitute a "current transaction" within the
                  meaning of Section 3(a)(3) of the Securities Act of 1933, as
                  amended;

                          (vii)   which is an "account" or a "payment
                  intangible" within the meaning of Article 9 of the UCC of
                  the applicable jurisdictions;

                          (viii)  which is denominated and payable only in
                  United States dollars in the United States;

                          (ix)    which arises under a Contract which, together
                  with such Receivable, is in full force and effect and
                  constitutes the legal, valid and binding obligation of the
                  Obligor of such Receivable and is not subject to any Adverse
                  Claim or any dispute, offset, counterclaim or defense
                  whatsoever (except the potential discharge in bankruptcy of
                  such Obligor and except with respect to adjudication fees
                  charged by any relevant PBM) and is not settled on a net
                  basis;

                          (x)     which, together with the Contract related
                  thereto, does not contravene in any material respect any laws,
                  rules or regulations applicable thereto (including, without
                  limitation, laws, rules and regulations relating to usury,
                  consumer protection, truth in lending, fair credit billing,
                  fair credit reporting, equal credit opportunity, fair debt
                  collection practices and privacy) and with respect to which no
                  party to the Contract related thereto is in violation of any
                  such law, rule or regulation in any material respect;

                          (xi)    which arises under a Contract (other than a
                  Contract with respect to which the related Obligor is a
                  Governmental Entity) which (A) does not contain an enforceable
                  provision requiring the Obligor under such Contract to consent
                  to the transfer, sale or assignment of the Obligor's payment
                  obligation by the applicable Originator, and (B) if such
                  Contract is between a PBM and a Contract Payor, does not
                  contain any enforceable provision prohibiting the transfer,
                  sale or assignment of such Contract Payor's payment obligation
                  to the applicable Originator;

                          (xii)   which was generated in the ordinary course of
                  the applicable Originator's business;

                                        6

                          (xiii)  which, at the time of the transfer of such
                  Receivable under this Agreement, has not been extended,
                  rewritten or otherwise modified from the original terms
                  thereof;

                          (xiv)   the transfer, sale or assignment of which in
                  accordance with the Transaction Documents does not contravene
                  any applicable law, rule or regulation;

                          (xv)    which (A) satisfies all applicable
                  requirements of the Credit and Collection Policy and (B)
                  complies with such other criteria and requirements (other
                  than those relating to the collectibility of such
                  Receivable) as the Purchaser or its assignees may from time
                  to time reasonably specify to the Seller upon 30 days'
                  notice;

                          (xvi)   as to which, at or prior to the later of the
                  date of this Agreement and the date such Receivable is
                  created, the Purchaser or its assignees has not notified the
                  Seller that such Receivable (or class of Receivables) is no
                  longer reasonably acceptable for purchase hereunder;

                          (xvii)  as to which the applicable Originator has
                  satisfied and fully performed all obligations required to be
                  fulfilled by it;

                          (xviii) as to which the applicable Originator has, or
                  has the right to use, valid provider identification numbers
                  and licenses to generate valid Receivables and all information
                  set forth in the bill and supporting claim documents with
                  respect to such Receivable is true, complete and correct;

                          (xix)   as to which the applicable Originator has, or
                  has the right to use, valid provider identification numbers
                  and licenses to generate valid reports with respect to such
                  Receivable, and all cost reports required by the applicable
                  state agency or other CMS-designated agents or agents of such
                  state agency;

                          (xx)    which does not arise from a sale by the
                  applicable Originator from a store located in Hawaii,
                  Illinois, Minnesota, Montana or New Mexico, unless the
                  applicable Originator shall have furnished the Seller and its
                  assignees with an opinion of local counsel, or other evidence
                  satisfactory to the Seller and its assignees, to the effect
                  that the transfer, sale and assignment of Receivables and
                  Participation Interests in accordance with this Agreement from
                  a store located in such state does not violate any provision
                  of the law of such state; and

                          (xxi)   which is not a Medicare Receivable.

                                        7

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "Event of Termination" has the meaning specified in
         Section 7.01.

                  "Facility Termination Date" means the earliest of (i) the
         "Facility Termination Date" (as such term is defined in the Financing
         Agreement), (ii) the date determined pursuant to Section 7.01 and (iii)
         the date which the Seller designates by at least two Business Days
         prior notice to the Purchaser and its assignees (including the Program
         Agent under the Financing Agreement).

                  "Federal Funds Rate" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average (rounded upwards, if necessary, to the next 1/100 of
         1%) of the rates on overnight Federal funds transactions with members
         of the Federal Reserve System arranged by Federal funds brokers, as
         published for such day (or, if such day is not a Business Day, for the
         next preceding Business Day) by the Federal Reserve Bank of New York,
         or, if such rate is not so published for any day which is a Business
         Day, the average (rounded upwards, if necessary, to the next 1/100 of
         1%) of the quotations for such day on such transactions received by
         Citibank, N.A. from three Federal funds brokers of recognized standing
         selected by it.

                  "Financial Officer" means the chief financial officer,
         principal accounting officer, treasurer, vice president of financial
         accounting or controller of the relevant Person.

                  "Financing Agreement" means that certain Receivables Financing
         Agreement, dated as of the date hereof, among the Purchaser, as
         borrower, CAFCO, LLC, Jupiter Securitization Corporation and Blue Ridge
         Asset Funding Corporation, each as an investor, Citibank, N.A., Bank
         One, NA and Wachovia Bank, National Association, each as a bank,
         Citicorp North America, Inc., as program agent, Citicorp North America,
         Inc., Bank One, NA and Wachovia Bank, National Association, each as an
         investor agent, the other investors, banks and investor agents party
         thereto from time to time, Rite Aid Hdqtrs. Funding, Inc., as the
         collection agent, the parties thereto named as Originators, and
         JPMorgan Chase Bank as trustee, as amended or restated from time to
         time.

                  "GAAP" means generally accepted accounting principles in the
         United States.

                  "General Trial Balance" for the Seller on any date means the
         Seller's (or the Collection Agent's) accounts receivable trial balance
         (whether in the form of a computer printout, magnetic tape or diskette)
         on such date, listing Obligors (other than Contract Payors) and the
         Receivables respectively owed by such Obligors on such date together

                                        8

         with the aged Outstanding Balances of such Receivables, in form and
         substance satisfactory to the Purchaser.

                  "Government Receivable" means any Receivable with respect to
         which the Obligor is a Governmental Entity.

                  "Governmental Entity" means the United States of America, any
         state, any political subdivision of a state and any agency or
         instrumentality of the United States of America or any state or
         political subdivision thereof and any entity exercising executive,
         legislative, judicial, regulatory or administrative functions of or
         pertaining to government. Payments from Governmental Entities shall be
         deemed to include payments governed under the Social Security Act (42
         U.S.C. ss. 1395, et seq.), including payments under Medicare, Medicaid
         and CHAMPUS, and payments administered or regulated by CMS.

                  "Governmental Entity Receivables Account Notice" means a
         notice contained in a Governmental Entity Receivables Agreement
         pursuant to which an Affiliate of the Parent gives revocable standing
         instructions to the Account Bank to sweep funds on a daily basis from
         the Governmental Entity Receivables Account to another designated
         account approved by the Purchaser and its assigns.

                  "Governmental Entity Receivables Account" has the meaning
         given to such term in the definition of Governmental Entity Receivables
         Agreement.

                  "Governmental Entity Receivables Agreement" means an agreement
         between a bank (an "Account Bank") and one or more Originators or
         Affiliates of the Parent with respect to one or more accounts (each, a
         "Governmental Entity Receivables Account") or associated Lock-Boxes
         into which Collections on account of Receivables of Governmental
         Entities are deposited or remitted and which is subject to a
         Governmental Entity Receivables Account Notice.

                  "Guarantee" of or by any Person (the "guarantor") means any
         obligation, contingent or otherwise, of the guarantor guaranteeing or
         having the economic effect of guaranteeing any Debt or other obligation
         of any Person (the "primary obligor") in any manner, whether directly
         or indirectly, and including any obligation of the guarantor, direct or
         indirect, (a) to purchase or pay (or advance or supply funds for the
         purchase or payment of) such Debt or other obligation or to purchase
         (or to advance or supply funds for the purchase of) any security for
         the payment thereof, (b) to purchase or lease property, securities or
         services for the purpose of assuring the owner of such Debt or other
         obligation of the payment thereof, (c) to maintain working capital,
         equity capital or any other financial statement condition or liquidity
         of the primary obligor so as to enable the primary obligor to pay such
         Debt or other obligation or (d) as an account party in respect of any
         letter of credit or letter of guaranty issued to support such Debt or

                                        9

         obligation; provided, that the term Guarantee shall not include
         endorsements for collection or deposit in the ordinary course of
         business.

                  "HQ" means Rite Aid Hdqtrs. Funding, Inc., a Delaware
         corporation.

                  "Incipient Event of Termination" means an event that but for
         notice or lapse of time or both would constitute an Event of
         Termination.

                  "Indemnified Amounts" has the meaning specified in
         Section 8.01.

                  "Intercreditor Agreement" means that certain Intercreditor
         Agreement dated as of September 22, 2004 among Citicorp North America,
         Inc. (as program agent under the Financing Agreement), the Borrower,
         the Originators, the Seller, and Citicorp North America, Inc. and
         JPMorgan Chase Bank, as collateral agents, as the same may be amended,
         modified or restated from time to time.

                  "Lock-Box" means a post office box either (a) administered by
         a Deposit Bank for the purpose of receiving Collections, which is the
         subject of a Deposit Account Agreement, or (b) which receives
         Collections of Government Receivables and is associated with a
         Government Entity Receivables Account that is subject to a Governmental
         Entity Receivables Agreement.

                  "Material Adverse Effect" means a material adverse effect on
         (i) the collectibility of the Receivables, (ii) the ability of the
         Purchaser, the Seller, the Collection Agent or any Originator to
         perform any of its respective material obligations under the
         Transaction Documents to which it is a party, (iii) the legality,
         validity or enforceability of the Transaction Documents (including,
         without limitation, the validity, enforceability or priority of the
         ownership interests and security interests granted hereunder) or the
         rights of or benefits available to the Purchaser under the Transaction
         Documents, or (iv) the business, assets, operations, condition
         (financial or otherwise), or prospects of the Parent and its
         subsidiaries, taken as a whole.

                  "Medicaid" means the medical assistance program established by
         Title XIX of the Social Security Act (42 U.S.C. Secs. 1396 et seq.)
         and any statutes succeeding thereto.

                  "Medicare" means the health insurance program for the aged and
         disabled established by Title XVIII of the Social Security Act (42
         U.S.C. Secs. 1395 et seq.) and any statutes succeeding thereto.

                  "Month" means a fiscal month of the Parent as set forth on
         Schedule 2 hereto, as such schedule shall be updated from time to time
         in accordance with the terms hereof.

                                       10

                  "Obligor" means a Person obligated to make payments to an
         Originator pursuant to a Contract; provided, however, if a PBM acts as
         agent for Contract Payors and is obligated, pursuant to a Contract, to
         turn over to an Originator payments made to it by such Contract Payors,
         then the term "Obligor" shall include both such PBM and such Contract
         Payors.

                  "Originator" means each of the Persons designated as such on
         Schedule I to the Originator Purchase Agreement.

                  "Originator Purchase Agreement" means the Purchase Agreement
         dated as of the date of this Agreement among the Originators, as
         sellers and HQ, as purchaser and collection agent, as amended or
         restated from time to time.

                  "Outstanding Balance" means at any time (i) with respect to
         any Receivable, the then outstanding principal balance thereof and (ii)
         with respect to any Participation Interest, the then outstanding
         principal balance of the underlying Government Receivable. Any sales or
         use tax billed in connection with a Receivable is not included in the
         Outstanding Balance.

                  "Parent" means Rite Aid Corporation, a Delaware corporation.

                  "Parent Undertaking (Originators)" means the Undertaking
         Agreement dated as of September 21, 2004 made by the Parent in favor of
         HQ relating to obligations of the Originators, as amended, modified or
         restated from time to time.

                  "Participated Receivable" means any Receivable which is the
         subject of a Purchased Participation Interest.

                  "Participation Interest" means, with respect to any
         Originator, a 100% undivided beneficial interest in such Originator's
         right, title and interest, whether now owned or hereafter arising and
         wherever located, in, to and under (i) each Government Receivable owned
         by such Originator, (ii) all Related Security and Collections with
         respect to such Government Receivable and (iii) all proceeds of such
         Government Receivable, Related Security, and Collections.

                  "PBM" means a pharmaceutical benefits manager which has
         entered into an agreement with an Originator to make payments as agent
         for various insurers and other Persons, on account of pharmaceutical
         goods sold by such Originator.

                  "Person" means an individual, partnership, corporation
         (including a business trust), limited liability company, joint stock
         company, trust, unincorporated association, joint venture or other
         entity, or a Governmental Entity.

                                       11

                  "Purchase" means a purchase by the Purchaser of Receivables
         and/or Participation Interests from the Seller pursuant to Article II
         (including a purchase paid for in whole or in part by a capital
         contribution).

                  "Purchase Date" means each day on which a Purchase is made
         pursuant to Article II.

                  "Purchase Price" for any Purchase means an amount equal to the
         Outstanding Balance of the Receivables that are the subject of such
         Purchase as set forth in the Seller's General Trial Balance, minus the
         Discount for such Purchase.

                  "Purchased Asset" means any Purchased Receivable or Purchased
         Participation Interest.

                  "Purchased Participation Interest" means any Participation
         Interest which is purchased or purported to be purchased by the
         Purchaser pursuant to Article II (including a Participation Interest
         which is contributed by the Seller to the Purchaser).

                  "Purchased Receivable" means any Receivable (other than a
         Government Receivable) which is purchased or purported to be purchased
         by the Purchaser pursuant to Article II (including a Receivable (other
         than a Government Receivable) which is contributed by the Seller to the
         Purchaser).

                  "Receivable" means the indebtedness or obligation of any
         Obligor resulting from the provision or sale of pharmaceutical
         merchandise by an Originator (or an Affiliate on behalf of such
         Originator) under a Contract (whether constituting an account,
         instrument, chattel paper, payment intangible or general intangible),
         and includes the right to payment of any interest or finance charges
         and other obligations of such Obligor with respect thereto.

                  "Related Security" means (a) with respect to any Receivable:

                          (i)     all of the applicable Originator's interest in
                  merchandise, if any, (including returned merchandise) relating
                  to any sale giving rise to such Receivable;

                          (ii)    all security interests or liens and property
                  subject thereto from time to time purporting to secure payment
                  of such Receivable, whether pursuant to the Contract related
                  to such Receivable or otherwise, together with all financing
                  statements filed against an Obligor describing any collateral
                  securing such Receivable;

                                       12

                          (iii)   all guaranties, insurance and other agreements
                  or arrangements of whatever character from time to time
                  supporting or securing payment of such Receivable whether
                  pursuant to the Contract related to such Receivable or
                  otherwise;

                          (iv)    the Contract and all other books, records and
                  other information (including, without limitation, computer
                  programs, tapes, discs, punch cards, data processing software
                  and related property and rights, subject to the rights of any
                  licensors and to applicable law) relating to such Receivable
                  and the related Obligor; and

                          (v)     the Originator Purchase Agreement, the
                  Secondary Purchase Agreement and the Parent Undertaking
                  (Originators) and all rights of the Seller to receive monies
                  due or to become due thereunder,

         and (b) with respect to any Participation Interest, the Related
         Security with respect to the Government Receivable that is the subject
         of such Participation Interest.

                  "RFA Final Payment Date" means the later of the "Facility
         Termination Date" (as such term is defined in the Financing Agreement)
         and the date on which all Principal, Yield, fees and other obligations
         under the Financing Agreement are paid in full.

                  "Secondary Purchase Agreement" means the purchase agreement,
         dated as of the date hereof, among HQ, as seller and collection agent
         and the Seller, as purchaser, as amended or restated from time to time.

                  "Secured Obligations" has the meaning given to such term in
         Section 5.02 hereof.

                  "Seller Collateral" has the meaning given to such term in
         Section 5.02 hereof.

                  "Seller Report" means a report, in form and substance
         satisfactory to the Purchaser, furnished by the Collection Agent to the
         Purchaser pursuant to Section 6.02(b).

                  "Settlement Date" means a Distribution Date (as such term is
         defined in the Financing Agreement); provided, however, that following
         the occurrence of an Event of Termination, Settlement Dates shall occur
         on such days as are selected from time to time by the Purchaser or its
         assignees in a written notice to the Collection Agent.

                  "Transaction Document" means any of this Agreement, the
         Originator Purchase Agreement, the Secondary Purchase Agreement, the
         Deposit Account Agreements, the Governmental Entity Receivables
         Agreements, all amendments to any of the foregoing and all other
         agreements and documents delivered and/or related hereto or thereto.

                                       13

                  "UCC" means the Uniform Commercial Code as from time to time
         in effect in the relevant jurisdiction.

                  SECTION 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.

                                   ARTICLE II

                         AMOUNTS AND TERMS OF PURCHASES

                  SECTION 2.01. Facility. On the terms and conditions
hereinafter set forth and without recourse to the Seller (except to the extent
specifically provided herein), the Seller shall sell and/or contribute to the
capital of the Purchaser all of its right, title and interest in, to and under
(i) all Receivables (other than Government Receivables) acquired by it from time
to time, and (ii) all Participation Interests in all Government Receivables
acquired by it from time to time, and the Purchaser shall purchase and/or accept
as a contribution from the Seller all such Receivables (other than Government
Receivables) and all Participation Interests in Government Receivables of the
Seller from time to time, in each case during the period from the date hereof to
the Facility Termination Date.

                  SECTION 2.02.  Making Purchases.

                  (a)   Initial Purchase. The Seller shall give the Purchaser at
least one Business Day's notice of its request for the initial Purchase, which
request shall specify the date of such Purchase (which shall be a Business Day)
and the proposed Purchase Price for such Purchase. The Purchaser shall promptly
notify the Seller whether it has determined to make such Purchase. On the date
of such Purchase, the Seller shall sell or contribute to the capital of
Purchaser (i) all Receivables (other than Government Receivables) acquired by
the Seller pursuant to the Originator Purchase Agreement and (ii) all
Participation Interests acquired by the Seller pursuant to the Originator
Purchase Agreement, and the Purchaser shall, upon satisfaction of the applicable
conditions set forth in Article III, pay the Purchase Price for such Purchase in
the manner provided in Section 2.02(d). Effective upon such payment, the Seller
hereby sells, conveys, transfers and assigns to the Purchaser (i) all
Receivables (other than Government Receivables) acquired by it and in existence
on the date of the initial Purchase and (ii) all Participation Interests in all
Government Receivables acquired by it and in existence on the date of the
initial Purchase.

                  (b)   Subsequent Purchases. On each Business Day following the
initial Purchase, unless the Seller or the Purchaser shall notify the other
party to the contrary (with a copy to the Collection Agent), the Seller shall
sell to the Purchaser and the Purchaser shall purchase from such Seller, upon
satisfaction of the applicable conditions set forth in Article III, (i) all
Receivables (other than Government Receivables) acquired by the Seller and (ii)
all

                                       14

Participation Interests in all Government Receivables acquired by the Seller, in
each case which have not previously been sold and/or contributed to the
Purchaser. The Purchaser shall pay the Purchase Price for such Purchase in the
manner provided in Section 2.02(d). Effective on each Purchase Date, the Seller
hereby sells, conveys, transfers and assigns to the Purchaser (i) all
Receivables (other than Government Receivables) acquired by it and not
previously sold, conveyed, transferred or assigned to the Purchaser and (ii) all
Participation Interests in all Government Receivables acquired by it and not
previously sold, conveyed, transferred or assigned to the Purchaser.

                  (c)   Special Provisions Relating to Sales of Participation
Interests. Pursuant to the Originator Purchase Agreement, each Originator has
agreed, following each sale of a Participation Interest in a Government
Receivable, to hold such Government Receivable and any Related Security,
Collections and proceeds with respect thereto for the benefit of the Seller and
its assigns; provided that such Originator shall take no action in contravention
of any law, rule or regulation applicable to such Government Receivable. It is
understood and agreed that sales of Participation Interests in Government
Receivables shall not include any right to collect the proceeds of any
Government Receivable directly from the applicable Governmental Entity, except
insofar as a court of competent jurisdiction shall order such Governmental
Entity to make such payments directly to the Purchaser or its assigns.

                  (d)   Payment of Purchase Price. The Purchase Price for the
initial Purchase shall be paid on the Purchase Date therefor and the Purchase
Price for each subsequent Purchase shall be paid on the next Settlement Date
(without giving effect to the proviso in the definition thereof) after the
Purchase Date therefor, in each case, by means of any one or a combination of
the following: (i) a deposit in same day funds to the Seller's account
designated by the Seller, and/or (ii) a contribution to the capital of the
Purchaser. To the extent that on any date set for the payment of Purchase Price,
the Purchaser does not have sufficient funds to pay the entire Purchase Price in
cash, the amount in excess of the cash portion of the Purchase Price paid by the
Purchaser shall constitute a contribution to the capital of the Purchaser by the
Seller, and the parties hereto will make the appropriate accounting entries in
their books and records to reflect such allocation of the Purchase Price as
between cash payment and capital contribution. It is agreed by the parties
hereto that the portion of the Purchase Price for the initial Purchase allocated
to a capital contribution is $394,971,504.26.

                  (e)   Ownership of Receivables, Participation Interests and
Related Security. On each Purchase Date, after giving effect to the Purchase on
such date, the Purchaser shall own (i) all Receivables (other than Government
Receivables) acquired by the Seller as of such date (including Receivables which
have been previously sold and/or contributed to the Purchaser hereunder), and
(ii) all Participation Interests in all Government Receivables acquired by the
Seller as of such date (including Participation Interests in Government
Receivables which have been previously sold and/or contributed to the Purchaser
hereunder). The Purchase of any Receivable or Participation Interest shall
include all Related Security with respect to such Receivable or Participation
Interest.

                                       15

                  SECTION 2.03. Collections. (a) Unless otherwise agreed, the
Collection Agent shall, on each Settlement Date, deposit into an account of the
Purchaser or the Purchaser's assignee all Collections of Purchased Assets then
held by the Collection Agent.

                  (b)   In the event that the Seller believes that Collections
which are not Collections of Purchased Assets have been deposited into an
account of the Purchaser or the Purchaser's assignee, the Seller shall notify
the Collection Agent who shall so advise the Purchaser and, on the Business Day
following such identification, the Purchaser shall remit, or shall cause to be
remitted, all Collections so deposited which are identified, to the Purchaser's
satisfaction, to be Collections of Receivables which are not either Purchased
Receivables or Participated Receivables to the Seller.

                  SECTION 2.04. Settlement Procedures. (a) If on any day any
Purchased Asset becomes (in whole or in part) a Diluted Receivable or a Diluted
Participation Interest (as the case may be), the Seller shall be deemed to have
received on such day a Collection of such Purchased Asset in the amount of such
Diluted Receivable or Diluted Participation Interest (as the case may be). The
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
all amounts deemed to have been received pursuant to this subsection.

                  (b)   Upon discovery by the Seller or the Purchaser of a
breach of any of the representations and warranties made by the Seller in
Section 4.01(j) with respect to any Purchased Asset, such party shall give
prompt written notice thereof to the Purchaser, the Collection Agent, and the
Seller, as soon as practicable and in any event within three Business Days
following such discovery. The Seller shall, upon not less than two Business
Days' notice from the Purchaser or its assignee or designee, repurchase such
Purchased Asset on the next succeeding Settlement Date for a repurchase price
equal to the Outstanding Balance of such Purchased Asset. Each repurchase of a
Purchased Asset shall include the Related Security with respect to such
Purchased Asset. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Purchased Asset. The Seller shall pay to the
Collection Agent on or prior to the next Settlement Date the repurchase price
required to be paid pursuant to this subsection.

                  (c)   Except as stated in subsection (a) or (b) of this
Section 2.04 or as otherwise required by law or the underlying Contract, all
Collections from an Obligor of any Purchased Receivable or Participated
Receivable shall be applied to the Receivables of such Obligor in the order of
the age of such Receivables, starting with the oldest such Receivable, unless
such Obligor designates its payment for application to specific Receivables.

                  SECTION 2.05. Payments and Computations, Etc. (a) All amounts
to be paid or deposited by the Seller or the Collection Agent hereunder shall be
paid or deposited no later than 12:00 noon (New York City time) on the day when
due in same day funds to an account or accounts designated by the Purchaser from
time to time, which accounts, during the existence of the Financing Agreement,
shall be those set forth in the Financing Agreement.

                                       16

                  (b)   The Seller shall, to the extent permitted by law, pay to
the Purchaser interest on any amount not paid or deposited by the Seller
(whether as Collection Agent or otherwise) when due hereunder at an interest
rate per annum equal to 2% per annum above the Alternate Base Rate, payable on
demand.

                  (c)   All computations of interest and all computations of
fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day) elapsed.
Whenever any payment or deposit to be made hereunder shall be due on a day other
than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit.

                                   ARTICLE III

                             CONDITIONS OF PURCHASES

                  SECTION 3.01. Conditions Precedent to Initial Purchase from
the Seller. The initial Purchase of Receivables and/or Participation Interests
from the Seller hereunder is subject to the conditions precedent that the
Purchaser shall have received on or before the date of such Purchase the
following, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Purchaser:

                  (a)     Certified copies of the resolutions (or similar
         authorization, if not a corporation) of the Board of Directors (or
         similar governing body or Persons, if not a corporation) of the Seller
         approving this Agreement and certified copies of all documents
         evidencing other necessary corporate action and governmental approvals,
         if any, with respect to this Agreement.

                  (b)     A certificate of the Secretary or Assistant Secretary
         of the Seller certifying the names and true signatures of the officers
         of such Seller authorized to sign this Agreement and the other
         documents to be delivered by it hereunder.

                  (c)     Copies of proper financing statements, duly filed on
         or before the date of the initial Purchase, naming the Seller as the
         seller/debtor and the Purchaser as the purchaser/secured party, or
         other similar instruments or documents, as the Purchaser may deem
         necessary or desirable under the UCC of all appropriate jurisdictions
         or other applicable law to perfect the Purchaser's ownership of and
         security interest in the Purchased Assets and Related Security and
         Collections with respect thereto.

                  (d)     Copies of proper financing statements, if any,
         necessary to release all security interests and other rights of any
         Person in the Purchased Assets, Contracts or Related Security
         previously granted by the Seller, except those evidencing security
         interests subject to the Intercreditor Agreement.

                                       17

                  (e)     Completed requests for information, dated on or before
         the date of such initial Purchase, listing all effective financing
         statements filed in the jurisdictions referred to in subsection (c)
         above that name the Seller as debtor, together with copies of such
         other financing statements (none of which shall cover any Purchased
         Assets, Contracts or Related Security except those evidencing security
         interests subject to the Intercreditor Agreement).

                  (f)     A favorable opinion of (i) Skadden, Arps, Slate,
         Meagher & Flom LLP, counsel for the Seller, in form and substance
         satisfactory to the Purchaser, (ii) Chapman & Cutler relating to
         various states' local perfection issues and (iii) Parent's general
         counsel, in each case, as to such matters as the Purchaser may
         reasonably request, and

                  (g)     Executed copies of (i) Deposit Account Agreements with
         each Deposit Bank and (ii) Governmental Entity Receivables Agreements
         with each Account Bank.

                  (h)     A copy of the Memorandum and Articles of Association
         of the Seller, certified by the Secretary or Assistant Secretary of
         the Seller.

                           SECTION 3.02. Conditions Precedent to All Purchases.
         Each Purchase (including the initial Purchase) hereunder shall be
         subject to the further conditions precedent that:

                  (a)     with respect to any such Purchase, on or prior to the
         date of such Purchase, the Seller shall have delivered to the
         Purchaser, if requested by the Purchaser, (i) the Seller's General
         Trial Balance (which if in magnetic tape or diskette format shall be
         compatible with the Purchaser's computer equipment) as of a date not
         more than 31 days prior to the date of such Purchase, and (ii) such
         additional information concerning the Receivables and Participation
         Interests to be purchased as may reasonably be requested by the
         Purchaser;

                  (b)     with respect to any such Purchase, on or prior to the
         date of such Purchase, the Collection Agent shall have delivered to
         the Purchaser, in form and substance satisfactory to the Purchaser, a
         completed Seller Report for the most recently ended reporting period
         for which information is required pursuant to Section 6.02(b) and
         containing such additional information as may reasonably be requested
         by the Purchaser;

                  (c)     the Seller shall have marked its master data
         processing records and, at the request of the Purchaser, each Contract
         giving rise to Purchased Assets and all other relevant records
         evidencing the Receivables and Participation Interests which are the
         subject of such Purchase with a legend, acceptable to the Purchaser,
         stating that such Receivables and Participation Interests, together
         with the Related Security and Collections with respect thereto, have
         been sold in accordance with this Agreement; and

                                       18

                  (d)     on the date of such Purchase the following statements
         shall be true (and the Seller, by accepting the Purchase Price for such
         Purchase, shall be deemed to have certified that):

                          (i)     The representations and warranties made by the
                  Seller in Section 4.01 are correct on and as of the date of
                  such Purchase as though made on and as of such date,

                          (ii)    No event has occurred and is continuing, or
                  would result from such Purchase, that constitutes an Event of
                  Termination or an Incipient Event of Termination and

                          (iii)   The Purchaser shall not have delivered to the
                  Seller a notice that the Purchaser shall not make any further
                  Purchases hereunder; and

                  (e)     the Purchaser shall have received such other
         approvals, opinions or documents as the Purchaser may reasonably
         request.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Seller.
The Seller represents and warrants as follows:

                  (a)     The Seller is an exempted company incorporated with
         limited liability validly existing and in good standing under the laws
         of the Cayman Islands, and is duly qualified to do business, and is in
         good standing, in every jurisdiction where the nature of its business
         requires it to be so qualified.

                  (b)     The execution, delivery and performance by the Seller
         of this Agreement and the other documents to be delivered by it
         hereunder, including the Seller's sale of Receivables and
         Participation Interests hereunder and the Seller's use of the proceeds
         of Purchases, (i) are within the Seller's corporate powers, (ii) have
         been duly authorized by all necessary corporate action, (iii) do not
         contravene (1) the Seller's Memorandum and Articles of Association,
         (2) any law, rule or regulation applicable to the Seller, (3) any
         contractual restriction binding on or affecting the Seller or its
         property or (4) any order, writ, judgment, award, injunction or decree
         binding on or affecting the Seller or its property, and (iv) do not
         result in or require the creation of any lien, security interest or
         other charge or encumbrance upon or with respect to any of its
         properties (except for the interest created pursuant to this
         Agreement). This Agreement has been duly executed and delivered by the
         Seller.

                                       19

                  (c)     No authorization or approval or other action by, and
         no notice to or filing with, any governmental authority or regulatory
         body is required for the due execution, delivery and performance by
         the Seller of this Agreement or any other document to be delivered by
         it hereunder, except for the filing of UCC financing statements
         referred to herein.

                  (d)     Each of the Transaction Documents to which it is a
         party constitutes the legal, valid and binding obligation of the
         Seller enforceable against the Seller in accordance with its terms,
         subject to applicable bankruptcy, insolvency, moratorium or other
         similar laws affecting the rights of creditors generally and general
         equitable principles (whether considered in a proceeding at law or in
         equity).

                  (e)     Purchases made pursuant to this Agreement will
         constitute a valid sale, transfer, and assignment of the Purchased
         Assets to, or contributions of the Purchased Assets to the capital of,
         the Purchaser, enforceable against creditors of, and purchasers from,
         the Seller. The Seller shall have no remaining property interest in
         any Purchased Asset.

                  (f)     (i) The fair value of the property of the Seller is
         greater than the total amount of liabilities, including contingent
         liabilities, of the Seller, (ii) the present fair salable value of the
         assets of the Seller is not less than the amount that will be required
         to pay all probable liabilities of the Seller on its debts as they
         become absolute and matured, (iii) the Seller does not intend to, and
         does not believe that it will, incur debts or liabilities beyond the
         Seller's abilities to pay such debts and liabilities as they mature and
         (iv) the Seller is not engaged in a business or a transaction, and is
         not about to engage in a business or a transaction, for which the
         Seller's property would constitute unreasonably small capital.

                  (g)     There is no pending or threatened action,
         investigation or proceeding affecting the Seller or any of its
         subsidiaries before any court, governmental agency or arbitrator which
         if determined adversely to any of them, could reasonably be expected,
         individually or in the aggregate, to have a Material Adverse Effect.

                  (h)     No proceeds of any Purchase will be used to acquire
         any equity security of a class which is registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

                  (i)     No transaction contemplated hereby requires compliance
         with any bulk sales act or similar law.

                  (j)     Each Receivable (including, without limitation, each
         Participated Receivable) sold and/or contributed by the Seller and
         characterized in any Seller Report (or, if applicable, as of a date
         certain specified in such report) as an Eligible Receivable is, as of
         the date of such Seller Report, an Eligible Receivable. Each Purchased
         Asset, together with the Related Security, is owned (immediately prior
         to its sale hereunder) by

                                       20

         the Seller free and clear of any Adverse Claim (other than any Adverse
         Claim arising solely as the result of any action taken by the
         Purchaser). When the Purchaser makes a Purchase it shall acquire valid
         and perfected first priority ownership of each Purchased Asset and the
         Related Security and Collections with respect thereto free and clear of
         any Adverse Claim (other than any Adverse Claim arising solely as the
         result of any action taken by the Purchaser), and no effective
         financing statement or other instrument similar in effect covering any
         Purchased Asset, any interest therein, the Related Security or
         Collections with respect thereto is on file in any recording office
         except such as may be filed in favor of HQ as purchaser under the
         Originator Purchase Agreement, in favor of the Seller in accordance
         with the Secondary Purchase Agreement, in favor of Purchaser in
         accordance with this Agreement or in connection with any Adverse Claim
         arising solely as the result of any action taken by the Purchaser or
         those which relate to security interests that are subject to the
         Intercreditor Agreement.

                  (k)     Each Seller Report (if prepared by the Seller, or to
         the extent that information contained therein is supplied by the
         Seller), information, exhibit, financial statement, document, book,
         record or report furnished or to be furnished at any time (whether
         before or after the date of this Agreement) by the Seller to the
         Purchaser in connection with this Agreement is or will be accurate in
         all material respects as of its date or (except as otherwise disclosed
         to the Purchaser at such time) as of the date so furnished (or, if
         applicable, as of a date certain specified in such report), and no
         such document contains or will contain any untrue statement of a
         material fact or omits or will omit to state a material fact necessary
         in order to make the statements contained therein, in the light of the
         circumstances under which they were made, not misleading.

                  (l)     The principal place of business and chief executive
         office of the Seller and the office where such Seller keeps its
         records concerning the Purchased Assets are located at the address or
         addresses referred to in Section 5.01(b).

                  (m)     The names and addresses of all the Deposit Banks and
         Account Banks, together with the post office boxes and account numbers
         of the Lock-Boxes, Deposit Accounts at such Deposit Banks, and
         Governmental Entity Receivables Accounts at such Account Banks are
         specified in Exhibit B (as the same may be updated from time to time
         pursuant to Section 5.01(g)). The Lock-Boxes, Deposit Accounts and
         Governmental Entity Receivables Accounts are the only post office boxes
         and bank accounts into which Collections of Receivables and
         Participation Interests are deposited or remitted.

                  (n)     The Seller is not known by and does not use any
         tradename or doing- business-as name.

                  (o)     With respect to any programs used by HQ in the
         servicing of the Receivables and Participation Interests, no
         sublicensing agreements are necessary in connection with the
         designation of a new Collection Agent pursuant to Section 6.01 so that
         such new Collection Agent shall have the benefit of such programs (it
         being understood

                                       21

         that, however, the Collection Agent, if other than HQ, shall be
         required to be bound by a confidentiality agreement reasonably
         acceptable to HQ (on behalf of itself and each of the Originators)).

                  (p)     The transfers of Purchased Assets by the Seller to the
         Purchaser pursuant to this Agreement, and all other transactions
         between the Seller and the Purchaser, have been and will be made in
         good faith and without intent to hinder, delay or defraud creditors of
         such Seller.

                  (q)     The Seller has timely filed or caused to be filed all
         required income tax and sales tax returns and reports and all other
         material tax returns and reports required to have been filed and has
         paid or caused to be paid all material taxes due pursuant to such
         returns or pursuant to any assessment received by the Seller, except
         where the payment of any such taxes is being contested in good faith by
         appropriate proceedings and for which the Seller has set aside on its
         books adequate reserves. The charges, accruals and reserves on the
         books of the Seller in respect of such taxes or charges imposed by all
         Governmental Entities are, in the opinion of the Seller, adequate for
         the payment thereof.

                  (r)     The Seller was incorporated on August 11, 2004 under
         the name Cayman Resources (21) Ltd., and the Seller did not engage in
         any business activities prior to the date of this Agreement.

                                    ARTICLE V

                                    COVENANTS

                  SECTION 5.01. Covenants of the Seller. The Seller covenants
from the date hereof until the first day following the Facility Termination Date
on which all of the Purchased Assets are either collected in full or become
Defaulted Receivables or Defaulted Participation Interests (as the case may be):

                  (a)     Compliance with Laws, Etc. The Seller will comply in
         all material respects with all applicable laws, rules, regulations and
         orders and preserve and maintain its corporate existence, rights,
         franchises, qualifications and privileges except to the extent that
         the failure so to comply with such laws, rules and regulations or the
         failure so to preserve and maintain such rights, franchises,
         qualifications, and privileges could not reasonably be expected to
         result in a Material Adverse Effect.

                  (b)     Offices, Records, Name and Organization. The Seller
         will keep its principal place of business and chief executive office
         and the office where it keeps its records concerning the Purchased
         Assets at the address of the Seller set forth on Exhibit D hereto or,
         upon 30 days' prior written notice to the Purchaser and its assignees,
         at any other locations within the United States. The Seller will not
         change its name or its

                                       22

         jurisdiction of organization, unless (i) the Seller shall have provided
         the Purchaser and its assignees with at least 30 days' prior written
         notice thereof and (ii) no later than the effective date of such
         change, all actions required by Section 5.01(j) shall have been taken
         and completed. The Seller also will maintain and implement
         administrative and operating procedures (including, without limitation,
         an ability to recreate records evidencing Purchased Assets and related
         Contracts in the event of the destruction of the originals thereof),
         and keep and maintain all documents, books, records and other
         information reasonably necessary or advisable for the collection of all
         Purchased Assets (including, without limitation, records adequate to
         permit the daily identification of each new Purchased Asset and all
         Collections of and adjustments to each existing Purchased Asset). The
         Seller shall make a notation in its books and records, including its
         computer files, to indicate that all of its Receivables and
         Participation Interests have been sold by it to the Purchaser
         hereunder.

                  (c)     Performance and Compliance with Contracts and Credit
         and Collection Policy. The Seller will, at its expense, timely and
         fully perform and comply with all material provisions, covenants and
         other promises required to be observed by it under the Contracts
         related to the Purchased Receivables and Participated Receivables, and
         timely and fully comply in all material respects with the Credit and
         Collection Policy in regard to each Purchased Receivable, each
         Participated Receivable and the related Contract.

                  (d)     Sales, Liens, Etc. Except for the sales of Purchased
         Assets contemplated herein, the Seller will not sell, assign (by
         operation of law or otherwise) or otherwise dispose of, or create or
         suffer to exist any Adverse Claim upon or with respect to, any
         Purchased Asset, Receivable, Related Security, related Contract or
         Collections, or upon or with respect to any account to which any
         Collections of any Purchased Asset are sent, or assign any right to
         receive income in respect thereof.

                  (e)     Extension or Amendment of Purchased Assets. Except as
         provided in Section 6.02(c), the Seller will not extend, amend or
         otherwise modify the terms of any Purchased Receivable or Participated
         Receivable, or amend, modify or waive any term or condition of any
         Contract (to which it is a party) related thereto.

                  (f)     Change in Business or Credit and Collection Policy.
         The Seller will not make any change in the character of its business
         or in the Credit and Collection Policy that could, in either case,
         reasonably be expected to result in a Material Adverse Effect.

                  (g)     Change in Payment Instructions to Obligors. The Seller
         will not add or terminate any post office box, bank, or bank account as
         a Lock-Box, Deposit Bank, Deposit Account, Governmental Entity
         Receivables Account or Account Bank from those listed in Exhibit B to
         this Agreement, or make any change in its instructions to Obligors
         regarding payments to be made to any such box or account, unless the
         Purchaser shall have received notice of such addition, termination or
         change (including an updated Exhibit B) and a fully executed Deposit
         Account Agreement or Governmental Entity Receivables

                                       23

         Agreement with each new Deposit Bank or Account Bank, as the case may
         be, with respect to each new Lock-Box, Deposit Account, or Governmental
         Entity Receivables Account.

                  (h)     Deposits to Lock-Boxes, Deposit Accounts and
         Governmental Entity Receivables Accounts. The Seller will instruct all
         of the Obligors that are Governmental Entities other than Contract
         Payers to remit all their payments in respect of Participated
         Receivables to Governmental Entity Receivables Accounts or Lock-Boxes
         associated therewith. The Seller will instruct all of its Obligors
         that are not Governmental Entities (other than Contract Payors) to
         remit all their payments in respect of Purchased Receivables to
         Deposit Accounts or Lock-Boxes associated therewith. If the Seller
         shall receive any Collections directly, it shall immediately (and in
         any event within one Business Day) deposit the same to a Deposit
         Account or Governmental Entity Receivables Account, as the case may
         be. The Seller will not deposit or otherwise credit, or cause or
         permit to be so deposited or credited, to any Lock-Box, Deposit
         Account or Governmental Entity Receivables Account cash or cash
         proceeds other than Collections of Purchased Receivables and
         Participated Interests except as provided in the last sentence of this
         Section 5.01(h).

                  In furtherance of the foregoing, the Collection Agent agrees
         (i) within 30 days from the date of this Agreement, to notify all
         Obligors that are not Governmental Entities (other than Contract
         Payors) to remit all their payments in respect of Purchased Receivables
         to Deposit Accounts or Lock-Boxes associated therewith and (ii)
         thereafter, to use ongoing commercially reasonable efforts to obtain
         compliance with such notice from those Obligors who have failed to so
         comply. The foregoing notwithstanding the Collection Agent acknowledges
         that collections on account of accounts receivable belonging to
         Drugstore.com are regularly deposited into the Governmental Entity
         Receivables Account and agrees to identify and remove such collections
         (from such account) within two Business Days after they are received.

                  (i)     Audits. The Seller will, from time to time during
         regular business hours as requested by the Purchaser or its assigns,
         permit the Purchaser, or its agents, representatives or assigns, (i)
         to examine and make copies of and abstracts from all books, records
         and documents (including, without limitation, computer tapes and
         disks) in the possession or under the control of the Seller relating
         to Purchased Assets and the Related Security, including, without
         limitation, the related Contracts, and (ii) to visit the offices and
         properties of the Seller for the purpose of examining such materials
         described in clause (i) above, and to discuss matters relating to
         Purchased Assets and the Related Security or the Seller's performance
         hereunder or under the Contracts with any of the officers or employees
         of the Seller having knowledge of such matters.

                  (j)     Further Assurances. (i) The Seller agrees from time to
         time, at its expense, promptly to execute and deliver all further
         instruments and documents, and to take all further actions, that may be
         necessary or desirable, or that the Purchaser or its assignees

                                       24

         may reasonably request, to perfect, protect or more fully evidence the
         sale of Purchased Assets under this Agreement, or to enable the
         Purchaser or its assignees to exercise and enforce its respective
         rights and remedies under this Agreement. Without limiting the
         foregoing, the Seller will, upon the request of the Purchaser or its
         assignees, (A) execute and file such financing or continuation
         statements, or amendments thereto, and such other instruments and
         documents, that may be necessary or desirable to perfect, protect or
         evidence such Purchased Assets; and (B) deliver to the Purchaser copies
         of all Contracts (to which it is a party) relating to the Purchased
         Assets and all records relating to such Contracts and the Purchased
         Assets, whether in hard copy or in magnetic tape or diskette format
         (which if in magnetic tape or diskette format shall be compatible with
         the Purchaser's computer equipment).

                          (ii)    The Seller authorizes the Purchaser or its
         assignees to file financing or continuation statements, and amendments
         thereto and assignments thereof, relating to the Purchased Assets and
         the Related Security, the related Contracts and the Collections with
         respect thereto. Such financing statements filed against the Seller may
         describe the collateral in the same manner specified in Section 5.02
         hereof or in any other manner as the Purchaser or its assignees may
         reasonably determine is necessary to ensure the perfection of such
         security interest, including, without limitation, describing such
         property as all assets or all personal property of the Seller whether
         now owned or hereafter acquired.

                  (k)     Reporting Requirements. The Seller will provide to the
         Purchaser the following:

                          (i)     any reports, notices, public filings,
         financial information and any other information or correspondence
         delivered to the Seller pursuant to the Secondary Purchase Agreement;

                          (ii)    as soon as possible and in any event within
         five days after the occurrence of each Event of Termination or
         Incipient Event of Termination, a statement of a Financial Officer of
         the Seller setting forth details of such Event of Termination or
         Incipient Event of Termination and the action that the Seller has taken
         and proposes to take with respect thereto;

                          (iii)   at least 30 days prior to any change in the
         Seller's name or state of incorporation, a notice setting forth the new
         name or state of incorporation and the effective date thereof; and

                          (iv)    such other information respecting the
         Purchased Assets or the condition or operations, financial or
         otherwise, of the Seller as the Purchaser may from time to time
         reasonably request, to the extent such disclosure is permitted under
         applicable law, rule or regulation.

                                       25

         Reports and financial statements required to be delivered pursuant to
         clauses (i) and (ii) of Section 5.01(k) of the Originator Purchase
         Agreement (which are required to be delivered to the Seller pursuant to
         the Secondary Purchase Agreement) shall be deemed to have been
         delivered on the date on which the Parent posts such reports, or
         reports containing such financial statements, on the Parent's website
         on the internet at http://www.riteaid.com or when such reports, or
         reports containing such financial statements, are posted on the SEC's
         website at www.sec.gov.

                  (l)     Separate Conduct of Business. The Seller will: (i)
         maintain separate corporate records and books of account from those of
         the Purchaser; (ii) conduct its business from an office separate from
         that of the Purchaser (but which may be located in the same facility as
         the Purchaser); (iii) ensure that all oral and written communications,
         including without limitation, letters, invoices, purchase orders,
         contracts, statements and applications, will be made solely in its own
         name; (iv) have stationery and other business forms and a mailing
         address and a telephone number separate from those of the Purchaser;
         (v) not hold itself out as having agreed to pay, or as being liable for
         the obligations of the Purchaser; (vi) not engage in any transaction
         with the Purchaser except as contemplated by this Agreement or as
         permitted by the other Transaction Documents; and (vii) in its capacity
         as shareholder of the Purchaser, not adopt any special resolution for
         the voluntary winding up of the Purchaser without the prior written
         consent of the Program Agent under the Financing Agreement.

                  (m)     Secondary Purchase Agreement. The Seller will not
         amend, waive or modify any provision of the Secondary Purchase
         Agreement or waive the occurrence of any "Event of Termination" under
         the Secondary Purchase Agreement, without in each case the prior
         written consent of the Purchaser and its assignees; provided, however,
         that the Seller may amend the percentage set forth in the definition
         of "Discount" in the Secondary Purchase Agreement in accordance with
         the provisions of the Secondary Purchase Agreement without the consent
         of the Purchaser and its assignees, provided, further, that the Seller
         shall promptly notify the Purchaser and its assignees of any such
         amendment. The Seller will perform all of its obligations under the
         Secondary Purchase Agreement in all material respects and will enforce
         the Secondary Purchase Agreement in accordance with its terms in all
         material respects.

                  (n)     Additional Information. If additional information is
         requested by the Obligor as to a bill or supporting claim documents,
         the Seller has or will (or will cause the applicable Originator to)
         promptly provide the same, and if any error has been made with respect
         to such information, the Seller will (or will cause the applicable
         Originator to) promptly correct the same and, if necessary, rebill such
         Receivable.

                  (o)     Nature of Business. The Seller will not engage in any
         business other than the purchase or acquisition of Receivables,
         Participation Interests, Related Security and Collections from HQ and
         the transactions contemplated by this Agreement. The Seller will not
         create or form any Subsidiary other than the Purchaser.

                                       26

                  (p)     Mergers, Etc. The Seller will not merge with or into
         or consolidate with or into, or convey, transfer, lease or otherwise
         dispose of (whether in one transaction or in a series of
         transactions), all or substantially all of its assets (whether now
         owned or hereafter acquired) to, or acquire all or substantially all
         of the assets or capital stock or other ownership interest of, or
         enter into any joint venture or partnership agreement with, any
         Person, other than as specifically contemplated by this Agreement and
         the other Transaction Documents.

                  (q)     Distributions, Etc. The Seller will not declare or
         make any dividend payment or other distribution of assets, properties,
         cash, rights, obligations or securities on account of any shares of
         any class of equity interests of the Seller, or return any capital to
         its shareholders as such, or purchase, retire, defease, redeem or
         otherwise acquire for value or make any payment in respect of any
         shares of any class of equity of the Seller or any warrants, rights or
         options to acquire any such shares, now or hereafter outstanding;
         provided, however, that the Seller may declare and pay cash dividends
         on its share capital to its shareholders so long as (i) no Event of
         Termination shall then exist or would occur as a result thereof, (ii)
         such dividends are in compliance with all applicable law including the
         laws of The Cayman Islands, and (iii) such dividends have been
         approved by all necessary and appropriate corporate action of the
         Seller.

                  (r)     Debt. The Seller will not incur any Debt.

                  (s)     Memorandum and Articles of Association. The Seller
         will not amend, modify or delete any provision of its Memorandum and
         Articles of Association without the prior written consent of the
         Program Agent under the Financing Agreement.

                  SECTION 5.02. Grant of Security Interest. The Seller and the
Purchaser intend that the transfer of each Purchased Receivable and
Participation Interest hereunder from the Seller to the Purchaser be treated as
a sale of all of the Seller's right, title and interest in, to and under such
Purchased Receivable and Participation Interest and that, immediately after
giving effect to the transfer, the Seller has no further interest (legal or
equitable) in any Purchased Receivable or Participation Interest. The Seller and
the Purchaser shall record each Purchase as a sale or purchase, as the case may
be, on its books and records, and reflect each Purchase in its financial
statements and tax returns as a sale or purchase, as the case may be. In the
event that, contrary to the mutual intent of the Seller and the Purchaser, any
Purchase of Purchased Receivables and/or Participation Interests hereunder is
not characterized as a sale but rather as a collateral transfer for security (or
the transactions contemplated hereby are characterized as a financing
transaction), such Purchase shall be deemed to be a secured financing, secured
by a security interest in all of the Seller's right, title and interest now or
hereafter existing and hereafter arising in, to and under (i) all Receivables
now existing and hereafter arising, (ii) all Participation Interests, (iii) all
Related Security, (iv) all Collections with respect to the items in clauses (i)
through (iii), (v) all other assets, including without limitation, accounts,
chattel paper, instruments, payment intangibles and general intangibles (as
those terms are defined in the UCC) and (vi) all proceeds of the foregoing
(collectively, the "Seller Collateral"). In furtherance of the foregoing, the
Seller

                                       27

hereby grants, to the Purchaser a security interest in all of the Seller's
right, title and interest now or hereafter existing in, to and under the Seller
Collateral to secure the repayment of all amounts due and owing by the Seller to
the Purchaser hereunder with accrued interest thereon, if applicable, whether
now or hereafter existing, due or to become due, direct or indirect, or absolute
or contingent (such amounts the "Secured Obligations").

                                   ARTICLE VI

                          ADMINISTRATION AND COLLECTION

                  SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Purchased Assets shall be conducted by such
Person (the "Collection Agent") so designated hereunder from time to time. Until
the RFA Final Payment Date, HQ (or such other Person as may be designated from
time to time under the Financing Agreement) is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Collection Agent pursuant
to the terms hereof. Thereafter, the Purchaser, by notice to HQ and the Seller,
may designate as Collection Agent any Person (including itself) to succeed HQ or
any successor Collection Agent, if such Person shall consent and agree to the
terms hereof. Upon HQ's receipt of such notice, HQ agrees that it will terminate
its activities as Collection Agent hereunder in a manner which the Purchaser (or
its designee) believes will facilitate the transition of the performance of such
activities to the new Collection Agent, and HQ shall use its best efforts to
assist the Purchaser (or its designee) to take over the servicing,
administration and collection of the Purchased Assets, including, without
limitation, providing access to and copies of all computer tapes or disks and
other documents or instruments that evidence or relate to Purchased Assets
maintained by HQ in its capacity as Collection Agent and access to all employees
and officers of HQ responsible with respect thereto. The Collection Agent may,
with the prior consent of the Purchaser, subcontract with any other Person for
the servicing, administration or collection of Purchased Assets. Any such
subcontract shall not affect the Collection Agent's liability for performance of
its duties and obligations pursuant to the terms hereof, and any such
subcontract shall terminate upon designation of a successor Collection Agent.

                  SECTION 6.02. Duties of Collection Agent. (a) The Collection
Agent shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Purchased Asset from time to time, all in accordance
in all material respects with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and Collection
Policy. The Purchaser hereby appoints the Collection Agent, from time to time
designated pursuant to Section 6.01, as agent to enforce its ownership and other
rights in the Purchased Assets, the Related Security and the Collections with
respect thereto. In performing its duties as Collection Agent, the Collection
Agent shall exercise the same care and apply the same policies as it would
exercise and apply if it owned the Purchased Assets and shall act in the best
interests of the Purchaser and its assignees.

                                       28

                  (b)     On or before each Determination Date, the Collection
Agent shall prepare and forward to the Purchaser (i) a Seller Report, relating
to all then outstanding Purchased Assets, and the Related Security and
Collections with respect thereto, in each case, as of the close of business of
the Collection Agent on the last day of the immediately preceding Month, and
(ii) if requested by the Purchaser, a listing by Obligor (other than Contract
Payors) of all Purchased Assets, together with an aging report of such Purchased
Assets.

                  (c)     If no Event of Termination or Incipient Event of
Termination shall have occurred and be continuing, HQ, while it is the
Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Purchased
Receivable or Participated Receivable as it deems appropriate to maximize
Collections thereof, or otherwise amend or modify other terms of any Purchased
Receivable or Participated Receivable.

                  (d)     The Seller shall deliver to the Collection Agent, and
the Collection Agent shall hold in trust for the Seller and the Purchaser in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Purchased Assets.

                  (e)     The Collection Agent shall as soon as practicable
following receipt turn over to the Seller (or other person entitled thereto) any
cash collections or other cash proceeds received with respect to Receivables not
constituting Purchased Receivables or Participated Receivables.

                  (f)     The Collection Agent also shall perform the other
obligations of the "Collection Agent" set forth in this Agreement with respect
to the Purchased Assets.

                  SECTION 6.03. Collection Agent Fee. The Purchaser shall pay to
the Collection Agent, so long as it is acting as the Collection Agent hereunder,
a periodic collection fee (the "Collection Agent Fee") of 1.00% per annum on the
average daily aggregate Outstanding Balance of the Purchased Assets, payable in
arrears on each Settlement Date or such other day during each Month as the
Purchaser and the Collection Agent shall agree. So long as the Financing
Agreement is in effect, amounts paid to the Collection Agent as "Collection
Agent Fee" pursuant to the Financing Agreement shall reduce, on a
dollar-for-dollar basis, the obligation of the Purchaser to pay the Collection
Agent Fee hereunder, provided that such obligation of the Purchaser shall in no
event be reduced below zero.

                  SECTION 6.04. Certain Rights of the Purchaser. (a) The
Purchaser may, at any time during the existence of an Event of Termination or
Incipient Event of Termination, give notice of ownership and/or direct the
Obligors of Purchased Assets and any Person obligated on any Related Security,
or any of them, that payment of all amounts payable under any Purchased Asset
shall be made directly to the Purchaser or its assignees. The Seller hereby
transfers to the Purchaser (and its assigns and designees) the exclusive
ownership and control of the Lock-Boxes

                                       29

and Deposit Accounts maintained by the Seller for the purpose of receiving
Collections (other than Collections from Governmental Entities).

                  (b)     The Seller shall, at any time during the existence of
an Event of Termination or Incipient Event of Termination upon the Purchaser's
request and at the Seller's expense, give notice of the Purchaser's ownership to
each Obligor of Purchased Assets and, to the extent permitted under applicable
law, direct that payments of all amounts payable under the Purchased Receivables
or Participated Receivables be made directly to the Purchaser or its assignees.

                  (c)     At the Purchaser's request and at the Seller's
expense, the Seller and the Collection Agent shall (A) assemble all of the
documents, instruments and other records (including, without limitation,
computer tapes and disks) that evidence or relate to the Purchased Assets, and
the related Contracts and Related Security, or that are otherwise necessary or
desirable to collect the Purchased Receivables and Participated Receivables, and
shall make the same available to the Purchaser at a place selected by the
Purchaser or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections of
Purchased Assets in a manner acceptable to the Purchaser and, promptly upon
receipt, remit all such cash, checks and instruments, duly indorsed or with duly
executed instruments of transfer, to the Purchaser or its designee. The
Purchaser shall also have the right to make copies of all such documents,
instruments and other records at any time.

                  (d)     The Seller authorizes the Purchaser to take any and
all steps in the Seller's name and on behalf of the Seller that are necessary or
desirable, in the determination of the Purchaser, to collect amounts due under
the Purchased Receivables and Participated Receivables, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections of Purchased Assets and enforcing the Purchased
Receivables and Participated Receivables and the Related Security and related
Contracts.

                  SECTION 6.05. Rights and Remedies. (a) If the Seller or the
Collection Agent fails to perform any of its obligations under this Agreement,
the Purchaser may (but shall not be required to) (after notice to the Seller or
Collection Agent and such failure to perform, if capable of being cured, is not
cured within 10 days after such notice is sent) itself perform, or cause
performance of, such obligation, and, if the Seller (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Purchaser incurred
in connection therewith shall be payable by the Seller as provided in Section
8.01 or Section 9.04 as applicable.

                  (b)     The Seller shall perform all of its obligations under
the Contracts related to the Purchased Receivables and Participated Receivables
to the same extent as if the Seller had not sold Receivables or Participation
Interests hereunder and the exercise by the Purchaser of its rights hereunder
shall not relieve the Seller from such obligations or its obligations with
respect to the Purchased Receivables and Participated Receivables. The Purchaser
shall not have any obligation or liability with respect to any Purchased
Receivables and Participated Receivables or related

                                       30

Contracts, nor shall the Purchaser be obligated to perform any of the
obligations of the Seller thereunder.

                  (c)     The Seller shall cooperate with the Collection Agent
in collecting amounts due from Obligors in respect of the Purchased Receivables
and Participated Receivables.

                  (d)     The Seller hereby grants to Collection Agent an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller all steps necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by the Seller or transmitted or received by Purchaser
(whether or not from the Seller) in connection with any Purchased Asset.

                  SECTION 6.06. Transfer of Records to Purchaser. Each Purchase
of Receivables and Participation Interests hereunder shall include the transfer
to the Purchaser of all of the Seller's right and title to and interest in the
records relating to such Receivables or Participation Interests (as the case may
be) and, subject to the rights of any licensors and applicable law, shall
include an irrevocable non-exclusive license to the use of the Seller's computer
software system to access and create such records. Such license shall be without
royalty or payment of any kind, is coupled with an interest, and shall be
irrevocable until all of the Purchased Assets are either collected in full or
become Defaulted Receivables or Defaulted Participation Interests (as the case
may be).

                  The Seller shall take such action requested by the Purchaser,
from time to time hereafter, that may be necessary or appropriate to ensure that
the Purchaser has an enforceable ownership interest in the records relating to
the Purchased Assets and rights (whether by ownership, license or sublicense) to
the use of the Seller's computer software system to access and create such
records, subject to the rights of any licensors and applicable law.

                  In recognition of the Seller's need to have access to the
records transferred to the Purchaser hereunder, the Purchaser hereby grants to
the Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Collection Agent, provided that (i) the Seller
shall not disrupt or otherwise interfere with the Purchaser's use of and access
to such records during such license period and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.

                                   ARTICLE VII

                              EVENTS OF TERMINATION

                  SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur and be continuing:

                                       31

                  (a)     The Collection Agent (i) shall fail to perform or
         observe any term, covenant or agreement under this Agreement (other
         than as referred to in clause (ii) or (iii) of this subsection (a))
         and such failure, if capable of being cured, shall remain unremedied
         for ten days or (ii) shall fail to make when due any payment or
         deposit to be made by it under this Agreement or (iii) shall fail to
         deliver any Seller Report when required and such failure shall remain
         unremedied for one Business Day (provided that the grace period in
         this clause (iii) may not be utilized more than once in any Month); or

                  (b)     The Seller shall fail to make any payment required
         under Section 2.04(a) or 2.04(b); or

                  (c)     Any representation or warranty (unless such
         representation or warranty relates solely to one or more specific
         Receivables incorrectly characterized as Eligible Receivables and the
         Seller shall have made any required deemed Collection payment pursuant
         to Section 2.04 with respect to such Receivables) made or deemed made
         by the Seller (or any of its officers) under or in connection with
         this Agreement or any information or report delivered by the Seller
         pursuant to this Agreement shall prove to have been incorrect or
         untrue in any material respect when made or deemed made or delivered;
         or

                  (d)     The Seller shall fail to perform or observe any other
         term, covenant or agreement contained in this Agreement on its part to
         be performed or observed and any such failure shall remain unremedied
         for 10 days, provided that failure to perform or observe any covenant
         contained in Sections 5.01(b), 5.01(d), 5.01(g), and 5.01(h) shall not
         be entitled to the benefit of such 10-day period; or

                  (e)     The Seller or the Collection Agent shall fail to pay
         any principal of or premium or interest on any of its Debt which is
         outstanding in a principal amount of at least $25,000,000 in the
         aggregate when the same becomes due and payable (whether by scheduled
         maturity, required prepayment, acceleration, demand or otherwise), and
         such failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating to such Debt; or any
         other event shall occur or condition shall exist under any agreement
         or instrument relating to any such Debt and shall continue after the
         applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such event or condition is to accelerate,
         or to permit the acceleration of, the maturity of such Debt; or any
         such Debt shall be declared to be due and payable, or required to be
         prepaid (other than by a regularly scheduled required prepayment),
         redeemed, purchased or defeased, or an offer to repay, redeem,
         purchase or defease such Debt shall be required to be made, in each
         case prior to the stated maturity thereof; or

                  (f)     Any Purchase of Receivables or Participation Interests
         hereunder, the Related Security and the Collections with respect
         thereto shall for any reason cease to constitute valid and perfected
         ownership of such Receivables, Participation Interests, Related
         Security and Collections free and clear of any Adverse Claim; or

                                       32

                  (g)     The Seller or the Collection Agent shall generally not
         pay its debts as such debts become due, or shall admit in writing its
         inability to pay its debts generally, or shall make a general
         assignment for the benefit of creditors; or any proceeding shall be
         instituted by or against the Seller or the Collection Agent seeking to
         adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
         up (whether such Person is insolvent or not), reorganization,
         arrangement, adjustment, protection, relief, or composition of it or
         its debts under any law relating to bankruptcy, insolvency or
         reorganization or relief of debtors, or seeking the entry of an order
         for relief or the appointment of a receiver, trustee, custodian or
         other similar official for it or for any substantial part of its
         property and, in the case of any such proceeding instituted against it
         (but not instituted by it), either such proceeding shall remain
         undismissed or unstayed for a period of 60 days, or any of the actions
         sought in such proceeding (including, without limitation, the entry of
         an order for relief against, or the appointment of a receiver,
         trustee, custodian or other similar official for, it or for any
         substantial part of its property) shall occur; or any proceeding or
         petition shall be instituted or adopted for the winding up of the
         Seller (whether or not in the context of a bankruptcy or insolvency
         proceeding); or the Seller shall take any corporate action to
         authorize any of the actions set forth above in this subsection (g);
         or

                  (h)     An Event of Termination shall have occurred under the
         Originator Purchase Agreement, the Secondary Purchase Agreement or the
         Financing Agreement; or

                  (i)     There shall have occurred any event which may
         materially adversely affect the collectibility of the Purchased Assets
         or the ability of the Seller or the Collection Agent to collect
         Purchased Assets or otherwise perform its respective obligations under
         this Agreement;

then, and in any such event, the Purchaser may in its sole discretion without
regard to Section 9.08, by notice to the Parent and the Seller take either or
both of the following actions: (x) declare the Facility Termination Date to have
occurred (in which case the Facility Termination Date shall be deemed to have
occurred), and all Purchases hereunder shall cease immediately and (y) following
the RFA Final Payment Date, without limiting any right under this Agreement to
replace the Collection Agent, designate another Person to succeed HQ (or any
successor Collection Agent) as Collection Agent; provided, that, automatically
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in paragraph (g) of this Section 7.01,
the Facility Termination Date shall occur, HQ (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Purchaser (or,
prior to the RFA Final Payment Date, the Person designated under the Financing
Agreement) shall become the Collection Agent. Upon any such declaration or
designation or upon such automatic termination, the Purchaser shall have, in
addition to the rights and remedies under this Agreement, all other rights and
remedies with respect to the Receivables provided after default under the UCC
and under other applicable law, which rights and remedies shall be cumulative.

                                       33

                                  ARTICLE VIII

                                 INDEMNIFICATION

                  SECTION 8.01. Indemnities by the Seller. Without limiting any
other rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and its assigns and transferees
(each, an "Indemnified Party"), from and against any and all damages, claims,
losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), awarded against or incurred by any
Indemnified Party arising out of or as a result of this Agreement or the
purchase of any Purchased Assets or in respect of any Purchased Asset,
Participated Receivable or any Contract, including, without limitation, arising
out of or as a result of:

                  (i)     the characterization in any Seller Report or other
         statement made by the Seller of any Purchased Receivable or
         Participated Receivable as an Eligible Receivable which is not an
         Eligible Receivable as of the date on which such information was
         certified;

                  (ii)    any representation or warranty or statement made or
         deemed made by the Seller (or any of its officers) under or in
         connection with this Agreement, which shall have been incorrect in any
         material respect when made;

                  (iii)   the failure by the Seller to comply with any
         applicable law, rule or regulation with respect to any Purchased
         Asset, Participated Receivable or the related Contract; or the failure
         of any Purchased Asset, Participated Receivable or the related
         Contract to conform to any such applicable law, rule or regulation;

                  (iv)    the failure to vest in the Purchaser absolute
         ownership of the Purchased Receivables and Participation Interests
         that are, or that purport to be, the subject of a Purchase under this
         Agreement and the Related Security and Collections in respect thereof,
         free and clear of any Adverse Claim;

                  (v)     the failure of the Seller to have filed, or any delay
         in filing, financing statements or other similar instruments or
         documents under the UCC of any applicable jurisdiction or other
         applicable laws with respect to any Purchased Receivables or
         Participation Interests that are, or that purport to be, the subject
         of a Purchase under this Agreement and the Related Security and
         Collections in respect thereof, whether at the time of any Purchase or
         at any subsequent time;

                  (vi)    any dispute, claim, offset or defense (other than
         discharge in bankruptcy of the Obligor) of the Obligor to the payment
         of any Receivable that is, or that purports to be, the subject of (A) a
         Purchase under this Agreement, or (B) a Participation Interest
         purchased under this Agreement from the Seller (including, without
         limitation, a defense based on such Receivable or the related Contract
         not being a legal, valid and binding

                                       34

         obligation of such Obligor enforceable against it in accordance with
         its terms), or any other claim resulting from the sale of the
         merchandise or services related to such Receivable or the furnishing or
         failure to furnish such merchandise or services or relating to
         collection activities with respect to such Receivable (if such
         collection activities were performed by the Seller acting as Collection
         Agent);

                  (vii)   any failure of the Seller to perform its duties or
         obligations in accordance with the provisions hereof or to perform its
         duties or obligations under any Contract related to a Purchased
         Receivable or Participated Receivable;

                  (viii)  any products liability or other claim arising out of
         or in connection with merchandise, insurance or services which are the
         subject of any Contract related to a Purchased Receivable or
         Participated Receivable;

                  (ix)    the commingling of Collections of Purchased Assets by
         the Seller (or a designee of the Seller) at any time with other funds
         of the Seller or an Affiliate of the Seller;

                  (x)     any investigation, litigation or proceeding related to
         this Agreement or the use of proceeds of Purchases by the Seller or the
         ownership by the Seller of Receivables, Participation Interests (and
         the Government Receivables with respect thereto) the Related Security,
         or Collections with respect thereto or in respect of any Receivable,
         Participation Interests (and the Government Receivables with respect
         thereto) Related Security or Contract;

                  (xi)    any failure of the Seller to comply with its covenants
         contained in this Agreement;

                  (xii)   any claim brought by any Person other than an
         Indemnified Party arising from any activity the Seller or any designee
         of the Seller in servicing, administering or collecting any Purchased
         Asset or Participated Receivable; or

                  (xiii)  any Purchased Asset becoming (in whole or in part) a
         Diluted Receivable or a Diluted Participation Interest; or

                  (xiv)   in the case of a Contract between an Originator and a
         PBM, where such PBM acts as an agent for Contract Payors rather than as
         a principal, the inability of the Program Agent, as collateral assignee
         pursuant to this Agreement and the other Purchase Agreements of such
         Contract, to enforce any Receivable arising under such contract
         directly (by contract or by operation of law) against such Contract
         Payor, except to the extent such Contract Payor is a Governmental
         Entity and such enforcement rights are limited by the 1972 Amendments
         to the Social Security Act; or

                                       35

                  (xv)    the inability of the Purchaser to exercise its rights
under this Agreement to review any Contract which contains a confidentiality
provision that purports to restrict its ability to do so, or any litigation or
proceeding relating to any such confidentiality provision.

It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Purchased Assets and (ii) that
nothing in this Section 8.01 shall require the Seller to indemnify any Person
(A) for Purchased Receivables and Participation Interests which are not
collected, not paid or uncollectible on account of the insolvency, bankruptcy,
or financial inability to pay of the applicable Obligor, (B) for damages,
losses, claims or liabilities or related costs or expenses to the extent found
in a final non-appealable judgment of a court of competent jurisdiction to have
resulted from such Person's gross negligence or willful misconduct, or (C) for
any income taxes or franchise taxes measured by income incurred by such Person
arising out of or as a result of this Agreement or in respect of any Purchased
Asset, Participated Receivable or any Contract.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Purchaser and, in the case
of any amendment, also signed by the Seller and the Collection Agent, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Purchaser to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.

                  SECTION 9.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by facsimile, to each party hereto, at its address
set forth on Exhibit D hereto or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All notices and
communications given to any party hereto shall be deemed to have been given on
the date of receipt.

                  SECTION 9.03. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Seller, the
Purchaser, the Collection Agent and their respective successors and assigns;
provided, however, that neither the Seller nor the Collection Agent may assign
its rights or obligations hereunder or any interest herein without the prior
written consent of the Purchaser. In connection with any sale or assignment by
the Purchaser of all or a portion of the Purchased Assets, the buyer or
assignee, as the case may be, shall, to the extent of its purchase or
assignment, have all rights of the Purchaser under this Agreement (as if such
buyer or assignee, as the case may be, were the Purchaser hereunder) except to
the extent

                                       36

specifically provided in the agreement between the Purchaser and such buyer or
assignee, as the case may be.

                  (b)     This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time, after the Facility
Termination Date, when all of the Purchased Receivables and Participated
Receivables are either collected in full or become Defaulted Receivables;
provided, however, that rights and remedies with respect to any breach of any
representation and warranty made by the Seller pursuant to Article IV and the
provisions of Article VIII and Sections 9.04, 9.05 and 9.06 shall be continuing
and shall survive any termination of this Agreement.

                  SECTION 9.04. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted to the Purchaser pursuant to Article VIII
hereof, the Seller agrees to pay on demand all costs and expenses in connection
with the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder excluding, however, any costs of enforcement or collection
of Purchased Assets which are not paid on account of the insolvency, bankruptcy
or financial inability to pay of the applicable Obligor.

                  (b)     In addition, the Seller agrees to pay any and all
stamp and other taxes and fees payable in connection with the execution,
delivery, filing and recording of this Agreement or the other documents or
agreements to be delivered hereunder, and the Seller agrees to save each
Indemnified Party harmless from and against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.

                  SECTION 9.05. No Proceedings. Each of the Seller and the
Collection Agent hereby agrees that it will not institute against, or join any
other Person in instituting against, the Purchaser any proceeding of the type
referred to in Section 7.01(g) so long as there shall not have elapsed one year
plus one day since the later of (i) the Facility Termination Date and (ii) the
date on which all of the Purchased Receivables and Participated Receivables are
either collected in full or become Defaulted Receivables.

                  SECTION 9.06. Confidentiality. Unless otherwise required by
applicable law, each party hereto agrees to maintain the confidentiality of this
Agreement in communications with third parties and otherwise; provided that this
Agreement may be disclosed to (i) third parties to the extent such disclosure is
made pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Purchaser's assignees, if they agree in each case
to hold it confidential.

                                       37

                  SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT
WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO
THE EXTENT THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION
AND THE EFFECT OF PERFECTION OR NON- PERFECTION OF THE PURCHASER'S OWNERSHIP OF
OR SECURITY INTEREST IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

                  SECTION 9.08. Third Party Beneficiary. Each of the parties
hereto hereby acknowledges that the Purchaser may assign all or any portion of
its rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and the Seller hereby consents to any such assignments. All such assignees,
including parties to the Financing Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, except to the extent specifically limited under
the terms of their assignment.

                  SECTION 9.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.

                  SECTION 9.10. Consent to Jurisdiction. (a) Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement or the other Transaction Documents,
and each party hereto hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. The parties
hereto hereby irrevocably waive, to the fullest extent they may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The Seller and the Purchaser hereby irrevocably appoints CT
Corporation (the "Process Agent"), with an office on the date hereof at 111 8th
Avenue, 13th Floor, New York, New York, 10011, United States, as their agent to
receive on behalf of each of the Seller and the Purchaser and its property
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. Such service may be made by mailing
or delivering a copy of such process to the Purchaser in care of the Process
Agent at the Process Agent's above address, and each of the Seller and the
Purchaser hereby irrevocably authorizes and directs the Process Agent to accept
such service on its behalf. The parties hereto agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

                                       38

                  (b)     Each of the parties hereto consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to it at its address specified in Section 9.02. Nothing in this
Section 9.10 shall affect the right of the Purchaser or its assignees to serve
legal process in any other manner permitted by law.

                  (c)     To the extent that the Seller or the Purchaser has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, such party hereby irrevocably waives such immunity in respect
of its obligations under this Agreement or any other Transaction Document.

                  SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED OR DELIVERED PURSUANT
HERETO.

                  SECTION 9.12. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder in U.S.
Dollars into another currency, the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the judgment creditor could
purchase U.S. Dollars with such other currency at New York, New York on the
Business Day preceding that on which final judgment is given.

                  (b)     The obligation of any party hereto (an "Obligor
Party") in respect of any sum due from it to any other party hereto (the
"Obligee") hereunder shall, notwithstanding any judgment in a currency other
than U.S. Dollars, be discharged only to the extent that on the Business Day
following receipt by the Obligee of any sum adjudged to be so due in such other
currency, the Obligee may in accordance with normal banking procedures purchase
U.S. Dollars with such other currency; if the U.S. Dollars so purchased are less
than the sum originally due to the Obligee in U.S. Dollars, the Obligor Party
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Obligee against such loss, and if the U.S. Dollars so purchased
exceed the sum originally due to the Obligee in U.S. Dollars, the Obligee shall
remit to the Obligor Party such excess.

                                       39

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

SELLER:                           RITE AID FUNDING I

                                  By:
                                     ------------------------------------------
                                  Title:
                                        ---------------------------------------

PURCHASER:                        RITE AID FUNDING II

                                  By:
                                     ------------------------------------------
                                  Title:
                                        ---------------------------------------

                  Signature Page to Tertiary Purchase Agreement
                  ---------------------------------------------

COLLECTION AGENT:                 RITE AID HDQTRS. FUNDING, INC.

                                  By:
                                     ------------------------------------------
                                  Title:
                                        ---------------------------------------

                  Signature Page to Tertiary Purchase Agreement
                  ---------------------------------------------

                                   SCHEDULE 1

                             Intentionally Omitted.

                                     Sch 1-1

                                   SCHEDULE 2

                                     MONTHS

                                Fiscal Year 2004
                                ----------------

Period          Start                  End                      # of Wks
------          -----                  ---                      --------

1               3/2/2003               3/29/2003                4

2               3/30/2003              4/26/2003                4

3               4/27/2003              5/31/2003                5

4               6/1/2003               6/28/2003                4

5               6/29/2003              7/26/2003                4

6               7/27/2003              8/30/2003                5

7               8/31/2003              9/27/2003                4

8               9/28/2003              10/25/2003               4

9               10/26/2003             11/29/2003               5

10              11/30/2003             12/27/2003               4

11              12/28/2003             1/24/2004                4

12              1/25/2004              2/28/2004                5

                                     Sch 2-1

                                   SCHEDULE 2

                                     MONTHS

                          Fiscal Year 2005 (leap year)
                          ----------------------------

Period              Start                  End                      # of Wks
------              -----                  ---                      --------

1                   2/29/2004              3/27/2004                4

2                   3/28/2004              4/24/2004                4

3                   4/25/2004              5/29/2004                5

4                   5/30/2004              6/26/2004                4

5                   6/27/2004              7/24/2004                4

6                   7/25/2004              8/28/2004                5

7                   8/29/2004              9/25/2004                4

8                   9/26/2004              10/23/2004               4

9                   10/24/2004             11/27/2004               5

10                  11/28/2004             12/25/2004               4

11                  12/26/2004             1/22/2005                4

12                  1/23/2005              2/26/2005                5

                                     Sch 2-2

                                   SCHEDULE 2

                                     MONTHS

                           Fiscal Year 2006 (53 weeks)
                           --------------------------

Period           Start                    End                      # of Wks
------           -----                    ---                      --------

1                2/27/2005                3/26/2005                4

2                3/27/2005                4/23/2005                4

3                4/24/2005                5/28/2005                5

4                5/29/2005                6/25/2005                4

5                6/26/2005                7/23/2005                4

6                7/24/2005                8/27/2005                5

7                8/28/2005                9/24/2005                4

8                9/25/2005                10/22/2005               4

9                10/23/2005               11/26/2005               5

10               11/27/2005               12/31/2005               5

11               1/1/2006                 1/28/2006                4

12               1/29/2006                3/4/2006                 5

                                     Sch 2-3

                                   SCHEDULE 2

                                     MONTHS

                                Fiscal Year 2007
                                ----------------

Period              Start                  End                      # of Wks
------              -----                  ---                      --------

1                   3/5/2006               4/1/2006                 4

2                   4/2/2006               4/29/2006                4

3                   4/30/2006              6/3/2006                 5

4                   6/4/2006               7/1/2006                 4

5                   7/2/2006               7/29/2006                4

6                   7/30/2006              9/2/2006                 5

7                   9/3/2006               9/30/2006                4

8                   10/1/2006              10/28/2006               4

9                   10/29/2006             12/2/2006                5

10                  12/3/2006              12/30/2006               4

11                  12/31/2006             1/27/2007                4

12                  1/28/2007              3/3/2007                 5

                                     Sch 2-4

                                   SCHEDULE 2

                                     MONTHS

                          Fiscal Year 2008 (leap year)
                          ----------------------------

Period           Start                End                          # of Wks
------           -----                ---                          --------

1                3/4/2007             3/31/2007                    4

2                4/1/2007             4/28/2007                    4

3                4/29/2007            6/2/2007                     5

4                6/3/2007             6/30/2007                    4

5                7/1/2007             7/28/2007                    4

6                7/29/2007            9/1/2007                     5

7                9/2/2007             9/29/2007                    4

8                9/30/2007            10/27/2007                   4

9                10/28/2007           12/1/2007                    5

10               12/2/2007            12/29/2007                   4

11               12/30/2007           1/26/2008                    4

12               1/27/2008            3/1/2008                     5

                                     Sch 2-5

                                   SCHEDULE 2

                                     MONTHS

                                Fiscal Year 2009
                                ----------------

Period                Start                   End                    # of Wks
------                -----                   ---                    --------

1                     3/2/2008                3/29/2008              4

2                     3/30/2008               4/26/2008              4

3                     4/27/2008               5/31/2008              5

4                     6/1/2008                6/28/2008              4

5                     6/29/2008               7/26/2008              4

6                     7/27/2008               8/30/2008              5

7                     8/31/2008               9/27/2008              4

8                     9/28/2008               10/25/2008             4

9                     10/26/2008              11/29/2008             5

10                    11/30/2008              12/27/2008             4

11                    12/28/2008              1/24/2009              4

12                    1/25/2009               2/28/2009              5

                                     Sch 2-6

                                    EXHIBIT A

                          CREDIT AND COLLECTION POLICY

                                       A-1

                                                       EXHIBIT B

                                   DEPOSIT BANKS, LOCK BOXES AND DEPOSIT ACCOUNTS

--------------------------------------------------------------------------------------------------------------------
DEPOSIT BANK NAME AND ADDRESS                                       LOCK BOX (POST OFFICE          DEPOSIT ACCOUNT
                                                                         BOX) NUMBER                   NUMBER
--------------------------------------------------------------------------------------------------------------------

Mellon Bank, Pittsburgh                                                     360321                        -
--------------------------------------------------------------------------------------------------------------------
Mellon Bank                                                                   -                       069-3636
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

                             ACCOUNT BANKS AND GOVERNMENTAL ENTITY RECEIVABLES ACCOUNTS

--------------------------------------------------------------------------------------------------------------------
ACCOUNT BANK NAME AND ADDRESS                                       LOCK BOX (POST OFFICE           GOVERNMENTAL
                                                                         BOX) NUMBER             ENTITY RECEIVABLES
                                                                                                   ACCOUNT NUMBER
--------------------------------------------------------------------------------------------------------------------

Mellon Bank, Philadelphia                                                   007020                        -
--------------------------------------------------------------------------------------------------------------------
Mellon Bank, Pittsburgh                                                     371115                        -
--------------------------------------------------------------------------------------------------------------------
Mellon Bank                                                                   -                       103-7294
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

                                       B-1

                                    EXHIBIT C

                              Intentionally Omitted

                                       C-1

                                    EXHIBIT D

                                    ADDRESSES

PURCHASER:                        Rite Aid Funding II

                                  30 Hunter Lane
                                  Camp Hill, Pennsylvania  17011
                                  Attention:  Robert Sari
                                  Facsimile No. (717) 760-7867

SELLER:                           Rite Aid Funding I

                                  30 Hunter Lane
                                  Camp Hill, Pennsylvania  17011
                                  Attention:  Robert Sari
                                  Facsimile No. (717) 760-7867

 COLLECTION AGENT:                Rite Aid Hdqtrs. Funding, Inc.

                                  30 Hunter Lane
                                  Camp Hill, Pennsylvania  17011
                                  Attention:  Robert Sari
                                  Facsimile No. (717) 760-7867

                                       D-1Exhibit 10.7

                                                                  Execution Copy

--------------------------------------------------------------------------------

                             INTERCREDITOR AGREEMENT
                         dated as of September 22, 2004

                                      among

                          CITICORP NORTH AMERICA, INC.,
                                as Program Agent,
                                -----------------

                               RITE AID FUNDING I,
                                  as Purchaser,
                                  -------------

                              RITE AID FUNDING II,
                                  as Borrower,
                                  ------------

                   Each of the Other Parties Listed on Annex I
                                 as Originators
                                 --------------

                         RITE AID HDQTRS. FUNDING, INC.,
                     as a Purchaser and as Collection Agent
                     --------------------------------------

                                       and

                          CITICORP NORTH AMERICA, INC.
                                       and
                              JPMORGAN CHASE BANK,
                     collectively as Senior Collateral Agent
                     ---------------------------------------

--------------------------------------------------------------------------------

                                                          TABLE OF CONTENTS
                                                                                                               Page
                                                                                                               ----

PRELIMINARY STATEMENTS............................................................................................1

ARTICLE I           DEFINITIONS
                    SECTION 1.01.         Defined Terms...........................................................3
                    SECTION 1.02.         References to Terms Defined in the Purchaser
                                          Documents and the Senior Loan Documents.................................9

ARTICLE II          INTERCREDITOR PROVISIONS
                    SECTION 2.01.         Interests in and Priorities of Purchased Property and
                                          Pre-Event Unsold Receivables Property...................................9
                    SECTION 2.02.         Respective Interests in Purchased Property and
                                          Collateral.............................................................10
                    SECTION 2.03.         Distribution of Proceeds...............................................11
                    SECTION 2.03A.        Collections............................................................12
                    SECTION 2.04.         Deferred Purchase Price Note...........................................12
                    SECTION 2.05.         Enforcement Actions....................................................12
                    SECTION 2.06.         Access to and Use of Collateral........................................13
                    SECTION 2.07.         Notice of Defaults.....................................................14
                    SECTION 2.08.         Agency for Perfection..................................................14
                    SECTION 2.09.         UCC Notices............................................................15
                    SECTION 2.10.         Independent Credit Investigations......................................15
                    SECTION 2.11.         Limitation on Liability of Parties to Each Other.......................15
                    SECTION 2.12.         Marshalling of Assets..................................................15
                    SECTION 2.13.         Relative Rights of Investors, Liquidity Banks and
                                          Secured Parties as Among Themselves....................................15
                    SECTION 2.14.         Effect upon Senior Loan Documents and Purchaser
                                          Documents..............................................................16
                    SECTION 2.15.         Accountings............................................................16
                    SECTION 2.16.         Further Assurances.....................................................16

ARTICLE III         MISCELLANEOUS
                    SECTION 3.01.         Notices................................................................17
                    SECTION 3.02.         Agreement Absolute.....................................................18
                    SECTION 3.03.         Successors and Assigns.................................................18
                    SECTION 3.04.         Third-Party Beneficiaries..............................................18
                    SECTION 3.05.         Amendments, Etc........................................................19
                    SECTION 3.06.         Section Titles.........................................................19
                    SECTION 3.07.         Severability...........................................................19
                    SECTION 3.08.         Execution in Counterparts..............................................19
                    SECTION 3.09.         Governing Law..........................................................19
                    SECTION 3.10.         Submission to Jurisdiction.............................................19
                    SECTION 3.11.         Consent to Service of Process..........................................20

                                        i

                                                                                                               Page
                                                                                                               ----

                    SECTION 3.12.         Waiver of Jury Trial...................................................20
                    SECTION 3.13.         No Proceedings.........................................................20

ANNEX I             List of Originators

                                       ii

                             INTERCREDITOR AGREEMENT

                  INTERCREDITOR AGREEMENT, dated as of September 22, 2004, by
and among CITICORP NORTH AMERICA, INC., as Program Agent (together with its
successors and assigns, the "Program Agent") for and on behalf of CAFCO, LLC
("CAFCO") and the other financial institutions from time to time party to the
Receivables Financing Agreement referred to below as Investors (together with
CAFCO, the "Investors"), CITIBANK, N.A., a national banking association
("Citibank"), and the other financial institutions from time to time party to
the Receivables Financing Agreement referred to below as Banks (together with
Citibank, the "Liquidity Banks"), CITICORP NORTH AMERICA, INC. ("CNAI") and the
other financial institutions from time to time party to the Receivables
Financing Agreement referred to below as Investor Agents (together with CNAI,
the "Investor Agents"), RITE AID HDQTRS. FUNDING, INC., a Delaware corporation
("HQ"), RITE AID FUNDING I, a Cayman Islands exempted company incorporated with
limited liability on August 11, 2004 with registration number 138720 (formerly
known as Cayman Resources (21) Ltd.) ("RAF I"), RITE AID FUNDING II, a Cayman
Islands exempted company incorporated with limited liability on August 11, 2004
with registration number 138722 (formerly known as Cayman Resources (22) Ltd.)
(the "Borrower"), each of the other parties listed on Annex I hereto as an
originator (the "Originators"), and CITICORP NORTH AMERICA, INC., as
administrative agent pursuant to the Credit Agreement (as hereinafter defined)
and as senior collateral processing co-agent pursuant to the Other Intercreditor
Agreement (as hereinafter defined) and JPMORGAN CHASE BANK, as senior collateral
processing co-agent pursuant to the Other Intercreditor Agreement (Citicorp
North America, Inc. and JPMorgan Chase Bank, as senior collateral processing
co-agents, and their respective successors and assigns, collectively, the
"Senior Collateral Agent").

                             PRELIMINARY STATEMENTS

                  1.    The Originators have agreed to sell, transfer and assign
to HQ and HQ has agreed to purchase and acquire from the Originators, all of the
right, title and interest of the Originators in and to the Purchased Receivables
(as hereinafter defined) and the Related Security (as hereinafter defined) with
respect thereto (or, in the case of certain Purchased Receivables, a 100%
undivided beneficial interest therein) pursuant to an Originator Purchase
Agreement, dated as of September 21, 2004 (as amended, supplemented, restated or
otherwise modified from time to time, the "Originator Purchase Agreement"),
among the Originators and HQ.

                  2.    Pursuant to the Originator Purchase Agreement, the
Originators shall grant to HQ a security interest in all of the right, title and
interest of the Originators in and to the Pre- Event Unsold Receivables (as
hereinafter defined) and the Related Security with respect thereto.

                  3.    HQ has agreed to sell, transfer and assign to RAF I, and
RAF I has agreed to purchase and acquire from HQ, all of the right, title and
interest of HQ in and to the Purchased Receivables and the Related Security with
respect thereto pursuant to a Secondary Purchase Agreement, dated as of
September 21, 2004 (as amended, supplemented, restated or otherwise modified
from time to time, the "Secondary Purchase Agreement"), between HQ and RAF I.

                  4.    Pursuant to the Secondary Purchase Agreement, HQ shall
grant to RAF I a security interest in all of the right, title and interest of HQ
in and to the Pre-Event Unsold Receivables and the Related Security with respect
thereto.

                  5.    RAF I has agreed to sell, transfer and assign to the
Borrower, and the Borrower has agreed to purchase and acquire from RAF I, all of
the right, title and interest of RAF I in and to the Purchased Receivables and
the Related Security with respect thereto pursuant to a Tertiary Purchase
Agreement, dated as of September 21, 2004 (as amended, supplemented, restated or
otherwise modified from time to time, the "Tertiary Purchase Agreement"),
between RAF I and the Borrower.

                  6.    Pursuant to the Tertiary Purchase Agreement, RAF I shall
grant to the Borrower a security interest in all of the right, title and
interest of RAF I in and to the Pre-Event Unsold Receivables and the Related
Security with respect thereto.

                  7.    The Borrower, the Originators, HQ, as the collection
agent (the "Collection Agent"), the Program Agent, the Investors, the Liquidity
Banks and the Investor Agents are parties to a Receivables Financing Agreement,
dated as of September 21, 2004 (as amended, supplemented, restated or otherwise
modified from time to time, the "Receivables Financing Agreement"), pursuant to
which the Investors and the Liquidity Banks have agreed to make Advances (as
hereinafter defined) to the Borrower secured by the Purchased Receivables and
the Related Security with respect thereto or interests therein and the Borrower
has agreed to grant a security interest in favor of the Program Agent in, among
other things, the right, title and interest of the Borrower in and to the
Originator Purchase Agreement, the Secondary Purchase Agreement and the Tertiary
Purchase Agreement (including, without limitation, all of the Borrower's
interest in the Pre-Event Unsold Receivables and the Related Security with
respect thereto).

                  8.    The Originator Purchase Agreement, the Secondary
Purchase Agreement, the Tertiary Purchase Agreement and the Receivables
Financing Agreement provide for the filing of UCC (as hereinafter defined)
financing statements and, in the case of the Tertiary Purchase Agreement and the
Receivables Financing Agreement, the registration of charges on the register of
mortgages and charges of RAF I and the Borrower in connection with obtaining the
ownership and perfecting the security interests of the parties thereto in the
Receivables (as hereinafter defined) and the Related Security.

                  9.    The Originators and certain other subsidiaries of Rite
Aid Corporation ("Rite Aid") have entered into a Credit Agreement, dated as of
June 27, 2001, as amended and restated as of August 4, 2003, as further amended
and restated as of September 22, 2004 with, among other parties, the Senior
Lenders (as hereinafter defined) and CNAI, as administrative agent and
collateral processing co-agent (as amended, supplemented, restated or otherwise
modified from time to time, the Credit Agreement") and related agreements,
pursuant to which the Originators other than Rite Aid and such subsidiaries have
guaranteed the payment and performance of the Senior Obligations (as hereinafter
defined) and granted security interests in

                                        2

certain collateral, including but not limited to the Receivables, the Related
Security and proceeds thereof.

                  10.   The Originators and certain subsidiaries of Rite Aid
have entered into the 12.5% Note Indenture, the 9.5% Note Indenture and the
8.125% Note Indenture (each as defined in the Other Intercreditor Agreement) in
favor of the Second Priority Debt Parties (as hereinafter defined) (such
indentures, as amended, supplemented, restated or otherwise modified from time
to time, the "Indentures") and related agreements, pursuant to which the
Originators other than Rite Aid and such subsidiaries have guaranteed the
payment and performance of the Second Priority Debt Obligations and granted
security interests in certain collateral, including but not limited to the
Receivables, the Related Security and proceeds thereof.

                  11.   The Originators, Rite Aid, the Second Priority
Collateral Trustee (as hereinafter defined), the Senior Collateral Agent,
JPMorganChase Bank and certain trustees have entered into an Amended and
Restated Collateral Trust and Intercreditor Agreement dated as of June 27, 2001,
as amended and restated as of May 28, 2003, as amended, supplemented, restated
or otherwise modified from time to time, the "Other Intercreditor Agreement"),
pursuant to which, among other things, lien priority was established between the
Senior Lenders and the Second Priority Debt Parties and the Senior Collateral
Agent was given certain rights with respect to the release of liens on the
Receivables and the Related Security.

                  12.   It is a condition precedent to the making of the initial
Advance secured by the Purchased Receivables pursuant to the Receivables
Financing Agreement that the parties hereto enter into this Agreement.

                  13.   The parties hereto have agreed to enter into this
Agreement to set forth provisions regarding the interests and allocation of
priorities in, and the enforcement of remedies with respect to, the Purchased
Property (as hereinafter defined), the Pre-Event Unsold Receivables Property (as
hereinafter defined) and the other Collateral (as hereinafter defined);

                  NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, it is hereby agreed as
follows:

                                    ARTICLE I
                                   DEFINITIONS

                  SECTION 1.01.    Defined Terms. As used in this Agreement, the
following capitalized terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined). The term "Agreement" shall mean this Intercreditor Agreement, as the
same may be amended, supplemented, restated or otherwise modified from time to
time.

                  "Advances" has the meaning specified in the Receivables
Financing Agreement.

                                        3

                  "Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New York or is a
day on which banking institutions located in such state are closed.

                  "Claim" means the Lender Claim and/or the Indenture Claims, as
applicable.

                  "Collateral" means all Lender Collateral which does not
constitute Purchased Property.

                  "Collection Account" means deposit account no. 069-3636 at
Mellon Bank, N.A. and the corresponding lock-box 360321, into which Collections
on account of Receivables are deposited or remitted.

                  "Collection Account Bank" has the meaning specified for the
term "Deposit Bank" in the Receivables Financing Agreement.

                  "Collection Agent" has the meaning specified in Preliminary
Statement 7.

                  "Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of the Related Security with respect to such
Receivable, excluding such collections and proceeds received by an Originator or
HQ with respect to the sale of the Purchased Receivables (or interests therein)
under the Originator Purchase Agreement or the Secondary Purchase Agreement.

                  "Company Claim" means all of the indebtedness, obligations and
other liabilities of HQ to the Originators arising under, or in connection with,
the Purchaser Documents, including, but not limited to, obligations evidenced by
the Deferred Purchase Price Note, and all costs of collection or enforcement
thereof.

                  "Contract" means an agreement between an Originator and an
Obligor or between a pharmaceutical benefits manager and an Obligor pursuant to
or under which such Obligor shall be obligated to pay for pharmaceutical
merchandise sold by such Originator or its affiliates from time to time.

                  "Deferred Purchase Price Note" has the meaning specified in
the Originator Purchase Agreement.

                  "Enforcement" means, collectively or individually, for (i) the
Program Agent on behalf of the Investors, the Liquidity Banks and the Investor
Agents to declare an "Event of Termination" under the Receivables Financing
Agreement and to cease making Advances secured by Receivables or interests
therein or (ii) a "Triggering Event" (as defined in the Other Intercreditor
Agreement) to occur or, if the Other Intercreditor Agreement is no longer in
effect, an Event of Default to occur which results in the acceleration of the
principal amount of any

                                        4

Senior Obligations or Second Priority Debt Obligations under the terms of any
Senior Loan Document or any Second Priority Debt Document.

                  "Enforcement Notice" means a written notice delivered in
accordance with Section 2.05 hereof, which notice shall (i) if delivered by the
Program Agent, state that an Event of Termination has occurred, specify the
nature of such Event of Termination and state that an Enforcement Period has
commenced and (ii) if delivered by the Senior Collateral Agent, state that an
Event of Default has occurred, specify the nature of such event and state that
an Enforcement Period has commenced.

                  "Enforcement Period" means the period of time following the
receipt by either the Program Agent or the Senior Collateral Agent of an
Enforcement Notice delivered by the other such Person until the earliest of the
following: (i) the Purchaser Claim Termination Date, in the case of an
Enforcement Notice delivered by the Program Agent; (ii) the Lender Claim
Termination Date, in the case of an Enforcement Notice delivered by the Senior
Collateral Agent; and (iii) the date the Program Agent and the Senior Collateral
Agent agree in writing to terminate the Enforcement Period.

                  "Event of Default" means any "Event of Default" as defined in
the Credit Agreement and any "Event of Default" or similar event as defined in
any Second Priority Debt Document, as the case may be.

                  "Event of Termination" has the meaning specified in the
Receivables Financing Agreement.

                  "Governmental Entity Receivables Account" means deposit
account no. 103-7294 at Mellon Bank, N.A. and the corresponding lock-boxes nos.
007020 and 371115, into which Collections on account of Receivables are
deposited or remitted.

                  "Indenture" has the meaning specified in Preliminary
Statement 10.

                  "Indenture Claims" means the Second Priority Debt Obligations.

                  "Lender Claim" means all Senior Obligations.

                  "Lender Collateral" means the Senior Collateral (as defined in
the Other Intercreditor Agreement) and the Second Priority Collateral (as
defined in the Other Intercreditor Agreement).

                  "Lender Commitments" means the "Commitments" as such term is
defined in the Credit Agreement.

                  "Lender/Indenture Claim Termination Date" means the first date
after the date hereof on which (a)(i) the Bank Commitments shall have expired or
terminated and (ii) the

                                        5

Lender Claim has been indefeasibly paid and satisfied in full in cash and (b)
the Indenture Claims have been indefeasibly paid and satisfied in full in cash.

                  "Obligor" means a Person obligated to make payments pursuant
to a Contract; provided, however, if a pharmaceutical benefits manager acts as
agent for various persons and is obligated, pursuant to a Contract, to turn over
to an Originator payments made to it by such persons, then the term "Obligor"
shall include both such pharmaceutical benefits manager and such persons.

                  "Other Intercreditor Agreement" has the meaning specified in
Preliminary Statement 11.

                  "Person" means an individual, corporation, trust (including a
business trust), joint-stock company, limited liability company, unincorporated
organization, association, partnership, joint venture, governmental authority or
any other entity.

                  "Post-Event Receivables" means (i) all Receivables arising
from the conduct or operation of the business of any Originator after the
occurrence of an Enforcement with respect to any Lender Claim or Indenture
Claim, (ii) the Collections related to such Receivables and (iii) the Related
Security with respect to such Receivables.

                  "Pre-Event Unsold Receivables" means any Receivables other
than Purchased Receivables and which arise from the conduct or operation of the
business of any Originator prior to the occurrence of an Enforcement with
respect to any Lender Claim or Indenture Claim.

                  "Pre-Event Unsold Receivables Property" means (i) the
Pre-Event Unsold Receivables, (ii) the Collections related to the Pre-Event
Unsold Receivables and (iii) the Related Security with respect to the Pre-Event
Unsold Receivables.

                  "Purchase Agreements" means, collectively, the Originator
Purchase Agreement, the Secondary Purchase Agreement and the Tertiary Purchase
Agreement.

                  "Purchased Property" means (i) the Purchased Receivables, (ii)
the Collections related to the Purchased Receivables, (iii) the Related Security
with respect to the Purchased Receivables and (iv) each of the Collection
Accounts; provided, however, that the inclusion of each of the Collection
Accounts as Purchased Property is not intended to include as Purchased Property
cash collections and other cash proceeds deposited in the Collection Accounts
that are not Collections related to Purchased Receivables, Pre-Event Unsold
Receivables or Related Security with respect to either of the foregoing.

                  "Purchased Receivables" means all Receivables now owned or
hereafter existing sold, contributed or otherwise transferred or purported to be
sold, contributed or otherwise transferred (including Receivables in which a
100% Participation Interest (as defined in the Originator Purchase Agreement)
has been transferred), in each instance, to a Purchaser, under

                                        6

and pursuant to the terms of the Originator Purchase Agreement, the Secondary
Purchase Agreement or the Tertiary Purchase Agreement.

                  "Purchaser" means any of (i) the Borrower, HQ or RAF I, as the
purchaser or transferee of Purchased Receivables under the Purchase Agreements
or the holder of a security interest in Pre-Event Unsold Receivables under the
Purchase Agreements; (ii) the Investors and Liquidity Banks, as the owners of
Advances secured by Purchased Receivables or interests therein under the
Receivables Financing Agreement or (in the case of the Liquidity Banks) as the
purchasers of Advances or interests therein from the Investors; (iii) the
Program Agent, as representative of the Investors and the Liquidity Banks; and
(iv) the Investor Agents.

                  "Purchaser Claim" means all obligations of any Originator, HQ,
RAF I, or the Collection Agent or of the Borrower to, or which have been
assigned to or entered into in favor of, the Program Agent, the Investors, the
Liquidity Banks or the Investor Agents arising under any Purchaser Document and
of any Obligor arising under any Purchased Receivable, including, but not
limited to, all amounts now or hereafter advanced or made to or for the benefit
of the Borrower thereunder, any interest thereon, any repayment obligations,
indemnity payments, fees or expenses due thereunder (including any interest,
fees or expenses that, but for the provisions of the federal Bankruptcy Code,
would have accrued), and any costs of collection or enforcement.

                  "Purchaser Claim Termination Date" means the first date after
the date hereof on which (i) the Purchaser Claim has been indefeasibly paid and
satisfied in full in cash and (ii) the commitments of the Liquidity Banks to
make Advances secured by Purchased Receivables or interests therein pursuant to
the Receivables Financing Agreement shall have expired or terminated.

                  "Purchaser Documents" means the Receivables Financing
Agreement, the Originator Purchase Agreement, the Secondary Purchase Agreement,
the Tertiary Purchase Agreement, the Deposit Account Agreements, the
Governmental Entity Receivables Agreements, the Parent Undertakings and the Fee
Agreement (each as defined in the Receivables Financing Agreement) and any other
agreements, instruments or documents executed by the Originators, the Collection
Agent, HQ, RAF I, or the Borrower in connection therewith.

                  "Purchaser Funding Date" means the date on which the initial
Advances are made by the Investors and/or the Liquidity Banks under the
Receivables Financing Agreement.

                  "Receivable" means the indebtedness or obligation of any
Obligor resulting from the provision or sale of pharmaceutical merchandise by an
Originator (or an affiliate on behalf of such Originator) under a Contract
(whether constituting an account, instrument, chattel paper, payment intangible
or general intangible), and includes the right to payment of any interest or
finance charges and other obligations of such Obligor with respect thereto.

                  "Records" means all contracts (including, without limitation,
the Contracts) and other books, records and other information (including,
without limitation, computer programs,

                                        7

tapes, disks, punch cards, data processing software and related property and
rights, subject to the rights of any licensors and to applicable law) to the
extent relating to any of the Receivables or any of the related Obligors.

                  "Related Security" means with respect to any Receivable: (i)
all of the interest of an Originator in the merchandise (including Returned
Goods), if any, relating to any sale giving rise to such Receivable; (ii) all
security interests or liens and property subject thereto from time to time
purporting to secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together will all UCC
financing statements filed against an Obligor describing any collateral securing
such Receivable; (iii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise; and (iv) the Records relating to such Receivable and
the related Obligor. Notwithstanding the foregoing, Returned Goods shall only
constitute part of the Related Security for Purchased Receivables and Pre-Event
Unsold Receivables after an Enforcement with respect to the Receivables
Financing Agreement. At all other times, Returned Goods shall constitute part of
the Collateral.

                  "Responsible Officer" means, as to the Senior Collateral Agent
or the Program Agent, an officer thereof at the level of vice president or
higher who is actively involved with the administration of the Credit Agreement,
the Purchaser Documents or the Other Intercreditor Agreement, as the case may
be.

                  "Returned Goods" means all right, title and interest of an
Originator, HQ, RAF I or the Borrower, as applicable, in and to returned,
repossessed or foreclosed goods and/or merchandise the sale of which gave rise
to a Purchased Receivable or a Pre-Event Unsold Receivable.

                  "Second Priority Collateral Trustee" has the meaning specified
in the Other Intercreditor Agreement.

                  "Second Priority Debt Documents" has the meaning specified in
the Other Intercreditor Agreement.

                  "Second Priority Debt Obligations" has the meaning specified
in the Other Intercreditor Agreement.

                  "Second Priority Debt Parties" has the meaning specified in
the Other Intercreditor Agreement.

                  "Secured Parties" has the meaning specified in the Other
Intercreditor Agreement.

                  "Senior Lenders" has the meaning specified in the Other
Intercreditor Agreement.

                                        8

                  "Senior Loan Documents" has the meaning specified in the Other
Intercreditor Agreement.

                  "Senior Obligations" has the meaning specified in the Other
Intercreditor Agreement.

                  "UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdictions.

                  SECTION 1.02. References to Terms Defined in the Purchaser
Documents and the Senior Loan Documents. Whenever in Section 1.01 a term is
defined by reference to the meaning specified in any of the Purchaser Documents,
the Other Intercreditor Agreement or Senior Loan Documents, then, unless
otherwise specified herein, such term shall have the meaning specified in such
Purchaser Documents, the Other Intercreditor Agreement or Senior Loan Documents,
as the case may be, as in existence on the date hereof, without giving effect to
any amendments of such term as may hereafter be agreed to by the parties to such
documents, unless such amendments have been consented to in writing by all of
the parties hereto.

                                   ARTICLE II
                            INTERCREDITOR PROVISIONS

                  SECTION 2.01.    Interests in and Priorities of Purchased
Property and Pre- Event Unsold Receivables Property. (a) Notwithstanding any
provision of the UCC, any applicable law or decision or any of the Senior Loan
Documents, Purchaser Documents or the Other Intercreditor Agreement, the Senior
Collateral Agent hereby agrees that (1) any lien, claim, encumbrance, security
interest or other interest acquired by the Senior Collateral Agent, the Second
Priority Collateral Trustee or any other Secured Party in the Purchased
Receivables, the Related Security with respect thereto, the proceeds thereof or
any other Purchased Property is hereby automatically and without further action
terminated and released, effective on the Purchaser Funding Date, and the Senior
Collateral Agent, the Second Priority Collateral Trustee and the other Secured
Parties shall thereafter have no lien, claim, encumbrance, security interest or
other interest or right therein, and (2) any lien, claim, encumbrance, security
interest or other interest acquired by the Senior Collateral Agent, the Second
Priority Collateral Trustee or any other Secured Party in the Pre-Event Unsold
Receivables, the Related Security with respect thereto, the proceeds thereof or
any other Pre-Event Unsold Receivables Property shall in all respects be junior
and subordinate to any lien, claim, encumbrance, security interest or other
interest acquired by the Program Agent or any Purchaser therein; provided,
however, that nothing in clause (1) above shall be deemed to constitute a
termination or release by the Senior Collateral Agent of: (i) any lien on and
security interest in the proceeds received by any Originator or HQ for the sale
or other transfer of the Purchased Receivables (including, without limitation,
cash payments made by HQ or RAF I and the Deferred Purchase Price Note issued by
HQ in favor of Rite Aid of Delaware, Inc., as agent for the Originators, each in
connection with such sales) and the Related Security with respect thereto; (ii)
any lien on, security interest in or assignment of any Company Claim; (iii) any
lien, claim, encumbrance, security interest or other interest or right the
Senior Collateral Agent may have in the Deferred Purchase Price Note or in any
capital or

                                                         9

equity interests issued by HQ; and (iv) any lien, claim, encumbrance, security
interest or other interest or right the Senior Collateral Agent may have in the
Records (other than the Contracts), provided, that the Program Agent may have
access to and use of all Records as provided in Section 2.06. If Returned Goods
are fungible with any Collateral and are commingled with any Collateral, such
Returned Goods shall be presumed to be the first goods of such type sold by an
Originator after such Returned Goods become commingled with other goods of the
same type. In the event that the Senior Collateral Agent shall foreclose or
otherwise dispose of any commingled inventory described in the immediately
preceding sentence, the Program Agent shall be allowed to have a representative
observe such foreclosure or disposition and the Senior Collateral Agent's
application of proceeds received therefrom.

                  (b)   The Senior Collateral Agent hereby acknowledges that the
Deferred Purchase Price Note is subordinated to the Purchaser Claim and the lien
of the Program Agent on the Purchased Property and Pre-Event Unsold Receivables
Property pursuant to the Purchaser Documents.

                  (c)   The priorities of the liens, claims, encumbrances,
security interests or other interests established, altered or specified in
clause (2) of the first sentence of Section 2.01(a) are applicable irrespective
of the time or order of attachment or perfection thereof, the method of
perfection, the time or order of filing of financing statements or the taking of
possession, or the giving of or failure to give notice of the acquisition or
expected acquisition of purchase money or other security interests or otherwise
and irrespective of any other fact, circumstance, act or occurrence that might
otherwise affect the priorities established under such clause (2).

                  SECTION 2.02. Respective Interests in Purchased Property and
Collateral. (a) Except for all rights of access to and use of Records granted to
the Purchasers pursuant to the Purchaser Documents and Section 2.06 hereof and
the Program Agent's security interest in, lien upon or other interest in the
Pre-Event Unsold Receivables Property, the Program Agent agrees that it does not
have and shall not have any security interest in, lien upon or interest in the
Collateral. Except as otherwise specified in Section 2.01 above, the Senior
Collateral Agent agrees that it does not have and shall not have any security
interest in, lien upon or interest in the Purchased Property, the Pre-Event
Unsold Receivables Property, the Governmental Entity Receivables Account or any
other assets or property of the Borrower or RAF I. The Program Agent agrees that
(i) it does not have and shall not have any security interest in, lien upon, or
interest in, any Post-Event Receivables and (ii) any lien, claim, encumbrance,
security interest or other interest acquired by the Program Agent, the
Investors, the Liquidity Banks or the Purchasers in the Post-Event Receivables
shall in all respects be junior and subordinate to any lien, claim, encumbrance,
security interest or other interest acquired therein by the Senior Collateral
Agent, the Second Priority Collateral Trustee and any other Security Party. The
Senior Collateral Agent agrees to terminate, effective on the date of this
Agreement, any account control agreements in its favor with respect to the
Collection Account or the Governmental Entity Receivables Account.

                  (b)   The priorities of the liens, claims, encumbrances,
security interests or other interests established, altered or specified in the
third sentence of Section 2.02(a) are applicable

                                       10

irrespective of the time or order of attachment or perfection thereof, the
method of perfection, the time or order of filing of financing statements or the
taking of possession, or the giving of or failure to give notice of the
acquisition or expected acquisition of purchase money or other security
interests or otherwise and irrespective of any other fact, circumstance, act or
occurrence that might otherwise affect the priorities established under such
sentence.

                  SECTION 2.03.    Distribution of Proceeds. At all times, all
proceeds of Collateral and Purchased Property shall be distributed in accordance
with the following procedure:

                  (a)   (i) prior to the Lender/Indenture Claim Termination
         Date, all proceeds of the Collateral, including the Post-Event
         Receivables (other than Pre-Event Unsold Receivables Property), shall,
         to the extent required by the Other Intercreditor Agreement and the
         other Senior Loan Documents and Second Priority Debt Documents, be
         paid or delivered to the Senior Collateral Agent for application in
         accordance with the Other Intercreditor Agreement and the other Senior
         Loan Documents and Second Priority Debt Documents and (ii) any
         proceeds of Collateral (other than Pre-Event Unsold Receivables
         Property) not required to be applied pursuant to clause (i) shall be
         paid to the Originators or as otherwise required by applicable law.

                  (b)   (i) prior to the Purchaser Claim Termination Date, all
         Collections and other proceeds of the Purchased Property shall, to the
         extent required by the Purchaser Documents, be paid or delivered to the
         Program Agent for the benefit of the Investors and the Liquidity Banks
         for application in accordance with the terms of the Receivables
         Financing Agreement against the Purchaser Claim until the Purchaser
         Claim Termination Date, (ii) any Collections and proceeds of the
         Purchased Property not required to be applied pursuant to clause (i)
         shall be paid to the Borrower in accordance with the terms of the
         Receivables Financing Agreement or as otherwise required by applicable
         law, (iii) prior to the Purchaser Claim Termination Date, all
         Collections and other proceeds of the Pre-Event Unsold Receivables
         Property shall be paid or delivered to the Originators unless provided
         otherwise in the Purchaser Documents and (iv) after the Purchaser Claim
         Termination Date, all Collections and other proceeds of the Pre-Event
         Unsold Receivables Property shall be paid or delivered to the
         Originators unless provided otherwise in the Senior Loan Documents or
         the Second Priority Debt Documents; provided, however, that HQ and the
         Originators hereby agree that, prior to the Lender Claim Termination
         Date, all such remaining Collections and proceeds of Purchased Property
         which, pursuant to the Purchaser Documents, are to be paid by HQ to the
         Originators for application against a Company Claim shall, if required
         by the Other Intercreditor Agreement or the other Senior Loan Documents
         or Second Priority Debt Documents, be paid by the Borrower, HQ and RAF
         I directly on behalf of the Originators to the Senior Collateral Agent
         for application against the Claim before being paid to the Originators.

                  (c)   Subject to the terms and conditions of this Section
         2.03(c), the Program Agent agrees that it shall transfer its interest
         in and control over the Collection Account

                                       11

         and its rights with respect to the Governmental Entity Receivables
         Account to the Senior Collateral Agent upon the occurrence of the
         Purchaser Claim Termination Date (provided that the Lender/Indenture
         Claim Termination Date shall not yet have occurred). Any such transfer
         shall be without representation, recourse or warranty of any kind on
         the part of the Program Agent.

                  SECTION 2.03A. Collections. (a) For purposes of determining
whether specific Collections and other proceeds have been received on account of
Purchased Receivables, on the one hand, or on account of Pre-Event Unsold
Receivables or Post-Event Receivables, on the other hand, the parties hereto
agree as follows:

                        (i)    all payments made by an Obligor which is
                  obligated to make payments on Purchased Receivables but is not
                  obligated to make any payments on Pre-Event Unsold Receivables
                  or Post-Event Receivables shall be conclusively presumed to be
                  payments on account of Purchased Receivables and all payments
                  made by an Obligor which is obligated to make payments on
                  Pre-Event Unsold Receivables or Post-Event Receivables but is
                  not obligated to make any payments on Purchased Receivables
                  shall be conclusively presumed to be payments on account of
                  Pre-Event Unsold Receivables or Post-Event Receivables; and

                        (ii)   all payments made by an Obligor which is
                  obligated to make payments with respect to both Purchased
                  Receivables and Pre-Event Unsold Receivables or Post-Event
                  Receivables shall be applied against the specific Receivables,
                  if any, which are designated by such Obligor as the
                  Receivables with respect to which such payments should be
                  applied. In the absence of such designation, such payments
                  shall be applied as a Collection of Receivables of such
                  Obligor in the order of the age of such Receivables, starting
                  with the oldest such Receivable.

                  (b)   For purposes of determining whether specific Collections
and other proceeds have been received on account of Pre-Event Unsold
Receivables, on the one hand, or on account of Post-Event Receivables, on the
other hand, the parties hereto agree that all payments made by an Obligor which
is obligated to make payments with respect to both Pre-Event Unsold Receivables
and Post-Event Receivables shall be applied against the specific Receivables, if
any, which are designated by such Obligor as the Receivables with respect to
which such payments should be applied. In the absence of such designation, such
payments shall be applied as a Collection of Receivables of such Obligor in the
order of the age of such Receivables, starting with the oldest such Receivable.

                  SECTION 2.04.    Deferred Purchase Price Note. The Program
Agent hereby acknowledges that Rite Aid will deliver to the Senior Collateral
Agent the Deferred Purchase Price Note issued by HQ to Rite Aid, as agent for
the Originators, as security for the Claim.

                  SECTION 2.05.    Enforcement Actions. Each of the Senior
Collateral Agent and the Program Agent agrees to use reasonable efforts to give
an Enforcement Notice to each

                                       12

other party hereto prior to commencement of Enforcement and further agrees that
during the period, if any, between the giving of such Enforcement Notice and the
commencement of Enforcement thereunder, each party receiving such notice shall
have the right to the extent within its power (but not the obligation) to cure
the Event of Default or Event of Termination which has occurred under the Senior
Loan Documents, the Second Priority Debt Documents or the Purchaser Documents,
and to which such Enforcement Notice relates. Subject to the foregoing, the
parties hereto agree that during an Enforcement Period:

                  (a)   To the extent authorized by the Purchaser Documents, the
         Program Agent may take any action to liquidate the Purchased Property
         and Pre-Event Unsold Receivables Property or to foreclose or realize
         upon or enforce any of its rights with respect to the Purchased
         Property and Pre-Event Unsold Receivables Property without the prior
         written consent of any Secured Party (including, without limitation,
         the Senior Collateral Agent) or any other party hereto.

                  (b)   To the extent authorized by the Other Intercreditor
         Agreement or the other Senior Loan Documents or Second Priority Debt
         Documents, the Senior Collateral Agent may, at its option and without
         the prior written consent of the other parties hereto, take any action
         to accelerate payment of the Claim and to foreclose or realize upon or
         enforce any of its rights with respect to the Collateral; provided,
         however, that the Senior Collateral Agent shall not take any action to
         foreclose or realize upon or to enforce any rights it may have with
         respect to any of (i) the Company Claim (including, without limitation,
         any obligations evidenced by the Deferred Purchase Price Note), or (ii)
         the Pre-Event Unsold Receivables Property (including, without
         limitation, sending or causing to be sent any notice to any Obligor of
         any Pre-Event Unsold Receivables Property directing such Obligor to
         remit Collections of any Pre-Event Unsold Receivables Property other
         than to the Deposit Accounts), in each case without the Program Agent's
         prior written consent (unless the Purchaser Claim Termination Date
         shall have occurred).

                  SECTION 2.06.    Access to and Use of Collateral. The Program
Agent and the Senior Collateral Agent hereby agree that, notwithstanding the
priorities and other agreements set forth in this Agreement, the Program Agent
and the Senior Collateral Agent shall have the following rights of access to and
use of the Purchased Property and the Collateral, respectively:

                  (a)   To the extent authorized by the Purchaser Documents, the
         Program Agent may enter one or more premises of the Originators, HQ,
         RAF I, or the Borrower, whether leased or owned, at any time during
         reasonable business hours, without force or process of law and without
         obligation to pay rent or compensation to the Originators, HQ, RAF I,
         the Borrower, the Senior Collateral Agent or any other Secured Party,
         whether before, during or after an Enforcement Period, and may have
         access to and use of all Records located thereon (including the right
         to make copies thereof) and may have access to and use of any other
         property to which such access and use are granted under the Purchaser
         Documents, in each case provided that such use is for any purpose
         permitted under the Purchaser Documents or for the purposes of
         enforcing the rights of the Purchasers with

                                       13

         respect to the Purchased Property or the Pre-Event Unsold Receivables
         Property. To the extent the Senior Collateral Agent has taken
         possession of the Records in connection with any enforcement of any
         rights and remedies as set forth in under the Other Intercreditor
         Agreement or the Other Senior Loan Documents or Second Priority Debt
         Documents, the Senior Collateral Agent will permit the Program Agent to
         have access to and use of the Records during reasonable business hours
         (including the right to make copies thereof).

                  (b)   To the extent the Program Agent has taken possession of
         the Records for any reason, the Program Agent will permit the Senior
         Collateral Agent to have access to and use of the Records during
         reasonable business hours (including the right to make copies thereof),
         provided that such use by the Senior Collateral Agent is for any
         purpose permitted under the Senior Loan Documents (other than any use
         for any purpose prohibited by the proviso to Section 2.05(b) above) or
         for the purposes of enforcing the Senior Collateral Agent's rights with
         respect to the Collateral (other than Pre-Event Unsold Receivables
         Property).

                  SECTION 2.07.    Notice of Defaults. The Senior Collateral
Agent agrees to use reasonable efforts to give to the Program Agent a copy of
any notice sent to any Originator with respect to the occurrence or existence of
an Event of Default which continues for a period of ten (10) consecutive
Business Days without there being in effect a waiver thereof or an agreement
forbearing from the exercise of remedies duly executed by the parties required
to do so under the applicable Senior Loan Documents. The Program Agent agrees to
use reasonable efforts to give to the Senior Collateral Agent a copy of any
notice sent to any Originator, HQ, RAF I or the Borrower with respect to the
occurrence or existence of an Event of Termination which continues for a period
of ten (10) consecutive Business Days without there being in effect a waiver
thereof or an agreement forbearing from the exercise of remedies duly executed
by the parties required to do so under the applicable Purchaser Documents.
Notwithstanding the foregoing, any failure by any party hereto to give such
notice shall not create a cause of action against any party failing to give such
notice or create any claim or right on behalf of any third party. In each of the
above cases, the party receiving such notice shall have the right to the extent
within its power (but not the obligation) to cure the Event of Default or Event
of Termination, as the case may be, which gave rise to the sending of such
notice.

                  SECTION 2.08.    Agency for Perfection. The Program Agent and
the Senior Collateral Agent hereby appoint each other as agent for purposes of
perfecting by possession their respective security interests and ownership
interests and liens on the Collateral (which may include the Deferred Purchase
Price Note) and the Purchased Property. In the event the Program Agent, to the
actual knowledge of a Responsible Officer thereof, obtains possession of any of
the Collateral (other than Pre-Event Unsold Receivables Property), the Program
Agent shall notify the Senior Collateral Agent of such fact, shall hold such
Collateral in trust and shall deliver such Collateral to the Senior Collateral
Agent upon request. In the event that the Senior Collateral Agent, to the actual
knowledge of a Responsible Officer thereof, obtains possession of any of the
Purchased Property or Pre-Event Unsold Receivables Property, the Senior
Collateral Agent shall notify in writing the Program Agent of such fact, shall
hold such Purchased Property or Pre-

                                       14

Event Unsold Receivables Property in trust and shall deliver such Purchased
Property or Pre- Event Unsold Receivables Property to the Program Agent upon
request.

                  SECTION 2.09.    UCC Notices. In the event that any party
hereto shall be required by the UCC or any other applicable law to give notice
to the other of the intended disposition of Purchased Property or Collateral,
such notice shall be given in accordance with Section 3.01 hereof and ten (10)
days' notice shall be deemed to be commercially reasonable.

                  SECTION 2.10.    Independent Credit Investigations. Neither
the Program Agent nor the Senior Collateral Agent or any of their respective
directors, officers, agents or employees shall be responsible to the other or to
any other Person for the solvency, financial condition or ability of an
Originator, HQ, RAF I or the Borrower to repay the Purchaser Claim or the Lender
Claim, or for the value of the Purchased Property or the Collateral, or for
statements of an Originator, HQ, RAF I or the Borrower, oral or written, or for
the validity, sufficiency or enforceability of the Purchaser Claim, the Lender
Claim, the Purchaser Documents, the Senior Loan Documents, the Program Agent's
interest in the Purchased Property, the Pre-Event Unsold Receivables Property or
any other collateral or the Senior Collateral Agent's interest in the Collateral
or any other collateral. The Senior Collateral Agent and the Program Agent have
entered into their respective agreements with the Originators, HQ, RAF I or the
Borrower, as applicable, based upon their own independent investigations.
Neither the Senior Collateral Agent nor the Program Agent makes any warranty or
representation to the other nor does it rely upon any representation of the
other, in each instance, with respect to matters identified or referred to in
this Section 2.10.

                  SECTION 2.11.    Limitation on Liability of Parties to Each
Other. Except as provided in this Agreement, the Senior Collateral Agent shall
have no liability to the Program Agent, and the Program Agent shall have no
liability to the Senior Collateral Agent, except in each case for liability
arising from the gross negligence or willful misconduct of such party or its
representatives. Neither the Senior Collateral Agent nor the Program Agent shall
have any liability to any other party hereto in each case for consequential or
exemplary damages.

                  SECTION 2.12.    Marshalling of Assets. Nothing in this
Agreement will be deemed to require either the Program Agent or the Senior
Collateral Agent (a) to proceed against certain property securing any or all of
the Lender Claim, the Indenture Claims or the Purchaser Claim prior to
proceeding against other property securing any such Claim or (b) to marshal the
Collateral or the Purchased Property (as applicable) upon the enforcement of the
Senior Collateral Agent's or the Program Agent's rights or remedies under the
Other Intercreditor Agreement or Purchaser Documents, as applicable.

                  SECTION 2.13.    Relative Rights of Investors, Liquidity Banks
and Secured Parties as Among Themselves. The relative rights of the Investors
and the Liquidity Banks, each as against the other, with respect to the exercise
of the rights and the receipt of the benefits granted by the Program Agent
hereunder shall be determined by mutual agreement among such parties in
accordance with the terms of the Purchaser Documents. Each of the parties hereto
(other than the Program Agent) shall be entitled to rely on the power and
authority of the

                                       15

Program Agent to act on behalf of all of the Investors, the Liquidity Banks and
the Investor Agents. The relative rights of the Secured Parties, each as against
the other, with respect to the exercise of the rights and the receipt of the
benefits granted by the Senior Collateral Agent shall be determined by mutual
agreement among such parties in accordance with the terms of the Other
Intercreditor Agreement, the Senior Loan Documents and the Second Priority Debt
Documents. Each of the parties hereto (other than the Senior Collateral Agent)
shall be entitled to rely conclusively on the power and authority of the Senior
Collateral Agent to act on behalf of all of the other Secured Parties in
connection with this Agreement.

                  SECTION 2.14.    Effect upon Senior Loan Documents and
Purchaser Documents. By executing this Agreement, the Originators, HQ, RAF I and
the Borrower agree to be bound by the provisions hereof (a) as they relate to
the relative rights of the Senior Collateral Agent and the Program Agent, as the
case may be, with respect to the property of the Originators, HQ, RAF I and the
Borrower and (b) as they relate to the relative rights of the Originators and
the Program Agent as creditors of the Borrower. Each of the Originators, HQ, RAF
I and the Borrower acknowledge that the provisions of this Agreement shall not
give any of them any substantive rights as against any other Person and that
nothing in this Agreement shall amend, modify, change or supersede the terms of
(x) the Senior Loan Documents, the Second Priority Debt Documents or the Other
Intercreditor Agreement as among the Originators and the respective other
parties thereto or (y) the Purchaser Documents as among the Originators, HQ, RAF
I, the Borrower, the Investors, the Liquidity Banks, the Investor Agents, the
Collection Agent and the Program Agent. Notwithstanding the foregoing, the
Senior Collateral Agent, on the one hand, and the Program Agent, on the other
hand, agree that, as between themselves, to the extent the terms and provisions
of the Other Intercreditor Agreement or the Purchaser Documents are inconsistent
with the terms and provisions of this Agreement, the terms and provisions of
this Agreement shall control.

                  SECTION 2.15.    Accountings. To the extent not provided by
the Originators or the Collection Agent, (a) the Senior Collateral Agent agrees
to render accounts of the Lender Claim to the Program Agent upon request,
including, but not limited to, giving effect to the application of proceeds of
any collateral as hereinbefore provided and (b) the Program Agent agrees to
render statements to the Senior Collateral Agent upon request, which statements
shall identify in reasonable detail the Purchased Receivables and shall render
an account of the Purchaser Claim, giving effect to the application of proceeds
of Purchased Property as hereinbefore provided. The Senior Collateral Agent
understands that any such statements provided by the Program Agent will be based
on information furnished to the Program Agent by the Collection Agent, and the
Program Agent makes no representation as to such information furnished to it by
the Collection Agent.

                  SECTION 2.16.    Further Assurances. Each of the parties
hereto agrees to take such actions as may be reasonably requested by any other
party, whether before, during or after an Enforcement Period, in order to effect
the rules of release, distribution and allocation set forth above in this
Article II.

                                       16

                                   ARTICLE III
                                  MISCELLANEOUS

                  SECTION 3.01.    Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, to the intended party at the address or
facsimile number of such party set forth below or at such other address or
facsimile number as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall be deemed to
have been given on the date of receipt.

                  If to the Program Agent:

                           Citicorp North America, Inc.
                           450 Mamaroneck Avenue
                           Harrison, New York  10528
                           Facsimile No. (914) 899-7890
                           Attention:  Global Securitization

                  If to the Borrower:

                           Rite Aid Funding II
                           30 Hunter Lane
                           Camp Hill, PA 17011
                           Facsimile No.
                           Attention:

                  If to RAF I:

                           Rite Aid Funding I
                           30 Hunter Lane
                           Camp Hill, PA 17011
                           Facsimile No.
                           Attention:

                  If to any Originator, the Collection Agent or Rite Aid:

                           c/o Rite Aid Corporation
                           30 Hunter Lane
                           Camp Hill, PA 17011
                           Facsimile No.
                           Attention:

                                       17

                  If to the Senior Collateral Agent:

                           Citicorp North America, Inc.
                           388 Greenwich St, 19th floor
                           New York, NY 10013
                           Facsimile No. (212) 816-2613
                           Attention: Sebastien Delasnerie

Except as otherwise expressly required by this Agreement, no notice shall be
required to be given to any Secured Party under any Senior Loan Document or
Second Priority Debt Document, other than to the Senior Collateral Agent.

                  SECTION 3.02.    Agreement Absolute. The Program Agent shall
be deemed to have entered into the Purchaser Documents in express reliance upon
this Agreement. The Senior Collateral Agent and the other Secured Parties shall
be deemed to have entered into the Senior Loan Documents in express reliance
upon this Agreement. This Agreement shall be and remain absolute and
unconditional under any and all circumstances, and no acts or omissions on the
part of any other party to this Agreement shall affect or impair the agreement
of any party to this Agreement, unless otherwise agreed to in writing by all of
the parties hereto. This Agreement shall be applicable both before and after the
filing of any petition by or against any Originator, HQ, RAF I or the Borrower
under the United States Bankruptcy Code or any similar proceeding under the laws
of the Cayman Islands and all references herein to the Originators, HQ, RAF I or
the Borrower shall be deemed to apply to a debtor-in-possession, trustee or
liquidator for such party and all allocations of payments among the parties
hereto shall, subject to any court order to the contrary, continue to be made
after the filing of such petition on the same basis that the payments were to be
applied prior to the date of the petition.

                  SECTION 3.03.    Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of each of the parties hereto and their
respective successors and assigns. The successors and assigns for an Originator,
HQ, RAF I and the Borrower shall include a debtor-in-possession, trustee or
liquidator of or for such party. The successors and assigns for the Senior
Collateral Agent or the Program Agent, as the case may be, shall include any
successor Senior Collateral Agent or Program Agent, as the case may be,
appointed under the terms of the Other Intercreditor Agreement or the Purchaser
Documents, as applicable. Each of the Senior Collateral Agent and the Program
Agent, as the case may be, agrees to not transfer any interest it may have in
the Other Intercreditor Agreement or the Purchaser Documents, as the case may
be, unless such transferee has been notified of the existence of this Agreement
and has agreed to be bound hereby.

                  SECTION 3.04.    Third-Party Beneficiaries. The terms and
provisions of this Agreement shall be for the sole benefit of the parties
hereto, the Investors, the Liquidity Banks, the Investor Agents and the other
Secured Parties and their respective successors and assigns and no other Person
shall have any right, benefit or priority by reason of this Agreement.

                                       18

                  SECTION 3.05.    Amendments, Etc. No amendment or waiver of
any provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by all the parties hereto, and any such amendment
or waiver shall be effective only in the specific instance and for the specific
purpose for which given.

                  SECTION 3.06.    Section Titles. The article and section
headings contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.

                  SECTION 3.07.    Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.

                  SECTION 3.08.    Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page of this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 3.09.    Governing Law. THIS AGREEMENT, INCLUDING THE
RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 3.10.    Submission to Jurisdiction. (a) Each of the
parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement in the courts of any other jurisdiction.

                  (b)   Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York State or federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

                                       19

                  SECTION 3.11.    Consent to Service of Process. Each party to
this Agreement irrevocably consents to service of process by personal delivery,
certified mail, postage prepaid or overnight courier. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

                  SECTION 3.12.    Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
OR RELATING TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), ACTIONS OF ANY OF THE PARTIES HERETO OR
ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

                  SECTION 3.13.    No Proceedings. Each of the Senior Collateral
Agent and the Originators hereby agrees that it will not institute against RAF I
or the Borrower any proceeding under the United States Bankruptcy Code or any
insolvency, liquidation or winding up proceeding under the laws of the Cayman
Islands so long as there shall not have elapsed one year plus one day since the
Purchaser Claim Termination Date; provided that the foregoing shall not prohibit
the Senior Collateral Agent from exercising its rights in any such proceeding
that is instituted by another Person.

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

                  [Remainder of Page Intentionally Left Blank]

                                       20

                               CITICORP NORTH AMERICA, INC.,
                               as Program Agent

                               By:
                                  ---------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               RITE AID FUNDING I,
                               as a Purchaser

                               By:
                                  ----------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               RITE AID FUNDING II,
                               as Borrower

                               By:
                                  -------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               RITE AID CORPORATION

                               By:
                                  --------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               RITE AID HDQTRS. FUNDING, INC.,
                               as a Purchaser and as Collection Agent

                               By:
                                  -------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               CITICORP NORTH AMERICA, INC.,
                               as Senior Collateral Agent

                               By:
                                  -------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               THE ORIGINATORS LISTED ON ANNEX I
                               HERETO

                               By:
                                  -----------------------------------
                                  Name:
                                  Authorized Signatory:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                               JPMORGAN CHASE BANK,
                               as Senior Collateral Agent

                               By:
                                  ---------------------------------------
                                  Name:
                                  Title:

                  Signature Page to the Intercreditor Agreement
                  ---------------------------------------------

                                     ANNEX I

                               LIST OF ORIGINATORS

         Rite Aid Corporation, a Delaware corporation
         Rite Aid of Connecticut, Inc., a Connecticut corporation
         Rite Aid of Delaware, Inc., a Delaware corporation
         Rite Aid of Georgia, Inc., a Georgia corporation
         Rite Aid of Indiana, Inc., an Indiana corporation
         Rite Aid of Kentucky, Inc., a Kentucky corporation
         Rite Aid of Maine, Inc., a Maine corporation
         Rite Aid of Maryland, Inc., a Maryland corporation
         Rite Aid of Michigan, Inc., a Michigan corporation
         Rite Aid of New Hampshire, Inc., a New Hampshire corporation
         Rite Aid of New Jersey, Inc., a New Jersey corporation
         Rite Aid of New York, Inc., a New York corporation
         Rite Aid of Ohio, Inc., an Ohio corporation
         Rite Aid of Pennsylvania, Inc., a Pennsylvania corporation
         Rite Aid of Tennessee, Inc., a Tennessee corporation
         Rite Aid of Vermont, Inc., a Vermont corporation
         Rite Aid of Virginia, Inc., a Virginia corporation
         Rite Aid of Washington, D.C., a District of Columbia corporation
         Rite Aid of West Virginia, Inc., a West Virginia corporation
         Keystone Centers, Inc., a Pennsylvania corporation
         The Lane Drug Company, an Ohio corporation
         Rite Aid Drug Palace, Inc., a Delaware corporation
         Thrifty PayLess, Inc., a California corporation
         Harco, Inc., an Alabama corporation
         Perry Drug Stores, Inc., a Michigan corporation
         Apex Drug Stores, Inc., a Michigan corporation
         PDS-1 Michigan, Inc., a Michigan corporation
         RDS Detroit, Inc., a Michigan corporation
         K & B Alabama Corporation, an Alabama corporation
         K & B Louisiana Corporation, a Louisiana corporation
         K & B Mississippi Corporation, a Mississippi corporation
         K & B Tennessee Corporation, a Tennessee corporation

                                     Sch 1-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]