RITE AID CORP, S-3, 1999-01-19

RITE AID CORP
S-3, 1999-01-19
DRUG STORES AND PROPRIETARY STORES

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As filed with the Securities and Exchange Commission on January 19, 1999.
Registration No. 333-
- ----------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

Rite Aid Corporation Delaware 23-1614034
Rite Aid Financing I Delaware To Be Applied For
Rite Aid Financing II Delaware To Be Applied For
Rite Aid Financing III Delaware To Be Applied For
Rite Aid Financing IV Delaware To Be Applied For
(Exact Name of Registrant as (State or Other (I.R.S. Employer
Specified in Its Charter) Jurisdiction of Identification No.)
Incorporation or
Organization)

30 Hunter Lane, Camp Hill, Pennsylvania 17011, (717) 761-2633
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)

Elliot S. Gerson, Esq.
Rite Aid Corporation
30 Hunter Lane, Camp Hill, Pennsylvania 17011
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agents for Service)

Copy to:
Stacy J. Kanter, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue, New York, New York 10022, (212) 735-3000

Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.

If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the
following box. |_|

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |-|

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: |_|

(continued on next page)

CALCULATION OF REGISTRATION FEE

=================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Securities Amount to be Price Offering Registration
to be Registered Registered (1) Per Unit(1)(2) Price (1) (2) Fee
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$1.00, of Rite Aid
Corporation (3)
- -------------------------------------------------------------------------------------------------
Preferred Stock, par value
$1.00, of Rite Aid
Corporation (3)
- -------------------------------------------------------------------------------------------------
Debt Securities of Rite Aid
Corporation
- -------------------------------------------------------------------------------------------------
Warrants of Rite Aid
Corporation
- -------------------------------------------------------------------------------------------------
Purchase Contracts of Rite Aid
Corporation (4)
- -------------------------------------------------------------------------------------------------
Units (5)
- -------------------------------------------------------------------------------------------------
Preferred Securities of Rite Aid
Financing I (6)
- -------------------------------------------------------------------------------------------------
Preferred Securities of Rite Aid
Financing II (6)
- -------------------------------------------------------------------------------------------------
Preferred Securities of Rite Aid
Financing III (6)
- -------------------------------------------------------------------------------------------------
Preferred Securities of Rite Aid
Financing IV (6)
- -------------------------------------------------------------------------------------------------
Guarantees of Preferred Securities
of Rite Aid Financing I, Rite
Aid Financing II, Rite Aid
Financing III and Rite Aid
Financing IV Trust
by Rite Aid Corporation (7)
- -------------------------------------------------------------------------------------------------
Total $3,000,000,000 $834,000
=================================================================================================

<FN>

(1) Such indeterminate number or amount of Common Stock, Preferred Stock,
Debt Securities, Purchase Contracts, Warrants, Units and Guarantees
of Rite Aid Corporation (the "Company") and Preferred Securities of
Rite Aid Financing I, II, III and IV (the "Rite Aid Trusts") as may
from time to time be issued at indeterminate prices. Debt Securities
of the Company may be issued and sold to the Rite Aid Trusts, in
which event such Debt Securities may later be distributed to the
holders of Preferred Securities of the Rite Aid Trusts for no further
consideration upon a dissolution of any such Rite Aid Trust and the
distribution of the assets thereof.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the
securities registered hereby, and the exercise price of any
securities issuable upon exercise of the Warrants registered hereby,
will not exceed $3,000,000,000.

(3) Also includes such indeterminate number of shares of Common Stock and
Preferred Stock as may be issued upon conversion of or exchange for
any Debt Securities, Preferred Stock or Preferred Securities
registered hereunder that provide for conversion or exchange into
other securities. No separate consideration will be received for the
Common Stock or Preferred Stock issuable upon conversion of or in
exchange for Debt Securities, Preferred Stock or Preferred
Securities. Also consists of such currently indeterminate number of
shares of Common Stock issuable upon settlement of the Purchase
Contracts of the Company.

(4) Each Purchase Contract of the Company obligates the Company to sell,
and the holder thereof to purchase, a number of shares of Common
Stock.

(5) Each Unit initially consists of a Preferred Security of Rite Aid
Financing I, II, III or IV and a Purchase Contract.

(6) Each Preferred Security of Rite Aid Financing I, II, III and IV
represents a preferred undivided beneficial ownership interest in the
assets of Rite Aid Financing I, II, III and IV, respectively.

(7) No separate consideration will be received for the Guarantees of the
Company.

</FN>
</TABLE>

The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
registrants shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

FLAG

The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.

Prospectus

$3,000,000,000

RITE AID CORPORATION
RITE AID FINANCING I
RITE AID FINANCING II
RITE AID FINANCING III
RITE AID FINANCING IV

We will offer and sell, from time to time, in one or more offerings
certain debt and equity securities. The total offering price of these
securities, in the aggregate, will not exceed $3 billion. We will provide
the specific terms of these securities in supplements to this prospectus.
You should carefully read this prospectus and the supplements before you
decide to invest in any of these securities.

RITE AID CORPORATION

We will offer and sell, from time to time, in one or more
offerings:

o common stock o purchase contracts
o debt securities o units
o preferred stock o guarantees
o warrants

The purchase contracts will require a purchaser to buy a
certain amount of common stock, and they will obligate Rite Aid to
pay the purchasers certain fees. The units will include these
purchase contracts and preferred securities issued by Rite Aid
Financing I, II, III or IV (the "Rite Aid Trusts"). The guarantees
will be full, unconditional guarantees of the Rite Aid Trusts'
obligation to distribute certain amounts of cash to the holders of
Rite Aid Trust preferred securities.

THE RITE AID TRUSTS

The Rite Aid Trusts are each Delaware business trusts that
will offer and sell, from time to time, in one or more offerings,
preferred securities. Each Rite Aid Trust will use all of the
proceeds from the sale of its preferred securities to buy
subordinated notes of Rite Aid Corporation. The Rite Aid Trusts
will receive cash payments from the subordinated notes, and each
trust will distribute these payments to the holders of its
preferred and common securities. The Rite Aid Corporation will own
all of the common securities of the Rite Aid Trusts.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.

This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.

The date of this prospectus is January __, 1999

WHERE YOU CAN FIND MORE INFORMATION

Rite Aid Corporation ("Rite Aid" or the "Company") files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Rite Aid Corporation's filings with the
Commission are available over the Internet at the Commission's web site at
http://www.sec.gov. You may also read and copy any document we file with
the Commission at the Commission's public reference rooms at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549; Seven World Trade Center,
13th Floor, New York, New York 10048; and Citicorp Center, 5000 West
Madison Street (Suite 1400), Chicago, Illinois 60601. Please call the
Commission at 1-800-SEC-0330 for more information on the public reference
rooms and their copy charges. You may also inspect the reports and other
information we file with the Commission at the New York Stock Exchange, 20
Broad Street, New York, New York 10005.

We have filed a registration statement on Form S-3 with the
Commission that covers the securities described in this prospectus. For
further information on Rite Aid, the Rite Aid Trusts and the securities,
you should refer to our registration statement and its exhibits. In this
prospectus, we have summarized material provisions of contracts and other
documents. Since this prospectus may not contain all the information that
you may find important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our registration
statement. The registration statement can be obtained from the Commission
as indicated above, or from Rite Aid.

INCORPORATION BY REFERENCE

The Commission allows us to "incorporate by reference" the
information we file with the Commission. This means that we can disclose
important information to you by referring you to those documents. Any
information we reference in this manner is considered part of this
prospectus. Any information we file with Commission after the date of this
prospectus will automatically update and supersede the information
contained in this prospectus.

We incorporate by reference the following documents which we have
filed with the Commission:

o Rite Aid's Annual Report on Form 10-K for the year
ended February 28, 1998;

o Rite Aid's Quarterly Reports on Form 10-Q for the
quarters ended May 30, 1998, August 29, 1998 and
November 28, 1998;

o Current Report on Form 8-K dated November 17, 1998
and January 19, 1999;

o Rite Aid's Annual Report to Stockholders for the
fiscal year ended February 28, 1998 (incorporated by
reference into the Annual Report on Form 10-K); and

o Rite Aid's Proxy Statement for Annual Meeting of
Stockholders held on June 24, 1998 (incorporated by
reference into the Annual Report on Form 10-K).

We also incorporate by reference any future filings we will make
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") after the date of this
prospectus but before the end of the offering of the securities made by
this prospectus.

You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Investor
Relations, Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania
17011, telephone number (212) 345-5000.

ABOUT THIS PROSPECTUS

This prospectus (the "Prospectus") is part of a "shelf"
registration statement that we filed with the Commission. By using a shelf
registration statement, we may sell, from time to time, in one or more
offerings, any combination of the securities described in this Prospectus.
The total dollar amount of the securities we sell through these offerings
will not exceed $3 billion.

This Prospectus only provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement (a "Prospectus Supplement") that contains specific
information about the terms of the securities. The Prospectus Supplement
may also add, update or change information contained in this Prospectus.
You should read both this Prospectus and any Prospectus Supplement together
with the additional information described under the heading "Where You Can
Find More Information."

This Prospectus does not contain separate financial statements for
the trusts. We do not believe these financial statements would be useful
since each trust is a direct or indirect wholly-owned subsidiary of Rite
Aid, and we file consolidated financial information under the Exchange Act.
The trusts will not have any independent function other than to issue
common and preferred securities and to purchase subordinated notes of Rite
Aid. We will provide a full, unconditional guarantee of each trust's
obligations under their respective common and preferred securities.

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

You should rely only on the information contained or incorporated
by reference in this Prospectus and the Prospectus Supplement. We have not,
and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not, and the
underwriters will not, make an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this Prospectus, as well as information
we previously filed with the Commission and incorporated by reference, is
accurate as of the date on the front cover of this Prospectus only. Our
business, financial condition, results of operations and prospects may have
changed since that date.

RITE AID CORPORATION

Rite Aid, incorporated in 1968, is one of the largest retail
drugstore chains in the United States. As of November 28, 1998, we operated
3,827 drugstores, within a range of approximately 7,200 to 20,000 square
feet per store in size, in 30 eastern, southern and western states and the
District of Columbia and employed over 75,000 associates. Pharmacy service
forms the core of our business, with prescriptions accounting for 54.5
percent of drugstore sales in the thirty-nine week period ended November
28, 1998. Our drugstores cater to convenience, offering a full selection of
health and personal care products, seasonal merchandise and a large private
label product line. Express mail with complementary services and one-hour
photo departments have been added in select locations. Our Eagle Managed
Care Corp. subsidiary markets prescription plans and sells other managed
health care services to employers, health maintenance organizations and
government-sponsored employee benefit programs.

On December 12, 1996, we acquired Thrifty PayLess Holdings, Inc.
("Thrifty PayLess"), which was one of the largest drugstore retailers in
the western United States with over 1,000 stores in 10 states. We have
renamed the Thrifty PayLess stores "Rite Aid" and are in the process of
remodeling such stores. On August 27, 1997, we completed the acquisitions
of K&B Incorporated ("K&B") and Harco, Inc. ("Harco"). K&B, based in New
Orleans, Louisiana, operated 186 stores in Louisiana, Alabama, Mississippi,
Texas, Tennessee and Florida. It was the 13th largest drugstore chain in
the U.S. with sales of $580,000,000 for fiscal year 1996. Harco,
headquartered in Tuscaloosa, Alabama, operated 146 stores in Alabama,
Mississippi and Florida. It was the 17th largest drugstore chain in the
U.S. with sales of $258,000,000 in fiscal year 1996. We have renamed all
K&B and Harco stores "Rite Aid" and have completed the integration of such
stores with our operations.

Our strategy is to operate drugstores in large, fast-growing
metropolitan areas. Of the 60 largest metropolitan statistical areas
(commonly referred to as "MSAs") in the United States, we operate in 33 and
are either the largest or second largest for retail drugstore prescription
sales in 23 of those 33 MSAs.

The Company is a Delaware corporation, Our principal executive
offices are located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011 and
our telephone number is (717) 761-2633.

RECENT DEVELOPMENTS

On November 17, 1998, we and Eli Lilly and Company ("Lilly")
announced that we had entered into a Stock Purchase Agreement, pursuant to
which we have agreed to acquire all of the outstanding capital stock of PCS
Holding Corporation, a wholly-owned subsidiary of Lilly, for $1,500,000,000
in cash. PCS, a leading pharmacy benefits manager for employers, health
plans and their members, currently manages nearly 300,000,000 prescriptions
each year, serves more than 1,200 health plan sponsors, assists more than
50,000,000 plan members with their pharmaceutical needs and accounts for
approximately $10,000,000,000 in drug expenditures. The acquisition of PCS,
which we expect will close in the first quarter of 1999, will be accounted
for as a purchase.

RITE AID TRUSTS

Each of the Rite Aid Trusts is a statutory business trust formed
under Delaware law pursuant to (i) a separate declaration of trust (each a
"Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor") and the Rite Aid Trustees (as defined below) for such trust and
(ii) the filing of a certificate of trust with the Delaware Secretary of
State. Each such Declaration will be amended and restated in its entirety
(an "Amended Declaration") substantially in the form filed as an exhibit to
the registration statement of which this Prospectus forms a part, as of the
date the securities of each Rite Aid Trust are initially issued. Each
Amended Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").

Each Rite Aid Trust exists for the exclusive purposes of (i)
issuing preferred securities (the "Trust Preferred Securities") and common
securities (the "Trust Common Securities " and, together with the Trust
Preferred Securities, the "Trust Securities") representing undivided
beneficial interests in the assets of each respective trust, (ii) investing
the gross proceeds of the Trust Securities in certain Junior Subordinated
Debt Securities (as defined below) and (iii) engaging in only those other
activities necessary or incidental thereto.

All of the Trust Common Securities will be directly or indirectly
owned by the Company. The Trust Common Securities will rank pari passu in
right of payment, and payments will be made thereon pro rata, with the
Preferred Securities except that upon an event of default under an Amended
Declaration, the rights of the holders of the Trust Common Securities to
payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders
of the Preferred Securities. The Company will acquire, directly or
indirectly, Trust Common Securities in an aggregate liquidation amount
equal to 3% of the total capital of each Rite Aid Trust.

Each Rite Aid Trust has a term of approximately 55 years, but may
terminate earlier as provided in its Amended Declaration. The business and
affairs of each Rite Aid Trust will be conducted by the trustees (the "Rite
Aid Trustees") appointed by the Company, as the direct or indirect holder
of all the Trust Common Securities of each Rite Aid Trust. The Company, as
the direct or indirect holder of all of the Trust Common Securities of each
Rite Aid Trust, will be entitled to appoint, remove or replace any of the
Rite Aid Trustees of each Rite Aid Trust.

The duties and obligations of the Rite Aid Trustees shall be
governed by the Amended Declaration of each Rite Aid Trust. A majority of
the Rite Aid Trustees (the "Regular Trustees") of each Rite Aid Trust will
be persons who are employees or officers of or affiliated with the Company.
In certain limited circumstances set forth in a Prospectus Supplement, the
holders of a majority of the Preferred Securities will be entitled to
appoint one additional Regular Trustee, who need not be an employee or
officer of or otherwise affiliated with the Company.

One Rite Aid Trustee of each Rite Aid Trust will be a financial
institution which will be unaffiliated with the Company and which shall act
as property trustee and as indenture trustee for purposes of the Trust
Indenture Act, pursuant to the terms set forth in a Prospectus Supplement
(the "Property Trustee" or the "Institutional Trustee"). The Property
Trustee will hold title to the Junior Subordinated Debt Securities for the
benefit of the holders of the Trust Securities of each Rite Aid Trust. The
Property Trustee will have the power to exercise all rights, powers and
privileges under the indenture related to the Junior Subordinated Debt
Securities. In addition, the Property Trustee will maintain exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the Junior Subordinated
Debt Securities for the benefit of the holders of the Trust Securities of
each Rite Aid Trust. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
Property Account. Unless the Property Trustee maintains a principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law, one Rite Aid Trustee of each Rite Aid Trust will have
its principal place of business or reside in the State of Delaware (the
"Delaware Trustee").

The rights of the holders of the Trust Securities, including
economic rights, rights to information and voting rights, are set forth in
the Amended Declaration of each Rite Aid Trust, the Delaware Business Trust
Act and the Trust Indenture Act. The Company will pay all fees and expenses
related to the Rite Aid Trusts and the offering of Trust Securities, the
payment of which will be guaranteed by the Company. The office of the
Delaware Trustee for each Rite Aid Trust in the State of Delaware is First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801. The
principal place of business of each Rite Aid Trust shall be c/o Rite Aid
Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011, (717) 761-2633.

USE OF PROCEEDS

Unless we have indicated otherwise in the accompanying Prospectus
Supplement, we expect to use the net proceeds we receive from any offering
of these securities for our general corporate purposes, including working
capital, acquisitions and other business opportunities. Each of the Rite
Aid Trusts will use the net proceeds from the sale of its preferred
securities to purchase a series of subordinated notes from Rite Aid. We
also expect to use the net proceeds from the sale of those subordinated
notes for our general corporate purposes.

RATIO OF EARNINGS TO FIXED CHARGES [AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS]

The following table sets forth the ratio of earnings to combined
fixed charges and preferred stock dividends for the Company.

39 Weeks Ended Year Ended
November 29, Feb. 28 Mar. 1 Mar. 2 Mar. 4 Feb. 26
1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges (1) 1.57 2.91 2.56 3.08 3.78 1.66

<FN>
(1) The ratio of earnings to fixed charges is computed by
dividing earnings by fixed charges. For this purpose,
earnings include pre-tax income from continuing operations
plus fixed charges. Fixed charges include interest, whether
expensed or capitalized, amortization of debt expense and
that portion of rental expense which is representative of
the interest factor in these rentals.

</FN>
</TABLE>

DESCRIPTION OF THE OFFERED SECURITIES

Rite Aid intends to issue, from time to time, in one or more
offerings, common stock, par value $1.00 per share (the "Common Stock"),
preferred stock, par value $1.00 per share (the "Preferred Stock"), debt
securities (the "Debt Securities"), warrants (the "Warrants"), purchase
contracts (the "Purchase Contracts"), units (the "Units") and guarantees
(the "Guarantees"). The Rite Aid Trusts intend to issue, from time to time,
in one or more offerings, Trust Preferred Securities (collectively, with
the Common Stock, Preferred Stock, Debt Securities, Warrants, Purchase
Contracts, Units and Guarantees, the"Offered Securities"). The aggregate
principal amount, initial price to the purchaser or liquidation preference
of the Offered Securities will not exceed, in the aggregate, $3 billion.

This Prospectus contains a summary of the Offered Securities. This
summary is not meant to be a complete description of each security. The
specific terms of the Offered Securities will be set forth in an
accompanying Prospectus Supplement, together with the terms of the
offering, the initial price and the net proceeds to the Company from the
sale of the Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about material United States federal income
tax considerations relating to, and any listing on a securities exchange
of, the Offered Securities covered by such Prospectus Supplement. This
Prospectus may not be used to consummate a sale of Offered Securities
unless it is accompanied by a Prospectus Supplement.

DESCRIPTION OF CAPITAL STOCK

The following summary does not purport to be complete and is
subject to, and qualified in its entirety by, Rite Aid's Restated
Certificate of Incorporation (the "Rite Aid Charter"), Rite Aid's by-laws
(the "Rite Aid By-laws") and the Delaware General Corporation Law (the
"DGCL"). Under the Rite Aid Charter, Rite Aid's authorized capital stock
consists of 300,000,000 shares of Common Stock and 20,000,000 shares of
Preferred Stock. The following description of the terms of the shares of
Common Stock and Preferred Stock that may be offered by the Company sets
forth certain general terms and provisions to which any Prospectus
Supplement may relate. Certain terms of any Common Stock or any series of
Preferred Stock offered by a Prospectus Supplement will be described in the
Prospectus Supplement relating thereto, including the number of shares
offered, any initial offering price and market price and dividend
information. If so indicated in the Prospectus Supplement, the terms of any
series may differ from the terms set forth below.

Common Stock

As of January 7, 1999, there were 258,767,046 shares of Common
Stock issued and outstanding, and 37,477,244 shares reserved for issuance
under Rite Aid's stock option plans and under outstanding convertible
subordinated notes.

The holders of Common Stock are entitled to receive ratably, from
funds legally available for the payment thereof, dividends when as declared
by resolution of the board of directors of Rite Aid (the "Board"), subject
to any preferential dividend rights granted to the holders of any
outstanding Preferred Stock.

Each holder of Common Stock is entitled to one vote for each share
registered in his name on the books of the Company on all matters submitted
to a vote of stockholders. Except as otherwise provided by law, the holders
of Common Stock vote as one class. The shares of Common Stock do not have
cumulative voting rights. As a result, subject to the voting rights, if
any, of the holders of any shares of the Company's Preferred Stock which
may at the time be outstanding, the holders of Common Stock entitled to
exercise more than 50% of the voting rights in an election of directors can
elect 100% of the directors to be elected in a particular year if they
choose to do so. In such event, the holders of the remaining Common Stock
voting for the election of directors will not be able to elect any persons
to the Board of Directors.

Holders of Common Stock do not have preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and nonassesable.

Preferred Stock

No shares of Preferred Stock are issued or outstanding. The Board
is authorized to issue Preferred Stock in one or more series and to
determine liquidation preferences, voting rights, dividend rights,
conversion rights and redemption rights thereof. The ability of the Board
to issue and set the terms of Preferred Stock could have the effect of
making it more difficult for a third person to acquire, or of discouraging
a third person from attempting to acquire, control of Rite Aid.

Charter and By-Law Provisions

The Rite Aid Charter specifies that the Board shall be divided into
three classes, as nearly equal in number as possible, and shall consist of
not less than three nor more than 15 directors elected for three-year
staggered terms. The Rite Aid By-laws provide that the number of directors
on the Board may be fixed by the Board only, or if the number is not fixed,
the number will be seven. The number of directors may be increased or
decreased by the Board only. In the interim period between annual meetings
of stockholders or of special meetings of stockholders, vacancies and newly
created directorships may be filled by the Board. Any directors so elected
will hold office until the next election of the class to which such
directors have been elected. The Board currently consists of 11 directors.

The Rite Aid Charter requires that any mergers, consolidations
asset dispositions and other transactions involving a beneficial owner of
10% or more of the voting power of the then outstanding classes of stock
entitled to vote in the election of directors (the "Voting Stock") be
approved, unless certain conditions are satisfied, by the affirmative vote
of the holders of shares representing not less than 75% of the Voting
Stock. These special voting requirements do not apply if the transaction is
approved by a majority of the Continuing Directors (as defined below) or
the consideration offered to the stockholders of Rite Aid meets specified
fair price standards (including related procedural requirements as to the
form of consideration and continued payment of dividends). "Continuing
Director" as defined in the Rite Aid Charter means a member of the Board
who has not affiliated with a Related Person (as defined below) and was a
member of the Board prior to the time that the Related Person acquired the
last shares of Common Stock entitling such Related Person to exercise, in
the aggregate, in excess of 10% of the total voting power of all classes of
Voting Stock, or any individual, corporation, partnership, person or other
entity ("Person") recommended to succeed a Continuing Director by a
majority of Continuing Directors. "Related Person" as defined in the Rite
Aid Charter means any Person, affiliate or associate of such Person, which
has beneficial owners directly or indirectly of shares of stock of Rite Aid
entitling such Person to exercise more than 10% of the total voting power
of all classes of Voting Stock.

The Rite Aid Charter also provides that any corporate action either
(i) taken at a special meeting of stockholders called by the Board, a
majority of whose members are not Continuing Directors or (ii) approved by
written consent of stockholders, shall require the approval of not less
than 75% of the then outstanding Voting Stock.

Change of Control

Section 203 of the DGCL prohibits generally a public Delaware
corporation, including Rite Aid, from engaging in a Business Combination
(as defined below) with an Interested Stockholder (as defined below) for a
period of three years after the date of the transaction in which an
Interested Stockholder became such, unless: (i) the board of directors of
such corporation approved, prior to the date such Interested Stockholder
became such, either such Business Combination or such transaction; (ii)
upon consummation of such transaction, such Interested Stockholder owns at
least 85% of the voting shares of such corporation (excluding specified
shares); or (iii) such Business Combination is approved by the board of
directors of such corporation and authorized by the affirmative vote (at an
annual or special meeting and not by written consent) of at least 66 2/3%
of the outstanding voting shares of such corporation (excluding shares held
by such Interested Stockholder). A "Business Combination" includes (i)
mergers, consolidations and sales or other dispositions of 10% or more of
the assets of a corporation to or with an Interested Stockholder, (ii)
certain transactions resulting in the issuance or transfer to an Interested
Stockholder of any stock of such corporation or its subsidiaries and (iii)
certain other transactions resulting in a financial benefit to an
Interested Stockholder. An "Interested Stockholder" is a person who owns
(or, if such person is an affiliate or associate of the corporation, within
a three-year period did own) 15% or more of a corporation's stock entitled
to vote generally in the election of directors and, the affiliates and
associates of such person.

DESCRIPTION OF PREFERRED STOCK

The following description of the terms of the shares of Preferred
Stock that may be offered by the Company sets forth certain general terms
and provisions to which any Prospectus Supplement may relate. Certain other
terms of any series of Preferred Stock and the terms of any related option,
put or right of the Company to require the holder of any other Offered
Security to also acquire shares of Preferred Stock will be specified in the
applicable Prospectus Supplement. If so specified in the applicable
Prospectus Supplement, the terms of any series of Preferred Stock may
differ from the terms set forth below. The description of the terms of the
Preferred Stock set forth below and in any Prospectus Supplement is
necessarily a summary thereof and is qualified in its entirety by reference
to the Certificate of Designation relating to the applicable series of
Preferred Stock, which Certificate of Designation will be filed as an
exhibit to or incorporated by reference in the Registration Statement of
which this Prospectus forms a part.

General

Under the Rite Aid Charter, the Board has the authority, without
further stockholder action, to issue from time to time up to a maximum of
up to 20,000,000 shares of Preferred Stock, in one or more series and for
such consideration as may be fixed from time to time by the Board, and to
fix before the issuance of any shares of Preferred Stock of a particular
series, the designation of such series, the number of shares to comprise
such series, the dividend rate or rates payable with respect to the shares
of such series, the redemption price or prices, if any, and the terms and
conditions of any redemption, the voting rights, any sinking fund
provisions for the redemption or purchase of the shares of such series, the
terms and conditions upon which the shares are convertible or exchangeable,
if they are convertible or exchangeable, and any other relative rights,
preferences and limitations pertaining to such series. No shares of
Preferred Stock are issued or outstanding as of the date hereof.

Reference is made to the Prospectus Supplement relating to the
particular series of Preferred Stock offered thereby for specific terms
including: (i) the designation, stated value and liquidation preference of
such Preferred Stock and the number of shares offered; (ii) the initial
public offering price at which such shares will be issued; (iii) the
dividend rate or rates (or method of calculation), the dividend periods,
the date or dates on which dividends shall be payable and whether such
dividends shall be cumulative or noncumulative and, if cumulative, the
dates from which dividends shall commence to cumulate; (iv) any redemption
or sinking fund provisions; (v) any conversion or exchange provisions; (vi)
the procedures for any auction and remarketing, if any, of such Preferred
Stock; (vii) whether interest in Preferred Stock will be represented by
depositary shares; and (viii) any additional dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions of such Preferred Stock.

The Preferred Stock will, when issued against payment therefor, be
fully paid and nonassesable. Holders of Preferred Stock will have no
preemptive rights to subscribe for any additional securities which may be
issued by the Company.

Dividends

The holders of the Preferred Stock will be entitled to receive,
when and as declared by the Board, out of funds legally available therefor,
dividends at such rates and on such dates as will be specified in the
applicable Prospectus Supplement. Such rates may be fixed or variable or
both. If variable, the formula used for determining the dividend rate for
each dividend period will be specified in the applicable Prospectus
Supplement. Dividends will be payable to the holders of record as they
appear on the stock books of the Company on such record dates as will be
fixed by the Board. Dividends may be paid in the form of cash, Preferred
Stock (of the same or a different series) or Common Stock of the Company,
in each case as specified in the applicable Prospectus Supplement.

Dividends on any series of Preferred Stock may be cumulative or
noncumulative, as specified in the applicable Prospectus Supplement.
Dividends, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board fails to
declare a dividend payable on a dividend payment date on any Preferred
Stock for which dividends are noncumulative ("Noncumulative Preferred
Stock"), then the holders of such Preferred Stock will have no right to
receive a dividend in respect of the dividend period relating to such
dividend payment date, and the Company will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such
Preferred Stock are declared or paid on any future dividend payment dates.

The Company shall not declare, pay or set apart for payment any
dividends on any series of its Preferred Stock ranking, as to dividends, on
a parity with or junior to the outstanding Preferred Stock of any series
unless (i) if such series of Preferred Stock has a cumulative dividend
("Cumulative Preferred Stock"), full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on such Preferred Stock
for all past dividend periods and the then current dividend period, or (ii)
if such series of Preferred Stock is Noncumulative Preferred Stock, full
dividends for the then current dividend period on such Preferred Stock have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment. When
dividends are not paid in full upon Preferred Stock of any series and any
other shares of Preferred Stock of the Company ranking on a parity as to
dividends with such Preferred Stock, all dividends declared upon such
Preferred Stock and any other Preferred Stock of the Company ranking on a
parity as to dividends with such Preferred Stock shall be declared pro rata
so that the amount of dividends declared per share on such Preferred Stock
and such other shares of Preferred Stock shall in all cases bear to each
other the same ratio that the accrued dividends per share on such Preferred
Stock (which shall not, if such Preferred Stock is Noncumulative Preferred
Stock, include any accumulation in respect of unpaid dividends for prior
dividend periods) and such other shares of Preferred Stock bear to each
other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on Preferred Stock of such
series which may be in arrears.

Except as set forth in the preceding sentence, unless (i) full
dividends on the outstanding Cumulative Preferred Stock of any series have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period or (ii) full
dividends for the then current dividend period on the outstanding
Noncumulative Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment, no dividends (other than in Common
Stock of the Company or other shares of the Company ranking junior to such
Preferred Stock as to dividends and upon liquidation) shall be declared or
paid or set aside for payment, nor shall any other distribution be made, on
the Common Stock of the Company or on any other shares of the Company
ranking junior to or on a parity with such Preferred Stock as to dividends
or upon liquidation.

Unless (i) full dividends on the Cumulative Preferred Stock of any
series have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period or (ii) full
dividends for the then current dividend period on the Noncumulative
Preferred Stock of any series have been declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment, no
Common Stock or any other shares of the Company ranking junior to or on a
parity with such Preferred Stock as to dividends or upon liquidation shall
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid or made available for a sinking fund for the redemption of
any such shares) by the Company or any subsidiary of the Company except by
conversion into or exchange for shares of the Company ranking junior to
such Preferred Stock as to dividends and upon liquidation. Any dividend
payment made on shares of Cumulative Preferred Stock of any series shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains unpaid.

Redemption

Preferred Stock may be redeemable, in whole or in part, at the
option of the Company, out of funds legally available therefor, and may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, in
each case upon terms, at the times and at the redemption prices specified,
in the applicable Prospectus Supplement. Preferred Stock redeemed by the
Company will be restored to the status of authorized but unissued shares of
Preferred Stock.

The Prospectus Supplement relating to a series of Preferred Stock
that is subject to mandatory redemption will specify the number of shares
of such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified therein, at a redemption price per
share to be specified therein, together with an amount equal to all accrued
and unpaid dividends thereon (which shall not, if such Preferred Stock is
Noncumulative Preferred Stock, include any accumulation in respect of
unpaid dividends for prior dividend periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in
the applicable Prospectus Supplement. If the redemption price for Preferred
Stock of any series is payable only from the net proceeds of the issuance
of capital stock of the Company, the terms of such Preferred Stock may
provide that, if no such capital stock shall have been issued or to the
extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable
capital stock of the Company pursuant to conversion provisions specified in
the applicable Prospectus Supplement.

Notwithstanding the foregoing, unless (i) full dividends on the
Cumulative Preferred Stock of any series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period or (ii) full dividends for the then current dividend period
on the Noncumulative Preferred Stock of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment, no shares of Preferred Stock
of such series shall be redeemed unless all outstanding shares of Preferred
Stock of such series are simultaneously redeemed, and the Company shall not
purchase or otherwise acquire any shares of Preferred Stock of such series
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Stock of such series pursuant to a purchase or
exchange offer provided such offer is made on the same terms to all holders
of the Preferred Stock of such series.

Notice of redemption shall be given by mailing the same to each
record holder of the Preferred Stock to be redeemed, not less than 30 nor
more than 60 days prior to the date fixed for redemption thereof, at the
address of such holder as the same shall appear on the stock books of the
Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Stock are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accrue on
such redemption date; and (vi) the date upon which the holder's conversion
or exchange rights, if any, as to such shares shall terminate. If fewer
than all the shares of Preferred Stock of any series are to be redeemed,
the notice mailed to each such holder thereof shall also specify the number
of shares of Preferred Stock to be redeemed from each such holder.

If fewer than all the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Board and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares
held by such holders (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Board.

If notice of redemption of any shares of Preferred Stock has been
given and if the funds necessary for such redemption have been set aside by
the Company, separate and apart from its other funds, in trust for the pro
rata benefit of holders of any shares of Preferred Stock so called for
redemption, then from and after the redemption date for such shares,
dividends on such shares shall cease to accrue and such shares shall no
longer be deemed to be outstanding, and all rights of the holders thereof
as stockholders of the Company (except the right to receive the redemption
price) shall cease. Upon surrender, in accordance with such notice, of the
certificates representing any such shares (properly endorsed or assigned
for transfer, if the Board shall so require and the notice shall so state),
the redemption price set forth above shall be paid out of the funds
provided by the Company. If fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.

Conversion or Exchange Rights

The Prospectus Supplement relating to a series of Preferred Stock
that is convertible or exchangeable will state the terms on which shares of
such series are convertible or exchangeable into Common Stock, another
series of Preferred Stock or Debt Securities.

Rights Upon Liquidation

In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holder of each series of
Preferred Stock shall be entitled to receive out of the assets of the
Company legally available for distribution to stockholders, before any
distribution of assets is made to holders of Common Stock or any other
class or series of capital stock ranking junior to such Preferred Stock
upon liquidation, liquidating distributions in the amount of the
liquidation preference of such Preferred Stock plus all accrued and unpaid
dividends thereon (which shall not, in the case of Noncumulative Preferred
Stock, include any accumulation in respect of unpaid dividends for prior
dividend periods). If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable with respect
to Preferred Stock of any series and any other shares of Preferred Stock of
the Company ranking as to any such distribution on a parity with such
Preferred Stock are not paid in full, the holders of such Preferred Stock
and of such other shares of Preferred Stock will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the
holders of Preferred Stock of any series will not be entitled to any
further participation in any distribution of assets by the Company.

Voting Rights

Except as indicated below or in the applicable Prospectus
Supplement, or except as expressly required by applicable law, the holders
of Preferred Stock will not be entitled to vote.

If the Company fails to pay dividends on any shares of Preferred
Stock for six consecutive quarterly periods, the holders of such shares of
Preferred Stock (voting separately as a class with all other series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable) will be entitled to vote for the election of two additional
directors of the Company at a special meeting called by the holders of
record of at least 10% of such Preferred Stock or the next annual meeting
of stockholders and at each subsequent meeting until (i) all dividends
accumulated on shares of Cumulative Preferred Stock for the past dividend
periods and the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment
or (ii) four consecutive quarterly dividends on shares of Noncumulative
Preferred Stock shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment. In such case, the entire
Board will be increased by two directors.

So long as any shares of Preferred Stock remain outstanding, the
Company shall not, without the affirmative vote of the holders of at least
two-thirds of each series of Preferred Stock outstanding at the time, given
in person or by proxy, at a meeting (voting separately as a class): (i)
authorize, create or issue, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such series
of Preferred Stock with respect to payment of dividends or distribution of
assets upon liquidation, dissolution or winding up, or reclassify any
capital stock into any such shares, or authorize, create or issue any
obligation or security convertible into, exchangeable for or evidencing the
right to purchase any such shares or (ii) amend, alter or repeal the
provisions of the Restated Certificate of Incorporation, including the
Certificate of Designation relating to such series of Preferred Stock,
whether by merger, consolidation, or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of such
series of Preferred Stock or the holders thereof; provided, however, that
any increase in the amount of the authorized Preferred Stock or any
outstanding series of Preferred Stock or any other capital stock of the
Company, or the creation and issuance of any other series of Preferred
Stock or of any other capital stock of the Company, in each case ranking on
a parity with or junior to the Preferred Stock of such series with respect
to the payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.

The foregoing voting provisions will not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of such series of
Preferred Stock shall have been redeemed or called for redemption upon
proper notice and sufficient funds shall have been deposited in trust to
effect such redemption.

DESCRIPTION OF DEBT SECURITIES

The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The specific terms of the Debt Securities, and the extent, if any,
to which the general provisions summarized below may not apply, will be
described in the Prospectus Supplement relating to such Debt Securities.

The Debt Securities will be unsecured general obligations of the
Company. The Debt Securities will consist of either senior notes ("Senior
Debt Securities"), subordinated notes ("Subordinated Debt Securities") or
junior subordinated notes ("Junior Subordinated Debt Securities") of the
Company. The Senior Debt Securities will be issued under a senior debt
indenture (as amended or supplemented from time to time, a "Senior
Indenture"), the Subordinated Debt Securities will be issued under a
subordinated debt indenture (as amended or supplemented from time to time,
a "Subordinated Indenture" and together with the Senior Indenture, the
"Indenture") and the Junior Subordinated Debt Securities will be issued
under a junior subordinated debt indenture (as amended or supplemented from
time to time, a "Junior Subordinated Indenture"). The institutions named as
the trustees under the Senior Indenture, the Subordinated Indenture and the
Junior Subordinated Indenture are hereinafter referred to individually as
the "Indenture Trustee". Copies of the form of Senior Indenture, the
Subordinated Indenture and the Junior Subordinated Indenture have been
filed as exhibits to the Registration Statement. The following summary of
certain general provisions of the Senior Indenture, the Subordinated
Indenture, the Junior Subordinated Indenture and the Debt Securities does
not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the provisions of the Senior Indenture, the
Subordinated Indenture, the Junior Subordinated Indenture and the Debt
Securities as the case may be, including the definitions of certain terms
therein.

The particular terms of the Debt Securities offered by any
Prospectus Supplement (the "Offered Debt Securities") and the extent, if
any, to which such general provisions may apply to the Offered Debt
Securities will be described in the Prospectus Supplement relating to such
Offered Debt Securities. The Prospectus Supplement relating to the Offered
Debt Securities will also set forth whether the Offered Debt Securities are
Senior Debt Securities, Subordinated Debt Securities or Junior Subordinated
Debt Securities.

Senior and Subordinated Debt Securities

General

The Indenture does not limit the amount of Debt Securities which
may be issued thereunder and provides that Debt Securities may be issued
thereunder up to the aggregate principal amount which may be authorized
from time to time. The Debt Securities may be issued from time to time in
one or more series. Unless otherwise specified in the Prospectus
Supplement, the Senior Debt Securities will be unsecured and will rank
equally with all other unsecured and unsubordinated indebtedness of the
Company. The Subordinated Debt Securities will be subordinated in right of
payment to the prior payment in full of the Senior Indebtedness (as defined
below) of the Company, as described below under "Subordination of
Subordinated Debt Securities" and in a Prospectus Supplement applicable to
an offering of Subordinated Debt Securities. The Senior Indenture and the
Subordinated Indenture are identical in all respects except as otherwise
indicated below.

Reference is made to the Prospectus Supplement relating to the
particular series of Offered Debt Securities offered thereby for the
following terms of the Offered Debt
Securities:

o the designation, aggregate principal amount (and any limit
on the aggregate principal amount of the Offered Debt
Securities) and authorized denominations of the Offered Debt
Securities;
o the price (expressed as a percentage of the aggregate
principal amount thereof) at which the Offered Debt
Securities will be issued;
o the date or dates on which the principal of the Offered Debt
Securities will be payable;
o the rate or rates per annum (which may be fixed, floating or
adjustable) at which the Offered Debt Securities will bear
interest, if any, or the formula pursuant to which such rate
or rates shall be determined;
o the date from which such interest, if any, on the Offered
Debt Securities will accrue, the dates on which such
interest, if any, will be payable, the date on which payment
of such interest, if any, will commence and the Regular
Record Dates for such Interest Payment Dates, if any, and
the Person to whom any interest on the Offered Debt
Securities will be payable, if other than the Person in
whose name such Offered Debt Securities are registered on
any Regular Record Date;
o any optional or mandatory sinking fund provisions;
o the date, if any, after which and the price or prices at
which the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed at
the option of the Company or the holder and any other terms
and provisions of such optional or mandatory redemptions;
o if applicable, the terms of any right to convert or exchange
the Offered Debt Securities into Common Stock of the
Company;
o if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Offered Debt
Securities of the series will be issuable;
o if other than the principal amount thereof, the portion of
the principal amount of Offered Debt Securities which will
be payable upon declaration of acceleration of maturity
thereof or provable in bankruptcy;
o the currency or currencies, including composite currencies
and currency units, in which payment of the principal of
(and premium, if any) and interest, if any, on the Offered
Debt Securities will be payable (if other than the currency
of the United States of America), which unless otherwise
specified will be the currency of the United States of
America as at the time of payment is legal tender for
payment of public or private debts;
o if the principal of (and premium, if any), or interest, if
any, on the Offered Debt Securities are to be payable, at
the election of the Company or any holder thereof, in a
coin, currency or currency unit other than that in which the
Offered Debt Securities of the series are stated to be
payable, the period or periods within which, and the terms
and conditions upon which, such election may be made;
o if such securities are to be denominated in a currency or
currencies, including composite currencies and currency
units, other than the currency of the United States of
America, the equivalent price in the currency of the United
States of America for purposes of determining the voting
rights of holders of such Debt Securities as outstanding
securities under the Indenture;
o if the amount of payments of principal of (and premium, if
any), or portions thereof, or interest, if any, on the
Offered Debt Securities may be determined with reference to
an index, formula or other method, the manner in which such
amounts will be determined;
o whether the Offered Debt Securities shall be issued in whole
or in part in the form of a Global Security or Securities;
the terms and conditions, if any, upon which such Global
Security or Securities may be exchanged in whole or in part
for other definitive Debt Securities; and the depositary for
such Global Security or Securities, which depositary must be
a clearing agency registered under the Exchange Act;
o any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Offered Debt
Securities; or
o any additional terms relating to the Offered Debt Securities
(which may not be inconsistent with the Indenture).

In addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, the Indenture
provides the Company with the ability to "reopen" a previous issue of a
series of Debt Securities and issue additional Debt Securities of such
series.

Unless otherwise indicated in the Prospectus Supplement relating
thereto, principal, premium, if any, and interest, if any, will be payable
and the Debt Securities will be transferable and convertible, if
applicable, at the corporate trust office of the Indenture Trustee. Unless
other arrangements are made, interest will be paid by checks mailed to the
holders at their registered addresses. (Sections 3.5, 10.2.)

Unless otherwise indicated in the Prospectus Supplement relating
thereto, the Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple
thereof. No service charge will be made for any transfer or exchange of the
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Sections 3.2, 3.5.)

Some or all of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below
their stated principal amount. Federal income tax consequences and other
special considerations applicable to any such discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.

The rights of the Company, and hence the right of creditors of the
Company (including the holders of Debt Securities), to participate in any
distribution of the assets of any subsidiary upon its liquidation or
reorganization or otherwise is necessarily subject to the prior claims of
creditors of the subsidiary, except to the extent that claims of the
Company itself as a creditor of the subsidiary may be recognized.

The Indenture does not contain any provisions that afford holders
of the Debt Securities protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect holders of the Debt
Securities (except to the limited extent that the covenants described below
under "Certain Restrictions" might affect the Company's ability to
consummate such transactions).

Debt Securities denominated or payable in foreign currencies may
entail significant risks. These risks include, without limitation, the
possibility of significant fluctuations in the foreign currency markets.
These risks will vary depending upon the currency or currencies involved.
These risks will be more fully described in the Prospectus Supplement
relating thereto.

Certain Restrictions

The various restrictive provisions of the Indenture applicable to
the Company and its Restricted Subsidiaries (as defined below) do not apply
to Unrestricted Subsidiaries (as defined below). The assets and
indebtedness of Unrestricted Subsidiaries are not consolidated with those
of the Company and its Restricted Subsidiaries in calculating Consolidated
Net Tangible Assets under the Senior Indenture and Investments by the
Company or by its Restricted Subsidiaries in Unrestricted Subsidiaries are
excluded in computing Consolidated Net Tangible Assets. Subsidiaries" are
those subsidiaries of the Company which are designated as Unrestricted
Subsidiaries by the Board of Directors from time to time pursuant to the
Indenture (in each case, unless and until designated as Restricted
Subsidiaries by the Board pursuant to the Indenture). "Restricted
Subsidiaries" are all Subsidiaries other than Unrestricted Subsidiaries. A
"Wholly-owned Restricted Subsidiary" is a Restricted Subsidiary all of the
outstanding Funded Debt and capital stock of which (except directors'
qualifying shares) is owned by the Company and its other Wholly-owned
Restricted Subsidiaries. (Section 1.1 of the Senior Indenture and, in
relation to the designation of Restricted Subsidiaries and Unrestricted
Subsidiaries, Section 1.1 of the Subordinated Indenture.)

An Unrestricted Subsidiary may not be designated a Restricted
Subsidiary if it has any Secured Debt, Funded Debt or Attributable Debt
unless immediately thereafter the Company and its Restricted Subsidiaries
would be permitted to incur such debt under the terms of the Senior
Indenture. (Section 10.11 (a) of the Senior Indenture.)

Restrictions Upon Secured Debt: Neither the Company nor a
Restricted Subsidiary is permitted to incur or guarantee certain
indebtedness secured by any lien, mortgage, pledge or other encumbrance on
its property without equally and ratably securing the Senior Debt
Securities. This restriction does not apply to certain permitted
encumbrances described in the Senior Indenture, including purchase money
mortgages, encumbrances existing on property at the time it is acquired by
the Company or a Restricted Subsidiary or created within 24 months of the
date of such acquisition, conditional sales and similar agreements and the
extension, renewal or refunding of any of the foregoing. Subsection (d) of
Section 10.10 of the Senior Indenture also permits other indebtedness
secured by encumbrances not otherwise specifically permitted which,
together with Attributable Debt respecting existing Sale and Leaseback
Transactions (excluding Sale and Leaseback Transactions entered into in
respect of property acquired by the Company or a Restricted Subsidiary not
more than 24 months prior to the date such Transaction is entered into),
and unsecured Funded Debt of Subsidiaries, incurred or entered into, as the
case may be, after the date of the Senior Indenture, would not at the time
exceed 20% of the Consolidated Net Tangible Assets of the Company and its
Restricted Subsidiaries. (Section 10.10 of the Senior Indenture.)

"Attributable Debt" means, as to any particular Sale and Leaseback
Transaction under which the Company or any Restricted Subsidiary is at the
time liable, at any date as of which the amount thereof is to be determined
(i) in the case of any such transaction involving a Capital Lease, the
amount on such date of the Capital Lease Obligation thereunder, or (ii) in
the case of an other such Sale and Leaseback Transaction, the then present
value of the minimum rental obligation under such Transaction during the
remaining term thereof (after giving effect to any extensions at the option
of the lessor) computed by discounting the respective rental payments at
the actual interest factor cannot be readily determined, at the rate per
annum equal to the rate of interest on the initial series of Securities,
except that if no interest is payable in respect of the initial series of
Securities or if such rate is not fixed then at the rate of 9% per annum.
The amount of any rental payment required to be made under any such Sale
and Leaseback Transaction not involving a capital lease may exclude amounts
required to be paid by the lessee on account of maintenance and repairs,
insurance, taxes, assessments, utilities, operating and labor costs and
similar charges. (Section 1.1 of the Senior Indenture).

"Consolidated Net Tangible Assets" means the total amount of assets
on a consolidated balance sheet of the Company and its Restricted
Subsidiaries (less applicable reserves and other properly deductible items
and after excluding any investments made in Unrestricted Subsidiaries or in
corporations while they were Unrestricted Subsidiaries but which are not
Subsidiaries at the time of computation) after deducting (i) all
liabilities and liability items, including amounts in respect of
obligations under leases (or guarantees thereof) which under generally
accepted accounting principles would be included on such balance sheet,
except Funded Debt, capital stock and surplus, surplus reserves and
provisions for deferred income taxes and (ii) goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles. (Section 1.1 of the Senior Indenture.)

"Funded Debt" means any indebtedness for money borrowed, created,
issued, incurred, assumed or guaranteed, whether secured or unsecured,
maturing more than one year after the date of determination thereof and any
indebtedness, regardless of its term, renewable pursuant to the terms
thereof or of a revolving credit or similar agreement effective for more
than one year after the date of the creation of the indebtedness, which
would, in accordance with generally accepted accounting principles, be
classified as funded debt, excluding (i) indebtedness for which money in
satisfaction thereof has been deposited in trust, (ii) certain guarantees
arising in the ordinary course of business and (iii) liabilities resulting
from capitalization of lease rentals. (Section 1.1 of the Senior
Indenture.)

"Secured Debt" means indebtedness for money borrowed which is
secured by a lien on property of the Company or any Restricted Subsidiary,
excluding certain guarantees arising in the ordinary course of business.
(Section 1.1 of the Senior Indenture.)

Restrictions Upon Sales with Leases Back: The Company is not
permitted, and may not permit a Restricted Subsidiary, to sell (except to
the Company or one or more Wholly-owned Restricted Subsidiaries) any
manufacturing plant, warehouse, retail store or equipment owned and
operated by the Company or a Restricted Subsidiary on or after the date of
the Senior Indenture with the intention that the Company or any Restricted
Subsidiaries take back a lease thereof, except a lease for a period,
including renewals, of not more than 24 months by the end of which period
it is intended that the use of such property by the lessee will be
discontinued, except (i) where the Company would be entitled under
subsection (d) of Section 10.10 of the Senior Indenture to incur additional
secured indebtedness not otherwise specifically permitted by the Senior
Indenture in an amount equal to the Attributable Debt respecting such Sale
and Leaseback Transaction, (ii) where the Sale and Leaseback Transaction is
entered into in respect of property acquired by the Company or a Restricted
Subsidiary within 24 months of such acquisition, or (iii) where the Company
within 120 days of entering into the Sale and Leaseback Transaction applies
to the retirement of its Secured Debt an amount equal to the greater of (a)
the net proceeds of the sale of the property leased pursuant to such
Transaction or (b) the fair market value of the property so leased.
(Section 10.9 of the Senior Indenture.)

Restrictions Upon Funded Debt of Restricted Subsidiaries:
Restricted Subsidiaries are prohibited from becoming liable for any
unsecured Funded Debt except where the Company would be entitled under
subsection (d) of Section 10.10 of the Senior Indenture to incur additional
secured indebtedness not otherwise specifically permitted by the Senior
Indenture in an amount equal to such Funded Debt and except for certain
extensions, refunding and renewals of Funded Debt. (Section 10.8 of the
Senior Indenture.)

Restrictions Upon Merger and Sale of Assets: The Senior Indenture
provides that no merger of the Company with or sale of the Company's
property substantially as an entirety to any other corporation shall be
made if, as a result, properties or assets of the Company would become
subject to a mortgage or lien which would not be permitted by the Senior
Indenture, unless the Senior Debt Securities shall be equally and ratably
secured with such obligations. (Section 8.1 of the Senior Indenture.) Any
successor entity must be a corporation organized in the United States and,
immediately after giving effect to a merger or consolidation, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing. (Section
8.1.)

Although the amount of the Company's property that will constitute
a sale of such property "substantially as an entirety" is not readily
quantifiable, a determination as to whether such a sale has occurred will
depend on the percentage of operating and total assets transferred, among
other measurements, and other facts and circumstances of the transaction.
In any particular transaction, the determination of whether such a sale has
occurred will be made by the Company, and the Company will give notice of
such occurrence to the holders of the Debt Securities. Because of the
uncertainty regarding whether a particular sale will constitute a sale of
property "substantially as an entirety," holders will not be able to
determine for themselves whether such a transaction has occurred and will
have to rely on the Company's determination. If such a transaction occurs,
the person to which such amount of the Company's property is transferred
shall enter into a supplemental Indenture satisfactory in form to the
Indenture Trustee.

Modification of the Indenture

The Indenture and the rights of the holders may be modified by the
Company only with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Debt Securities of each
series affected by the modification; but no modification altering the terms
of payment of principal or interest, changing the place or medium of
payment of principal or interest, impairing the rights of holders to
institute suit for payment, adversely changing the right to convert or
exchange any Debt Security, including decreasing the conversion rate or
increasing the conversion price of such Debt Security (if applicable),
reducing the percentage required for modification or, in the case of the
Subordinated Indenture, modifying the subordination provisions in a manner
adverse to the holders of the Subordinated Debt Securities will be
effective against any Holder without his consent. (Section 9.2.)

Events of Default

The Indenture defines an Event of Default with respect to the Debt
Securities of any series as being any one of the following events: (a)
default for 30 days in any payment of interest upon any Security of that
series when due (in the case of the Subordinated Indenture, whether or not
payment is prohibited by the provisions described under the heading
"Subordination of Subordinated Debt Securities" below), (b) default in any
payment of principal of (or premium, if any) upon any Security of that
series when due (in the case of the Subordinated Indenture, whether or not
payment is prohibited by the provisions described under the heading
"Subordination of Subordinated Debt Securities" below), (c) default for 60
days after appropriate notice in the performance of any other covenant in
the Debt Securities of that series or the Indenture (other than a covenant
included in the Indenture solely for the benefit of any series of Debt
Securities other than that series), (d) certain events in bankruptcy,
insolvency or reorganization, or (e) certain events of default resulting in
the acceleration of the maturity of the related indebtedness aggregating in
excess of $10,000,000 under any mortgages, indentures (including the
Indenture) or instruments under which the Company may have issued, or by
which there may have been secured or evidenced, any other indebtedness
(including Debt Securities of any series) of the Company. In case an Event
of Default shall occur and be continuing with respect to the Debt
Securities of any series, the Indenture Trustee or the holders of not less
than 25% in aggregate principal amount of the Debt Securities then
outstanding of that series may declare the principal of the Debt Securities
of such series (or, if the Debt Securities of that series were issued as
discounted Debt Securities, such portion of the principal as may be
specified in the terms of that series) and the accrued interest thereon, if
any, to be due and payable. Any Event of Default with respect to the Debt
Securities of any series which has been cured may be waived by the holders
of a majority in aggregate principal amount of the Debt Securities of that
series then outstanding. (Sections 5.1, 5.2, 5.13.)

The Indenture requires the Company to file annually with the
Indenture Trustee a written statement signed by an officer of the Company
as to the absence of certain defaults under the terms of the Indenture. The
Indenture provides that the Indenture Trustee may withhold notice to the
holders of any default (except in payment of principal or premium, if any,
or interest) if it considers it in the interest of the holders to do so.
(Sections 6.2 and 10.13 of the Senior Indenture and Sections 6.2 and 10.10
of the Subordinated Indenture.)

Subject to the provisions of the Indenture relating to the duties
of the Indenture Trustee in case an Event of Default shall occur and be
continuing, the Indenture provides that the Indenture Trustee shall be
under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of holders unless such holders
shall have offered to the Indenture Trustee reasonable indemnity. Subject
to such provisions for indemnification and certain other rights of the
Indenture Trustee, the Indenture provides that the holders of a majority in
principal amount of the Debt Securities of any series then outstanding
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee or exercising
any trust or power conferred on the Indenture Trustee. (Sections 5.12,
6.3.)

Conversion Rights

The terms on which Debt Securities of any series are convertible
into or exchangeable for Common Stock of the Company will be set forth in
the Prospectus Supplement relating thereto. Such terms shall include
provisions as to whether conversion or exchange is mandatory, at the option
of the holder or at the option of the Company, and may include provisions
pursuant to which the number of shares of Common Stock of the Company to be
received by the holders of Debt Securities would be calculated according to
the market price of Common Stock of the Company as of a time stated in the
Prospectus Supplement. (Article Thirteen.)

Defeasance and Discharge

The terms of the Indenture provide the Company with the option to
be discharged from any and all obligations with respect to a particular
series of Debt Securities, including, in the case of Subordinated Debt
Securities, the provisions described under the heading "Subordination of
Subordinated Debt Securities" herein (except for certain obligations to
register the transfer or exchange of Debt Securities, to replace stolen,
lost or mutilated Debt Securities, to maintain paying agencies and hold
moneys for payment in trust) upon the deposit with the Indenture Trustee,
in trust, of money or U.S. Government Obligations (as defined) (or Foreign
Government Obligations in case of Debt Securities denominated in foreign
currencies), or both, which through the payment of interest and principal
thereof in accordance with their terms will provide money in an amount
sufficient to pay any installment of principal (and premium, if any) and
interest on and any mandatory sinking fund payments in respect of such Debt
Securities on the Stated Maturity of such payments or on the applicable
Redemption Date in accordance with the terms of the Indenture and such Debt
Securities. Such option may only be exercised if the Company has received
from, or there has been published by, the United States Internal Revenue
Service a ruling to the effect that such a discharge will not be deemed, or
result in, a taxable event with respect to holders of such series of Debt
Securities. (Section 4.3.)

Defeasance of Certain Covenants

The terms of the Indenture provide the Company with the option to
have the occurrence of events described in (c) or (e) under the heading
"Events of Default" above no longer be Events of Default and, in the case
of Senior Debt Securities, to omit to comply with certain of the covenants
described under the heading "Certain Restrictions" above, and, in the case
of Subordinated Debt Securities, the provisions described under the heading
"Subordination of Subordinated Debt Securities" below will no longer be
applicable, in each case, with respect to a particular series of Debt
Securities. The Company, in order to exercise such option, will be required
to deposit with the Indenture Trustee money or U.S. Government Obligations
(or Foreign Government Obligations in case of Debt Securities denominated
in foreign currencies), or both, which through the payment of interest and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay principal (and premium, if any) and interest on
and any mandatory sinking fund payments in respect of such Debt Securities
on the Stated Maturity of such payments or on the applicable Redemption
Date in accordance with the terms of the Indenture and such Debt
Securities. The Company will also be required to deliver to the Indenture
Trustee an opinion of counsel to the effect that the deposit and related
covenant defeasance will not cause the holders of such series of Debt
Securities to recognize income, gain or loss for federal income tax
purposes. (Section 10.12 of the Senior Indenture and Section 10.9 of the
Subordinated Indenture.)

The Company may exercise its defeasance option with respect to such
Debt Securities notwithstanding its prior exercise of its covenant
defeasance option. If the Company exercises its defeasance option, payment
of such Debt Securities may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment
of such Debt Securities may not be accelerated by reference to the
provisions described in the preceding paragraph. In the event the Company
omits to comply with its remaining obligations with respect to such Debt
Securities under the Indenture after exercising its covenant defeasance
option and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations (or Foreign Government Obligations in case of Debt Securities
denominated in foreign currencies) on deposit with the Indenture Trustee
may be insufficient to pay amounts due on the Debt Securities of such
series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such
payments. (Sections 4.3 and 10.12 of the Senior Indenture and Sections 4.3
and 10.9 of the Subordinated Indenture.)

Subordination of Subordinated Debt Securities

The Subordinated Debt Securities will be subordinated in right of
payment, as set forth in the Subordinated Indenture, to the prior payment
in full of all existing and future Senior Indebtedness of the Company.
(Section 14.1 of the Subordinated Indenture.) "Senior Indebtedness" means
the principal of (and premium, if any) and interest on (including interest
accruing after the filing of a petition initiating any proceeding pursuant
to any bankruptcy law, but only to the extent allowed or permitted to the
holder of such Debt against the bankruptcy or any other insolvency estate
of the Company in such proceeding) or accrued original issue discount on
and other amounts due on or in connection with any Debt incurred, assumed
or guaranteed by the Company, whether presently outstanding or hereafter
incurred, assumed or guaranteed, and all renewals, extensions and
refundings of any such Debt (as defined below); provided however, that the
following will not constitute Senior Indebtedness:

o any Debt which expressly provides (i) that such Debt shall
not be senior in right of payment to the Subordinated Debt
Securities, or (ii) that such Debt shall be subordinated to
any other Debt of the Company, unless such Debt expressly
provides that such Debt shall be senior in right of payment
to the Subordinated Debt Securities;
o any Debt of the Company in respect of the Subordinated Debt
Securities;
o any Debt or liability for compensation to employees, for
goods or materials purchased in the ordinary course of
business or for services;
o any Debt of the Company to any subsidiary for money borrowed
or advanced from such subsidiary; and
o any liability for federal, state, local or other taxes owed
or owing by the Company.

"Debt" means (i) all indebtedness for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of the
borrower or only to a portion thereof and including all indebtedness
evidenced by notes, bonds, debentures or other securities sold for money),
(ii) all indebtedness incurred or assumed in the acquisition (whether by
way of purchase, merger, consolidation or otherwise) of any business, real
property or other assets (except assets other than real property acquired
in the ordinary course of the conduct of the acquirer's usual business),
(iii) all Capital Lease Obligations, (iv) Hedging Obligations, (v)
guarantees of indebtedness described in clauses (i), (ii), (iii) or (iv) of
any other person and (vi) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness
(including, without limitation, exchange offers), obligation or guarantee.

By reason of the subordination described herein, in the event of
insolvency, upon any distribution of the assets of the Company, (i) the
holders of Subordinated Debt Securities are required to pay over their
share of such distribution to the Indenture Trustee in bankruptcy, receiver
or other person distributing the assets of the Company for application to
the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all holders of Senior Indebtedness in full and (ii)
unsecured creditors of the Company who are not holders of Subordinated Debt
Securities or holders of Senior Indebtedness of the Company may recover
less, ratably, than holders of Senior Indebtedness of the Company and may
recover more, ratably, than the holders of Subordinated Debt Securities.
(Section 14.2 of the Subordinated Indenture.)

In the event that any Subordinated Debt Securities are declared due
and payable prior to their Stated Maturity by reason of the occurrence of
an Event of Default, then the Company is obligated to notify promptly
holders of Senior Indebtedness of such acceleration. The Company may not
pay the Subordinated Debt Securities until 120 days have passed after such
acceleration occurs and may thereafter pay the Subordinated Debt Securities
if the terms of the Indenture otherwise permit payment at that time.
(Section 14.3 of the Subordinated Indenture.)

No payment of the principal, premium, if any, or interest with
respect to any Subordinated Debt Securities may be made, nor may the
Company acquire any Subordinated Debt Securities except as set forth
in the Indenture, if any default with respect to Senior Indebtedness occurs
and is continuing that permits the acceleration of the maturity thereof and
the Company has actual knowledge of the default, unless (a) 120 days pass
after notice of the default is given to the Indenture Trustee and such
default is not then the subject of judicial proceedings or the default with
respect to the Senior Indebtedness is cured (including, without limitation,
by the payment of such Senior Indebtedness in full) or waived and (b) the
terms of the Indenture otherwise permit the payment or acquisition of
Subordinated Debt Securities at that time. The Company is required to give
the Indenture Trustee notice of a default with respect to Senior
Indebtedness within five Business Days after the Company has actual
knowledge of the default or potential default. (Section 14.4 of the
Subordinated Indenture.)

The Subordinated Indenture does not limit the amount of
Subordinated Debt Securities which the Company may issue, nor does it limit
the Company from issuing any other secured or unsecured debt. The
Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is
senior to the Subordinated Debt Securities, but subordinate to other
obligations of the Company. The Senior Debt Securities, when issued, will
constitute Senior Indebtedness. The Prospectus Supplement may further
describe the provisions, if any, applicable to the subordination of the
Subordinated Debt Securities of a particular series.

Junior Subordinated Debt Securities

General

The Company plans to sell one or more series of Junior Subordinated
Debt Securities to the Rite Aid Trusts pursuant to this Prospectus. The
Prospectus Supplement relating to each such series of Junior Subordinated
Debt Securities will describe the following terms:

o the title;
o any limit on the amount that may be issued;
o whether or not such series of Junior Subordinated Debt
Securities will be issued in global form, the terms and who
the depository will be;
o the maturity date(s);
o the annual interest rate(s) (which may be fixed or variable)
or the method for determining the rate(s) and the date(s)
interest will begin to accrue, the date(s) interest will be
payable and the regular record dates for interest payment
dates or the method for determining such date(s);
o the place(s) where payments shall be payable;
o the Company's right, if any, to defer payment of interest
and the maximum length of any such deferral period;
o the date, if any, after which, and the price(s) at which,
such series of Junior Subordinated Debt Securities may,
pursuant to any optional redemption provisions, be redeemed
at the Company's option, and other related terms and
provisions;
o the date(s), if any, on which, and the price(s) at which the
Company is obligated, pursuant to any mandatory sinking fund
provisions or otherwise, to redeem, or at the holder's
option to purchase, such series of Junior Subordinated Debt
Securities and other related terms and provisions;
o the denominations in which such series of Junior
Subordinated Debt Securities will be issued, if other than
denominations of $25 and any integral multiple thereof; and
o any other terms (which terms shall not be inconsistent with
the Junior Subordinated Indenture).

Conversion or Exchange Rights

The terms on which a series of Junior Subordinated Debt Securities
may be convertible into or exchangeable for Common Stock or other
securities of the Company will be set forth in the Prospectus Supplement
relating thereto. Such terms will include provisions as to whether
conversion or exchange is mandatory, at the option of the holder or at the
option of the Company, and may include provisions pursuant to which the
number of shares of Common Stock or other securities of the Company to be
received by the holders of such series of Junior Subordinated Debt
Securities would be subject to adjustment.

Consolidation, Merger or Sale

The Junior Subordinated Indenture does not contain any covenant
which restricts the ability of the Company to merge or consolidate, or
sell, convey, transfer or otherwise dispose of all or substantially all of
their assets. However, any successor or acquirer of such assets must assume
all of the obligations of the Company under the Junior Subordinated
Indenture or the Junior Subordinated Debt Securities, as appropriate.

Events of Default Under the Junior Subordinated Indenture

The following are events of default under the Junior Subordinated
Indenture with respect to any series of Junior Subordinated
Debt Securities issued:

o failure to pay interest when due and such failure continues
for 90 days and the time for payment has not been extended
or deferred;
o failure to pay the principal (or premium, if any) when due;
o failure to observe or perform any other covenant contained
in the Junior Subordinated Debt Securities or the Junior
Subordinated Indenture (other than a covenant specifically
relating to another series of Junior Subordinated Debt
Securities), and such failure continues for 90 days after
the Company receives notice from the Indenture Trustee or
holders of at least 25% in aggregate principal amount of the
outstanding Junior Subordinated Debt Securities of that
series;
o certain events of bankruptcy, insolvency or reorganization
of the Company; and
o the voluntary or involuntary dissolution, winding up or
termination of the Rite Aid Trust that owns the series of
Junior Subordinated Debt Securities, except in connection
with

(1) the distribution of such Junior Subordinated Debt
Securities to holders of Trust Securities of the Rite
Aid Trust,

(2) the redemption of all of the Trust Securities of the
Rite Aid Trust; and

(3) mergers, consolidations or amalgamations permitted by
the Amended Declaration of the Rite Aid Trust.

If an event of default with respect to Junior Subordinated Debt
Securities of any series occurs and is continuing, the Indenture Trustee or
the holders of at least 25% in aggregate principal amount of the
outstanding Junior Subordinated Debt Securities of that series, by notice
in writing to the Company (and to the Indenture Trustee if notice is given
by such holders), may declare the unpaid principal of, premium, if any, and
accrued interest, if any, due and payable immediately.

The holders of at least a majority in aggregate liquidation amount
of the Trust Preferred Securities of the Rite Aid Trust may waive any
default or event of default with respect to such series and its
consequences, except defaults or events of default regarding:

o payment of principal, premium, if any, or interest; or
o certain covenants containing limitations on the Company's
ability to pay dividends and make payments on debt
securities in certain circumstances.

Any such waiver shall cure such default or event of default.

If , under the Amended Declaration of a Rite Aid Trust, a
Declaration Event of Default has occurred and is attributable to the
failure of the Company to pay principal, premium, if any, or interest on,
such Junior Subordinated Debt Securities, then each holder of the Trust
Preferred Securities of the Rite Aid Trust may sue the Company or seek
other remedies, to force payment to such holder of the principal of,
premium, if any, or interest on, such Junior Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation amount of the
Trust Preferred Securities held by such holder.

Subject to the terms of the Junior Subordinated Indenture, if an
event of default under an Junior Subordinated Debt Indenture shall occur
and be continuing, the Indenture Trustee will be under no obligation to
exercise any of its rights or powers under such Junior Subordinated
Indenture at the request or direction of any of the holders of the
applicable series of Junior Subordinated Debt Securities, unless such
holders have offered the Indenture Trustee reasonable indemnity. The
holders of at least a majority in aggregate liquidation amount of the Trust
Preferred Securities of the Rite Aid Trust will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power
conferred on the Indenture Trustee, with respect to the Junior Subordinated
Debt Securities of that series, provided that:

o it is not in conflict with any law or the applicable Junior
Subordinated Indenture;
o the Indenture Trustee may take any other action deemed
proper by it which is not inconsistent with such direction;
and
o subject to its duties under the Trust Indenture Act, the
Indenture Trustee need not take any action that might
involve it in personal liability or might be unduly
prejudicial to the holders not involved in the proceeding.

A holder of the Junior Subordinated Debt Securities of any series
will only have the right to institute a proceeding under the Junior
Subordinated Indenture or to appoint a receiver or trustee, or to seek
other remedies if:

o the holder has given written notice to the Indenture Trustee
of a continuing event of default with respect to that
series;
o the holders of at least 25% in aggregate principal amount of
the outstanding Junior Subordinated Debt Securities of that
series have made written request, and such holders have
offered reasonable indemnity to the Indenture Trustee to
institute such proceedings as trustee; and
o the Indenture Trustee does not institute such proceeding,
and does not receive from the holders of a majority in
aggregate principal amount of the outstanding Junior
Subordinated Debt Securities of that series other
conflicting directions within 60 days after such notice,
request and offer.

These limitations do not apply to a suit instituted by a holder of
Junior Subordinated Debt Securities if the Company defaults in the payment
of the principal, premium, if any, or interest on, the Junior
Subordinated Debt Securities.

The Company will periodically file statements with the Indenture
Trustee regarding its compliance with certain of the covenants in the
Junior Subordinated Indenture.

Modification of Junior Subordinated Indenture; Waiver

The Company and the Indenture Trustee may change a Junior
Subordinated Indenture without the consent of any holders with respect to
certain matters, including:

o to fix any ambiguity, defect or inconsistency in such Junior
Subordinated Indenture; and
o to change anything that does not materially adversely affect
the interests of any holder of Junior Subordinated Debt
Securities of any series.

In addition, under the Junior Subordinated Debt Indenture, the
rights of holders of a series of Junior Subordinated Debt Securities may be
changed by the Company and the Indenture Trustee with the written consent
of the holders of at least a majority in aggregate liquidation amount of
the Trust Preferred Securities of the Rite Aid Trust holding the
outstanding Junior Subordinated Debt Securities of each series that is
affected. However, the following changes may only be made with the consent
of each holder of any outstanding Junior Subordinated Debt Securities
affected:

o extending the fixed maturity of such series of Junior
Subordinated Debt Securities;
o reducing the principal amount, reducing the rate of or
extending the time of payment of interest, or any premium
payable upon the redemption of any such Junior Subordinated
Debt Securities; or
o reducing the percentage of Junior Subordinated Debt
Securities, the holders of which are required to consent to
any amendment.

If the consent of the Property Trustee of the Rite Aid Trust, as
holder of Junior Subordinated Debt Securities, is required to consent to
any amendment, modification or termination of a Junior Subordinated
Indenture, the Property Trustee will request directions from the holders of
the Trust Preferred Securities of the applicable Rite Aid Trust.

Form, Exchange, and Transfer

The Junior Subordinated Debt Securities of each series will be
issuable only in fully registered form without coupons and, unless
otherwise specified in the applicable Prospectus Supplement, in
denominations of $1,000 and any integral multiple thereof.

At the option of the holder, subject to the terms of the Junior
Subordinated Debt Indenture and the limitations applicable to global
securities described in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities of any series will be exchangeable for other
Junior Subordinated Debt Securities of the same series, in any authorized
denomination and of like tenor and aggregate principal amount.

Subject to the terms of the Junior Subordinated Indenture and the
limitations applicable to global securities set forth in the applicable
Prospectus Supplement, Junior Subordinated Debt Securities may be presented
for exchange or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed if so required by the
Company or the Indenture Trustee) at the office of the Security Registrar
or at the office of any transfer agent designated by the Company for such
purpose. Unless otherwise provided in the Junior Subordinated Debt
Securities to be transferred or exchanged, no service charge will be made
for any registration of transfer or exchange, but the Company may require
payment of any taxes or other governmental charges. The Company has
appointed the Indenture Trustee as Security Registrar. Any transfer agent
(in addition to the Security Registrar) initially designated by the Company
for any Junior Subordinated Debt Securities will be named in the applicable
Prospectus Supplement. The Company may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve
a change in the office through which any transfer agent acts, except that
the Company will be required to maintain a transfer agent in each place of
payment for the Junior Subordinated Debt Securities of each series.

If the Junior Subordinated Debt Securities of any series are to be
redeemed, the Company will not be required to:

o issue, register the transfer of, or exchange any Junior
Subordinated Debt Securities of that series during a period
beginning at the opening of business 15 days before the day
of mailing of a notice of redemption of any such Junior
Subordinated Debt Securities that may be selected for
redemption and ending at the close of business on the day of
such mailing; or
o register the transfer of or exchange any Junior Subordinated
Debt Securities so selected for redemption, in whole or in
part, except the unredeemed portion of any such Junior
Subordinated Debt Securities being redeemed in part.

Information Concerning the Junior Subordinated Indenture Trustee

The Indenture Trustee, other than during the occurrence and
continuance of an event of default under an Junior Subordinated Indenture,
undertakes to perform only such duties as are specifically set forth in the
Junior Subordinated Indenture and, upon an event of default under an Junior
Subordinated Indenture, must use the same degree of care as a prudent
person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the Indenture Trustee is under no obligation to
exercise any of the powers given it by the Indentures at the request of any
holder of Junior Subordinated Debt Securities unless it is offered
reasonable security and indemnity against the costs, expenses and
liabilities that it might incur. The Indenture Trustee is not required to
spend or risk its own money or otherwise become financially liable while
performing its duties unless it reasonably believes that it will be repaid
or receive adequate indemnity.

Payment and Paying Agents

Unless otherwise indicated in the applicable Prospectus Supplement,
payment of the interest on any Junior Subordinated Debt Securities on any
interest payment date will be made to the person in whose name such Junior
Subordinated Debt Securities (or one or more predecessor securities) are
registered at the close of business on the regular record date for such
interest.

Principal of and any premium and interest on the Junior
Subordinated Debt Securities of a particular series will be payable at the
office of the paying agents designated by the Company, except that unless
otherwise indicated in the applicable Prospectus Supplement, interest
payments may be made by check mailed to the holder. Unless otherwise
indicated in such Prospectus Supplement, the corporate trust office of the
Indenture Trustee in The City of New York will be designated as the
Company's sole paying agent for payments with respect to Junior
Subordinated Debt Securities of each series. Any other paying agents
initially designated by the Company for the Junior Subordinated Debt
Securities of a particular series will be named in the applicable
Prospectus Supplement. The Company will be required to maintain a paying
agent in each place of payment for the Junior Subordinated Debt Securities
of a particular series.

All moneys paid by the Company to a paying agent or the Indenture
Trustee for the payment of the principal of or any premium or interest on
any Junior Subordinated Debt Securities which remains unclaimed at the end
of two years after such principal, premium or interest has become due and
payable will be repaid to the Company, and the holder of the security
thereafter may look only to the Company for payment thereof.

Subordination of Junior Subordinated Debt Securities

The Junior Subordinated Debt Securities will be unsecured and will
be subordinate and junior in priority of payment to certain of the
Company's other indebtedness to the extent described in a Prospectus
Supplement. The Junior Subordinated Indenture does not limit the amount of
Junior Subordinated Debt Securities which the Company may issue, nor does
it limit the Company from issuing any other secured or unsecured debt.

Global Securities

Securities of any series of Debt Securities may be issued in whole
or in part in the form of one or more global securities that will be
deposited with, or on behalf of, a depositary identified in the Prospectus
Supplement relating to such series ("Global Securities"). Global Securities
will be issued in registered form and in either temporary or permanent
form. Unless and until it is exchanged for Debt Securities in definitive
form, a temporary Global Security may not be transferred except as a whole
by the depositary for such Global Security to a nominee of such depositary
or any such nominee to a successor of such depositary or a nominee of such
successor.

The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following
provisions will apply to any depositary arrangements.

Upon the issuance of a Global Security, the depositary for such
Global Security or its nominee will credit the accounts of persons held
with it with the respective principal amounts of the Securities represented
by such Global Security. Such accounts shall be designated by the
underwriters or agents with respect to such Securities or by the Company if
such Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that
have accounts with the depositary for such Global Security or its nominee
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the depositary (with respect to participants' interests) for
such Global Security or by participants or persons that hold through
participants (with respect to beneficial owners' interests).

Governing Law

The Senior Indenture, the Subordinated Indenture, the Junior
Subordinated Indenture and the Debt Securities will be governed by and
construed in accordance with the laws of the State of New York except
to the extent that the Trust Indenture Act shall be applicable.

DESCRIPTION OF WARRANTS

The Company may issue Warrants to purchase Debt Securities, Common
Stock, Preferred Stock or any combination thereof, and such Warrants may be
issued independently or together with any Offered Securities and may be
attached to or separate from such Offered Securities. Each series of
Warrants will be issued under a separate warrant agreement (each a "Warrant
Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent ("Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Warrants being offered thereby. The
Warrant Agent will act solely as an agent of the Company in connection with
the Warrants of each such series and will not assume any obligation or
relationship of agency for or with holders or beneficial owners of
Warrants.

The following sets forth certain general terms and provisions of
the Warrant Agreement and the certificates representing the Warrants
("Warrant Certificates") This summary does not purport to be complete and
is subject to, and qualified in its entirety by reference to, all the
provisions of the Warrant Agreement and the Warrant Certificates, including
the definitions of certain terms therein.

The Prospectus Supplement relating to a series of Warrants will
describe the specific terms of the Warrants including the following:

o the title of such Warrants;
o the aggregate number of such Warrants;
o the price or prices at which such Warrants will be issued;
o the designation and terms of the securities purchasable upon
the exercise of such Warrants;
o the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire;
o whether such Warrants will be issued in registered form or
bearer form;
o if applicable, the minimum or maximum amount of such
Warrants which may be exercised at any one time;
o if applicable, the designation and terms of the Offered
Securities (other than Trust Preferred Securities) with
which such Warrants are issued and the number of such
Warrants issued with each such Offered Security;
o if applicable, the date on and after which such Warrants and
the related Offered Securities (other than Trust Preferred
Securities) will be separately transferable;
o information with respect to book-entry procedures, if any;
o if applicable, a discussion of certain United States federal
income tax considerations; and
o any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and
exercise of such Warrants.

Warrant Certificates will be exchangeable for new Warrant
Certificates of different denominations and Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their
Warrants, holders of Warrants will not be entitled to payments of principal
of (premium, if any), or interest, if any, on, the Debt Securities
purchasable upon such exercise.

Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
Warrant Certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward
the Debt Securities purchasable upon such exercise. If less than all of the
Warrants represented by such Warrant Certificate are exercised, a new
Warrant Certificate will be issued for the remaining Warrants.

DESCRIPTION OF THE PURCHASE CONTRACTS AND THE UNITS

The Company may issue Purchase Contracts, including contracts
obligating holders to purchase from the Company, and the Company to sell to
the holders, a specified number of shares of Common Stock or Preferred
Stock at a future date or dates. The consideration per share of Common
Stock or Preferred Stock may be fixed at the time the Purchase Contracts
are issued or may be determined by reference to a specific formula set
forth in the Purchase Contracts. The Purchase Contracts may be issued
separately or as a part of units ("Units"), including, but not limited to,
adjustable conversion-rate equity security units. Each Unit consists of a
Purchase Contract and Debt Securities, Trust Securities or debt obligations
of third parties, including U.S. Treasury securities, securing the holders'
obligations to purchase the Common Stock or Preferred Stock under the
Purchase Contracts. The Purchase Contracts may require the Company to make
periodic payments to the holders of the Units or vice versa, and such
payments may be unsecured or refunded on some basis. The Purchase Contracts
may require holders to secure their obligations thereunder in a specified
manner.

The applicable Prospectus Supplement will describe the terms of any
Purchase Contracts or Units. The description in the Prospectus Supplement
will not necessarily be complete, and reference will be made to the
Purchase Contracts, and, if applicable, collateral arrangements and
depositary arrangements, relating to such Purchase Contracts or Units.

DESCRIPTION OF THE TRUST PREFERRED SECURITIES

General

The Amended Declaration of each Rite Aid Trust authorizes the
respective Regular Trustees to issue, on behalf of such Rite Aid Trust, one
series of Trust Preferred Securities which will have the terms described in
a Prospectus Supplement. The proceeds from the sale of the Trust Securities
will be used by each Rite Aid Trust to purchase a series of Junior
Subordinated Debt Securities issued by the Company. These Junior
Subordinated Debt Securities will be held in trust by the Property Trustee
for the benefit of the holders of such Trust Securities.

The Company will guarantee the payments of distributions and
payments on redemption or liquidation with respect to the Trust Preferred
Securities, but only to the extent the Rite Aid Trust has funds available
to make those payments and has not made the payments (the"Trust Preferred
Securities Guarantee"). See "Description of the Trust Preferred Securities
Guarantees."

The assets of each Rite Aid Trust available for distribution to the
holders of its Trust Preferred Securities will be limited to payments from
the Company under the series of Junior Subordinated Debt Securities held by
the Rite Aid Trust. If the Company fails to make a payment on such Junior
Subordinated Debt Securities, the Rite Aid Trust will not have sufficient
funds to make related payments, including distributions, on its Trust
Preferred Securities.

The Trust Preferred Securities Guarantee, when taken together with
the Company's obligations under the related series of Junior Subordinated
Debt Securities, the Junior Subordinated Indenture related thereto and the
Amended Declaration, will provide a full and unconditional guarantee of
amounts due on the Trust Preferred Securities issued by each Rite Aid
Trust.

The Trust Preferred Securities will have the terms, including
distributions, redemption, voting, liquidation rights and such other
preferred, deferred or other special rights or such restrictions as
described in the Amended Declaration or made part of the Amended
Declaration by the Trust Indenture Act or the Delaware Business Trust Act.
The terms of such Trust Preferred Securities will mirror the terms of the
Junior Subordinated Debt Securities held by each Rite Aid Trust.

The Prospectus Supplement relating to the Trust Preferred
Securities of a Rite Aid Trust will describe the specific terms of such
Trust Preferred Securities, including:

o the name of such Trust Preferred Securities;
o the dollar amount and number of Trust Preferred Securities
issued;
o the annual distribution rate(s) (or method of determining
such rate(s)), the payment date(s) and the record dates used
to determine the holders who are to receive distributions;
o the date from which distributions shall be cumulative;
o the optional redemption
provisions, if any, including the prices, time periods and
other terms and conditions for which such Trust Preferred
Securities shall be purchased or redeemed, in whole or in
part;
o the terms and conditions, if any, upon which the applicable
series of Junior Subordinated Debt Securities and the
related Trust preferred Securities Guarantee may be
distributed to holders of such Trust Preferred Securities;
o any securities exchange on which such Trust Preferred
Securities will be listed;
o whether such Trust Preferred Securities are to be issued in
book-entry form and represented by one or more global
certificates, and if so, the depository for such global
certificates and the specific terms of the depositary
arrangements; and
o any other relevant rights, preferences, privileges,
limitations or restrictions of such Trust Preferred
Securities.

The Prospectus Supplement will describe certain United States
federal income tax considerations applicable to the purchase, holding and
disposition of the Trust Preferred Securities covered by such
Prospectus Supplement.

Liquidation Distribution Upon Dissolution

The Amended Declaration of each Rite Aid Trust states that the
trust shall be dissolved:

o on the expiration of the term of the Rite Aid Trust;
o upon the bankruptcy of the Company;
o upon the filing of a certificate of dissolution or its
equivalent with respect to the Company;
o upon the filing of a certificate of cancellation with
respect to the Rite Aid Trust after obtaining the consent of
at least a majority in liquidation amount of the Trust
Securities of the Rite Aid Trust, voting together as a
single class;
o 90 days after the revocation of the charter of the Company
(but only if the charter is not reinstated during that
90-day period);
o upon the distribution of the related Junior Subordinated
Debt Securities directly to the holders of the Trust
Securities;
o upon the redemption of all of the Trust Securities of the
Rite Aid Trust; or
o upon entry of a court order for the dissolution of the
Company or the Rite Aid Trust.

In the event of a dissolution, after the Rite Aid Trust pays all
amounts owed to creditors, the holders of the Trust Securities will be
entitled to receive:

o cash equal to the aggregate liquidation amount of each Trust
Security specified in an accompanying Prospectus Supplement,
plus accumulated and unpaid distributions to the date of
payment; unless
o Junior Subordinated Debt Securities in an aggregate
principal amount equal to the aggregate liquidation amount
of the Trust Securities are distributed to the holders of
the Trust Securities.

If a Rite Aid Trust cannot pay the full amount due on its Trust
Securities because insufficient assets are available for payment, then the
amounts payable by the Rite Aid Trust on its Trust Securities shall be paid
pro rata. However, if an event of default under the related Amended
Declaration has occurred, the total amounts due on such Trust Preferred
Securities will be paid before any distribution on such Trust Common
Securities.

Declaration Events of Default

An event of default under the Junior Subordinated Indenture
relating to a series of Junior Subordinated Debt Securities is an event of
default under the Amended Declaration of the Rite Aid Trust that owns these
Junior Subordinated Debt Securities (a "Declaration Event of Default"). See
"Description of the Debt Securities -- Junior Subordinated Debt Securities
- -- Events of Default."

The Company and the Regular Trustees of each Rite Aid Trust must
file annually with the Property Trustee for the Rite Aid Trust a
certificate stating whether or not they are in compliance with all the
applicable conditions and covenants under the related Amended Declaration.

Upon the occurrence of a Declaration Event of Default, the Property
Trustee of the Rite Aid Trust, as the sole holder of the Junior
Subordinated Debt Securities held by the Rite Aid Trust, will have the
right under the Junior Subordinated Indenture to declare the principal of,
premium, if any, and interest on such Junior Subordinated Debt Securities
to be immediately due and payable.

If a Property Trustee fails to enforce its rights under the Amended
Declaration or the Junior Subordinated Indenture to the fullest extent
permitted by law and subject to the terms of the Amended Declaration and
the Junior Subordinated Indenture, any holder of Trust Preferred Securities
may sue the Company, or seek other remedies, to enforce the Property
Trustee's rights under the Amended Declaration or the Junior Subordinated
Indenture without first instituting a legal proceeding against such
Property Trustee or any other person.

If the Company fails to pay principal, premium, if any, or interest
on a series of Junior Subordinated Debt Securities when payable, then a
holder of such Trust Preferred Securities may directly sue the Company or
seek other remedies, to collect its pro rata share of payments owned.

Removal and Replacement of Trustees

Only the holders of Trust Common Securities have the right to
remove or replace the trustees of a Rite Aid Trust. The resignation or
removal of any trustee and the appointment of a successor trustee shall be
effective only on the acceptance of appointment by the successor trustee in
accordance with the provisions of the Amended Declaration for the Rite Aid
Trust.

Conversion or Exchange Rights

The terms on which the Trust Preferred Securities are convertible
into or exchangeable for Common Stock or other securities of the Company
will be set forth in the Prospectus Supplement relating thereto. Such terms
will include provisions as to whether conversion or exchange is mandatory,
at the option of the holder or at the option of the Company, and may
include provisions pursuant to which the number of shares of Common Stock
or other securities of the Company to be received by the holders of Trust
Preferred Securities would be subject to adjustment.

Mergers, Consolidations or Amalgamations of the Rite Aid Trusts

The Rite Aid Trusts may not consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease their properties and
assets substantially as an entirety to any other corporation or other body
("Merger Event"), except as described below. A Rite Aid Trust may, with the
consent of a majority of its Regular Trustees and without the consent of
the holders of its Trust Securities, consolidate, amalgamate, merge with or
into, or be replaced by another trust, provided that:

o the successor entity either

(1) assumes all of the obligations of the Rite Aid Trust
relating to its Trust Securities or

(2) substitutes other securities for the Trust Securities
that are substantially similar to such Trust
Securities ("Successor Securities"), so long as the
Successor Securities rank the same as such Trust
Securities for distributions and payments upon
liquidation, redemption and otherwise;

o the Company acknowledges a trustee of such successor entity
who has the same powers and duties as the Property Trustee
of the Rite Aid Trust, as the holder of the particular
series of Junior Subordinated Debt Securities;

o the Trust Preferred Securities are listed, or any successor
securities will be listed, upon notice of issuance, on the
same national securities exchange or other organization that
the Trust Preferred Securities are then listed;

o the Merger Event does not cause the Trust Preferred
Securities or successor securities to be downgraded by any
national rating agency;

o the Merger Event does not adversely affect the rights,
preferences and privileges of the holders of the Trust
Securities or successor securities in any material way
(other than with respect to any dilution of the holders'
interest in the new entity);

o the successor entity has a purpose identical to that of the
Rite Aid Trust;

o prior to the Merger Event, the Company has received an
opinion of counsel from a nationally recognized law firm
stating that

(1) such Merger Event does not adversely affect the
rights of the holders of the Rite Aid Trust's
Preferred Securities or any successor securities in
any material way (other than with respect to any
dilution of the holders' interest in the new entity)
and

(2) following the Merger Event, neither the Rite Aid
Trust nor the successor entity will be required to
register as an investment company under the
Investment Company Act of 1940, as amended (the
"Investment Company Act"); and

o the Company guarantees the obligations of the successor
entity under the successor securities in the same manner as
in the Trust Preferred Securities Guarantee and the
guarantee of the common securities for the Rite Aid Trust.

In addition, unless all of the holders of the Trust Preferred
Securities and Trust Common Securities approve otherwise, the Rite Aid
Trust shall not consolidate, amalgamate, merge with or into, or be replaced
by any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if such transaction would cause the Rite
Aid Trust or the successor entity to be classified other than as a grantor
trust for United States federal income tax purposes.

Voting Rights; Amendment of Declarations

The holders of Trust Preferred Securities have no voting rights
except as discussed under "-Mergers, Consolidations, Amalgamations or
Replacements of the Trust" and "Description of the Trust Preferred
Securities Guarantee-Amendments and Assignment," and as otherwise required
by law and the Amended Declaration for the Rite Aid Trust.

The Amended Declaration may be amended if approved by a majority of
the Regular Trustees of the Rite Aid Trust. However, if any proposed
amendment provides for, or such Regular Trustees otherwise propose to
effect,

(1) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities,
whether by way of amendment to such Amended Declaration or
otherwise or

(2) the dissolution, winding-up or termination of the Rite Aid
Trust other than pursuant to the terms of its Amended
Declaration,

then the holders of the Trust Securities as a single class will be entitled
to vote on such amendment or proposal. In that case, the amendment or
proposal will only be effective if approved by at least a majority in
liquidation amount of the Trust Securities affected by such amendment or
proposal.

If any amendment or proposal referred to in clause (1) above would
adversely affect only a particular class of the Trust Securities of the
Rite Aid Trust, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal will only be
effective with the approval of at least a majority in liquidation amount of
such affected class.

No amendment may be made to an Amended Declaration if such
amendment would:

o cause the Rite Aid Trust to be characterized as other than a
grantor trust for United States federal income tax purposes;

o reduce or otherwise adversely affect the powers of the
Property Trustee; or

o cause the Rite Aid Trust to be deemed to be an "investment
company" which is required to be registered under the
Investment Company Act.

The holders of a majority in aggregate liquidation amount of the
Trust Preferred Securities have the right to:

o direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee
of the Rite Aid Trust; or

o direct the exercise of any trust or power conferred upon
such Property Trustee under the Rite Aid Trust's Amended
Declaration, including the right to direct the Property
Trustee, as the holder of a series of Junior Subordinated
Debt Securities, to

(1) exercise the remedies available under the Junior
Subordinated Indenture with respect to such Junior
Subordinated Debt Securities,

(2) waive any event of default under the Junior
Subordinated Indenture that is waivable or

(3) cancel an acceleration of the principal of the Junior
Subordinated Debt Securities.

However, if the Junior Subordinated Indenture requires the consent
of the holders of more than a majority in aggregate principal amount of the
Junior Subordinated Debt Securities (a "super-majority"), then the Property
Trustee must get approval of the holders of a super-majority in liquidation
amount of the Trust Preferred Securities.

In addition, before taking any of the foregoing actions, the
Property Trustee must obtain an opinion of counsel stating that, as a
result of such action, the Rite Aid Trust will continue to be classified as
a grantor trust for United States federal income tax purposes.

The Property Trustee of the Rite Aid Trust will notify all Trust
Preferred Securities holders of the Rite Aid Trust of any notice received
from the Indenture Trustee with respect to the Junior Subordinated Debt
Securities held by the Rite Aid Trust.

As described in the Amended Declaration, the Property Trustee may
hold a meeting to have holders of Trust Preferred Securities vote on a
change or have them approve a change by written consent.

If a vote by the holders of Trust Preferred Securities is taken or
a consent is obtained, any Trust Preferred Securities that are owned by the
Company or any of its affiliates will, for purposes of the vote or consent,
be treated as if they were not outstanding. This means

(1) the Company and any of its affiliates will not be
able to vote on or consent to matters requiring the
vote or consent of holders of Trust Preferred
Securities and

(2) any Trust Preferred Securities owned by the Company
or any of its affiliates will not be counted in
determining whether the required percentage of votes
or consents has been obtained.

Information Concerning the Property Trustee

For matters relating to compliance with the Trust Indenture Act,
the Property Trustee of the Rite Aid Trust will have all of the duties and
responsibilities of an Indenture Trustee under the Trust Indenture Act. The
Property Trustee, other than during the occurrence and continuance of a
Declaration Event of Default under the Rite Aid Trust, undertakes to
perform only such duties as are specifically set forth in the Amended
Declaration and, upon a Declaration Event of Default, must use the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers given it by
the applicable Amended Declaration at the request of any holder of Trust
Preferred Securities unless it is offered reasonable security or indemnity
against the costs, expenses and liabilities that it might incur. However,
the holders of the Trust Preferred Securities will not be required to offer
such an indemnity where the holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Declaration
Event of Default.

Miscellaneous

The Regular Trustees of a Rite Aid Trust are authorized and
directed to conduct the affairs of and to operate the Rite Aid Trust in
such a way that

o it will not be deemed to be an "investment company" required
to be registered under the Investment Company Act;

o it will be classified as a grantor trust for United States
federal income tax purposes; and

o the Junior Subordinated Debt Securities held by it will be
treated as indebtedness of the Company for United States
federal income tax purposes.

The Company and the Regular Trustees of the Rite Aid Trust are
authorized to take any action (so long as it is consistent with applicable
law or the certificate of trust or Amended Declaration) that the Company
and the Regular Trustees of the Rite Aid Trust determine to be necessary or
desirable for such purposes.

Holders of Trust Preferred Securities have no preemptive or similar
rights.

The Rite Aid Trust may not borrow money, issue debt, execute
mortgages or pledge any of its assets.

Governing Law

The Amended Declaration and the related Trust Preferred Securities will be
governed by and construed in accordance with the laws of the State of
Delaware.

DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE

General

The Company will execute a Trust Preferred Securities Guarantee,
which benefits the holders of Trust Preferred Securities, at the time that
a trust issues those Trust Preferred Securities. The Trust Preferred
Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The First National Bank of Chicago will act as trustee
("Trust Preferred Guarantee Trustee") under the Trust Preferred Securities
Guarantee for the purposes of compliance with the Trust Indenture Act. The
Trust Preferred Guarantee Trustee will hold the Trust Preferred Securities
Guarantee for the benefit of the holders of Trust Preferred Securities.

The Company will irrevocably agree, as described in the Trust
Preferred Securities Guarantee, to pay in full, to the holders of the Trust
Preferred Securities issued by a Rite Aid Trust, the Trust Preferred
Securities Guarantee Payments (as defined below) (except to the extent
previously paid), when and as due, regardless of any defense, right of
set-off or counterclaim which such Rite Aid Trust may have or assert. The
following payments, to the extent not paid by the Rite Aid Trust ("Trust
Preferred Securities Guarantee Payments"), will be covered by the Trust
Preferred Securities Guarantee:

o any accrued and unpaid distributions required to be paid on
the Trust Preferred Securities, to the extent that the Rite
Aid Trust has funds available to make the payment;

o the redemption price, to the extent that the Rite Aid Trust
has funds available to make the payment; and

o upon a voluntary or involuntary dissolution and liquidation
of the Rite Aid Trust (other than in connection with a
distribution of Junior Subordinated Debt Securities to
holders of such Trust Preferred Securities or the redemption
of all such Trust Preferred Securities), the lesser of

(1) the aggregate of the liquidation amount specified in
the Prospectus Supplement for each Trust Preferred
Security plus all accrued and unpaid distributions on
the Trust Preferred Securities to the date of
payment, to the extent the Rite Aid Trust has funds
available to make the payment and

(2) the amount of assets of the Rite Aid Trust remaining
available for distribution to holders of its Trust
Preferred Securities upon a dissolution and
liquidation of the trust ("Liquidation Payment").

The Company's obligation to make a Trust Preferred Securities
Guarantee Payment may be satisfied by directly paying the required amounts
to the holders of the Trust Preferred Securities or by causing the Rite Aid
Trust to pay the amounts to the holders.

No single document executed by the Company relating to the issuance
of Trust Preferred Securities will provide for its full, irrevocable and
unconditional guarantee of the Trust Preferred Securities. It is only the
combined operation of the Company's obligations under the Junior
Subordinated Indenture and the Trust Preferred Securities Guarantee and
Amended Declaration that has the effect of providing a full, irrevocable
and unconditional guarantee of the trust's obligations under its Trust
Preferred Securities.

Status of the Trust Preferred Securities Guarantee

The Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Company and will rank:

o subordinate and junior in right of payment to all of the
Company's other liabilities (except those obligations made
equal or junior to its obligations under the Trust Preferred
Securities Guarantee);

o equal with the senior most preferred or preference stock now
or hereafter issued by the Company, and with any guarantee
now or hereafter issued by it in respect of any preferred or
preference stock of any of its affiliates; and

o senior to the Company's Common Stock.

The Amended Declaration will require that the holder of Trust
Preferred Securities accept the subordination provisions and other terms of
the Trust Preferred Securities Guarantee. The Trust Preferred Securities
Guarantee will constitute a guarantee of payment and not of collection (in
other words the holder of the guaranteed security may sue the Company, or
seek other remedies, to enforce its rights under the Trust Preferred
Securities Guarantee without first suing any other person or entity). A
Trust Preferred Securities Guarantee will not be discharged except by
payment of the Trust Preferred Securities Guarantee Payments in full to the
extent not previously paid or upon distribution of the corresponding series
of Junior Subordinated Debt Securities to the holders of Trust Preferred
Securities pursuant to the Amended Declaration.

Amendments and Assignment

Except with respect to any changes which do not adversely affect
the rights of holders of Trust Preferred Securities in any material respect
(in which case no consent of such holders will be required), a Trust
Preferred Securities Guarantee may only be amended with the prior approval
of the holders of at least a majority in aggregate liquidation amount of
such Trust Preferred Securities (excluding any such Trust Preferred
Securities held by the Company or any of its affiliates). A description of
the way to obtain any approval is described under "Description of the Trust
Preferred Securities-Voting Rights; Amendment of Declaration." All
guarantees and agreements contained in the Trust Preferred Securities
Guarantee will be binding on the Company's successors, assigns, receivers,
trustees and representatives and are for the benefit of the holders of the
applicable Trust Preferred Securities.

Trust Preferred Securities Guarantee Events of Default

An event of default under the Trust Preferred Securities Guarantee
occurs if the Company fails to make any of its required payments or perform
its obligations under the Trust Preferred Securities Guarantee.

The holders of at least a majority in aggregate liquidation amount
of the Trust Preferred Securities (excluding any Trust Preferred Securities
held by the Company or any of its affiliates) will have the right to direct
the time, method and place of conducing any proceeding for any remedy
available to the Trust Preferred Guarantee Trustee or to direct the
exercise of any trust or power given to the Trust Preferred Guarantee
Trustee under the Trust Preferred Securities Guarantee.

Information Concerning the Trust Preferred Guarantee Trustee

The Trust Preferred Guarantee Trustee under the Trust Preferred
Securities Guarantee, other than during the occurrence and continuance of
an event of default under such Trust Preferred Securities Guarantee, will
only perform the duties that are specifically described in such Trust
Preferred Securities Guarantee. After such a default, the Trust Preferred
Guarantee Trustee will exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Trust Preferred Guarantee Trustee
is under no obligation to exercise any of its powers as described in the
Trust Preferred Securities Guarantee at the request of any holder of
covered Trust Preferred Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it might incur.

Termination of the Trust Preferred Securities Guarantee

The Trust Preferred Securities Guarantee will terminate once the
Trust Preferred Securities are paid in full or upon distribution of the
corresponding series of Junior Subordinated Debt Securities to the holders
of such Trust Preferred Securities. The Trust Preferred Securities
Guarantee will continue to be effective or will be reinstated if at any
time any holder of Trust Preferred Securities must restore payment of any
sums paid under such Trust Preferred Securities or such Trust Preferred
Securities Guarantee.

Governing Law

The Trust Preferred Securities Guarantee will be governed by and
construed in accordance with the laws of the State of New York.

RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE TRUST PREFERRED SECURITIES GUARANTEE
AND THE SUBORDINATED NOTES HELD BY THE TRUST

Payments of distributions and redemption and liquidation payments
due on the Trust Preferred Securities (to the extent the trust has funds
available for the payments) will be guaranteed by the Company to the extent
described under "Description of the Trust Preferred Securities Guarantees."
No single document executed by the Company in connection with the issuance
of the Trust Preferred Securities will provide for its full, irrevocable
and unconditional guarantee of such Trust Preferred Securities. It is only
the combined operation of the Company's obligations under the Trust
Preferred Securities Guarantee, Amended Declaration and the Junior
Subordinated Indenture that has the effect of providing a full, irrevocable
and unconditional guarantee of each of the Rite Aid Trusts' obligations
under its Trust Preferred Securities.

As long as the Company makes payments of interest and other
payments when due on the Junior Subordinated Debt Securities held by a Rite
Aid Trust, such payments will be sufficient to cover the payment of
distributions and redemption and liquidation payments due on the Trust
Preferred Securities issued by the Rite Aid Trust, primarily because:

o the aggregate principal amount of the Junior Subordinated
Debt Securities will be equal to the sum of the aggregate
liquidation amount of the Trust Securities;

o the interest rate and interest and other payment dates on
the Junior Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates
for the Trust Preferred Securities;

o the Company shall pay for any and all costs, expenses and
liabilities of each Rite Aid Trust except such trust's
obligations under its Trust Preferred Securities; and

o each Amended Declaration provides that a Rite Aid Trust will
not engage in any activity that is not consistent with the
limited purposes of the Rite Aid Trust.

If and to the extent that the Company does not make payments on
such Junior Subordinated Debt Securities, the Rite Aid Trust will not have
funds available to make payments of distributions or other amounts due on
its Trust Preferred Securities. In those circumstances, you will not be
able to rely upon the Trust Preferred Securities Guarantee for payment of
these amounts. Instead, you may directly sue the Company or seek other
remedies to collect your pro rata share of payments owed. If you sue the
Company to collect payment, then the Company will assume your rights as a
holder of Trust Preferred Securities under the Amended Declaration to the
extent the Company makes a payment to you in any such legal action.

A holder of any Trust Preferred Security may sue the Company, or
seek other remedies, to enforce its rights under the Trust Preferred
Securities Guarantee without first suing the Trust Preferred Guarantee
Trustee, the Rite Aid Trust or any other person or entity.

PLAN OF DISTRIBUTION

The Company may sell Common Stock, Preferred Stock, any series of
Debt Securities, Warrants, Purchase Contracts, Units or Guarantees and the
Rite Aid Trusts may sell Trust Preferred Securities being offered hereby in
one or more of the following ways from time to time:

o to underwriters for resale to the public or to institutional
investors;

o directly to institutional investors; or

o through agents to the public or to institutional investors.

The Prospectus Supplements will set forth the terms of the offering
of the securities, including the name or names of any underwriters or
agents, the purchase price of such securities and the proceeds to the
Company or the Rite Aid Trusts, as the case may be, from such sale, any
underwriting discounts or agency fees and other item's constituting
underwriters' or agents' compensation, any initial public offering price,
any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchanges on which such securities may be listed.

If underwriters are used in the sale, the Offered Securities will
be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale.

Unless otherwise set forth in a Prospectus Supplement, the
obligations of the underwriters to purchase any series of securities will
be subject to certain conditions precedent and the underwriters will be
obligated to purchase all of such series of securities, if any are
purchased.

Underwriters and agents may be entitled under agreements entered
into with the Company and/or the Rite Aid Trusts to indemnification by the
Company and/or the Rite Aid Trusts against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with
respect to payments which the underwriters or agents may be required to
make in respect thereof. Underwriters and agents may be customers of,
engage in transactions with, or perform services for the Company and its
affiliates in the ordinary course of business.

Each series of Offered Securities will be a new issue of securities
and will have no established trading market other than the Common Stock
which is listed on the NYSE and the PSE. Any Common Stock sold pursuant to
a Prospectus Supplement will be listed on the NYSE and the PSE, subject to
official notice of issuance. Any underwriters to whom securities are sold
by the Company or by a Rite Aid Trust for public offering and sale may make
a market in the securities, but such underwriters will not be obligated to
do so and may discontinue any market making at any time without notice. The
securities may or may not be listed on a national securities exchange.

LEGAL OPINIONS

The validity of the securities being offered hereby is being passed
upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP. Nancy A.
Lieberman, a partner in the law firm of Skadden, Arps, Slate, Meagher &
Flom LLP, serves as a director of the Company.

EXPERTS

The consolidated financial statements and schedule of Rite Aid
Corporation and subsidiaries as of February 28, 1998 and March 1, 1997 and
for each of the years in the three-year period ended February 28, 1998,
have been incorporated by reference herein and in the Registration
Statement in reliance upon the reports of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

With respect to the unaudited interim financial information for the
periods ended May 30, 1998, and May 31, 1997, August 29, 1998 and August
30, 1997, and November 28, 1998 and November 29, 1997, incorporated by
reference herein, the independent certified public accountants have
reported that they applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate reports included in the Company's quarterly reports on Form 10-Q
for the quarters ended May 30, 1998, August 29, 1998, and November 28, 1998
and incorporated by reference herein, state that they did not audit and
they do not express an opinion on the interim financial information.
Accordingly, the degree of reliance on their reports on such information
should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability
provisions of section 11 of the Securities Act for their report on the
unaudited interim financial information because that report is not a
"report" or a "part" of the Registration Statement prepared or certified by
the accountants within the meaning of sections 7 and 11 of the Securities
Act.

The consolidated financial statements of PCS Holding Corporation and
Subsidiaries for the three years ended December 31, 1997 incorporated by
reference from Rite Aid Corporation's Form 8-K of January 19, 1999, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report incorporated by reference therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.

CERTAIN FORWARD-LOOKING STATEMENTS

This Prospectus (including the documents incorporated by reference
herein) contains certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) and
information relating to the Company that are based on the beliefs of the
management of the Company as well as assumptions made by and information
currently available to the management of the Company. When used in this
Prospectus, the words "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to the Company or the
management of the Company, identify forward-looking statements. Such
statements, which include, without limitation, the matters set forth herein
under the captions "The Company," reflect the current views of the Company
with respect to future events, the outcome of which is subject to certain
risks, including among others (i) competition from other drugstore chains,
supermarkets, membership clubs and other retailers as well as third-party
plans and mail order providers, (ii) the continued efforts of third-party
payors to reduce prescription drug costs, (iii) continued consolidation of
the drugstore industry, (iv) possible federal and state health care reform
initiatives to reduce governmental health costs, (v) the effects of
technological difficulties including remediation of Year 2000 compliance
issues and (vi) general and industry-specific economic conditions including
inflation, interest rate movements, access to capital, availability of real
estate and construction and start-up of drugstore and distribution center
facilities. The forward-looking statements referred to above are also
subject to uncertainties and assumptions relating to the operations and
results of operations of the benefits of recent acquisitions assumed by the
Company. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those described herein as anticipated, believed,
estimated, expected or intended.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be borne by
the Company in connection with the offerings described in this Registration
Statement. All such expenses other than the Securities and Exchange
Commission registration fee are estimates.

Securities and Exchange Commission Registration Fee........ $834,000
Transfer Agents, Trustees and Depositary's
Fees and Expenses....................................... 25,000
Printing and Engraving Fees and Expenses................... 75,000
Accounting Fees and Expenses............................... 100,000
Legal Fees................................................. 150,000
Rating Agency Fees......................................... 100,000
Miscellaneous (including Listing
Fees, if applicable).................................... 16,000
----------

Total.............................................. $1,300,000
==========

Item 15. Indemnification of Directors and Officers

As authorized by Section 145 of the General Corporation Law of the
State of Delaware, each director and officer of the Corporation may be
indemnified by the Corporation against expenses (including attorney's fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred in connection with the defense or settlement of any threatened,
pending or completed legal proceedings in which he is involved by reason of
the fact that he is or was a director or officer of the Company if he acted
in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe
that his conduct was unlawful. If the legal proceeding, however, is by or
in the right of the Company, the director or officer may not be indemnified
in respect of any claim, issue or matter as to which he shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the Company unless a court determines otherwise.

Article Ten of the Certificate of Incorporation of the Company
provides that, to the fullest extent permitted by law, directors of the
Company will not be liable for monetary damages to the Company or its
stockholders for breaches of their fiduciary duties.

The directors and officers of the Company and its subsidiaries are
insured (subject to certain exceptions and deductions) under liability
insurance policies carried by the Company against liabilities which they
may incur in their capacity as such including liabilities under the
Securities Act.

Item 16. Exhibits

The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.

Exhibit
Number Description of Exhibits

1.1 The form of Underwriting Agreement with respect to the
Company's Debt Securities will be filed as an exhibit to a
Current Report of the Registrant on form 8-K and
incorporated herein by reference.
1.2 The form of Underwriting Agreement with respect to the
Company's Equity Securities will be filed as an exhibit to a
Current Report of the Registrant on form 8-K and
incorporated herein by reference.
4.1 Form of Senior Indenture to be used in connection with the
issuance of Company's Debt Securities.*
4.2 Form of Subordinated Indenture to be used in connection with
the issuance of the Company's Debt Securities.*
4.3 Form of Senior Debt Securities (included in Exhibit 4.1).
4.4 Form of Subordinated Debt Securities (included in Exhibit 4.2).
4.5 The form of any certificate of designation with respect to
any preferred stock issued hereunder will be filed as an
exhibit to a Current Report of the Registrant on form 8-K
and incorporated herein by reference.
4.6 Form of Purchase Contract Agreement, between the Company and
__________________, as Purchase Contract Agent (including
as Exhibit A the form of the Security Certificate).*
4.7 Certificate of Trust of Rite Aid Financing Trust I.
4.8 Certificate of Trust of Rite Aid Financing Trust II.
4.9 Certificate of Trust of Rite Aid Financing Trust III.
4.10 Certificate of Trust of Rite Aid Financing Trust IV.
4.11 Declaration of Trust of Rite Aid Financing Trust I.
4.12 Declaration of Trust of Rite Aid Financing Trust II.
4.13 Declaration of Trust of Rite Aid Financing Trust III.
4.14 Declaration of Trust of Rite Aid Financing Trust IV.
4.15 Form of Amended and Restated Declaration of Trust for the
Rite Aid Trusts.*
4.16 Form of Trust Preferred Security (included in Exhibit 4.16).*
4.17 Form of Junior Subordinated Indenture to be used in
connection with the issuance of the Junior Subordinated Debt
Securities to the Rite Aid Trusts.*
4.18 Form of Guarantee Agreement with respect to the Preferred
Securities of the Rite Aid Trusts.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
8.1 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
12.1 Computation of Ratios of Earnings to Fixed Charges and of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
15.1 Letter re Unaudited Interim Financial Information.
23.1 Consent of KPMG LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibits 5.1 and 8.1).*
24 Power of Attorney of certain officers and directors of the
Company (included in the signatures pages to the
Registration Statement).
25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of __________, as Trustee
under the Senior Indenture.*
25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of __________, as Trustee
under the Subordinated Indenture.*
25.3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee of the Preferred Securities Guarantee of Rite Aid
for the benefit of the holders of the Preferred Securities
of the Rite Aid Financing Trust I, II, III and IV.
25.4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee under the Amended and Restated Declaration of Trust
of Rite Aid Financing Trust I, II, III and IV.

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

* To be filed by amendment.

Item 17. Undertakings

The undersigned registrants hereby undertake:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;

provided, however, that paragraphs (1)(i) and 1(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering;

(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;

(5) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of Prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective; and

(6) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Act.

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrants pursuant to the provisions set forth in Item 15,
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling registrant of expenses incurred or paid by a
director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Camp Hill, in
the State of Pennsylvania on January 19, 1999.

RITE AID CORPORATION

By /s/ Martin L. Grass
----------------------
Name: Martin L. Grass
Title: Chairman, Chief
Executive Officer
and Director

POWER OF ATTORNEY

Each person whose signature appears below hereby authorizes Martin
L. Grass, Frank M. Bergonzi, Franklin C. Brown, and Elliot S. Gerson, and
each and any one of them, as attorneys-in-fact and agents, with full powers
of substitution, to sign on his or her behalf, individually and in the
capacities stated below, and to file any and all amendments (including
post-effective amendments) to this Registration Statement (or any other
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act) with the
Securities and Exchange Commission, granting to said attorney-in-fact and
agents full power and authority to perform any other act on behalf of the
undersigned required to be done in the premises.

Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date

/s/ Martin L. Grass Chairman of the Board, January 19, 1999
- ----------------------------- Chief Executive
Martin L. Grass Officer and Director

/s/ Timothy J. Noonan President, Chief January 19, 1999
- ----------------------------- Operating Officer
Timothy J. Noonan and Director

/s/ Frank M. Bergonzi Executive Vice President, January 19, 1999
- ----------------------------- Chief Financial
Frank M. Bergonzi Officer and Chief
Accounting Officer

/s/ Franklin C. Brown Vice Chairman and January 19, 1999
- ----------------------------- Director
Franklin C. Brown

Director
- -----------------------------
Alex Grass

/s/ Nancy A. Lieberman Director January 19, 1999
- -----------------------------
Nancy A. Lieberman

Director
- -----------------------------
Phillip Neivert

/s/ Leonard N. Stern Director January 19, 1999
- -----------------------------
Leonard N. Stern

Director
- -----------------------------
Leonard I. Green

/s/ Preston Robert Tisch Director January 19, 1999
- -----------------------------
Preston Robert Tisch

/s/ William J. Bratton Director January 19, 1999
- -----------------------------
William J. Bratton

/s/ Gerald Tsai, Jr. Director January 19, 1999
- -----------------------------
Gerald Tsai, Jr.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of Rite
Aid Financing Trust I, Rite Aid Financing Trust II, Rite Aid Financing
Trust III and Rite Aid Financing Trust IV certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form
S-3 and that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Camp Hill, in the State of Pennsylvania on January 19, 1999.

RITE AID FINANCING TRUST I

By /s/ Frank M. Bergonzi
----------------------------
Frank M. Bergonzi, Trustee

By /s/ Elliot S. Gerson
-----------------------------
Elliot S. Gerson, Trustee

By /s/ Joseph Speaker
-----------------------------
Joseph Speaker, Trustee

RITE AID FINANCING TRUST II

By /s/ Frank M.Bergonzi
-----------------------------
Frank M.Bergonzi, Trustee

By /s/ Elliot S. Gerson
-----------------------------
Elliot S. Gerson, Trustee

By /s/ Joseph Speaker
-----------------------------
Joseph Speaker, Trustee

RITE AID FINANCING TRUST III

By /s/ Frank M. Bergonzi
-----------------------------
Frank M. Bergonzi, Trustee

By /s/ Elliot S. Gerson
-----------------------------
Elliot S. Gerson, Trustee

By /s/ Joseph Speaker
-----------------------------
Joseph Speaker, Trustee

RITE AID FINANCING TRUST IV

By /s/ Frank M. Bergonzi
-----------------------------
Frank M. Bergonzi, Trustee

By /s/ Elliot S. Gerson
------------------------------
Elliot S. Gerson, Trustee

By /s/ Joseph Speaker
------------------------------
Joseph Speaker, Trustee

EXHIBIT 4.7

CERTIFICATE OF TRUST

The undersigned, the trustees of Rite Aid Financing I, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del.
C. section 3810, hereby certify as follows:

(1) The name of the business trust being formed hereby (the
"Trust") is "Rite Aid Financing I."

(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

/s/ Frank M. Bergonzi FIRST CHICAGO DELAWARE INC.,
---------------------------- as Trustee
Name: Frank M. Bergonzi
Tile: Regular Trustee

/s/ Elliot S. Gerson By: /s/ Sandra Caruba
---------------------------- ---------------------------
Name: Elliot S. Gerson Name: Sandra L. Caruba
Title: Regular Trustee Title: Vice President

/s/ Joseph Speaker
-----------------------------
Name: Joseph Speaker
Title: Regular Trustee

Dated as of this 15TH
day of December 1998.

EXHIBIT 4.8

CERTIFICATE OF TRUST

The undersigned, the trustees of Rite Aid Financing II, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del.
C. section 3810, hereby certify as follows:

(1) The name of the business trust being formed hereby (the
"Trust") is "Rite Aid Financing II."

(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

/s/ Frank M. Bergonzi FIRST CHICAGO DELAWARE INC.,
----------------------------- as Trustee
Name: Frank M. Bergonzi
Tile: Regular Trustee

/s/ Elliot S. Gerson By: /s/ Sandra Caruba
------------------------------ -------------------------
Name: Elliot S. Gerson Name: Sandra L. Caruba
Title: Regular Trustee Title: Vice President

/s/ Joseph Speaker
------------------------------
Name: Joseph Speaker
Title: Regular Trustee

Dated as of this 15TH
day of December 1998.

EXHIBIT 4.9

CERTIFICATE OF TRUST

The undersigned, the trustees of Rite Aid Financing III, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del.
C. section 3810, hereby certify as follows:

(1) The name of the business trust being formed hereby (the
"Trust") is "Rite Aid Financing III."

(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

/s/ Frank M. Bergonzi FIRST CHICAGO DELAWARE INC.,
---------------------------- as Trustee
Name: Frank M. Bergonzi
Tile: Regular Trustee

/s/ Elliot S. Gerson By: /s/ Sandra Caruba
---------------------------- ---------------------------
Name: Elliot S. Gerson Name: Sandra L. Caruba
Title: Regular Trustee Title: Vice President

/s/ Joseph Speaker
----------------------------
Name: Joseph Speaker
Title: Regular Trustee

Dated as of this 15TH
day of December 1998.

EXHIBIT 4.10

CERTIFICATE OF TRUST

The undersigned, the trustees of Rite Aid Financing IV, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del.
C. section 3810, hereby certify as follows:

(1) The name of the business trust being formed hereby (the
"Trust") is "Rite Aid Financing IV."

(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

/s/ Frank M. Bergonzi FIRST CHICAGO DELAWARE INC.,
----------------------------- as Trustee
Name: Frank M. Bergonzi
Tile: Regular Trustee

/s/ Elliot S. Gerson By: /s/ Sandra Caruba
----------------------------- -------------------------
Name: Elliot S. Gerson Name: Sandra L. Caruba
Title: Regular Trustee Title: Vice President

/s/ Joseph Speaker
------------------------------
Name: Joseph Speaker
Title: Regular Trustee

Dated as of this 15TH
day of December 1998.

EXHIBIT 4.11

================================

DECLARATION OF TRUST

Rite Aid Financing I

Dated as of December 15, 1998

================================

TABLE OF CONTENTS

Page
ARTICLE I
DEFINITIONS

SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
ORGANIZATION

SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . . . . 5
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . . . 6
SECTION 2.10 Declaration Binding on Securities Holders . . . . . . . . 6

ARTICLE III
TRUSTEES

SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Regular Trustees. . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee . . . . . . . . . . . . . . . . . . 8
SECTION 3.5 Not Responsible for Recitals or Sufficiency
of Declaration . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . . . . 13

ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS

SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 15

DECLARATION OF TRUST
OF
RITE AID FINANCING I

December 15, 1998

DECLARATION OF TRUST ("Declaration") dated and effective as of
December 15, 1998 by the undersigned Trustees (together with all other
persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Rite
Aid Corporation, a Delaware corporation, as trust sponsor (the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in
the Trust to be issued pursuant to this Declaration;

WHEREAS, the Trustees and the Sponsor desire to establish a trust
(the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter
defined);

NOW, THEREFORE, it being the intention of the parties hereto that
the Trust constitute a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will
be held for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.

ARTICLE I
DEFINITIONS

SECTION 1.1 Definitions.

Unless the context otherwise requires:

(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in
this Section 1.1;

(b) a term defined anywhere in this Declaration has the same meaning
throughout;

(c) all references to "the Declaration" or "this Declaration" are to
this Declaration of Trust as modified, supplemented or amended
from time to time;

(d) all references in this Declaration to Articles and Sections are
to Articles and Sections of this Declaration unless otherwise
specified; and

(e) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.

"Business Day" means any day other than a day on which banking
institutions in New York, New York, Chicago, Illinois or Wilmington,
Delaware are authorized or required by law to close.

"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code section3801 et seq., as it may be amended from time to
time, or any successor legislation.

"Commission" means the Securities and Exchange Commission.

"Common Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust
with such terms as may be set out in any amendment to this Declaration.

"Company Indemnified Person" means (a) any Regular Trustee; (b)
any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of
any Regular Trustee; or (d) any employee or agent of the Trust or its
Affiliates.

"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates and (b) any holder of Securities.

"Debenture Issuer" means Rite Aid Corporation in its capacity as
the issuer of the Debentures under the Indenture.

"Debentures" means the series of Debentures to be issued by the
Debenture Issuer and acquired by the Trust.

"Debenture Trustee" means The First National Bank of Chicago, as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.

"Delaware Trustee" has the meaning set forth in Section 3.1.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.

"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).

"Holder" means the person in whose name a certificate
representing a Security is registered.

"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.

"Indenture" means the indenture to be entered into among
Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.

"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.

"Preferred Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust
with such terms as may be set out in any amendment to this Declaration.

"Regular Trustee" has the meaning set forth in Section 3.1.

"Securities" means the Common Securities and the Preferred
Securities.

"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.

"Sponsor" means Rite Aid Corporation in its capacity as sponsor
of the Trust.

"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office
in accordance with the terms hereof, and all other Persons who may from
time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee
or the Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.

ARTICLE II
ORGANIZATION

SECTION 2.1 Name.

The Trust created by this Declaration is named "Rite Aid
Financing I." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.

SECTION 2.2 Office.

The address of the principal office of the Trust is c/o Rite Aid
Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011. At any time,
the Regular Trustees may designate another principal office.

SECTION 2.3 Purpose.

The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire
the Debentures, and (b) except as otherwise limited herein, to engage in
only those other activities necessary, or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to
be undertaken) any activity that would cause the Trust not to be classified
for United States federal income tax purposes as a grantor trust.

SECTION 2.4 Authority.

Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of and serve to bind
the Trust. In dealing with the Regular Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the
Regular Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Regular
Trustees as set forth in this Declaration.

SECTION 2.5 Title to Property of the Trust.

Legal title to all assets of the Trust shall be vested in the
Trust.

SECTION 2.6 Powers of the Trustees.

The Regular Trustees shall have the exclusive power and authority
to cause the Trust to engage in the following activities:

(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other
than the Securities and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;

(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:

(i) execute and file with the Commission a registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto in relation to the Preferred Securities;

(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register all or part of the
Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities for
sale;

(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange or any other national
stock exchange or the Nasdaq Stock Market's National Market for
listing upon notice of issuance of any Preferred Securities;

(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act; and

(v) execute and enter into an underwriting agreement and
pricing agreement providing for the sale of the Preferred
Securities;

(c) to employ or otherwise engage employees and agents (who may
be designated as officers with titles) and managers, contractors,
advisors, and consultants and provide for reasonable compensation for
such services;

(d) to incur expenses which are necessary or incidental to carry
out any of the purposes of this Declaration; and

(e) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.

SECTION 2.7 Filing of Certificate of Trust.

On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust
in the form attached hereto as Exhibit A with the Secretary of State of the
State of Delaware.

SECTION 2.8 Duration of Trust.

The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.

SECTION 2.9 Responsibilities of the Sponsor.

In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility
to engage in the following activities:

(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, including any amendments thereto;

(b) to determine the States in which to take appropriate action
to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;

(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;

(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and

(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.

SECTION 2.10 Declaration Binding on Securities Holders.

Every Person by virtue of having become a Holder of a Security or
any interest therein in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.

ARTICLE III
TRUSTEES

SECTION 3.1 Trustees.

The number of Trustees initially shall be four (4), and
thereafter the number of Trustees shall be such number as shall be fixed
from time to time by a written instrument signed by the Sponsor. The
Sponsor is entitled to appoint or remove without cause any Trustee at any
time; provided, however, that the number of Trustees shall in no event be
less than two (2); provided further that one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); provided further that there shall be at least one trustee who is
an employee or officer of, or is affiliated with the Sponsor (each, a
"Regular Trustee").

SECTION 3.2 Regular Trustees.

(a) The initial Regular Trustees shall be:

Frank M. Bergonzi
Elliot S. Gerson
Joseph Speaker

Except as expressly set forth in this Declaration, any power
of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.

(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 2.6 provided, that, the registration statement referred
to in Section 2.6(b)(i), including any amendments thereto, shall be signed
by a majority of the Regular Trustees; and

(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 2.6.

SECTION 3.3 Delaware Trustee.

The initial Delaware Trustee shall be:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of
the other Trustees described in this Declaration except as otherwise
mandated by the Business Trust Act. The Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
section3807(a) of the Business Trust Act. Notwithstanding anything herein
to the contrary, the Delaware Trustee shall not be liable for the acts or
omissions to act of the Trust, of the Sponsor or of the Regular Trustees
except that such limitation shall not limit the liability, if any, of the
Delaware Trustee to a Holder for acts that the Delaware Trustee is
expressly obligated to undertake under this Declaration or the Business
Trust Act or for the gross negligence or willful misconduct of the Delaware
Trustee. The Delaware Trustee may, at any time resign as Trustee hereunder
upon 30 days' prior written notice of such resignation to the Sponsor.
Upon its receipt of such notice of resignation, the Sponsor promptly shall
appoint a successor Delaware Trustee (each, a "Successor Trustee") and such
resignation shall take effect when the Successor Trustee accepts in writing
the Successor Trustee's appointment as successor Delaware Trustee. If
within such 30-day period, the Sponsor has failed to take appropriate steps
to appoint a successor Trustee, the Delaware Trustee may, but shall not be
required to, petition any court of competent jurisdiction for the
appointment of a Successor Trustee. Such court may thereupon appoint a
Successor Trustee after such notice to the Sponsor as such court may deem
proper and prescribe. The resignation of the Delaware Trustee shall not be
deemed to constitute bad faith for the purposes of Section 4.2 (b) hereof.

SECTION 3.4 Institutional Trustee.

Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional
Trustee") meeting the requirements of an eligible trustee of the Trust
Indenture Act of 1939, as amended, by the execution of an amendment to this
Declaration executed by the Regular Trustees, the Sponsor, the
Institutional Trustee and the Delaware Trustee.

SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.

The recitals contained in this Declaration shall be taken as the
statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration.

ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 4.1 Exculpation.

(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions; and

(b) an Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who if selected by such
Indemnified Person has been selected with reasonable care, including
information, opinions, reports or statements as to the value and amount of
the assets, liabilities, profits, losses, or any other facts pertinent to
the existence and amount of assets from which distributions to holders of
Securities might properly be paid.

SECTION 4.2 Fiduciary Duty.

(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating
thereto to the Trust or to any other Covered Person, an Indemnified Person
acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person;

(b) unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Persons; or

(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that are,
fair and reasonable to the Trust or any holder of Securities,

the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise; and

(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider
such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust
or any other Person; or

(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.

SECTION 4.3 Indemnification.

(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or
in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Company Indemnified
Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.

(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.

(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 4.3(a) shall be paid by the Debenture Issuer
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Debenture
Issuer as authorized in this Section 4.3(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (1) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion or (3) by the Common
Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed
or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty
to the Trust or its Common or Preferred Security Holders.

(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 4.3(a)
shall not be deemed exclusive of any other rights to which those
seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors
of the Debenture Issuer or Preferred Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.

(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).

(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.

(ix) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 4.3(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the
benefit of the heirs, executors and administrators of such a person.

(b)(i) The Debenture Issuer agrees to indemnify, to the full extent
permitted by law, the (1) the Delaware Trustee, (2) any Affiliate, of the
Delaware Trustee, and (3) any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Delaware Trustee (each of the Persons in (1) through (3) being referred to
as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary
Indemnified Person harmless against, any loss, liability or expense
incurred without gross negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable
legal fees and expenses) of defending itself against, or investigating, any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. (ii) To the fullest extent permitted by
applicable law, expenses (including reasonable and documented legal fees)
incurred by a Fiduciary Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Debenture Issuer prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Debenture Issuer of an
undertaking by or on behalf of the Fiduciary Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 4.3 (b) (i). (iii) The
obligation to indemnify and advance expenses as set forth in this Section
4.3(b) shall survive the termination of this Declaration and shall survive
the resignation or removal of the Delaware Trustee.

SECTION 4.4 Outside Businesses.

Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature
or description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not
be deemed wrongful or improper. No Covered Person, the Sponsor or the
Delaware Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character
that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Delaware Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment or other opportunity.
Any Covered Person and the Delaware Trustee may engage or be interested in
any financial or other transaction with the Sponsor, or any Affiliate of
the Sponsor, or may act as depositary for, trustee or agent for or may act
on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.

ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS

SECTION 5.1 Amendments.

At any time before the issue of any Securities, this Declaration
may be amended by, and only by, a written instrument executed by all of the
Regular Trustees and the Sponsor; provided, however, if the amendment
affects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall not be effective unless approved in
writing by the Delaware Trustee.

SECTION 5.2 Termination of Trust.

(a) The Trust shall terminate and be of no further force or
effect:

(i) upon the bankruptcy of the Sponsor;

(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of trust;

(iii) upon the entry of a decree of judicial dissolution of
the Sponsor, or the Trust; and

(iv) before the issue of any Securities, with the consent
of all of the Regular Trustees and the Sponsor; and

(b) as soon as is practicable upon completion of winding up by
the Trustees after the occurrence of an event referred to in Section
5.2(a), the Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.

SECTION 5.3 Governing Law.

This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.

SECTION 5.4 Headings.

Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.

SECTION 5.5 Successors and Assigns.

Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to
be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.

SECTION 5.6 Partial Enforceability.

If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to
persons or circumstances other than those to which it is held invalid,
shall not be affected thereby.

SECTION 5.7 Counterparts.

This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature
pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.

IN WITNESS WHEREOF, the undersigned has caused this Declaration
of Trust of Rite Aid Financing I to be executed as of the day and year
first above written.

\s\ Frank M. Bergonzi
---------------------------
Name: Frank M. Bergonzi
Title: Regular Trustee

\s\ Elliot S. Gerson
---------------------------
Name: Elliot S. Gerson
Title: Regular Trustee

\s\ Joseph Speaker
----------------------------
Name: Joseph Speaker
Title: Regular Trustee

FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee

By: \s\ Sandra L. Caruba
_____________________________
Name: Sandra L. Caruba
Title: Vice President

RITE AID CORPORATION, as Sponsor and
Debenture Issuer

By: \s\ Elliot S. Gerson
______________________________
Name: Elliot S. Gerson
Title: Senior Vice President

CERTIFICATE OF TRUST

The undersigned, the trustees of Rite Aid Financing I, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del.
C. section 3810, hereby certify as follows:

(1) The name of the business trust being formed hereby (the
"Trust") is "Rite Aid Financing I."

(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:

First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801

-------------------------------- FIRST CHICAGO DELAWARE INC.,
Name: Frank M. Bergonzi as Trustee
Title: Regular Trustee

-------------------------------- By:______________________________
Name: Elliot S. Gerson Name:
Title: Regular Trustee Title:

--------------------------------
Name: Joseph Speaker
Title: Regular Trustee

EXHIBIT 4.12

================================

DECLARATION OF TRUST

Rite Aid Financing II

Dated as of December 15, 1998

================================

TABLE OF CONTENTS

Page

ARTICLE I
DEFINITIONS

SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
ORGANIZATION

SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . . 6
SECTION 2.10 Declaration Binding on Securities Holders . . . . . . . 6

ARTICLE III
TRUSTEES

SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Regular Trustees. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee . . . . . . . . . . . . . . . . . 8
SECTION 3.5 Not Responsible for Recitals or Sufficiency of
Declaration. . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . . . . 13

ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS

SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 15

DECLARATION OF TRUST
OF
RITE AID FINANCING II