GNC 2010 Annual Report Download - page 104

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company pays interest based on the aggregate available amount of the revolving credit facility at a per annum rate equal to 0.5%.
The Company pays interest on outstanding borrowings on the revolving credit facility at a Eurodollar rate or Adjusted Base Rate ("ABR") plus
the applicable margin in effect. As of both December 31, 2009 and 2008, the ABR was 4.25%. The Company also pays an additional interest
rate of 2.25% per annum on all outstanding letters of credit issued. As of December 31, 2009 and 2008, $7.9 million and $6.2 million,
respectively, of the revolving credit facility was utilized to secure letters of credit. The Company had outstanding ABR borrowings under the
revolving credit facility of $5.4 million at December 31, 2008. No amounts were outstanding at December 31, 2009.
Senior Toggle Notes. In connection with the Merger, the Company completed a private offering of $300.0 million of Senior Floating Rate
Toggle Notes due 2014 at 99% of par value. The Senior Toggle Notes are the Company's senior non collateralized obligations and are
effectively subordinated to all of the Company's existing and future collateralized debt, including the 2007 Senior Credit Facility, to the extent of
the assets securing such debt, rank equally with all the Company's existing and future non collateralized senior debt and rank senior to all the
Company's existing and future senior subordinated debt, including the 10.75% Senior Subordinated Notes. The Senior Toggle Notes are
guaranteed on a senior non collateralized basis by each of the Company's existing and future domestic subsidiaries (as defined in the Senior
Toggle Notes indenture). If the Company fails to make payments on the Senior Toggle Notes, the notes guarantors must make them instead.
The Company may elect in its sole discretion to pay interest on the Senior Toggle Notes in cash, entirely by increasing the principal
amount of the Senior Toggle Notes or issuing new Senior Toggle Notes ("PIK interest"), or on 50% of the outstanding principal amount of the
Senior Toggle Notes in cash and on 50% of the outstanding principal amount of the Senior Toggle Notes by increasing the principal amount of
the Senior Toggle Notes or by issuing new Senior Toggle Notes ("partial PIK interest"). Cash interest on the Senior Toggle 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 the Company elects to
pay PIK interest or partial PIK interest, it will increase the principal amount of the Senior Toggle Notes or issue new Senior Toggle 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 Toggle Notes on the relevant record date. The Senior Toggle Notes are treated as having been issued with original issue
discount for U.S. federal income tax purposes. Interest on the Senior Toggle Notes is payable semi-annually in arrears on March 15 and
September 15 of each year.
The Company may redeem some or all of the Senior Toggle Notes at any time at specified redemption prices. If the Company
experiences certain kinds of changes in control, it must offer to purchase the notes at 101% of par plus accrued interest to the purchase date.
The Senior Toggle Notes indenture contains certain limitations and restrictions on the Company's and the Company's 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 Senior Toggle Notes indenture restricts the Company's and certain of the Company's subsidiaries' ability to declare or
pay dividends to its stockholders.
In accordance with the terms of the Senior Toggle Notes purchase 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, rank equally with all of the98