GNC 2010 Annual Report Download - page 33

Table of Contents
access to the cash flow of our subsidiaries, we will likely not have sufficient funds available at the time of any change of control event to
repurchase all tendered notes pursuant to this requirement. Our failure to offer to repurchase notes or to repurchase notes tendered following a
change of control would result in a default under the indentures. Accordingly, prior to repurchasing the notes upon a change of control event,
we must refinance all of our outstanding indebtedness. We may be unable to refinance all of our outstanding indebtedness on terms acceptable
to us or at all. If we were unable to refinance all such indebtedness, we would remain effectively prohibited from offering to repurchase the
notes.
Restrictions in the agreements governing our existing indebtedness may prevent us from taking actions that we believe would be in
the best interest of our business.
The agreements governing our existing indebtedness contain customary restrictions on us or our subsidiaries, including covenants that
restrict us or our subsidiaries, as the case may be, from:
• incurring additional indebtedness and issuing preferred stock;
• granting liens on our assets;
• making investments;
• consolidating or merging with, or acquiring, another business;
• selling or otherwise disposing our assets;
• paying dividends and making other distributions to our parent entities;
• entering into transactions with our affiliates; and
• incurring capital expenditures in excess of limitations set within the agreement.
Our ability to comply with these covenants and other provisions of the 2007 Senior Credit Facility and the indentures governing the
Senior Toggle Notes and the 10.75% Senior Subordinated Notes may be affected by changes in our operating and financial performance,
changes in general business and economic conditions, adverse regulatory developments, or other events beyond our control. The breach of
any of these covenants could result in a default under our debt, which could cause those and other obligations to become immediately due and
payable. If any of our debt is accelerated, we may not be able to repay it.
The senior credit facility also requires that we meet specified financial ratios, including, but not limited to, maximum total leverage ratios.
These restrictions may prevent us from taking actions that we believe would be in the best interest of our business and may make it difficult for
us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None. 28