GNC 2008 Annual Report Download - page 57

Table of Contents
facilities and take various other actions, including all actions permitted to be taken by a collateralized creditor. If certain bankruptcy events
occur, the facilities will automatically accelerate.
New Senior Notes. In connection with the Merger, we completed a private offering of $300.0 million of our Senior Floating Rate Toggle
Notes due 2014 (the "New Senior Notes"). The New Senior Notes are our senior non collateralized obligations and are effectively subordinated
to all of our existing and future collateralized debt, including the New Senior Credit Facility, to the extent of the assets securing such debt, rank
equally with all our existing and future non collateralized senior debt and rank senior to all our existing and future senior subordinated debt,
including the New Senior Subordinated Notes. The Senior Notes are guaranteed on a senior non collateralized basis by each of our existing
and future domestic subsidiaries (as defined in the New Senior Notes indenture). If we fail to make payments on the New Senior Notes, the
notes guarantors must make them instead.
We may elect in our sole discretion to pay interest on the New Senior Notes in cash, entirely by increasing the principal amount of the
New Senior Notes or issuing new New Senior Notes ("PIK interest"), or on 50% of the outstanding principal amount of the New Senior Notes in
cash and on 50% of the outstanding principal amount of the New Senior Notes by increasing the principal amount of the New Senior Notes or
by issuing new New Senior Notes ("partial PIK interest"). Cash interest on the New Senior Notes accrues at six-month LIBOR plus 4.5% per
annum, and PIK interest, if any, accrues at six-month LIBOR plus 5.25% per annum. If we elect to pay PIK interest or partial PIK interest, it will
increase the principal amount of the New Senior Notes or issue new New Senior Notes in an aggregate principal amount equal to the amount of
PIK interest for the applicable interest payment period (rounded up to the nearest $1,000) to holders of the New Senior Notes on the relevant
record date. The New Senior Notes are treated as having been issued with original issue discount for U.S. federal income tax purposes.
We may redeem some or all of the New Senior Notes at any time after March 15, 2009, at specified redemption prices. In addition, at any
time prior to March 15, 2009, we may on one or more occasions redeem up to 35% of the aggregate principal amount of the New Senior Notes
with the net proceeds of certain equity offerings if at least 65% of the original aggregate principal amount of the notes remain outstanding
immediately after such redemption. If we experience certain kinds of changes in control, we must offer to purchase the notes at 101% of par
plus accrued interest to the purchase date.
The New Senior Notes indenture contains certain limitations and restrictions on our and our restricted subsidiaries' ability to incur
additional debt beyond certain levels, pay dividends, redeem or repurchase our stock or subordinated indebtedness or make other distributions,
dispose of assets, grant liens on assets, make investments or acquisitions, engage in mergers or consolidations, enter into arrangements that
restrict our ability to pay dividends or grant liens, and engage in transactions with affiliates. In addition, the New Senior Notes indenture restricts
our and certain of our subsidiaries' ability to declare or pay dividends to its stockholders.
New Senior Subordinated Notes. In connection with the Merger, we completed a private offering of $110.0 million of our 10.75% Senior
Subordinated Notes due 2015 (the "New Senior Subordinated Notes"). The New Senior Subordinated Notes are our senior subordinated non
collateralized obligations and are subordinated to all our existing and future senior debt, including our New Senior Credit Facility and the New
Senior Notes and rank equally with all of our existing and future senior subordinated debt and rank senior to all our existing and future
subordinated debt. The New Senior Subordinated Notes are guaranteed on a senior subordinated non collateralized basis by each of our
existing and future domestic subsidiaries (as defined in the New Senior Subordinated Notes indenture). If we fail to make payments on the New
Senior Subordinated Notes, the notes guarantors must make them instead. Interest on the New Senior Subordinated Notes accrues at the rate
of 10.75% per year from March 16, 2007 and is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on
September 15, 2007.
We may redeem some or all of the New Senior Subordinated Notes at any time after March 15, 2009, at specified redemption prices. At
any time prior to March 15, 2009, we may on one or more occasions redeem up to 50% of the aggregate principal amount of the New Senior
Subordinated Notes at a redemption price of 105% of the principal amount, plus accrued and unpaid interest (including special interest, if any)
to the redemption date with net cash proceeds of certain equity offerings if at least 50% of
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