EXHIBIT 10.4
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this "Management Agreement"), dated
as of December 5, 2003, is made by and among General Nutrition Centers, Inc., a
Delaware corporation ("Centers"), General Nutrition Centers Holding Company, a
Delaware corporation ("Holdings" and, together with Centers, the "Companies"),
and Apollo Management V, L.P., a Delaware limited partnership (the "Manager").
WHEREAS, the Companies have obtained and desire to continue to obtain
from the Manager, and the Manager has provided and desires to continue to
provide to the Companies, certain investment banking, management, consulting and
financial planning services on an ongoing basis and certain financial advisory
and investment banking services in connection with major financial transactions
that may be undertaken by the Companies or their subsidiaries from time to time
in the future;
WHEREAS, the Companies have recently consummated the acquisition of the
General Nutrition Companies business (the "Acquisition") pursuant to the
Purchase Agreement, dated as of October 16, 2003, by and among Apollo GNC
Holding, Inc., Numico USA, Inc. and Royal Numico N.V. (the "Purchase
Agreement");
WHEREAS, this Management Agreement has been approved by the each of the
Companies' board of directors; and
WHEREAS, this Management Agreement has been approved by holders of a
majority of each of the Companies' common stock;
NOW, THEREFORE, in consideration of their mutual promises made herein,
and for other good and valuable consideration, receipt of which is hereby
acknowledged by each party, the parties, intending to be legally bound, hereby
agree as follows:
1. Retention of Services
1.1 Investment Banking Services. Subject to the terms and
conditions hereof, the Companies hereby retain the Manager, and the Manager
hereby agrees to be retained by the Companies, to provide investment banking
services to the Companies. The scope of these services shall be as reasonably
requested by the Companies and agreed to by the Manager from time to time.
1.2 General Services. Subject to the terms and conditions hereof,
the Companies hereby retain the Manager, and the Manager hereby agrees to be
retained by the Companies, to provide management, consulting and financial
planning services to the Companies on an ongoing basis in connection with the
operation and growth of the Companies and their subsidiaries in the ordinary
course of their businesses during the term of this Management Agreement (the
"General Services"). The scope of the General Services shall be such as
reasonably requested by the Companies and agreed to by the Manager from time to
time.
1.3 Major Transaction Services. Subject to the terms and
conditions hereof, the Companies hereby retain the Manager, and the Manager
hereby agrees to be retained by the Companies, to provide financial advisory and
investment banking services to the Companies in connection with major financial
transactions that may be undertaken by the Companies or their subsidiaries from
time to time in the future ("Major Transaction Services" and, together with the
General Services, the "Services"). The scope of the Major Transaction Services
shall be such as reasonably requested by the Companies and agreed to by the
Manager from time to time.
2. Compensation.
2.1 General Services Fee. In consideration of the General
Services, the Companies shall pay the Manager an annual fee payable in cash
equal to $1,500,000 (the "Annual Fee"). The Annual Fee shall be payable by the
Companies in equal monthly installments in advance, on the first business day of
each month commencing on the first such day following the date hereof, without
regard to the amount of services actually performed by Manager.
2.2 Major Transaction Services Fee. In consideration of any Major
Transaction Services provided by the Manager from time to time, the Companies
shall pay the Manager normal and customary fees for services of like kind as
agreed by the Manager and the Companies, taking into consideration all relevant
factors, including but not limited to, the complexity of the subject
transaction, the time devoted to providing such services and the value of the
Manager's financial advisory and/or investment banking expertise and
relationships within the business and financial community.
2.3 Structuring and Transition Services Fee. In connection with
the services provided to the Companies in connection with the transactions
contemplated by, and pursuant to the terms of, the Purchase Agreement, and the
provision of critical transition services by Manager for the four-week period
following the consummation of the Acquisition (the "Transition Period"), the
Companies agree to pay to the Manager a structuring and transition services fee
of $7,500,000, plus reimbursement of out-of-pocket expenses incurred and to be
incurred by the Manager in connection with the services provided in connection
with the Acquisition and the transition services. The structuring and transition
services fee and all out-of-pocket expenses to be paid pursuant to this Section
2.3 shall be earned following the completion of Manager's provision of services
during the Transition Period. The structuring and transition services fee shall
be paid by the Companies on the third business day following the end of the
Transition Period, provided that Manager shall not have materially breached its
obligation to perform the transition services, or at any such later date as the
Manager shall request, and, if so requested by the Manager, out-of-pocket
expenses shall be paid in advance of the payment of the structuring and
transition services fee.
2.4 Expenses. In addition to the fees to be paid to the Manager
under Sections 2.1, 2.2 and 2.3 hereof, the Companies shall pay to, or on behalf
of, the Manager, promptly as billed, an amount equal to all out-of-pocket
expenses incurred by the Manager in connection with the Services rendered
hereunder. Such expenses shall include, among other things, fees and
disbursements of counsel, travel expenses, word processing charges, messenger
and duplicating services, telephone and facsimile expenses and other customary
expenditures.
3. Term.
3.1 Termination. This Management Agreement shall terminate on the
tenth anniversary of this Management Agreement.
3.2 Survival of Certain Obligations. Notwithstanding any other
provision hereof, the obligations of the Companies to pay amounts due with
respect to periods prior to the termination hereof pursuant to Section 2 hereof
and the provisions of Sections 4 and 5 hereof shall survive any termination of
this Management Agreement.
4. Decisions/Authority of Advisor.
4.1 Limitation on the Managers' Liability. The Companies reserve
the right to make all decisions with regard to any matter upon which the Manager
has rendered its advice and consultation, and there shall be no liability of the
Manager for any such advice accepted by the Companies pursuant to the provisions
of this
Management Agreement.
4.2 Independent Contractor. The Manager shall act solely as an
independent contractor and shall have complete charge of its respective
personnel engaged in the performance of the Services. As an independent
contractor, the Manager shall have authority only to act as an advisor to the
Companies and shall have no authority to enter into any agreement or to make any
representation, commitment or warranty binding upon the Companies or to obtain
or incur any right, obligation or liability on behalf of the Companies. Nothing
contained in this Management Agreement shall constitute the Manager or any of
its partners or members or any of their affiliates, investment managers,
investment advisors or partners a partner of or joint venturer with the
Companies.
5. Indemnification.
5.1 Indemnification/Reimbursement of Expenses. The Companies shall
(i) indemnify the Manager and its partners and members and any of its
affiliates, investment managers, investment advisors and their respective
affiliates, and the partners, directors, officers, employees, agents and
controlling persons of the Manager and its partners and its affiliates
(collectively, the "Indemnified Parties"), to the fullest extent permitted by
law, from and against any and all losses, claims, damages and liabilities, joint
or several, to which any Indemnified Party may become subject, directly or
indirectly caused by, related to or arising out of the Services or any other
advice or services contemplated by this Management Agreement or the engagement
of the Manager pursuant to, and the performance by the Manager of the Services
contemplated by, this Management Agreement, and (ii) promptly reimburse each
Indemnified Party for all costs and expenses (including reasonable and
documented attorneys' fees and expenses), as incurred, in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefrom, whether or not such Indemnified
Party is a party and whether or not such claim, action or proceeding is
initiated or brought by or on behalf of the Companies and whether or not
resulting in any liability.
5.2 Limited Liability. The Companies shall not be liable under the
indemnification contained in Section 5.1 hereof to the extent that such loss,
claim, damage, liability, cost or expense is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the
Manager's willful misconduct or gross negligence. The Companies further agree
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract, tort or otherwise) to the Companies, holders of their securities or
their creditors related to or arising out of the engagement of the Manager
pursuant to, or the performance by the Manager of the Services contemplated by,
this Management Agreement.
6. Miscellaneous.
6.1 Assignment. None of the parties hereto shall assign this
Management Agreement or the rights and obligations hereunder, in whole or in
part, without the prior written consent of the other party; provided, however,
that, without obtaining such consent, the Manager may assign this Management
Agreement or its rights and obligations hereunder to (i) any of its partners or
members or their affiliates or any person who controls the Manager; or (ii) any
investment fund, investment account or investment entity whose investment
manager, investment advisor or partner, or any principal or beneficial owner of
any of the foregoing, is any person identified in clause (i) above. Subject to
the foregoing, this Management Agreement will be binding upon and inure solely
to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall acquire or have any right hereunder or by
virtue hereof.
6.2 Governing Law. This Management Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware as applied to
contracts made and performed within the State of Delaware without regard to
principles of conflict of laws.
6.3 Joint and Several Obligations. The obligations of the
Companies under this Management Agreement are the joint and several obligations
of Centers and Holdings.
6.4 Severability. If any term, provision, covenant or restriction
of this Management Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any such terms,
provisions, covenants and restrictions which may be hereafter declared invalid,
illegal, void or unenforceable.
6.5 Entire Agreement. This Management Agreement contains the
entire agreement between the parties with respect to the subject matter of this
Management Agreement and supersedes all written or verbal representations,
warranties, commitments and other understandings with respect to the subject
matter of this Management Agreement prior to the date of this Management
Agreement.
6.6 Further Assurances. Each party hereto agrees to use all
reasonable efforts to obtain all consents and approvals and to do all other
things necessary to consummate the transactions contemplated by this Management
Agreement. The
parties agree to take such further action and to deliver or cause to be
delivered any additional agreements or instruments as any of them may reasonably
request for the purpose of carrying out this Management Agreement and the
agreements and transactions contemplated hereby.
6.7 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Management Agreement, or where any provision
hereof is validly asserted as a defense, the prevailing party, as determined by
a court of competent jurisdiction, shall be entitled to recover reasonable and
documented attorneys' fees in addition to any other available remedy.
6.8 Headings. The headings in this Management Agreement are for
convenience and reference only and shall not limit or otherwise affect the
meaning hereof.
6.9 Amendment and Waiver. This Management Agreement may be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may be given, provided that the same are in writing and
signed by each of the parties hereto.
6.10 Counterparts. This Management Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement on the date first appearing above.
GENERAL NUTRITION CENTERS
HOLDING COMPANIES
By: /s/ James Sander
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Name: James Sander
Title: Senior Vice President, Law,
Chief Legal Officer
GENERAL NUTRITION CENTERS, INC.
By:/s/ James Sander
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Name: James Sander
Title: Senior Vice President, Law,
Chief Legal Officer
APOLLO MANAGEMENT V, L.P.
By: AIF V Management, Inc.,
its General Partner
By: /s/ Andrew Jhawar
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Name: Andrew Jhawar
Title: Vice President