GNC 2009 Annual Report Download - page 100

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the terms of the Senior Toggle Notes agreement and the offering memorandum, these notes were required to be
exchanged for publicly registered exchange notes within 210 days after the sale of these notes. As required, these notes were registered and
the exchange offer was completed on September 28, 2007.
10.75% Senior Subordinated Notes. In connection with the Merger, the Company completed a private offering of $110.0 million of its
10.75% Senior Subordinated Notes due 2015. The 10.75% Senior Subordinated Notes are the Company's senior subordinated non
collateralized obligations and are subordinated to all the Company's existing and future senior debt, including the Company's 2007 Senior
Credit Facility and the Senior Toggle Notes and rank equally with all of the Company's existing and future senior subordinated debt and rank
senior to all the Company's existing and future subordinated debt. The 10.75% Senior Subordinated Notes are guaranteed on a senior
subordinated non collateralized basis by each of the Company's existing and future domestic subsidiaries (as defined in the 10.75% Senior
Subordinated Notes indenture). If the Company fails to make payments on the 10.75% Senior Subordinated Notes, the notes guarantors must
make them instead. Interest on the 10.75% 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.
The Company may redeem some or all of the 10.75% Senior Subordinated Notes at any time at specified redemption prices. If the Company
experiences certain kinds of changes in control, it must offer to purchase the 10.75% Senior Subordinated Notes at 101% of par plus accrued
interest to the purchase date.
The 10.75% Senior Subordinated Notes indenture contains certain limitations and restrictions on the Company's and its restricted
subsidiaries' ability to incur additional debt beyond certain levels, pay dividends, redeem or repurchase the Company's 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 the Company's ability to pay dividends or grant liens, and engage in transactions with
affiliates. In addition, the 10.75% Senior Subordinated Notes indenture restricts the Company's and certain of the Company's subsidiaries'
ability to declare or pay dividends to the Company's stockholders.
In accordance with the terms of the 10.75% Senior Subordinate Notes agreement and the offering memorandum, these notes were required
to be exchanged for publicly registered exchange notes within 210 days after the sale of these notes. As required, these notes were registered
and the exchange offer was completed on September 28, 2007.
The Company expects to fund its operations through internally generated cash and, if necessary, from borrowings under the amount
remaining available under the Company's $60.0 million revolving credit facility. The Company expects its primary uses of cash in the near future
will be debt service requirements, capital expenditures and working capital requirements. The Company anticipates that cash generated from
operations, together with amounts available under the Company's revolving credit facility, will be sufficient to meet its future operating
expenses, capital expenditures and debt service obligations as they become due. However, the Company's ability to make scheduled payments
of principal on, to pay interest on, or to refinance the Company's indebtedness and to satisfy the Company's other debt obligations will depend
on the Company's future operating performance, which will be affected by general economic, financial and other factors beyond the Company's
control. The Company believes that it has complied with the Company's covenant reporting and compliance in all material respects for the year
ended December 31, 2008. 94