GNC 2009 Annual Report Download - page 59

Table of Contents
other material indebtedness, (5) bankruptcy events, (6) material judgments, (7) certain matters arising under the Employee Retirement Income
Security Act of 1974, as amended, (8) the actual or asserted invalidity of documents relating to any guarantee or security document, (9) the
actual or asserted invalidity of any subordination terms supporting the senior credit facility, and (10) the occurrence of a change in control. If any
such event of default occurs, the lenders would be entitled to accelerate the 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.
Senior Toggle 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 " Senior Notes"). The Senior Notes are our senior non collateralized obligations and are effectively subordinated to all of
our existing and future collateralized debt, including the 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
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 Senior Notes indenture). If we fail to make payments on the Senior Notes, the notes guarantors must make them
instead.
We may elect in our sole discretion to pay interest on the Senior Notes in cash, entirely by increasing the principal amount of the Senior
Notes or issuing Senior Notes ("PIK interest"), or on 50% of the outstanding principal amount of the Senior Notes in cash and on 50% of the
outstanding principal amount of the Senior Notes by increasing the principal amount of the Senior Notes or by issuing Senior Notes ("partial PIK
interest"). Cash interest on the 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 Senior Notes or
issue 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 Senior Notes on the relevant record date. To date, we have elected to pay cash interest. The 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 Senior Notes at any time at specified redemption prices. 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 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 Senior Notes indenture restricts our and certain
of our subsidiaries' ability to declare or pay dividends to its stockholders.
10.75% 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 " Senior Subordinated Notes"). The Senior Subordinated Notes are our senior subordinated non
collateralized obligations and are subordinated to all our existing and future senior debt, including our Senior Credit Facility and the 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 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 Senior Subordinated Notes indenture). If we fail to make payments on the Senior Subordinated Notes,
the notes guarantors must make them instead. Interest on the 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.
53