GNC 2009 Annual Report Download - page 117

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24. RELATED PARTY TRANSACTIONS
Successor:
Management Services Agreement. Upon consummation of the Merger, the Company entered into a services agreement with its Parent,
GNC Acquisition Holdings Inc ("Holdings"). Under the agreement, Holdings agreed to provide the Company and its subsidiaries with certain
services in exchange for an annual fee of $1.5 million, as well as customary fees for services rendered in connection with certain major financial
transactions, plus reimbursement of expenses and a tax gross-up relating to a non-tax deductible portion of the fee. The company agreed to
provide customary indemnifications to Holdings and its affiliates and those providing services on its behalf. In addition, upon consummation of
the Merger, the Company incurred an aggregate fee of $10.0 million, plus reimbursement of expenses, payable to Holdings for services
rendered in connection with the Merger. As of December 31, 2008, $2.7 million had been paid pursuant to this agreement.
Credit Facility. Upon consummation of the Merger, the Company entered into a $735.0 million credit agreement, of which various Ares fund
portfolios, which are related to one of our sponsors, are investors. As of December 31, 2008 and 2007, certain affiliates of Ares Management
LLC held approximately $63.9 million and $64.5 million, respectively of term loans under the Company's 2007 Senior Credit Facility.
Stock Purchase. During the third and fourth quarter of 2008, Axcel Partners III, LLC, of which an officer and director of the Company is a
member, purchased 273,215 shares of Common Stock of Holdings at a price of $6.82 per share, for an aggregate purchase price of
$1.9 million and 45,478 shares of Common Stock of Holdings at a price of $7.08 per share, for an aggregate purchase price of $0.3 million,
respectively and 110,151 and 18,710 shares of Preferred Stock of Holdings at a price of $5.00 per share plus accrued and unpaid dividends
through the dates of purchase, for an aggregate purchase price of $0.6 million and $0.1 million, respectively.
Lease Agreements. General Nutrition Centres Company, a wholly owned subsidiary of the Company, is party to 21 lease agreements, as
lessee, with Cadillac Fairview Corporation, as lessor, with respect to properties located in Canada. Cadillac Fairview Corporation is a direct,
wholly owned subsidiary of OTPP, one of the principal stockholders of our parent. The aggregate value of the leases is approximately
$10.4 million, together with certain future landlord related costs, of which $2.5 million was paid for the year ended December 31, 2008 and
$2.0 million for the period March 16 to December 31, 2007. Each lease was negotiated in the ordinary course of business on an arm's length
basis.
Predecessor:
Management Service Fees. As of December 5, 2003, the Company and Parent entered into a management services agreement with Apollo
Management V. The agreement provides that Apollo Management V furnish certain investment banking, management, consulting, financial
planning, and financial advisory services on an ongoing basis and for any significant financial transactions that may be undertaken in the future.
The length of the agreement was ten years. There was an annual general services fee of $1.5 million, which was payable in monthly
installments. There were also major transaction services fees for services that Apollo Management V may provide which would be based on
normal and customary fees of like kind. In addition, the Company reimburses expenses that are incurred and paid by Apollo Management V on
behalf of the Company. For the year ended December 31, 2006 and the period from January 1, 2007 to March 15, 2007, $1.1 million and
$0.4 million, respectively, were paid to Apollo Management V under the terms of this agreement. In addition, as a result of the Merger, for the
period from January 1, 2007 to March 15, 2007, $7.5 million was paid to Apollo Management V as a one-time payment for the termination of the
management services agreement. 111