EXHIBIT 10.27
AMENDMENT TO THE GNC/RITE AID RETAIL AGREEMENT
NOVEMBER 2000
THIS AMENDMENT (the "Amendment") to the GNC/Rite Aid Retail Agreement,
dated December 8, 1998, by and between General Nutrition Sales Corporation and
RITE AID HDTQRS CORP., as assignee of Rite Aid Corporation is effective as of
November 20, 2000.
WHEREAS, the parties hereto desire to amend the GNC/Rite Aid Retail
Agreement on the terms and conditions stated herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment of Paragraph 1.D. The first two sentences of Paragraph 1.D.
are amended and restated in their entirety to read as follows:
"1.D. Rite Aid hereby commits to open the Business in a minimum
of 1,000 Locations in the aggregate, by October 31, 2002,
pursuant to the following schedule:
- 560 were opened by October 20, 2000
- The balance of the 1,000 minimum Businesses will be opened in
Locations at a rate of no less than 22 openings per month,
except that (a) in each month Rite Aid shall be entitled to a
credit against its obligation to open 22 Businesses in that
month in an amount by which the average number of Businesses
opened in all prior months beginning with the month of January
2001 exceeded an average of 22 per month, and (b) the minimum
openings requirement shall not apply to the months of November
2001 and December 2001. All other references to 1,500 minimum
Locations are hereby reduced to 1,000 throughout the Agreement.
In addition, Exhibit A's list of Designated Locations shall be
reduced to a maximum of 1,200 Locations by March 1, 2001,
(reflecting both stores opened and projected new sites); such
reduction to be accomplished by reducing the number of Locations
on Exhibit A to 1500 no later than January 1, 2001, to 1400 no
later than February 1, 2001, and the balance of the reduction no
later than March 1, 2001. All Locations previously designated as
a potential Location on Exhibit A shall be (1) re-confirmed as
designated Locations on Exhibit A for operating the Business
pursuant to the Agreement, or (2) deleted from Exhibit A
entirely.
2. Amendment of Article II. "Term and Renewal," Paragraph A. Each
reference in Paragraph II.A to terms "36 months" or "36 month period" shall be
amended and restated to be "60 months" or "60 month period" respectively. For
ease of reference, March 2004 is the 60 month date (fifth year anniversary of
the first store opening).
3. Amendment of Paragraph IV.B.(2) "Product Purchases." Paragraph
IV.B.(2) is hereby amended by deleting the last sentence thereof and all sums
that may be due and owing under the provisions thereof are hereby waived.
4. Amendment of Paragraph IV.B(3) "Product Purchases." The following
sentence is added to the end of Paragraph IV.B(3):
"(3) On consignment pursuant to the Consignment Agreement, Rite
Aid shall initially stock and then maintain in inventory so long
as justified, in Rite Aid's sole judgment, by acceptable product
sales, the eight Efamol brand products and three Scan Diet
products specified by GNC in all Rite Aid stores that operate the
Business, as well as, six of the Efamol brand products in each of
the remaining Rite Aid stores in which it does not operate the
Business."
5. Amendment to Paragraph IV.B.(4) "Certain Product Purchases." A new
Paragraph IV.B.(4) is hereby added as follows:
"(4) Pertain Product Purchases. At the date of delivery to Rite
Aid: (a) all GNC Brand Products shall have expiration dates which
are a minimum of six months, (b) all nutrition bars shall have
expiration dates which are a minimum of six months, and (c) all
Third-Party Products shall have expiration dates which are a
minimum of 12 months prior to the expiration date on their
package."
6. Amendment of Article IV. New Paragraph IV.B.(5). "Product
Disposition." A new Paragraph IV.B.(4) is hereby added as follows:
"(5) Product Disposition. Effective for all purchase orders
written by Rite Aid during the period May 1, 2000 through
December 31, 2000 and in lieu of all other rebates and allowances
for damaged, outdated, and discontinued Products and rebates with
respect to Third Party Products sold to Rite Aid under this
Agreement, Rite Aid shall be entitled to deduct [*]% from each
invoice received by it from GNC, excluding Consigned Product
invoices. Effective for all purchase orders written by Rite Aid
from and after January 1, 2001, and in lieu of all other rebates
and allowances for damaged, outdated and discontinued Products,
other than GNC Brand Products, and rebates with respect to Third
Party Products sold to Rite Aid under this Agreement, Rite Aid
shall be entitled to deduct [*]% from each invoice received from
it from GNC, excluding Consigned Product invoices, and with
respect to GNC Brand Products Rite Aid shall have the right to
return all damaged and outdated GNC Brand Products to GNC's
distribution centers or elsewhere as GNC directs for full credit
at then current invoice cost. In addition, in the event that at
any time Rite Aid
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* This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.
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and GNC jointly determine to discontinue GNC Brand Products from
the GNC Plan-O-Gram or Rite Aid determines to discontinue Third
Party Products, Rite Aid shall, pursuant to the General Nutrition
Sales Corporation Product Return Policy with Rite Aid HDTQRS
Corp., a copy of which is attached hereto as Exhibit IV.B.(4)-1.,
have the right to return to GNC's distribution centers, for full
credit at then current invoiced cost, full cases of the
discontinued GNC Brand Products and Third Party Products
remaining at Rite Aid's distribution centers. All other Product
shipment discrepancies shall be handled pursuant to the General
Nutrition Products, Inc. Shipment Discrepancy Policy with Rite
Aid HDTQRS Corp., a copy of which is attached hereto as Exhibit
IV.B.(4)-2."
7. Amendment of Paragraph IV.C.2 "Cooperative Advertising." Paragraph
IV.C.2. is hereby amended by adding the following sentence to the end thereof:
"Gross Sales resulting from the sale of Consigned Products, as defined in the
Consignment Agreement, shall be determined by calculating the number of units
withdrawn from Consignment Inventory for the relevant time period."
8. Amendment of Paragraph D of Article IV. A new sentence is added at
the end of Paragraph D of Article IV as follows:
"All PRODUCTS delivered by GNC pursuant to this Agreement shall
be delivered on a carrier designated by GNC. Rite Aid will have
12 hours free time to offload carrier equipment arriving at the
agreed upon appointment time. Any time in excess of these 12
hours will be charged back to Rite Aid at a rate of $50 per hour
for detention of driver and equipment, not to exceed $500 per 24
hour period per delayed driver and equipment."
9. Amendment of Article XI "Noncompetition." Paragraph A. Paragraph
XI.A. is hereby amended and restated in its entirety as follows:
"GNC agrees that so long as this Agreement is in effect and
notwithstanding any other provision of this Agreement, neither it
nor any of its affiliates (a) will operate the Business of any
retail drug store chain, (b) will not grant any license sale of
GNC Brand Products in any retail drug store chain and (c) will
not permit any operator of any retail drug store chain to operate
a Business under the Comprehensive System or any derivation
thereof. For purposes of this Agreement a "chain" shall mean any
person or entity which together with any person or entity
controlling, by or under common control with such person or
entity operates 10 or more retail locations."
10. Miscellaneous. The following new provisions shall be added to the
Agreement pursuant to this Amendment
a. "Regional Store Directors" shall be employed by Rite Aid to
promote the Business and shall be responsible for maximizing
sales. Their job
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description, reporting system, training programs and start date
will be mutually defined by Rite Aid and GNC. The costs of these
individuals shall be split evenly between Rite Aid and GNC and
in the aggregate per person initially shall not exceed $[*]
b. (which includes wages, benefits, Travel and Entertainment,
transportation and office expenses).
b. GNC approves the use of using existing Rite Aid fixtures in the
440 stores that remain to be opened. At GNC's election it may
purchase certain wooden GNC fixtures from Rite Aid at Rite Aid's
acquisition cost. A smaller square footage GNC Plan-O-Gram shall
be designed by Rite Aid for use at certain approved Rite Aid
Locations. GNC senior management shall approve the design and
fixtures in the reduced square footage Locations and in those
using Rite Aid fixtures.
c. Rite Aid may close the Business operating in any Store, however,
such closure shall not reduce Rite Aid's obligation to open
Businesses in a minimum of 1000 Locations as required by this
Agreement. If a Location is closed and moved to another Location,
that subsequent Location shall not incur an additional $[*]
Initial Fee. An opening shall not be counted twice. The
relocation of a closed Location shall not count toward the
minimum of 1000 Locations or toward the minimum monthly opening
obligations.
d. As provided in a letter from Rite Aid to GNC dated June 17, 1999,
clarifying Article X. Xxxxx of License. Paragraph F (ii): GNC
shall not be in violation of that Paragraph if it sells,
promotes, advertises or distributes any product which bears a
Proprietary Xxxx provided that Proprietary Xxxx is not and does
not include the words "GNC" or "General Nutrition Center" or any
variation thereof.
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* This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.
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Except as amended by this Amendment, the GNC/Rite Aid Retail Agreement
remains in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Amendment as of the day and year first above written.
GENERAL NUTRITION SALES CORPORATION
By: /s/Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Vice President
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RITE AID HDTQRS CORP.
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Senior Vice President
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