GNC 2010 Annual Report Download - page 62

Table of Contents
We received cash from financing activities of $1,598.7 million in the 2007 Successor Period. The primary uses of this cash were:
(1) proceeds from the issuance of the Senior Notes and Senior Subordinated Notes, (2) borrowings under the Senior Credit Facility, and
(3) issuance of new equity.
$735.0 Million Senior Credit Facility. The Senior Credit Facility consists of a $675.0 million term loan facility and a $60.0 million Revolving
Credit Facility. As of December 31, 2009 and 2008, $7.9 million and $6.2 million was pledged to secure letters of credit, respectively. The term
loan facility will mature in September 2013. The Revolving Credit Facility will mature in March 2012. The Senior Credit Facility permits us to
prepay a portion or all of the outstanding balance without incurring penalties (except LIBOR breakage costs). Subject to certain exceptions,
commencing in fiscal 2008, the Credit Agreement requires that 100% of the net cash proceeds from certain asset sales, casualty insurance,
condemnations and debt issuances, and a specified percentage (ranging from 50% to 0% based on a defined leverage ratio) of excess cash
flow (as defined in the agreement) for each fiscal year must be used to pay down outstanding borrowings. GNC Corporation, our direct parent
company, and our existing and future direct and indirect domestic subsidiaries have guaranteed our obligations under the Senior Credit Facility.
In addition, the Senior Credit Facility is collateralized by first priority pledges (subject to permitted liens) of our equity interests and the equity
interests of our domestic subsidiaries.
All borrowings under the Senior Credit Facility bear interest, at our option, at a rate per annum equal to (i) the higher of (x) the prime rate
(as publicly announced by JPMorgan Chase Bank, N.A. as its prime rate in effect) and (y) the federal funds effective rate, plus 0.50% per
annum plus, at December 31, 2008, in each case, applicable margins of 1.25% per annum for the term loan facility and 1.0% per annum for the
revolving credit facility or (ii) adjusted LIBOR plus 2.25% per annum for the term loan facility and 2.0% per annum for the revolving credit
facility. In addition to paying interest on outstanding principal under the Senior Credit Facility, we are required to pay a commitment fee to the
lenders under the Revolving Credit Facility in respect of unutilized revolving loan commitments at a rate of 0.50% per annum.
The Senior Credit Facility contains customary covenants, including incurrence covenants and certain other limitations on the ability of
GNC Corporation, us, and our subsidiaries to incur additional debt, guarantee other obligations, grant liens on assets, make investments or
acquisitions, dispose of assets, make optional payments or modifications of other debt instruments, pay dividends or other payments on capital
stock, engage in mergers or consolidations, enter into sale and leaseback transactions, enter into arrangements that restrict our and our
subsidiaries' ability to pay dividends or grant liens, engage in transactions with affiliates, and change the passive holding company status of
GNC Corporation.
The Senior Credit Facility contains events of default, including (subject to customary cure periods and materiality thresholds) defaults
based on (1) the failure to make payments under the senior credit facility when due, (2) breaches of covenants, (3) inaccuracies of
representations and warranties, (4) cross-defaults to 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 (as defined below). 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. 56