Exhibit
10.1


 


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.


 


SECOND AMENDMENT TO SUPPLY AGREEMENT


 


This Second
Amendment to the Supply Agreement (the “Second Amendment”) is entered into the
7th day of November, 2008, 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 the Supply
Agreement dated December 8, 2007 (the “First 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 pharmaceutical and
OTC products to Rite Aid.


 


AGREEMENT


 


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


 


1.                                       Effective as of the first day of the
first full month following the Second Amendment Effective Date (as hereinafter
defined), Section 3.1 of the Agreement is hereby deleted and replaced with
the following:


 


3.1                               Warehouse.  The Cost of Goods for Warehouse purchases of Products,
other than Branded Rx Warehouse Repackaged Products and OneStop Generics, shall
be the [***Redacted***].


 


2.                                       Effective
as of the first day of the first full month following the Second Amendment
Effective Date (as hereinafter defined), the following is hereby added as Section 3.9(a) of
the Agreement:


 


3.9                               Additional
Rebates.


 


(a)                                  Buy
Profit Rebate.  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 Branded Rx
Warehouse purchases (net of Branded Rx Warehouse returns as provided in Section 8.1
and excluding Branded Rx Warehouse Repackaged Merchandise) (the “Buy Profit
Rebate”). The Buy Profit Rebate shall be paid each week on Tuesday for
purchases made from Saturday to Friday of the previous week, unless Tuesday is
a McKesson recognized holiday, in which case the rebate shall be paid on the
next business day.  An illustration of
the Buy Profit Rebate calculation is set forth below:


 


	
  Total monthly

  Branded Rx

  Warehouse

  Purchases

  	
   

  	
  (-)

  Branded Rx

  Warehouse

  Returns

  (Includes

  returns to

  vendors)

  	
   

  	
  (-)

  Branded Rx

  Warehouse

  Repackaged

  purchases

  	
   

  	
  (X)

  Buy Profit

  Rebate of

  [***Redacted***]

  	
   

  	
  (=)

  Buy Profit Rebate

  	
   

  
	
  $

  	
  100,000,000

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  8,000,000

  	
   

  	
  [***Redacted***]

  	
   

  	
  [***Redacted***]

  	
   

  
													



 


1

















 


3.                                       Effective
as of the first day of the first full month following the Second Amendment
Effective Date (as hereinafter defined), the fourth paragraph of Section 3.9(b) of
the Agreement is hereby deleted and replaced with the following:


 


(b)                                 Additional Rebates on Branded Rx Warehouse Purchases.  For the Contract Year which ended on November 30,
2007 (“Contract Year Ended 11/30/07”), the Annual Market Basket rebate shall be
paid on [***Redacted***] of Branded Rx Products
purchases (net of Branded Rx Warehouse returns as provided in Section 8.1
and rebates or other incentives hereunder and excluding Branded Rx Warehouse
Repackaged purchases) by the three original Rite Aid warehouses designated as
Perryman, Tuscaloosa and Woodland.


 


For subsequent Contract
Years following the Contract Year Ended 11/30/07, all purchases from Rite Aid
warehouses shall be included in the calculation of the Market Basket
Rebate.  The purchases eligible for the
Market Basket Rebate shall be reduced by the amount of the previous twelve (12)
months of the Buy Profit Rebate.


 


For the subsequent
Contract Years following the Contract Year Ended 11/30/07, the Annual Market
Basket Index Adjustment chart found in Section 3.9(b) shall be
replaced by the chart below.


 


Annual Market Basket Index Adjustment


 




	
  Rite
  Aid’s Achieved Annual Market

  	
   

  	
   

  	
   

  
	
  Basket
  Price Increase Rate

  	
   

  	
  Rebate on Annual Branded

  	
   

  
	
  From

  	
   

  	
  To

  	
   

  	
  Rx Warehouse purchases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***Redacted***]

  	
   

  	
   

  	
   

  	
  [***Redacted***]

  	
   

  






 


[***Redacted***]


 


In this example, McKesson
would pay Rite Aid a [***Redacted***]
on purchases of Branded Rx Warehouse purchases (less the Buy Profit Rebate) during
this Contract Year no later than [***Redacted***].


 


($1,000,000.00 - [***Redacted***]) X [***Redacted***] =
[***Redacted***]


 


Dollar volume –
Buy Profit Rebate X applicable Market Basket Rebate %


 


4.                                       In
consideration of various purchase commitments set forth in this Agreement, Rite
Aid shall be eligible to earn a one-time rebate equal to [***Redacted***]
of the dollar volume of DSD and Warehouse purchases (less all returns) by Rite
Aid, during the first thirty (30) days after the Second Amendment Effective
Date (as hereinafter defined) (“Purchase Volume Rebate”).  Notwithstanding anything in the foregoing, in
no event shall such Purchase Volume Rebate exceed [***Redacted***].  Such Purchase Volume Rebate shall be paid to
Rite Aid no later than fifteen (15) days following the close of the
above-referenced 30 day period.


 


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


 


6.                                       Except as amended above, the Agreement
remains unchanged and in full force and effect. 
Capitalized terms used in this Second Amendment and not otherwise
defined herein shall have the meaning given to them in the Agreement.


 


2

















 


7.                                       This Second Amendment may be executed in
counterparts, each of which shall constitute an original.


 


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


 


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


 


	
  RITE
  AID CORPORATION

  	
   

  	
  McKESSON
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert B. Sari

  	
   

  	
  By:

  	
  /s/ Paul C. Julian

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert B. Sari

  	
   

  	
  Name:

  	
  Paul C. Julian

  
	
   

  	
   

  	
   

  
	
  Title: 

  	
  Executive Vice
  President, General Counsel

  	
   

  	
  Title:

  	
  Executive Vice
  President, Group President

  
	
   

  	
  General Counsel and Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  November 7, 2008

  	
   

  	
  Date: 

  	
  November 7, 2008

  
											



 


3