GNC 2011 Annual Report Download - page 102

Table of Contents
NOTE 12. LONG-TERM DEBT / INTEREST (Continued)
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 Notes or issue new 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. The Senior Notes are treated as having been issued with original
issue discount for U.S. federal income tax purposes. Interest on the Senior 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 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 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 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 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.
Senior Subordinated Notes. In connection with the Merger, the Company completed a private offering of $110.0 million of the Senior Subordinated
Notes due 2015. The 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 Senior Credit Facility and the Senior Notes, 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 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 Senior
Subordinated Notes indenture). If the Company fails 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 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 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 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 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 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.
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