Exhibit 10.1
================================================================================
INVACARE CORPORATION
-----------------------------------
SECOND WAIVER AND AMENDMENT
Dated as of December 15, 2006
to
NOTE PURCHASE AGREEMENTS
Dated as of February 27, 1998
-----------------------------------
Re: $80,000,000 6.71% Series A Senior Notes due February 27, 2008
================================================================================
SECOND WAIVER AND AMENDMENT TO NOTE PURCHASE AGREEMENTS
THIS SECOND WAIVER AND AMENDMENT, dated as of December 15, 2006 (this
"Waiver and Amendment") to the separate and several Note Purchase Agreements
dated as of February 27, 1998, is between INVACARE CORPORATION, an Ohio
corporation (the "Company"), and each of the institutions which is a signatory
to this Waiver and is a Noteholder referred to below.
RECITALS:
A. The Company has previously entered into separate and several Note
Purchase Agreements, each dated as of February 27, 1998, between the Company and
each of the institutions identified on Schedule A thereto (together with their
successors and assigns, each a "Noteholder," and, collectively, the
"Noteholders"), as amended by that certain First Amendment, dated as of October
1, 2003, to Note Purchase Agreements dated as of February 27, 1998, that certain
Second Amendment, dated as of September 29, 2005, to Note Purchase Agreements
dated as of February 27, 1998, and that certain Waiver and Amendment, dated as
of November 14, 2006 (as amended, restated or otherwise modified, the "Existing
NPA Waiver"), to Note Purchase Agreements dated as of February 27, 1998 (as
amended, restated or otherwise modified from time to time, collectively, the
"Note Purchase Agreement"), pursuant to which the Company issued and sold its
(i) $80,000,000 6.71% Series A Senior Notes due February 27, 2008 (as amended,
restated, supplemented, replaced or otherwise modified hereby or from time to
time, collectively, the "Notes") and (ii) $20,000,000 6.60% Series B Senior
Notes due February 27, 2005 (which Series B Notes have since been paid in full
by the Company). The Noteholders are the holders of all of the outstanding
principal amount of the Notes.
B. The Company has also previously entered into separate and several Note
Purchase Agreements, each dated as of October 1, 2003, between the Company and
each of the institutions identified on Schedule A thereto, as amended by that
certain First Amendment, dated as of September 29, 2005, to Note Purchase
Agreement dated as of October 1, 2003, that certain Waiver and Amendment, dated
as of November 14, 2006, to Note Purchase Agreements dated as of October 1, 2003
(as amended, restated or otherwise modified from time to time, the "Existing
2003 NPA Waiver"), and that certain Second Waiver and Amendment, dated as of the
date hereof, to Note Purchase Agreements dated as of October 1, 2003 (as
amended, restated or otherwise modified from time to time, the "New 2003 NPA
Waiver") (such Note Purchase Agreements, as amended, restated or otherwise
modified from time to time, collectively, the "2003 Note Purchase Agreement"),
pursuant to which the Company issued and sold to the purchasers named on
Schedule A thereto its (i) $50,000,000 3.97% Series A Senior Notes due October
1, 2007, (ii) $30,000,000 4.74% Series B Senior Notes due October 1, 2009, and
(iii) $20,000,000 5.05% Series C Senior Notes due October 1, 2010 (all of such
notes, as amended, restated, supplemented, replaced or otherwise modified from
time to time, collectively, the "2003 Notes").
C. The Company has also previously entered into separate and several Note
Purchase Agreements, each dated as of April 27, 2006, between the Company and
each of the institutions identified on Schedule A thereto, as amended by that
certain Waiver and Amendment, dated as of November 14, 2006, to Note Purchase
Agreements dated as of April 27, 2006 (as amended, restated or otherwise
<page>
modified from time to time, the "Existing 2006 NPA Waiver") and that certain
Second Waiver and Amendment dated as of the date hereof to Note Purchase
Agreements dated as of April 27, 2006 (as amended, restated or otherwise
modified from time to time, the "New 2006 NPA Waiver") (such Note Purchase
Agreements, as amended, restated or otherwise modified from time to time,
collectively, the "2006 Note Purchase Agreement"), pursuant to which the Company
issued and sold to the purchasers named on Schedule A thereto its $150,000,000
6.15% Senior Notes due April 27, 2016 (all of such notes, as amended, restated,
supplemented, replaced or otherwise modified from time to time, collectively,
the "2006 Notes").
D. The Company has also previously entered into that certain Credit
Agreement dated as of January 14, 2005, among the Company, the Borrowing
Subsidiaries (as defined therein), JPMorgan Chase Bank, N.A., as agent (the
"Agent"), and the other bank lenders party thereto (the "Banks"), as amended by
that certain Letter Agreement, dated as of March 31, 2005, that certain First
Amendment to Credit Agreement, dated as of August 12, 2005, that certain Second
Amendment to Credit Agreement, dated as of March 31, 2006, that certain Waiver
and Amendment Agreement, dated as of November 14, 2006 (as amended, restated or
otherwise modified from time to time, the "Existing Bank Waiver"), and that
certain Second Waiver and Amendment Agreement (as amended, restated or otherwise
modified from time to time, the "New Bank Waiver"), dated as of the date hereof
(as amended, restated or otherwise modified from time to time, the "Bank Credit
Agreement").
E. The Company is also a party to (i) that certain Receivables Purchase
Agreement, dated as of September 30, 2005, among the Company, as Servicer,
Invacare Receivables Corporation, as Seller, Park Avenue Receivables Company,
LLC and JPMorgan Chase Bank, N.A., as Agent, and the purchasers named on
Schedule A thereto (the "Securitization Lenders") as amended by that certain
Amendment No. 1 to Receivables Purchase Agreement, dated as of September 28,
2006 and that certain Omnibus Waiver, Amendment and Reaffirmation of Performance
Undertaking, dated as of November 14, 2006 (as amended, restated or otherwise
modified from time to time, the "Existing Securitization Waiver"), and that
certain Second Omnibus Waiver, Amendment and Reaffirmation of Performance
Undertaking, dated as of the date hereof (as amended, restated or otherwise
modified from time to time, the "New Securitization Waiver", and together with
the New 2003 NPA Waiver, the New 2006 NPA Waiver and the New Bank Waiver, the
"Other December 2006 Waivers") (such Receivables Purchase Agreement, as amended,
restated or otherwise modified from time to time, the "Securitization Purchase
Agreement"), (ii) that certain Receivables Sale Agreement, dated as of September
30, 2005, among the Company, Invacare Receivables Corporation, Healthtech
Products, Inc. and Invacare Supply Group, Inc. as amended by the Existing
Securitization Waiver and the New Securitization Waiver (as amended, restated or
otherwise modified from time to time, the "Securitization Sale Agreement") and
(iii) that certain Performance Undertaking, dated as of September 30, 2005, in
favor of Invacare Receivables Corporation (as amended, restated or otherwise
modified from time to time, the "Performance Undertaking", and together with the
Securitization Sale Agreement and the Securitization Purchase Agreement, the
"Securitization Documents", and the Securitization Documents, together with the
2003 Note Purchase Agreement, the 2006 Note Purchase Agreement and the Bank
Credit Agreement, collectively, the "Other Primary Loan Agreements", and the
2
<page>
Other Primary Loan Agreements, together with the Note Purchase Agreement,
collectively, the "Primary Loan Agreements" and the Primary Loan Agreements,
together with the other agreements, documents and instruments entered into in
connection therewith or pursuant thereto, collectively, the "Primary Loan
Documents").
F. Pursuant to (i) the Existing NPA Waiver, the Noteholders have agreed to
waive, through December 15, 2006 (subject to the terms and conditions thereof)
certain Defaults and Events of Default that otherwise would exist and be
continuing under the Note Purchase Agreements and which are set forth on
Schedule A attached hereto (collectively, the "Existing Defaults"), (ii) the
Existing 2003 NPA Waiver, the holders of the 2003 Notes (the "2003 Noteholders")
have agreed to waive, through December 15, 2006, certain defaults and events of
default under the 2003 Note Purchase Agreement, (iii) the Existing 2006 NPA
Waiver, the holders of the 2006 Notes (the "2006 Noteholders") have agreed to
waive, through December 15, 2006, certain defaults and events of default under
the 2006 Note Purchase Agreement, (iv) the Existing Bank Waiver, the Banks have
agreed to waive, through December 15, 2006, certain defaults and events of
default under the Bank Credit Agreement and (v) the Existing Securitization
Waiver, the Securitization Lenders have agreed to waive, through December 15,
2006, certain "Termination Events" and "Potential Termination Events" under (and
as defined in) the Securitization Sale Agreement and certain "Amortization
Events" and "Potential Amortization Events" under (and as defined in) the
Securitization Purchase Agreement (all of such events, the "Existing
Securitization Defaults" and together with any other such events from time to
time existing under such documents, the "Securitization Defaults").
G. The Company has requested that the Noteholders agree to extend the
waivers of the Existing Defaults under the Note Purchase Agreement, and the
Noteholders are agreeable to such request, solely on the terms and conditions
set forth herein, including, without limitation, the amendments described in
Section 2 hereof.
H. The Company has likewise requested that (i) the 2003 Noteholders agree
to extend the waivers of the defaults and events of default under the 2003 Note
Purchase Agreement pursuant to the terms of the New 2003 NPA Waiver, (ii) the
2006 Noteholders agree to extend the waivers of the defaults and events of
default under the 2006 Note Purchase Agreement pursuant to the terms of the New
2006 NPA Waiver, (iii) the Banks agree to extend the waivers of the defaults and
events of default under the Bank Credit Agreement (and waive any new defaults or
events of default thereunder) pursuant to the terms of the New Bank Waiver and
(iv) the Securitization Lenders agree to extend the waivers of the Existing
Securitization Defaults under the Securitization Documents pursuant to the terms
of the New Securitization Waiver.
I. All requirements of law have been fully complied with and all other acts
and things necessary to make this Waiver and Amendment a valid, legal, and
binding instrument according to its terms for the purposes herein expressed have
been done or performed.
NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this Waiver and Amendment set forth in Section
3
<page>
4 hereof, and in consideration of good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the Company and the undersigned
Noteholders do hereby agree as follows:
SECTION 1. TEMPORARY WAIVER.
(a) The Company acknowledges and agrees that, as a result of the Existing
Defaults under the Note Purchase Agreement, the Noteholders may, on or after
December 15, 2006, if they so elect, proceed to enforce their respective rights
and remedies under the Note Purchase Agreement to collect the Company's
obligations thereunder.
(b) Subject to the terms and conditions of this Waiver and Amendment, the
Noteholders hereby agree to temporarily waive (collectively, the "Waivers") the
Existing Defaults during the period (the "Waiver Period") commencing on the
Effective Date and expiring on the earliest to occur of (i) January 31, 2007,
unless such date has been automatically extended to February 15, 2007 as
provided in Section 1(c) below (the "Outside Waiver Termination Date"), (ii) any
Default or Event of Default under the Note Purchase Agreement (including,
without limitation, any Default or Event of Default arising out of a failure to
comply with any term, covenant or condition of the Existing NPA Waiver,
including Section 5 thereof as amended hereby), (iii) the breach or
nonperformance by the Company or any Subsidiary of any covenant, agreement or
condition set forth in this Waiver and Amendment or the Other December 2006
Waivers, (iv) any breach of, default, event of default or Securitization Default
under any Other Primary Loan Agreement (or any amendment or waiver with respect
thereto) or any termination or other expiration of the waiver period set forth
in the Other December 2006 Waivers, and (v) the date on which any representation
or warranty in Section 3 hereof fails to be true and correct.
(c) The Outside Waiver Termination Date shall be automatically extended
from January 31, 2007 to February 15, 2007, without notice or any other action,
if (i) on or prior to December 22, 2006, the Company has provided each of the
Noteholders with a fully executed commitment letter or letters (as amended or
otherwise modified from time to time, collectively, the "Commitment Letters")
providing fully underwritten commitments from one or more reputable financial
institutions and/or institutional investors to provide financing to the Company
in an aggregate amount sufficient to pay in full all outstanding obligations of
the Company and its Subsidiaries under the Primary Loan Documents on or prior to
February 15, 2007, in form and substance satisfactory to the Required Holders
and (ii) the waiver period under each of the Other December 2006 Waivers has
likewise been (or shall be, concurrently with the extension of the Waiver
Period) extended to February 15, 2007 on terms and conditions satisfactory to
the Required Holders; provided, however if on or prior to January 31, 2007, (x)
any of the Commitment Letters is terminated (unless the commitments under the
remaining Commitment Letters, after giving effect to such termination and any
new Commitment Letter or Commitment Letters entered into by the Company in
replacement of such terminated Commitment Letter and delivered to each of the
Noteholders prior to such termination, are sufficient to pay in full all
outstanding obligations of the Company and its Subsidiaries under the Primary
Loan Documents on or prior to February 15, 2007) or (y) the waiver period under
any of the Other December 2006 Waivers shall have reverted to January 31, 2007
then, in any such case, the Outside Waiver Termination Date shall revert to
January 31, 2007; provided, further that if any of the events described in the
4
<page>
foregoing clauses (x) or (y) occurs after January 31, 2007, the Waiver Period
shall expire as of the occurrence of such event without notice or any further
action.
(d) The waiver contemplated in this Section 1 shall be effective only for
the Existing Defaults and only for the Waiver Period, and such waiver shall not
entitle the Company to any future waiver in similar or other circumstances and
shall automatically cease to be effective upon the expiration of the Waiver
Period, without notice or other action of any kind by the Noteholders. Such
waiver shall not prejudice or constitute a waiver of any right or remedies which
any Noteholder may have or be entitled to with respect to any other breach of
any provision of any of the Note Purchase Agreement or the Notes. The
Noteholders reserve their respective rights, in their discretion, to exercise
any or all of their rights and remedies under the Note Purchase Agreement and
Notes as a result of the Existing Defaults upon the expiration of the Waiver
Period. Without limiting the foregoing, upon the expiration of the Waiver
Period, an Event of Default will continue to exist under the Note Purchase
Agreement, and the Noteholders may, without the need for the expiration of grace
periods, if any, in connection with the Existing Defaults (but otherwise in
accordance with the terms of the Note Purchase Agreement), accelerate the
payment in full of the obligations owed to the Noteholders under the Note
Purchase Agreement and Notes, and enforce and exercise any or all of the
Noteholders' rights under or in respect of the Note Purchase Agreement and the
Notes and under applicable law.
(e) For avoidance of doubt, it is hereby acknowledged and agreed to by the
Company that the addition of the agreements and covenants in Section 5 hereof
and their continuance beyond the Waiver Period are not to be construed as an
acquiescence or waiver of the Existing Defaults beyond the Waiver Period but are
added for additional protection of the Noteholders, and the Noteholders shall
retain all their rights and remedies under or in respect of the Note Purchase
Agreement and Notes and under applicable law with respect to the Existing
Defaults upon the expiration or termination of the Waiver Period.
SECTION 2. AMENDMENTS.
Section 2.1. Amendment and Restatement of the Notes.
(a) Amendment and Restatement. Each Note is hereby, without any
further action required on the part of any Person, deemed to be
automatically amended to conform to and have the terms provided in Exhibit
2.1(a) to this Agreement (except that the principal amount and the payee of
each such Note shall remain unchanged). Any Note issued on or after the
Effective Date shall be in the form of Exhibit 2.1(a) to this Waiver and
Amendment.
(b) Replacement Notes. Upon the request of any Noteholder, the Company
will issue a replacement Note or Notes (consistent with the terms hereof)
in favor of such Noteholder in the appropriate form in exchange for the
Note or Notes of such Noteholder delivered to the Company at the time of
such exchange.
Section 2.2. Amendments of Existing NPA Waiver.
5
<page>
(a) Section 5 of the Existing NPA Waiver is hereby amended by deleting
the phrase "and continuing through April 15, 2007" in the third and fourth
lines thereof.
(b) Section 5(b) of the Existing NPA Waiver is hereby amended and
restated in its entirety to read as follows:
"(b) the Company will not, and will not permit any of its
Subsidiaries to, at any time, directly or indirectly (i) create,
incur, assume, guarantee, or otherwise become liable in respect of (A)
any Debt of the Company other than Debt incurred under the Credit
Agreement, (B) any Debt of Subsidiaries other than Debt incurred under
the Credit Agreement by Subsidiaries that are party to the Credit
Agreement as of December 15, 2006 and (C) any Securitization except
that one or more Special Purpose Subsidiaries that are party to the
Securitization Documents as of December 15, 2006 may become liable in
respect of a Permitted Receivables Securitization Program not
exceeding $75,401,750 (not including obligations in respect of fees,
expenses, indemnities and other reimbursement obligations permitted
under such Permitted Receivables Securitization Program) in the
aggregate at any time and (ii) create, incur, assume or suffer to
exist, any Lien securing any Debt of the Company or any Subsidiary or
any Lien created, incurred, assumed or otherwise existing with respect
to any Securitization, except Liens incurred on receivables, related
assets and collections of the Company or any Subsidiary in connection
with such assets being transferred to a Special Purpose Subsidiary
pursuant to a Permitted Receivables Securitization Program as
permitted in accordance with Section 5(f) of this Waiver; as used in
this Section 5(b), "Securitization" means one or more transactions
wherein the Company and/or a Subsidiary transfers receivables, related
assets and collections of the Company and/or such Subsidiary to a
special purpose Subsidiary which issues or incurs indebtedness secured
by such receivables and all of its other assets;"
(c) Section 5(i) of the Existing NPA Waiver is hereby amended and
restated in its entirety to read as follows:
"(i) the Company will not, and will not permit any Subsidiary to,
(x) enter into any agreement restricting the ability of the Company
and its Subsidiaries to amend or modify the Note Purchase Agreement or
Notes or any document or instrument executed in connection therewith,
except as set forth in the waiver/amendment to the Bank Credit
Agreement referred to in Section 3(c) hereof or (y) enter into any
agreement or arrangement requiring any defeasance of the Bank Credit
Agreement; and"
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
To induce the Noteholders to execute and deliver this Waiver and Amendment
(which representations shall survive the execution and delivery of this Waiver
and Amendment), the Company represents and warrants to the Noteholders that:
6
<page>
(a) this Waiver and Amendment has been duly authorized, executed and
delivered by it and this Waiver and Amendment constitutes the legal, valid and
binding obligation, contract and agreement of the Company enforceable against it
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally;
(b) the Note Purchase Agreement, as modified by this Waiver and Amendment,
constitutes the legal, valid, and binding obligations, contracts, and agreements
of the Company enforceable against it in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditors' rights generally;
(c) the execution, delivery and performance by the Company of this Waiver
and Amendment (i) has been duly authorized by all requisite corporate action
and, if required, shareholder action, (ii) does not require the consent or
approval of any governmental or regulatory body or agency, and (iii) does not
and will not (A) violate (1) any provision of law, statute, rule or regulation
or its certificate of incorporation or bylaws, (2) any order of any court or any
rule, regulation or order of any other agency or government binding upon it, or
(3) any provision of any indenture, agreement or other instrument to which it is
a party or by which its properties or assets are or may be bound, (B) result in
a breach or constitute (alone or with due notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Section 3(c) or (C) result in the creation of any Lien;
(d) as of the date hereof and after giving effect to this Waiver and
Amendment and the Other December 2006 Waivers,
(i) no Default or Event of Default has occurred which is continuing
under the Note Purchase Agreement,
(ii) no default, event of default, Securitization Default or similar
event has occurred and is continuing under any Other Primary Loan
Agreement; and
(e) all the representations and warranties made by the Company in the Note
Purchase Agreement are true and correct on the date hereof as if made on and as
of the date hereof and are so repeated herein as if expressly set forth herein
or therein, except (i) those representations and warranties included in the
Existing Defaults and (ii) to the extent that any of such representations and
warranties expressly relate by their terms to a prior date;
(f) neither the Company nor any of its Affiliates has paid or agreed to pay
any fees or other consideration, or given any additional security or collateral,
or shortened the maturity or average life of any indebtedness or permanently
reduced any borrowing capacity, in each case, in favor of or for the benefit for
any creditor of the Company, in connection with the obtaining of any consents or
approvals in connection with the transactions contemplated hereby (including,
without limitation, under the Other Primary Loan Agreements), other than (i)
with respect to the Notes, the payment of the waiver fees referred to in Section
4(b)(i) below and the additional fee payable in accordance with Section 5.2
below, (ii) with respect to the 2003 Notes, a waiver fee equal to 0.10% of the
7
<page>
aggregate outstanding principal amount of the 2003 Notes paid pro rata to the
2003 Noteholders, (iii) with respect to the 2006 Notes, a waiver fee equal to
0.10% of the aggregate outstanding principal amount of the 2006 Notes paid pro
rata to the 2006 Noteholders, (iv) with respect to the Bank Credit Agreement, a
waiver fee equal to 0.10% of the aggregate commitments of the Banks, (v) the
waiver fee payable to the Securitization Lenders under Section 4 of the New
Securitization Waiver and (vi) with respect to the 2003 Notes, the 2006 Notes
and the Bank Credit Agreement, a fee payable to the Banks, the 2003 Noteholders
and the 2006 Noteholders, respectively, on substantially identical terms to
those set forth in Section 5.2 below with respect to the fee payable to the
holders of Notes under such Section;
(g) the amount of Consolidated Debt of the Company and its Subsidiaries (as
defined in and as calculated under the Note Purchase Agreement) as of December
15, 2006, is $500,762,618, as described in further detail on Schedule B hereto;
(h) the amount of all Revolving Credit Advances (as defined in the Bank
Credit Agreement) outstanding under the Bank Credit Agreement as of December 15,
2006 is $157,893,617, consisting of $117,254,840 in Revolving Credit Advances
made to Subsidiaries and $40,638,778 in Revolving Credit Advances made to the
Company; and as of December 15, 2006, there are no Bid-Option Loans (as defined
in the Bank Credit Agreement) outstanding;
(i) on December 15, 2006, the Company and its Subsidiaries have the right
to obtain Advances (as defined in the Credit Agreement) of $20,000,000 under the
Credit Agreement;
(j) except as set forth and described in the Recitals hereto, the Company
has not entered into any amendment or waiver or entered into any agreement
having the effect of an amendment or waiver with respect to any provision of any
of the Primary Loan Documents; and
(k) there are no actions, suits or proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any governmental authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
SECTION 4. CONDITIONS TO EFFECTIVENESS; POST-CLOSING COVENANTS.
(a) The Waivers shall not become effective until, and shall become
effective when, each and every one of the following conditions shall have been
satisfied (the "Effective Date"):
(i) executed counterparts of this Waiver and Amendment, duly executed
by the Company and the Required Holders, shall have been delivered to the
Noteholders;
(ii) the representations and warranties of the Company set forth in
Section 3 hereof are true and correct on and with respect to the date
hereof and (except to the extent that any of such representations and
warranties expressly relate by their terms to a prior date) the Effective
Date;
8
<page>
(iii) the Company shall have furnished to the Noteholders and their
special counsel an executed copy of the New Bank Waiver which shall provide
for any amendment, modification, waiver, or consent necessary to waive the
defaults or events of default waived under the Existing Bank Waiver,
together with any other defaults or events of default that have occurred
and are continuing, for the Waiver Period, and any such amendment,
modification, waiver, or consent shall be reasonably satisfactory in form
and substance to the Noteholders and their special counsel (including,
without limitation, with respect to any waiver thereunder not expiring
before the end of the Waiver Period hereunder), and on the Effective Date,
after giving effect to the New Bank Waiver, (i) the Company and its
Subsidiaries have the right to obtain Advances of not less than $20,000,000
under the Credit Agreement and (ii) the "Termination Date" under the Credit
Agreement shall not be on a date prior to January 14, 2010;
(iv) the Company shall have furnished to the Noteholders and their
special counsel an executed copy of the New 2003 NPA Waiver which shall
provide for any amendment, modification, waiver, or consent necessary to
waive the defaults or events of default waived under the Existing 2003 NPA
Waiver for the Waiver Period, and any such amendment, modification, waiver,
or consent shall be reasonably satisfactory in form and substance to the
Noteholders and their special counsel (including, without limitation, with
respect to any waiver thereunder not expiring before the end of the Waiver
Period hereunder);
(v) the Company shall have furnished to the Noteholders and their
special counsel an executed copy of the New 2006 NPA Waiver which shall
provide for any amendment, modification, waiver, or consent necessary to
waive the defaults or events of default waived under the Existing 2006 NPA
Waiver for the Waiver Period, and any such amendment, modification, waiver,
or consent shall be reasonably satisfactory in form and substance to the
Noteholders and their special counsel (including, without limitation, with
respect to any waiver thereunder not expiring before the end of the Waiver
Period hereunder);
(vi) the Company shall have furnished to the Noteholders and their
special counsel an executed copy of the New Securitization Waiver which
shall provide for an amendment, modification, waiver, or consent necessary
to waive the Existing Securitization Defaults for the Waiver Period, and
any such amendment, modification, waiver, or consent shall be reasonably
satisfactory in form and substance to the Noteholders and their special
counsel (including, without limitation, with respect to any waiver
thereunder not expiring before the end of the Waiver Period hereunder);
(vii) the Company shall have acknowledged and agreed to an engagement
agreement between Bingham McCutchen LLP (on behalf of the Noteholders) and
FTI Consulting, Inc. (as amended, restated or otherwise modified from time
to time, the "Financial Advisor Engagement Agreement") satisfactory in form
and substance to the Noteholders and their special counsel;
9
<page>
(viii) the Company shall have acknowledged and agreed to an engagement
agreement among the Noteholders and Bingham McCutchen LLP (as amended,
restated or otherwise modified from time to time, the "Bingham Engagement
Agreement", and together with the Financial Advisor Engagement Agreement,
the "Engagement Agreements") satisfactory in form and substance to the
Noteholders and their special counsel;
(ix) the Noteholders shall have received a copy of the resolutions of
the Board of Directors of the Company authorizing the execution, delivery,
and performance by the Company of this Waiver and Amendment, certified by
its Secretary or an Assistant Secretary, together with documentation
evidencing all other proceedings taken in connection with the transactions
contemplated by this Waiver and Amendment, and all documents necessary to
the consummation thereof, in each case, which shall be reasonably
satisfactory in form and substance to the Noteholders and their special
counsel;
(x) the Noteholders shall have received such lien searches with
respect to the Company as are reasonably required by the Noteholders or
their special counsel; and
(xi) a statement of the Company's and its Subsidiaries' cash balances
as of the close of business on Friday, December 15, 2006, certified as true
and correct by a Senior Financial Officer.
(b) The Company shall, on or prior to December 18, 2006:
(i) pay to each Noteholder, by wire transfer of immediately availably
funds, a waiver fee, whether or not such holder has signed this Waiver and
Amendment, in an amount equal to 0.10% of the aggregate outstanding
principal amount of the Notes held by such Noteholder; such fee shall be
deemed earned when paid and shall not be subject to recovery or repayment
in the event this Waiver and Amendment is terminated or rescinded for any
reason;
(ii) pay the reasonable fees and disbursements of the Noteholders'
special counsel, Bingham McCutchen LLP, and the Noteholder's financial
advisor, FTI Consulting, Inc., incurred in connection with the negotiation,
preparation, execution and delivery of this Waiver and Amendment and the
transactions contemplated hereby, and any fees and expenses of Chapman and
Cutler LLP in connection with the negotiation, preparation, execution and
delivery of the Existing NPA Waivers that have not yet been paid; the
payment of the fees and disbursements pursuant to this Section 4(b)(ii)
does not preclude the Noteholders' rights to indemnification and
reimbursement for other costs and expenses as provided in Section 6 of this
Waiver and Amendment or Section 16 of the Note Purchase Agreement; and
(iii) pay the fee reserves payable to the Bingham McCutchen LLP and
FTI Consulting, Inc. under the terms of their respective Engagement
Letters.
10
<page>
The failure of the Company to comply with any of the covenants set forth in
this Section 4(b) shall constitute, and shall be deemed to constitute, an
immediate Event of Default under Section 12(c) of the Note Purchase Agreement.
SECTION 5. COVENANTS.
In addition to and without limiting the Company's obligations under the
Note Purchase Agreement, the Company covenants and agrees that at all times from
and after the date hereof:
Section 5.1. Compliance with Financial Advisor Engagement Agreement. The
Company shall comply with each of the terms and conditions of the Financial
Advisor Engagement Agreement.
Section 5.2. Fee Upon Failure to Deliver (or Termination of) Commitment
Letters. If either (i) the condition set forth in Section 1(c)(i) of this Waiver
and Amendment is not met or (ii) the event set forth in clause (x) of the first
proviso to Section 1(c)(i) of this Waiver and Amendment occurs, the Company
shall pay, and there shall become due and payable, on the next Business Day
following the first to occur of the events set forth in the foregoing clause (i)
or clause (ii), a fee to each Noteholder in an amount equal to 0.15% of the
aggregate outstanding principal amount of the Notes then held by such Noteholder
(which fee shall be paid by wire transfer of immediately available funds); such
fee shall be deemed earned when paid and shall not be subject to recovery or
repayment in the event this Waiver and Amendment is thereafter terminated or
rescinded for any reason.
Section 5.3. Payment of Additional Fees or Compensation to Creditors. The
Company will not, and will not permit any of its Subsidiaries or Affiliates to,
pay or agree to pay any fees or other consideration, or give any additional
security or collateral, or shorten the maturity or average life of any
indebtedness or permanently reduce any borrowing capacity, in each case, in
favor of or for the benefit for any creditor of the Company (or any agent of any
creditor or group of creditors) without the prior written consent of the
Required Holders (other than a fee payable to the Banks, the 2003 Noteholders
and the 2006 Noteholders on substantially identical terms to those set forth in
Section 5.2 above with respect to the fee payable to the Noteholders under such
Section).
Section 5.4. Amendments to Primary Loan Documents. The Company will not
permit any Primary Loan Document or any amendment or waiver of any Primary Loan
Document (in each case, other than the Note Purchase Agreement and the Notes),
to be amended, waived or otherwise modified after the date hereof without the
prior written consent of the Required Holders.
Section 5.5. Closing of New Credit Facilities; Prepayment. The Company
covenants and agrees that it shall close the credit facilities which are the
subject of the Commitment Letters on or before February 15, 2007 and it shall
make a drawing under such credit facilities on or before February 15, 2007 for
the purpose of prepaying all amounts owing under the Note Purchase Agreement.
Any such prepayment shall be deemed to be an optional prepayment of the
Company's obligations under the Note Purchase Agreement and the Notes in
11
<page>
accordance with Section 8.2 of the Note Purchase Agreement, and the Noteholders
waive the requirement of prior written notice of prepayment thereunder in
connection with such prepayment.
The failure of the Company to comply with any of the covenants set forth in
this Section 5 shall constitute, and shall be deemed to constitute, an immediate
Event of Default under Section 12(c) of the Note Purchase Agreement.
SECTION 6. FEES AND EXPENSES.
The Company shall pay the fees and disbursements of the Noteholders'
special counsel, Bingham McCutchen LLP and the Noteholders' financial advisor,
FTI Consulting, Inc., incurred in connection with the negotiation, preparation,
execution and delivery of this Waiver and Amendment and the transactions
contemplated hereby in accordance with the terms of the Engagement Letters. This
provision shall be supplementary to, and shall not in any way be deemed to
limit, the Noteholders' rights to indemnification and reimbursement for other
costs and expenses as provided in Section 16 of the Note Purchase Agreement.
SECTION 7. RELEASE.
In order to induce the Noteholders to enter into this Waiver and Amendment,
the Company acknowledges and agrees that: (a) neither the Company nor any of its
Subsidiaries has any claim or cause of action against any of the Noteholders or
any of their respective directors, trustees, officers, employees or agents
(collectively, the "Released Parties") relating to or arising out of the Note
Purchase Agreement or Notes or any of the transactions related thereto; (b)
neither the Company nor any of its Subsidiaries has any offset right, right of
recoupment, counterclaim or defense of any kind against any of their respective
obligations, indebtedness or liabilities to any of the Released Parties; and (c)
each of the Released Parties has heretofore properly performed and satisfied in
a timely manner all of its obligations to the Company and its Subsidiaries under
the Note Purchase Agreement. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, the Company, on
behalf of itself and its employees, agents, executors, heirs, successors and
assigns (the "Releasing Parties"), hereby releases the Noteholders, its
respective predecessors, officers, directors, trustees, employees, agents,
attorneys, affiliates, subsidiaries, successors and assigns, from any liability,
claim, right or cause of action which now exists or hereafter arises as a result
of acts, omissions or events occurring on or prior to the date hereof, whether
known or unknown, including but not limited to claims arising from or in any way
related to the Note Purchase Agreement or Notes or any of the transactions
relating thereto. No Released Party shall be liable with respect to, and the
Company hereby waives, releases and agrees not to sue for, any special, indirect
or consequential damages relating to the Note Purchase Agreement and the Notes
or arising out of its activities in connection herewith or therewith (whether
before, on or after the date hereof).
12
<page>
SECTION 8. AMENDMENTS AND WAIVERS.
This Waiver and Amendment may be amended, and the observance of any term
hereof may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders.
SECTION 9. DEFINITIONS.
Capitalized terms used herein shall have the respective meanings ascribed
thereto in the Note Purchase Agreement, unless defined herein (in which case
such terms shall have the meanings set forth herein) or the context shall
otherwise require.
SECTION 10. MISCELLANEOUS.
Section 10.1. More Favorable Provisions. The Company acknowledges and
agrees that any covenants, defaults or similar provisions set forth in any of
the Other December 2006 Waivers not substantially provided for in this Waiver
and Amendment, or any such covenants, defaults or similar provisions that are
more favorable to the creditors thereunder than the covenants, defaults or
similar provisions hereunder, are hereby incorporated by reference into this
Waiver and Amendment to the same extent as if set forth fully herein, and no
subsequent amendment, waiver, termination or modification thereof shall affect
any such covenants, terms, conditions or defaults as incorporated herein.
Section 10.2. Construction; References to Note Purchase Agreement. This
Waiver and Amendment shall be construed in connection with and as part of the
Note Purchase Agreement. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Waiver and Amendment may refer to the Note Purchase Agreement without making
specific reference to this Waiver and Amendment but nevertheless all such
references shall include this Waiver and Amendment unless the context otherwise
requires. This Waiver and Amendment shall not be construed more strictly against
the Noteholders merely by virtue of the fact that the same has been prepared by
the Noteholders or their counsel, it being recognized that the Company and the
Noteholders have contributed substantially and materially to the preparation of
this Waiver and Amendment, and each of the parties hereto waives any claim
contesting the existence and the adequacy of the consideration given by any of
the other parties hereto in entering into this Waiver and Amendment.
Section 10.3. Ramifications of Waiver; Reaffirmation. The Company
acknowledges that the waivers and amendments granted hereunder by the
Noteholders shall not be construed as an agreement to amend or waive any other
provision of any of the Note Purchase Agreement, and the Noteholders shall have
no obligation to enter into any such amendment or waiver. Other than the
Existing Defaults temporarily waived during the Waiver Period, none of the
Noteholders have waived, nor are they by this Waiver and Amendment waiving, and
have made no commitment to waive, any other Default or Event of Default that may
occur or be continuing on the date hereof or may occur or be continuing after
the date hereof. The Noteholders reserve their respective rights, in their
discretion, to exercise any or all of their rights and remedies under the Note
Purchase Agreement as a result of any other such Default or Event of Default. No
13
<page>
delay or omission of the Noteholders to exercise any right under the Note
Purchase Agreement shall impair any such right or be construed to be a waiver of
any other such Default or Event of Default or an acquiescence therein. Except as
modified, waived or expressly amended by this Waiver and Amendment, all terms,
conditions, and covenants contained in the Note Purchase Agreement are hereby
ratified and confirmed by the Company and shall be and remain in full force and
effect.
Section 10.4. Affirmation of Recitals; etc. The Company hereby acknowledges
and affirms the accuracy of all recitals to this Waiver and Amendment. The
Company represents that neither it, nor any of its Subsidiaries, has any
intention to file or acquiesce in the filing of any bankruptcy or insolvency
proceeding hereafter and that the Company believes that the period of time
allowed by this Waiver and Amendment is sufficient for the Company and its
Subsidiaries to accomplish the transactions that they have undertaken as
represented by the Company to the Noteholders.
Section 10.5. Further Assurances. The Company will, and will cause each of
its Subsidiaries to, execute and deliver any and all documents reasonably deemed
necessary or appropriate by the Noteholders to carry out the intent of and/or to
implement this Waiver and Amendment.
Section 10.6. Section Headings. The descriptive headings of the various
Sections or parts of this Waiver and Amendment are for convenience only and
shall not affect the meaning or construction of any of the provisions hereof.
Section 10.7. Governing Law. This Waiver and Amendment shall be governed by
and construed and enforced in accordance with the law of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
Section 10.8. Survival. The provisions of Sections 6 and 7 of this Waiver
and Amendment shall survive and continue in effect following any termination,
rescission or expiration of this Waiver and Amendment.
Section 10.9. Time is of the Essence. TIME IS OF THE ESSENCE WITH RESPECT
TO ALL COVENANTS, CONDITIONS, AGREEMENTS, OR OTHER PROVISIONS HEREIN.
Section 10.10. Counterparts. This Waiver and Amendment may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Waiver and Amendment by
facsimile shall be effective as delivery of a manually executed counterpart of
this Waiver and Amendment.
[Remainder of page left intentionally blank]
14
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Waiver and Amendment and
return it to the Company, whereupon the foregoing shall become a binding
agreement between you and the Company.
INVACARE CORPORATION
By: /s/ Gregory C. Thompson
Name: Gregory C. Thompson
Title: Chief Financial Officer
13
The foregoing is hereby agreed to as of the date thereof:
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Michael I. Bullock
Its V.P. Private Placements
J. ROMEO & CO. (as nominee for MONY
Life Insurance Company)
By
J. ROMEO & CO. (as nominee for MONY
Life Insurance Company)
By /s/ Peter Coccia
Its Partner
HARE & CO. (as nominee for MONY Life Insurance
Company)
By /s/ Monica M. Heyl
Its Authorized IM Representative
The foregoing is hereby agreed to as of the date thereof:
THE BALTIMORE LIFE INSURANCE COMPANY
By AllianceBernstein LP
its Investment Advisor
By /s/ Matthew Minnetian
Name Matthew Minnetian
Title: Senior Vice President
THE OHIO CASUALTY INSURANCE COMPANY
By /s/ Paul Gerard
Its Senior Vice President, Investments
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Joseph P. Young
Joseph P. Young
Its Authorized Signatory
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By: /s/ Roi G. Chandy
Name: Roi G. Chandy
Title: Director
<page>
The foregoing is hereby agreed to as of the date thereof:
TIAA-CREF LIFE INSURANCE COMPANY
By: Teachers Insurance and Annuity Association of
America, as Investment Manager
By: /s/ Roi G. Chandy
Name: Roi G. Chandy
Title: Director
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By /s/ Debra Svoboda EPP
EPP Counsel
By /s/ James C. Fifield
Counsel
<page>
Schedule A
Existing Defaults
Events of Default under Section 12.1(c) of the Note Purchase Agreement by virtue
of (a) the continuing failure of the Company to comply with Section 11.3 (the
Consolidated Debt covenant which is tested at all times) and (b) the failure of
the Company to give the written notice of its failure to comply with Section
11.3, as required by Section 7.1(d).
Events of Default under Section 12(f) of the Note Purchase Agreement (by
operation of Section 5(j) of the Existing NPA Waiver) due to the existence of
the defaults, events of default and Securitization Defaults described in the
Other December 2006 Waivers.
Schedule B
Description of Consolidated Debt
[to be provided by the Company]
EXHIBIT 2.1(a)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
[FORM OF SERIES A SENIOR NOTE]
INVACARE CORPORATION
6.71% SERIES A SENIOR NOTE DUE FEBRUARY 27, 2008
No. RA -__
PPN: 461203 A*2
$__________ [Date]
FOR VALUE RECEIVED, the undersigned, INVACARE CORPORATION, an Ohio
corporation (herein called the "Company"), hereby promises to pay to
_______________ or registered assigns, the principal sum of
_________________________________ DOLLARS ($__________) on February 27, 2008,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at a rate equal to 6.71% per annum from the
date hereof, payable semiannually on February 27 and August 27 in each year,
commencing with the February 27 or August 27 next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law, on any overdue payment of interest, and, during the
continuance of an Event of Default, on such unpaid balance and on any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
(defined below)), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the Default Rate (as defined in the Note Purchase Agreements).
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Elyria, Ohio or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreements referred to below.
This Note is one of the 6.71% Series A Senior Notes due February 27, 2008
(herein called the "Notes") issued pursuant to separate Note Purchase
Agreements, each dated as of February 27, 1998, as amended by that certain First
Amendment, dated as of October 1, 2003, to Note Purchase Agreements dated as of
February 27, 1998, that certain Second Amendment, dated as of September 29,
<page>
2005, to Note Purchase Agreements dated as of February 27, 1998, that certain
Waiver and Amendment, dated as of November 14, 2006, to Note Purchase Agreements
dated as of February 27, 1998, and that certain Second Waiver and Amendment,
dated as of December 15, 2006, to Note Purchase Agreements dated as of February
27, 1998 (as amended, restated or otherwise modified prior to the date hereof
and as amended or otherwise modified hereby or from time to time in accordance
with the terms hereof and thereof, collectively, the "Note Purchase
Agreements"), among the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 21 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer, duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to certain prepayments in the events, on the terms and
in the manner and amounts as provided in the Note Purchase Agreements. This Note
is also subject to optional prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE
THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
INVACARE CORPORATION
By:
Name: ___________________________________
Title: