EXHIBIT 10.25
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 $10,000
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 I. Grant 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 Mark provided that Proprietary Mark 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.
4
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/James M. Sander
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Name: James M. Sander
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Title: Vice President
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RITE AID HDTQRS CORP.
By: /s/Elliot S. Carson
--------------------------------
Name: Elliot S. Carson
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Title: Senior Vice President
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Amendment No. 1 to Retail Agreement
List of Exhibits
1. Exhibit IV.B.(4)-1: General Nutrition Sales Corporation Product Return
Policy with Rite Aid Hdqtrs Corp.
2. Exhibit IV.B.(4)-2: Nutricia Manufacturing USA, Inc. Shipment Discrepancy
Policy with Rite Aid Hdqtrs Corporation
EXHIBIT IV.B.(4)-1 TO THE GNC/RITE AID RETAIL AGREEMENT
GENERAL NUTRITION SALES CORPORATION
PRODUCT RETURN POLICY WITH RITE AID HDTQRS CORP.
This policy addresses issues related to the return of product purchased by RITE
AID HDTQRS CORP. (Rite Aid) from General Nutrition Sales Corporation (GNC).
Products covered under this policy include GNC Brand product and Third Party
Product. Consignment product will be controlled under the provisions of the
Consignment Agreement.
GNC does not intend for this policy to cover Third-party product recalls. Due to
multiple sourcing of Third Party Products, recalls for quality, safety,
packaging, labeling or other reason will be handled independently by Rite Aid
and GNC with the concerned vendor.
The following procedures will be followed in the event that Rite Aid needs to
return product to GNC.
GNC will not accept return of any Third Party Product which has a shelf-life of
less than 6 months from the date of receipt at GNC's distribution center.
1. GNC will require all GNC Return Forms to be faxed to GNC Order Control at
412-749-5375 and to contain the following information:
(a) GNC item number
(b) Total number of units
(c) Total number of cases
(d) Invoice number - for miss-pick and immediate damage returns
(e) Expiration date and lot number if applicable
(f) Reason for return
2. GNC Order Control will reply to all return requests within 3 business
days. GNC Order Control will provide Return Authorization Instructions,
Return Authorization Form and a Return Authorization Number to Rite Aid
for all return requests that are GNC Brand Products and for all return
requests for Third Party Product that are approved. In the event that a
return request is not approved, GNC Order Control will provide an
explanation to Rite Aid as to the reason for disapproval.
3. For approved returns, GNC will require Rite Aid to return product in its
original cases and segregate all products by item.
4. GNC will require that Rite Aid include the Return Authorization Number on
all paperwork and communications regarding the return.
5. GNC will require Rite Aid to return product within 60 business days of the
receipt of the Return Authorization Form.
6. GNC will require Rite Aid to pay for all costs incurred in transporting
returned product to GNC's distribution center unless other instructions
are contained in the Return Authorization Form.
7. GNC will issue credit to Rite Aid upon processing all saleable returned
products covered by the applicable Return Authorization Form.
8. Product for which credit will not be issued for non-conformance with
number 7 above will be itemized and sent to Rite Aid for disposition. Rite
Aid will have 30 days to provide disposition instructions. If no
instructions are received, the items will be destroyed and Rite Aid will
be charged 8% of the item's value for disposal.
9. GNC will issue credit to Rite Aid on a per unit basis at the then current
invoice price.
10. GNC will credit Rite Aid within 21 days after processing all product
contained in the return authorization.
11. Any Rite Aid initiated deductions for returns will be immediately charged
back. Only GNC processed credits will be accepted.
Attachments:
GNC Return Form
GNC RETURN FORM
ORIGIN
LOCATION ______________________________________ DATE__________ RA #__________
RETURN VIA ___________________________________________PER_______________________
ORIGIN CONTACT POINT ___________________________________________________________
ITEM # GNC # # CTNS # EA INV # REASON FOR RETURN
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE FILL OUT FORM PRIOR TO CALLING ORDER CONTROL FOR RETURN AUTHORIZATION
NUMBER YOU MAY EITHER CALL 1-800-274-8558 OR FAX THIS FORM TO 412-749-5375.
TOTAL # CARTONS TO BE RETURNED_____________________________
DATE RETURNED TO GNC _____________________________
WEIGHT _______________________PALLETS _____________________
DRIVER SIGNATURE____________________________
COMMENTS________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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Exhibit IV.B. (4)-2 To The GNC/Rite Aid Retail Agreement
NUTRICIA MANUFACTURING USA, INC.
SHIPMENT DISCREPANCY POLICY WITH RITE AID HDTQRS CORPORATION
This policy addresses issues related to the shipment of product purchased
by RITE AID HDTQRS CORP. ("Rite Aid") from Nutricia Manufacturing USA, Inc.
("GNP"). Specifically, this policy addresses issues related to discrepancies
between amounts GNP considers shipped and amounts Rite Aid considers received.
The discrepancies addressed in this policy may result from over shipments, under
shipments, visible damage, concealed damage and expiration date issues. Products
purchased included GNC Brand Product, Third Party Product, PharmAssure Premium
product, PharmAssure Basic product, and Rite Aid Private Label product.
Consignment product will be controlled under the provisions of the Consignment
Agreement.
The following procedures will be followed in order to achieve agreement between
Rite Aid claimed discrepancies and GNP accepted discrepancies.
1. GNP will include with each shipment of product, a Summary Packing Slip and
a Detailed Packing Slip. The Detailed Packing Slip will contain all
information, instructions and forms required to claim a shipment
discrepancy.
2. GNP will require a completed Packing List Discrepancy Worksheet for every
invoice regardless of whether a discrepancy is claimed. For invoices where
no discrepancy is claimed, the worksheet should be completed indicating
that there is no discrepancy ("received clear").
3. Rite Aid will fax a copy of all Packing List Discrepancy Worksheets to GNP
Order Control at 412-749-5375.
4. For all invoices where a discrepancy is claimed, GNP will require a copy
of the receiving Bill of Lading to accompany the Packing List Discrepancy
Worksheet. The final carton count on the Packing List Discrepancy
Worksheet must agree with the total carton count indicated on the Bill of
Lading.
5. GNP will require a contact person with a telephone, e-mail address, or fax
number for every Packing Slip Discrepancy worksheet faxed by Rite Aid.
6. GNP will require that all discrepancies be reported in the above manner to
GNP Order Control within 21 days of the invoice date.
7. For accepted and approved discrepancies, GNP order Control will provide
Rite Aid with a discrepancy control number to validate the approval and
processing of the discrepancy within 3 business days. This discrepancy
control number will be provided to the Rite Aid contact person indicated
on the original transmission of the Packing List Discrepancy Worksheet.
8. GNP will issue credit against the original invoice on a per unit basis,
prices consistent with the original invoice.
9. For product not refused and returned to the driver at the time of
delivery, GNP will require disposition of damaged or expiring product by
either of the following:
(a) a return of the product by Rite Aid in accordance with the General
Nutrition Sales Corporation Product Return Policy using the GNC
Return Form or
(b) receipt of a Proof of Destruction from Rite Aid.
10. GNP will credit Rite Aid after processing the discrepancy.
11. Rite Aid initiated deductions will reference the original GNP invoice
number and include specific line item details. These deductions can be
cross referenced back to GNP initiated credit memos referencing the
original invoice number.
12. GNP will require Rite Aid to reference the GNP invoice number and the
discrepancy control number in any correspondence dealing with shipment
discrepancies.
Attachments:
Example Instruction Sheet for interpreting GNP shipping documents.
Example Detailed Packing List
Example Summary Packing List
Example Case-Pick Label
Example Packing List Discrepancy Worksheet
Example Bill of Lading
Example GNC Return Form
GENERAL NUTRITION DISTRIBUTION
BUNCHER INDUSTRIAL PARK
OHIO RIVER BLVD. & FERRY STREET
LEETSDALE, PA, 15056
From: Phil Bolalek, (412) 749-5334 16 October 2000
To: Wholesale Customers
Subject: Interpreting GNC Shipping Documents
The following pages are intended to familiarize you with the shipping documents
that will accompany shipments from GNC facilities. The location and meaning of
the information provided in these documents are included on each Figure.
The documents included with each shipment are: a Bill of Lading for each invoice
(and a Master Bill of Lading if more than 1 invoice is sent in a shipment), a
packing ship, and a packing slip summary. Additionally you win use the case-pick
label, pallet placard, and Discrepancy Worksheet in finalizing the receipt.
Each pallet will be identified by a placard that will contain the Destination,
Purchase Order Number, GNC Invoice Number, and sequence number of the pallet.
This should match the GNC invoice number on both the Packing Slip and the
Summary Packing Slip. An important part of the Packing Slip is the section
entitled "Packing List by Item Number" (Fig. 1). This will provide you with the
GNC item number that can be cross-referenced to your item number. You can also
use the UPCs included in the Summary Packing Slip (Fig. 2) to cross-reference
your item number. The Summary Packing Slip is in UPC sequence and contains a
(??) of cartons of each item in the order.
Individual cases are identified by a Case-Pick Label (Fig.3), this label
provides most of the information you need to receive the item (Note: When
separating items it is easier to sort items by the bold print of the "Location"
code.). Other important information includes case count, total number of cases
of each item, item description, UPC code and your purchase order number.
The "Packing List Discrepancy Worksheet" (Fig. 4) must be completed for each
invoice whether or not there are any discrepancies. Please fax these completed
sheets to (412) 749-5375. This allows us to close out the invoice and complete
our processing. Different types of discrepancies and the proper way to report
them are also shown in Fig. 4
The Bill of Lading (Fig. 5) must also be properly completed to support your
receipt of the shipment and any discrepancies. Be sure to indicate carton
overages/shortages, visible damages, and total cartons received.
Any questions you have on these documents or any other receiving problems can be
directed to me at (412) 749-5334 from 8AM to 5PM EST or you may leave a
voice-mail and I'll return your call as soon as possible.
EXPLANATION OF PACKING LIST
(FIGURE 1)
[EXAMPLE DETAILED PACKING LIST]
EXPLANATION OF SUMMARY PACKING LIST
(FIGURE 2)
[EXAMPLE SUMMARY PACKING LIST]
WHOLESALE CASE PICK LABEL
(FIGURE 3)
[EXAMPLE CASE-PICK LABEL]
EXAMPLES-DISCREPANCIES
(FIGURE 4)
[EXAMPLE PACKING LIST DISCREPANCY WORKSHEET]
BILL OF LADING
(FIGURE 5)
[EXAMPLE BILL OF LADING]
GNC RETURN FORM
ORIGIN
LOCATION ______________________________________ DATE__________ RA#__________
RETURN VIA ___________________________________________PER______________________
ORIGIN CONTACT POINT ___________________________________________________________
ITEM # GNC # # CTNS # EA INV # REASON FOR RETURN
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE FILL OUT FORM PRIOR TO CALLING ORDER CONTROL FOR RETURN AUTHORIZATION
NUMBER YOU MAY EITHER CALL 1-800-274-8558 OR FAX THIS FORM TO 412-749-5375.
TOTAL # CARTONS TO BE RETURNED_______________________________
DATE RETURNED TO GNC _______________________________
WEIGHT ______________________ PALLETS ________________________
DRIVER SIGNATURE_________________________________
COMMENTS________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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