Exhibit 10.2

 

Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omissions have been indicated by “[**Redacted**]”, and the omitted text has been
filed separately with the Securities and Exchange Commission.

 

SIXTH AMENDMENT TO SUPPLY AGREEMENT

 

This Sixth Amendment to the Supply Agreement (the “Sixth Amendment”) is entered
into the 1st day of October, 2012, by and between Rite Aid Corporation (“Rite
Aid”) and McKesson Corporation (“McKesson”).

 

INTRODUCTION

 

Pursuant to the terms of the Supply Agreement dated December 22, 2003 (the “Rite
Aid Agreement”) as amended by the First Amendment to Supply Agreement dated
December 8, 2007 (the “First Amendment”), the Second Amendment to the Supply
Agreement dated November 7, 2008 (the “Second Amendment”), the Third Amendment
to the Supply Agreement dated February 1, 2009 (the “Third Amendment”), the
Fourth Amendment to the Supply Agreement dated December 11, 2009 (the “Fourth
Amendment”), and the Fifth Amendment to the Supply Agreement dated June 22, 2010
(the “Fifth Amendment”) (collectively referred to herein as the “Agreement”),
McKesson and Rite Aid entered into an agreement to establish a program for
McKesson’s supply of pharmaceuticals and certain OTC products to Rite Aid.

 

AGREEMENT

 

For good and valuable consideration, the receipt and sufficiency of which is
acknowledged, McKesson and Rite Aid agree as follows:

 

1.                                      As of the Sixth Amendment Effective Date
(as defined below), Section 1.2 of the Agreement is deleted in its entirety and
replaced with the following:

 

1.2.                            Renewal Term.  At the conclusion of the Initial
Term this Agreement shall renew for an additional six year and five month term
(“Renewal Term”) commencing on November 1, 2009 and ending on March 31, 2016,
unless earlier terminated in accordance with Section 13.

 

2.                                As of the Sixth Amendment Effective Date, the
following is added to Section 2.1(c) Exceptions of the Agreement:

 

xi.                                   Products purchased for dispensing by Rite
Aid Specialty Pharmacy, LLC, as it currently exists or is expanded as well as
any other specialty pharmacies built or acquired.

 

3.                                      As of November 1, 2012, the DSD Cost of
Goods Matrix in Section 3.2 of the Agreement is deleted in its entirety and
replaced with the following:

 

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DSD COST OF GOODS MATRIX

 

Chain-Wide Average Product
Purchases Per
Location/Month (less all
returns)

 

 

 

 

 

Rite Aid
Contract

 

Schedule II

 

From

 

To

 

Rx

 

OTC

 

Items

 

Narcotics

 

 

 

 

 

[**Redacted**]

 

 

 

 

 

 

4.                                      As of November 1, 2012, Section 3.4 of
the Agreement is deleted in its entirety and replaced with the following:

 

3.4                               DSD Returns Adjustment: As an incentive for
Rite Aid to continue to maintain its chain-wide average DSD return volume at or
below [**Redacted**] of total DSD purchases (“DSD Acceptable Returns Volume
Percentage”), Rite Aid’s DSD Cost of Goods shall only be subject to an
adjustment, as determined pursuant to the matrix below, based on Rite Aid’s
performance for each quarter effective for the following quarter in the event
that Rite Aid does not achieve the DSD Acceptable Returns Volume Percentage. Any
applicable adjustment will take place [**Redacted**] after [**Redacted**], and
continue for [**Redacted**].

 

 

% of Chain-Wide Average Saleable
Returns & Allowances to DSD Purchases

 

Adjustments to Cost of Goods
Markup on All DSD Purchases
(Rebate Amounts Not Cumulative)

 

 

[**Redacted**]

 

[**Redacted**]

 

 

5.                                      As of November 1, 2012,
Section 3.9(a) of the Agreement is deleted in its entirety and replaced with the
following:

 

(a)                                 For the period of November 1, 2012 through
March 31, 2013, McKesson will issue to Rite Aid a rebate, in the form of a
credit, in an amount equal to [**Redacted**] of the Cost of Goods for Warehouse
purchases of Branded Rx Products and OTC Products (net of Warehouse returns as
provided in Section 8.1 and excluding Warehouse Repackaged Merchandise) (the
“Buy Profit Rebate”).  The Buy Profit Rebate shall be paid [**Redacted**] for
purchases made [**Redacted**]. An illustration of the Buy Profit Rebate
calculation is set forth below:

 

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Total
[**Redacted**]
Warehouse
Purchases of
Branded Rx
Products and OTC
Products

 

(-)
Warehouse
Returns
(Includes
returns to
vendors)

 

(-)
Warehouse
Repackaged
purchases

 

(X)
Buy Profit
Rebate of
[**Redacted
**]

 

(=)
Buy Profit
Rebate

 

[**Redacted**]

 

[**Redacted**]

 

[**Redacted**]

 

[**Redacted**]

 

[**Redacted**]

 

As of April 1, 2013 through March 31, 2014 the Buy Profit Rebate will be
calculated on an amount equal to [**Redacted**] (rather than the previous amount
of [**Redacted**]).  From April 1, 2014 through the remainder of the Term of the
Agreement, the Buy Profit Rebate shall be equal to [**Redacted**].

 

6.                                      As of the Sixth Amendment Effective
Date, the third sentence of Section 3.10 of the Agreement is deleted in its
entirety.

 

7.                                      As of November 1, 2012, the language
“[**Redacted**]….” in Section 10.1 of the Agreement is deleted in its entirety
and replaced with “[**Redacted**]” and the table immediately after
Section 10.1(b) is deleted in its entirety and replaced with the following
table:

 

 

Total Annualized Rite Aid combined
DSD and Warehouse Generic
Purchases plus Negative Generic
Purchasing Events(s)
[**Redacted**] (net of any returns,
rebates, allowances, and all credits
and adjustments issued for Generics
purchases).

 

Monthly COG adjustment or upcharge(1)

 

 

[**Redacted**]

 

[**Redacted**]

 

 

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(1)To be applied across all Cost of Goods for Products delivered by DSD,
Warehouse, RxPak and Cross-Dock.

 

8.                                      As of the Sixth Amendment Effective
Date, the header on the left side of the table in Section 10.1(b) of the
Agreement is deleted in its entirety and replaced with the following:

 

Total Annualized Rite Aid combined DSD and Warehouse Purchases of Generics Rx
Product plus Negative Generic Purchasing Event(s) [**Redacted**] (net of all
returns, rebates, allowances and all credits and adjustments issued for Generics
purchases).

 

9.                                      As of the Sixth Amendment Effective
Date, the following is added as a new Section 10.6 to the Agreement:

 

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10.6        McKesson will provide to Rite Aid [**Redacted**] reports indicating
stocking levels at each McKesson Forward DC servicing Rite Aid for Generic
products included in Rite Aid’s formulary.

 

10.                               As of November 1, 2012, the first paragraph of
Section 11.1 of the Agreement is deleted in its entirety and replaced with the
following:

 

11.1.                     In consideration of the various purchase commitments
set forth in this Agreement, McKesson will provide throughout the Renewal Term
of the Agreement a [**Redacted**] rebate to Rite Aid on total purchases of
Merchandise (net of all returns) by Rite Aid (such rebate shall be referred to
herein as a “[**Redacted**] Purchase Volume Rebate”).  Each [**Redacted**]
Purchase Volume Rebate shall be paid to Rite Aid [**Redacted**].

 

11.                               This Sixth Amendment shall become effective on
the first date on which both Rite Aid and McKesson shall have executed it (the
“Sixth Amendment Effective Date”).

 

12.                               Except as amended above, the Agreement remains
unchanged and in full force and effect.

 

13.                               This Sixth Amendment may be executed in
counterparts, all of which taken together shall constitute an original.

 

14.                               This Sixth Amendment, together with the
Agreement, as amended, embodies the entire agreement between the parties with
regard to the subject matter hereof and supersedes all prior agreements,
understandings, and representations with the exception of any promissory note,
security agreement, or other credit or financial document(s) executed by Rite
Aid or between Rite Aid and McKesson.

 

IN WITNESS WHEREOF, the parties have caused this Sixth Amendment to be duly
executed as of the date written below.  The persons signing this Sixth Amendment
warrant that they are duly authorized to sign for and on behalf of their
respective parties. This Sixth Amendment shall be deemed accepted by McKesson
only on its execution by a duly authorized representative of McKesson.

 

RITE AID CORPORATION

 

McKESSON CORPORATION

 

 

 

 

 

 

 

 

 

By:

/s/ Christopher Hall

 

By:

/s/ Paul C. Julian

 

 

 

Name:

Christopher Hall

 

Name:

Paul C. Julian

 

 

 

 

 

Title:

SVP, Pharmacy Services

 

Title:

Executive Vice President, Group President

 

 

 

 

 

Date:

September 18, 2012

 

Date:

October 1, 2012

 

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