GNC 2011 Annual Report Download - page 64

Table of Contents
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 Notes. In connection with the Merger, we completed a private offering of $300.0 million of 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 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.
Senior Subordinated Notes. In connection with the Merger, we completed a private offering of $110.0 million of 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
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