GNC 2010 Annual Report Download - page 63

Table of Contents
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 Senior 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 our or their 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.
We may redeem some or all of the Senior Subordinated Notes at any time, at specified redemption prices. If we experience certain kinds
of changes in control, we must offer to purchase the Senior Subordinated Notes at 101% of par plus accrued interest to the purchase date.
The Senior Subordinated 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
Subordinated Notes indenture restricts our and certain of our subsidiaries' ability to declare or pay dividends to our stockholders.
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