Exhibit 10.1
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 30, 2005
AMONG
INVACARE RECEIVABLES CORPORATION, AS SELLER,
INVACARE CORPORATION, AS SERVICER,
PARK AVENUE RECEIVABLES COMPANY, LLC
AND
JPMORGAN CHASE BANK, N.A., AS AGENT
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE ARRANGEMENTS..............................................1
Section 1.1 Purchase Facility...........................................1
Section 1.2 Incremental Purchases.......................................2
Section 1.3 Incremental Reductions......................................2
Section 1.4 Payment Requirements........................................2
Section 1.5 Extension of Liquidity Termination Date.....................3
Section 1.6 Clean Up Call...............................................3
ARTICLE II. PAYMENTS AND COLLECTIONS..........................................3
Section 2.1 Payments....................................................3
Section 2.2 Collections Prior to Amortization...........................4
Section 2.3 Collections Following Amortization..........................4
Section 2.4 Application of Collections..................................4
Section 2.5 Payment Rescission..........................................5
Section 2.6 Maximum Purchaser Interests.................................5
ARTICLE III. CONDUIT FUNDING..................................................5
Section 3.1 CP Costs....................................................5
Section 3.2 CP Costs Payments...........................................6
Section 3.3 Calculation of CP Costs.....................................6
ARTICLE IV. FINANCIAL INSTITUTION FUNDING.....................................6
Section 4.1 Financial Institution Funding...............................6
Section 4.2 Yield Payments..............................................6
Section 4.3 Selection and Continuation of Tranche Periods...............6
Section 4.4 Financial Institution Discount Rates........................7
Section 4.5 Suspension of the LIBO Rate.................................7
Section 4.6 Terminating Financial Institutions..........................7
ARTICLE V. REPRESENTATIONS AND WARRANTIES.....................................8
Section 5.1 Representations and Warranties of The Seller Parties........8
Section 5.2 Financial Institution Representations and Warranties.......12
ARTICLE VI. CONDITIONS OF PURCHASES..........................................13
Section 6.1 Conditions Precedent to Initial Incremental Purchase.......13
Section 6.2 Conditions Precedent to All Purchases and Reinvestments....13
ARTICLE VII. COVENANTS.......................................................14
Section 7.1 Affirmative Covenants of the Seller Parties................14
Section 7.2 Negative Covenants of the Seller Parties...................22
ARTICLE VIII. ADMINISTRATION AND COLLECTION..................................23
Section 8.1 Designation of Servicer....................................23
Section 8.2 Duties of Servicer.........................................24
Section 8.3 Collection Notices.........................................25
Section 8.4 Responsibilities of Seller.................................25
Section 8.5 Reports....................................................26
Section 8.6 Servicing Fees.............................................26
ARTICLE IX. AMORTIZATION EVENTS..............................................26
Section 9.1 Amortization Events........................................26
Section 9.2 Remedies...................................................29
ARTICLE X. INDEMNIFICATION...................................................29
Section 10.1 Indemnities................................................29
Section 10.2 Increased Cost and Reduced Return..........................32
Section 10.3 Other Costs and Expenses...................................33
ARTICLE XI. THE AGENT........................................................34
Section 11.1 Authorization and Action...................................34
Section 11.2 Delegation of Duties.......................................34
Section 11.3 Exculpatory Provisions.....................................34
Section 11.4 Reliance by Agent..........................................35
Section 11.5 Non-Reliance on Agent and Other Purchasers.................35
Section 11.6 Reimbursement and Indemnification..........................35
Section 11.7 Agent in its Individual Capacity...........................36
Section 11.8 Successor Agent............................................36
ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS.....................................36
Section 12.1 Assignments................................................36
Section 12.2 Participations.............................................37
ARTICLE XIII.................................................................38
MISCELLANEOUS................................................................38
Section 13.1 Waivers and Amendments.....................................38
Section 13.2 Notices....................................................39
Section 13.3 Ratable Payments...........................................39
Section 13.4 Protection of Ownership Interests of the Purchasers........39
Section 13.5 Confidentiality............................................40
Section 13.6 Bankruptcy Petition........................................40
Section 13.7 Limitation of Liability....................................41
Section 13.8 CHOICE OF LAW..............................................41
Section 13.9 CONSENT TO JURISDICTION....................................41
Section 13.10 WAIVER OF JURY TRIAL.......................................41
Section 13.11 Integration; Binding Effect; Survival of Terms.............42
Section 13.12 Counterparts; Severability; Section References.............42
Section 13.13 JPMorgan Chase Roles.......................................42
Section 13.14 Characterization...........................................42
EXHIBITS AND SCHEDULES
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III State of Organization; Places of Business; Locations of
Records; Federal Employer Identification Number and
Organizational Identification Number
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy
Exhibit IX Form of Monthly Report
Exhibit X Form of Performance Undertaking
Schedule A Commitments
Schedule B Closing Documents
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT dated as of September 30, 2005 is among
Invacare Receivables Corporation, a Delaware corporation ("Seller"), Invacare
Corporation, an Ohio corporation ("Invacare"), as initial Servicer (the Servicer
together with Seller, the "Seller Parties" and each a "Seller Party"), the
entities listed on Schedule A to this Agreement (together with any of their
respective successors and assigns hereunder, the "Financial Institutions"), Park
Avenue Receivables Company, LLC ("Conduit") and JPMorgan Chase Bank, N.A., as
agent for the Purchasers hereunder or any successor agent hereunder (together
with its successors and assigns hereunder, the "Agent"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the
Purchasers from time to time.
Conduit may, in its absolute and sole discretion, purchase
Purchaser Interests from Seller from time to time.
In the event that Conduit declines to make any such purchase, the
Financial Institutions shall make such purchase in accordance with the
terms hereof.
JPMorgan Chase Bank, N.A. has been requested and is willing to
act as Agent on behalf of Conduit and the Financial Institutions in
accordance with the terms hereof.
ARTICLE I.
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility. (a) Upon the terms and subject to the
conditions hereof, Seller may from time to time prior to the Facility
Termination Date, at its option, sell and assign Purchaser Interests to the
Agent for the benefit of one or more of the Purchasers by delivering (or causing
the Servicer to deliver on its behalf) a Purchase Notice to the Agent in
accordance with Section 1.2. Upon the Agent's receipt of a Purchase Notice from
Seller or Servicer, in accordance with the terms and conditions set forth
herein, Conduit may, at its option, instruct the Agent to purchase on behalf of
Conduit, or if Conduit shall decline to purchase, the Agent shall purchase, on
behalf of the Financial Institutions, Purchaser Interests from time to time in
an aggregate amount not to exceed at such time the lesser of (i) the Purchase
Limit and (ii) the aggregate amount of the Commitments.
(b) Seller may, upon at least 5 Business Days' notice to the Agent,
terminate in whole or reduce in part (and ratably among the Financial
Institutions), the unused portion of the Purchase Limit; provided that each
partial reduction of the Purchase Limit shall be in an aggregate amount equal to
$10,000,000 or a larger integral multiple of $1,000,000 thereof.
Section 1.2 Incremental Purchases. Seller (or Servicer on Seller's behalf)
shall provide the Agent with at least two (2) Business Days' prior notice in a
form set forth as Exhibit II hereto of each Incremental Purchase (a "Purchase
Notice"). Each Purchase Notice shall be subject to Section 6.2 hereof and,
except as set forth below, shall be irrevocable and shall specify the requested
Purchase Price (which shall not be less than $1,000,000) and date of purchase
(which, in the case of any Incremental Purchase (after the initial Incremental
Purchase hereunder), shall only be on a Settlement Date) and, in the case of an
Incremental Purchase to be funded by the Financial Institutions, the requested
Discount Rate and Tranche Period. Following receipt of a Purchase Notice, the
Agent will determine whether Conduit agrees to make the purchase. If Conduit
declines to make a proposed purchase, Agent shall provide Seller notice thereof,
and Seller may then cancel the Purchase Notice or, in the absence of such a
cancellation, the Incremental Purchase of the Purchaser Interest will be made by
the Financial Institutions. On the date of each Incremental Purchase, upon
satisfaction of the applicable conditions precedent set forth in Section 6.2
(but for the initial Incremental Purchase, all of Article VI), each of Conduit
or the Financial Institutions, as applicable, shall wire-transfer to the
Facility Account, in immediately available funds, no later than 12:00 noon
(Chicago time), an amount equal to (i) in the case of Conduit, the aggregate
Purchase Price of the Purchaser Interests Conduit is then purchasing or (ii) in
the case of a Financial Institution, such Financial Institution's Pro Rata Share
of the aggregate Purchase Price of the Purchaser Interests the Financial
Institutions are then purchasing.
Section 1.3 Incremental Reductions. Seller (or Servicer on its behalf)
shall provide the Agent with prior written notice in conformity with the
Required Notice Period (a "Reduction Notice") of any proposed reduction of
Aggregate Capital. Such Reduction Notice shall designate (i) the date (the
"Proposed Reduction Date") upon which any such reduction of Aggregate Capital
shall occur (which date shall give effect to the applicable Required Notice
Period), and (ii) the amount of Aggregate Capital to be reduced (the "Aggregate
Reduction") which shall be applied ratably to the Purchaser Interests of Conduit
and the Financial Institutions in accordance with the amount of Capital (if any)
owing to Conduit, on the one hand, and the amount of Capital (if any) owing to
the Financial Institutions (ratably, based on their respective Pro Rata Shares),
on the other hand. Only one (1) Reduction Notice shall be outstanding at any
time.
Section 1.4 Payment Requirements. All amounts to be paid or deposited by
any Seller Party pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago
time) on the day when due in immediately available funds, and if not received
before 11:00 a.m. (Chicago time) shall be deemed to be received on the next
succeeding Business Day. If such amounts are payable to a Purchaser they shall
be paid to the Agent, for the account of such Purchaser, at 1 Bank Xxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000 until otherwise notified by the Agent. All computations
of Yield, per annum fees calculated as part of any CP Costs, per annum fees
hereunder and per annum fees under the Fee Letter shall be made on the basis of
a year of 360 days for the actual number of days elapsed; provided that any
interest or per annum fees calculated based on the Prime Rate shall be made on
the basis of a year of 365 days. If any amount hereunder shall be payable on a
day which is not a Business Day, such amount shall be payable on the next
succeeding Business Day.
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Section 1.5 Extension of Liquidity Termination Date. Provided that no
Amortization Event or Potential Amortization Event has occurred and is
continuing, the Seller (or Servicer on Seller's behalf) may request an extension
of the Liquidity Termination Date by submitting a request for an extension
(each, an "Extension Request") to the Agent no more than 120 days and not less
than 60 days prior to the then current Liquidity Termination Date. Upon receipt
of such an Extension Request, the Agent shall notify the Purchasers of the
contents thereof and shall request each Purchaser to approve the Extension
Request. Each Purchaser shall deliver its written notice indicating whether such
Purchaser intends to renew its Commitment hereunder to the Agent no later than
thirty (30) days after the request (the "Response Date"), whereupon the Agent
shall notify the Seller within one Business Day thereafter as to whether all
Purchasers have approved the Extension Request. If all Purchasers have approved
the Extension Request by the Response Date, the Liquidity Termination Date shall
be extended to the date which is 364 days from the Response Date (such date, the
"Extension Date"). If any Financial Institution does not agree to an Extension
Request, the Liquidity Termination Date as to such Financial Institution shall
remain unchanged and Conduit shall have the rights set forth in Section 4.6.
Section 1.6 Clean Up Call. Each of Seller and Servicer shall have the right
(after providing written notice to the Agent in accordance with the Required
Notice Period), at any time following the reduction of the Aggregate Capital to
a level that is less than 50.0% of the original Purchase Limit, to repurchase
all, but not less than all, of the then outstanding Purchaser Interests. The
purchase price in respect thereof shall be an amount equal to the Aggregate
Unpaids through the date of such repurchase, payable in immediately available
funds to the Agent. Such repurchase shall be without representation, warranty or
recourse of any kind by, on the part of, or against Conduit or the Agent.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse contained
in this Agreement, Seller (or Servicer on Seller's behalf) shall immediately pay
to the Agent when due, for the account of the relevant Purchaser or Purchasers
on a full recourse basis, (i) such fees as set forth in the Fee Letter (which
fees shall be sufficient to pay all fees owing to the Financial Institutions),
(ii) all CP Costs, (iii) all amounts payable as Yield, (iv) all amounts payable
as Deemed Collections (which shall be immediately due and payable by Seller and
applied to reduce outstanding Aggregate Capital hereunder in accordance with
Sections 2.2 and 2.3 hereof but which, unless an Amortization Event has occurred
and is continuing, shall not be applied until the next Settlement Date, (v) all
amounts required pursuant to Section 2.6, (vi) all amounts payable pursuant to
Article X, if any, (vii) the Servicing Fee and all Servicer costs and expenses
in connection with servicing, administering and collecting the Receivables,
(viii) all Broken Funding Costs and (ix) all Default Fees (collectively, the
"Obligations"). If Seller fails to pay any of the Obligations when due, Seller
agrees to pay, on demand, the Default Fee in respect thereof (other than with
respect to clauses (vii) and (ix) thereof) until paid. Notwithstanding the
foregoing, no provision of this Agreement or the Fee Letter shall require the
payment or permit the collection of any amounts hereunder in excess of the
maximum permitted by applicable law. If at any xxxx Xxxxxx receives any
Collections or Deemed Collections, Seller shall immediately pay such Collections
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or Deemed Collections to the Servicer for application in accordance with the
terms and conditions hereof and, at all times prior to such payment, such
Collections or Deemed Collections shall be held in trust by Seller for the
exclusive benefit of the Purchasers and the Agent.
Section 2.2 Collections Prior to Amortization. Prior to the Amortization
Date, any Collections and/or Deemed Collections received by the Servicer shall
be set aside and held in trust by the Servicer (but the Servicer shall not be
required to segregate such Collections or Deemed Collections) for the payment of
any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in
this Section 2.2. If on any Business Day prior to the Amortization Date,
Collections are received by the Servicer after payment of any Obligations that
are due and occurring, Seller hereby requests and the Purchasers hereby agree to
make, simultaneously with such receipt, a reinvestment (each a "Reinvestment")
with that portion of the balance of each and every Collection received by the
Servicer that is part of any Purchaser Interest, such that after giving effect
to such Reinvestment, the amount of Capital of such Purchaser Interest
immediately after such receipt and corresponding Reinvestment shall be equal to
the amount of Capital immediately prior to such receipt. On each Settlement Date
prior to the occurrence of the Amortization Date, the Servicer shall remit to
the Agent's account the amounts set aside during the preceding Settlement Period
that have not been subject to a Reinvestment and apply such amounts (if not
previously paid in accordance with Section 2.1) to reduce the Obligations. Once
such Obligations shall be reduced to zero, any additional Collections received
by the Servicer (i) if applicable, shall be remitted to the Agent's account no
later than 11:00 a.m. (Chicago time) to the extent required to fund any
Aggregate Reduction on such Settlement Date and (ii) any balance remaining
thereafter shall be remitted from the Servicer to Seller on such Settlement
Date.
Section 2.3 Collections Following Amortization. On the Amortization Date
and on each day thereafter, the Servicer shall set aside and hold in trust, for
the holder of each Purchaser Interest, all Collections received on such day and
an additional amount for the payment of any accrued and unpaid Obligations owed
by Seller and not previously paid by Seller in accordance with Section 2.1. On
and after the Amortization Date, the Servicer shall, at any time upon the
request from time to time by (or pursuant to standing instructions from) the
Agent (i) remit to the Agent's account the amounts set aside pursuant to the
preceding sentence, and (ii) apply such amounts to reduce the Capital associated
with each such Purchaser Interest and any other Aggregate Unpaids.
Section 2.4 Application of Collections. If there shall be insufficient
funds on deposit for the Servicer to distribute funds in payment in full of the
aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the
Servicer shall distribute funds:
first, to the payment of the Servicer's reasonable out-of-pocket
costs and expenses in connection with servicing, administering and
collecting the Receivables, including the Servicing Fee, to the extent
such costs and expenses are documented in reasonable detail,
second, to the reimbursement of the Agent's costs of collection
and enforcement of this Agreement,
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third, ratably to the payment of all accrued and unpaid fees
under the Fee Letter, CP Costs and Yield,
fourth, for the ratable payment of Aggregate Capital to the
extent required by any Section of this Agreement,
fifth, unless the Amortization Date has occurred or a Reduction
Notice has been delivered, to the making of a Reinvestment,
sixth, to the ratable reduction of all other Obligations, and
seventh, after the Aggregate Unpaids have been indefeasibly
reduced to zero, to Seller.
Collections applied to the payment of Aggregate Unpaids shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth above in this Section 2.4, shall be shared ratably (within
each priority) among the Agent and the Purchasers in accordance with the amount
of such Aggregate Unpaids owing to each of them in respect of each such
priority.
Section 2.5 Payment Rescission. No payment of any of the Aggregate Unpaids
shall be considered paid or applied hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial authority, or must otherwise be returned or refunded for any
reason. Seller shall remain obligated for the amount of any payment or
application so rescinded, returned or refunded, and shall promptly pay to the
Agent (for application to the Person or Persons who suffered such rescission,
return or refund) the full amount thereof together with, in the case of Capital,
Yield thereon from the date of any such rescission, return or refunding at the
Prime Rate.
Section 2.6 Maximum Purchaser Interests. Seller shall ensure that the
Purchaser Interests of the Purchasers shall at no time exceed in the aggregate
100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds
100%, Seller shall pay to the Agent on the earlier of (a) the day that is two
(2) Business Days after the date thereof or (b) the next Settlement Date, an
amount to be applied to reduce the Aggregate Capital (as allocated by the
Agent), such that after giving effect to such payment the aggregate of the
Purchaser Interests equals or is less than 100%, except for a representation and
warranty that such reconveyance to Seller is being made free and clear of any
Adverse Claim created by the Agent or any Purchaser.
ARTICLE III.
CONDUIT FUNDING
Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the Capital
associated with each Purchaser Interest of Conduit for each day that any Capital
in respect of such Purchaser Interest is outstanding. Each Purchaser Interest
funded substantially with Pooled Commercial Paper will accrue CP Costs each day
on a pro rata basis, based upon the percentage share the Capital in respect of
such Purchaser Interest represents in relation to all assets held by Conduit and
funded substantially with related Pooled Commercial Paper.
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Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall pay to
the Agent (for the benefit of Conduit) an aggregate amount equal to all accrued
and unpaid CP Costs in respect of the Capital associated with all Purchaser
Interests of Conduit for the immediately preceding Accrual Period in accordance
with Article II.
Section 3.3 Calculation of CP Costs. On the third Business Day immediately
preceding each Settlement Date, Conduit shall calculate the aggregate amount of
CP Costs allocated to the Capital of the Purchaser Interests for the applicable
Accrual Period and shall notify Seller of such aggregate amount.
ARTICLE IV.
FINANCIAL INSTITUTION FUNDING
Section 4.1 Financial Institution Funding. Each Purchaser Interest of the
Financial Institutions shall accrue Yield for each day during its Tranche Period
at either the LIBO Rate or the Prime Rate in accordance with the terms and
conditions hereof. Until Seller gives notice to the Agent of another Discount
Rate in accordance with Section 4.4, the initial Discount Rate for any Purchaser
Interest transferred to the Financial Institutions by Conduit pursuant to the
terms and conditions hereof shall be the Prime Rate. If the Financial
Institutions acquire by assignment from Conduit any Purchaser Interest pursuant
to a Funding Agreement, each Purchaser Interest so assigned shall each be deemed
to have a new Tranche Period commencing on the date of any such assignment.
Section 4.2 Yield Payments. On the Settlement Date for each Purchaser
Interest of the Financial Institutions, Seller shall pay to the Agent (for the
benefit of the Financial Institutions) an aggregate amount equal to the accrued
and unpaid Yield for the entire Tranche Period of each such Purchaser Interest
in accordance with Article II.
Section 4.3 Selection and Continuation of Tranche Periods.
(a) With consultation from (and approval by) the Agent (which approval
shall not be unreasonably withheld), Seller shall from time to time request
Tranche Periods for the Purchaser Interests of the Financial Institutions,
provided that, if at any time the Financial Institutions shall have a Purchaser
Interest, Seller shall always request Tranche Periods such that at least one
Tranche Period shall end on the date specified in clause (A) of the definition
of Settlement Date.
(b) Seller or the Agent, upon notice to and consent by the other (such
consent not to be unreasonably withheld) received at least three (3) Business
Days prior to the end of a Tranche Period (the "Terminating Tranche") for any
Purchaser Interest, may, effective on the last day of the Terminating Tranche:
(i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii)
combine any such Purchaser Interest with one or more other Purchaser Interests
that have a Terminating Tranche ending on the same day as such Terminating
Tranche or (iii) combine any such Purchaser Interest with a new Purchaser
Interests to be purchased on the day such Terminating Tranche ends, provided,
that in no event may a Purchaser Interest of Conduit be combined with a
Purchaser Interest of the Financial Institutions.
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Section 4.4 Financial Institution Discount Rates. Seller may select the
LIBO Rate or the Prime Rate for each Purchaser Interest of the Financial
Institutions. Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3)
Business Days prior to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being requested as a new Discount Rate and (ii) on the
day of the expiration of any Terminating Tranche with respect to which the Prime
Rate is being requested as a new Discount Rate, give the Agent irrevocable
notice of the new Discount Rate for the Purchaser Interest associated with such
Terminating Tranche. Until Seller gives notice to the Agent of another Discount
Rate, the initial Discount Rate for any Purchaser Interest transferred to the
Financial Institutions pursuant to the terms and conditions hereof (including
Section 4.1) shall be the Prime Rate.
Section 4.5 Suspension of the LIBO Rate
(a) If any Financial Institution notifies the Agent that it has determined
that funding its Pro Rata Share of the Purchaser Interests of the Financial
Institutions at a LIBO Rate would violate any applicable law, rule, regulation,
or directive of any governmental or regulatory authority, whether or not having
the force of law, or that (i) deposits of a type and maturity appropriate to
match fund its Purchaser Interests at such LIBO Rate are not available or (ii)
such LIBO Rate does not, in its reasonable determination, accurately reflect the
cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then
the Agent shall suspend the availability of such LIBO Rate and require Seller to
select the Prime Rate for any Purchaser Interest accruing Yield at such LIBO
Rate; provided that before making any such suspension, the applicable Financial
Institution shall use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it) to designate, in consultation with Seller and the Agent,
a different LIBO Rate lending office if the making of such designation would
allow such Financial Institution or its LIBO Rate lending office to continue to
fund its Pro Rata Share of the Purchaser Interests at a LIBO Rate and avoid the
situations set forth in clauses (i) - (iii) above.
(b) If less than all of the Financial Institutions give a notice to the
Agent pursuant to Section 4.5(a), each Financial Institution which gave such a
notice shall be obliged, at the request of Seller, Conduit or the Agent, to
assign all of its rights and obligations hereunder to (i) another Financial
Institution or (ii) another funding entity nominated by Seller or the Agent that
is acceptable to Conduit and willing to participate in this Agreement through
the Liquidity Termination Date in the place of such notifying Financial
Institution; provided that (i) the notifying Financial Institution receives
payment in full, pursuant to an Assignment Agreement, of an amount equal to such
notifying Financial Institution's Pro Rata Share of the Capital and Yield owing
to all of the Financial Institutions and all accrued but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Purchaser
Interests of the Financial Institutions, and (ii) the replacement Financial
Institution otherwise satisfies the requirements of Section 12.1(b).
Section 4.6 Terminating Financial Institutions.
(a) If any Financial Institution fails to deliver notice pursuant to
Section 1.5 by the Response Date, such Financial Institution will be deemed to
have declined to renew its Commitment (each Financial Institution which has
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declined or has been deemed to have declined to renew its Commitment hereunder,
a "Non-Renewing Financial Institution"). The Agent shall promptly notify Conduit
of each Non-Renewing Financial Institution and Conduit, in its sole discretion,
may (A) to the extent of Commitment Availability, declare that such Non-Renewing
Financial Institution's Commitment shall, to such extent, automatically
terminate on the Liquidity Termination Date or (B) upon one (1) Business Days'
notice to such Non-Renewing Financial Institution assign to such Non-Renewing
Financial Institution on a date specified by Conduit its Pro Rata Share of the
aggregate Purchaser Interests then held by Conduit, subject to, and in
accordance with, the Funding Agreement. In addition, Conduit may, in its sole
discretion, at any time (x) to the extent of Commitment Availability, declare
that any Affected Financial Institution's Commitment shall automatically
terminate on a date specified by Conduit or (y) assign to any Affected Financial
Institution on a date specified by Conduit its Pro Rata Share of the aggregate
Purchaser Interests then held by Conduit, subject to, and in accordance with,
the Funding Agreement (each Affected Financial Institution or each Non-Renewing
Financial Institution is hereinafter referred to as a "Terminating Financial
Institution"). The parties hereto expressly acknowledge that any declaration of
the termination of any Commitment, any assignment pursuant to this Section 4.6
and the order of priority of any such termination or assignment among
Terminating Financial Institutions shall be made by Conduit in its sole and
absolute discretion.
(b) Upon any assignment to a Terminating Financial Institution as provided
in this Section 4.6, any remaining Commitment of such Terminating Financial
Institution shall automatically terminate. Upon reduction to zero of the Capital
of all of the Purchaser Interests of a Terminating Financial Institution (after
application of Collections thereto pursuant to Sections 2.2 and 2.3) all rights
and obligations of such Terminating Financial Institution hereunder shall be
terminated and such Terminating Financial Institution shall no longer be a
"Financial Institution" hereunder; provided, however, that the provisions of
Article X shall continue in effect for its benefit with respect to Purchaser
Interests held by such Terminating Financial Institution prior to its
termination as a Financial Institution.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of The Seller Parties. As of the
date of each Incremental
Purchase and the date of each Reinvestment:
(a) Corporate Existence and Power. Each of Seller and Servicer represents
and warrants that it is a Person duly organized, validly existing and in good
standing under the laws of the state or other political subdivision of its
jurisdiction of incorporation or organization, as the case may be, and is duly
qualified to do business, and is in good standing, in all additional
jurisdictions where such qualification is necessary under applicable law, except
where the failure to be so qualified would not have a Material Adverse Effect.
(b) Power and Authority. Each of Seller and Servicer represents and
warrants that it has all requisite corporate power to own or lease the
properties used in its business and to carry on its business as now being
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conducted and as proposed to be conducted, and to execute and deliver the
Transaction Documents to which it is a party and to engage in the transactions
contemplated by the Transaction Documents.
(c) No Conflict. Each of Seller and Servicer represents and warrants that
the execution and delivery by it of this Agreement and each other Transaction
Document to which it is a party, and the performance of its obligations
hereunder and thereunder do not contravene or violate (i) its certificate or
articles of incorporation or by-laws, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree of which
it is aware binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on its assets or the assets of its
Subsidiaries (except as created hereunder) except, in each of the foregoing
cases, where such contravention or violation would not have a Material Adverse
Effect. The Seller represents and warrants that no transaction contemplated
hereunder requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Each of Seller and Servicer represents and
warrants that, other than the filing of the financing statements required
hereunder, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required for the due execution and
delivery by Seller of this Agreement and each other Transaction Document to
which it is a party and the performance of its obligations hereunder and
thereunder, except in the case of Seller (i) with respect to Governmental
Receivables, compliance with any Assignment of Claims Act and (ii) any such
authorization, approval or other action that may be required by any foreign
Governmental Authority with respect to Foreign Receivables.
(e) Actions, Suits. Each of Seller and Servicer represents and warrants
that there is no action, suit or proceeding pending or, to the best of its
knowledge, threatened against or affecting such Seller Party before or by any
court, Governmental Authority or arbitrator, which is likely to have, either
individually or collectively, a Material Adverse Effect, and to the best of such
Seller Party's knowledge, there is no basis for any such action, suit or
proceeding
(f) Binding Effect. Each of Seller and Servicer represents and warrants
that the Transaction Documents executed by it, will be at all times from and
after the date of delivery thereof, its legal, valid and binding obligations
enforceable against it in accordance with their respective terms; except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to equitable defenses and to the discretion of the court
before which any proceedings may be brought.
(g) Accuracy of Information. Each of Seller and Servicer represents and
warrants that all information heretofore furnished by an Authorized Officer of
such Seller Party or any Originator to the Agent or the Purchasers for purposes
of or in connection with this Agreement, any of the other Transaction Documents
or any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by an Authorized Officer of such Seller Party or any
Originator to the Agent or the Purchasers will be, true and accurate in every
9
material respect on the date such information is stated or certified (unless
otherwise disclosed to Agent or Purchasers at such time) and does not and will
not contain any material misstatement of fact or omit to state a material fact
or any fact necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. Seller represents and warrants that no proceeds of any
purchase hereunder will be used (i) for a purpose that violates Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System from
time to time or (ii) to acquire any security in any transaction which is subject
to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Seller represents and warrants that, immediately prior to
each purchase hereunder, Seller shall be the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim (except with respect to Foreign Receivables), except as created by
the Transaction Documents. Seller represents and warrants that there have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Seller's ownership interest in each Receivable (other than Foreign
Receivables), its Collections and the Related Security, except that Seller's
rights with respect to any Government Receivable may be restricted by an
applicable Assignment of Claims Act.
(j) Perfection. Seller represents and warrants that, this Agreement,
together with the filing of the financing statements contemplated hereby, is
effective to, and shall, upon each purchase hereunder, transfer to the Agent for
the benefit of the relevant Purchaser or Purchasers (and the Agent for the
benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and
perfected first priority undivided percentage ownership or security interest in
each Receivable (other than Foreign Receivables) existing or hereafter arising
and in the Related Security (to the extent covered by Article 9 of the UCC) and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transactions Documents. Seller represents and warrants that there
have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect the Agent's (on behalf of the Purchasers) ownership or
security interest in the Receivables (other than Foreign Receivables), the
Related Security (to the extent covered by Article 9 of the UCC) and the
Collections, except that Seller's rights with respect to any Government
Receivable may be restricted by an applicable Assignment of Claims Act.
(k) Places of Business and Locations of Records. Seller represents and
warrants that (i) its state of organization, principal places of business, chief
executive office and the offices where it keeps all of its Records are located
at the addresses listed on Exhibit III or such other locations of which the
Agent has been notified in accordance with Section 7.2(a) in jurisdictions where
all action required by Section 13.4(a) has been taken and completed, and (ii)
Seller's Federal Employer Identification Number and Organizational
Identification Number are correctly set forth on Exhibit III.
(l) Collections. Each of Seller and Servicer represents and warrants that
(i) the conditions and requirements set forth in Section 7.1(j) and Section 8.2
have at all times been satisfied and duly performed, and (ii) the names and
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addresses of all Collection Banks, together with the account numbers of the
Collection Accounts of Seller at each Collection Bank and the post office box
number of each Lock-Box, are listed on Exhibit IV. Seller represents and
warrants that Seller has not granted any Person, other than the Agent as
contemplated by this Agreement, dominion and control of any Lock-Box or
Collection Account, or the right to take dominion and control of any such
Lock-Box or Collection Account at a future time or upon the occurrence of a
future event. Notwithstanding the foregoing, Seller confirms that it has granted
the Servicer a right of access to the Lock-Boxes and Collection Accounts to the
extent permitted in the Collection Account Agreements.
(m) Material Adverse Effect. (i) The initial Servicer represents and
warrants that since September 30, 2004, no event has occurred that would have a
Material Adverse Effect and (ii) Seller represents and warrants that since the
date of this Agreement, no event has occurred that would have a Material Adverse
Effect on Seller.
(n) Names. Seller represents and warrants that, in the past five (5) years,
Seller has not used any corporate names, trade names or assumed names other than
the name in which it has executed this Agreement.
(o) Ownership of Seller. Seller represents and warrants that the
Originators own, directly or indirectly, 100% of all classes of the issued and
outstanding capital stock of Seller, free and clear of any Adverse Claim. Seller
represents and warrants that such capital stock is validly issued, fully paid
and nonassessable, and that there are no options, warrants or other rights to
acquire securities of Seller.
(p) Not a Holding Company or an Investment Company. Seller represents and
warrants that Seller is not a "holding company" or a "subsidiary holding
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or any successor statute. Seller represents and
warrants that Seller is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or any successor statute.
(q) Compliance with Law. Each of Seller and Servicer represents and
warrants that it has complied with all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without limitation, laws, rules
and regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
in effect, except in each of the foregoing cases, where failure to comply could
not reasonably be expected to have a Material Adverse Effect. Each Eligible
Receivable, together with the Contract related thereto, does not contravene any
laws, rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy), and no part of such Contract is in violation of any such law, rule
or regulation, except where such contravention or violation could not reasonably
be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Each of Seller and
Servicer represents and warrants that it has complied in all material respects
with the Credit and Collection Policy with regard to each Eligible Receivable
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and the related Contract, and has not made or authorized any material change to
such Credit and Collection Policy, except such material change as to which the
Agent has been notified in accordance with Section 4.1(a)(vii) of the
Receivables Sale Agreement.
(s) Payments to Originators. Seller represents and warrants that, with
respect to each Receivable transferred to Seller pursuant to the Receivables
Sale Agreement, Seller has given reasonably equivalent value to the applicable
Originator in consideration therefor and such transfer was not made for or on
account of an antecedent debt. No transfer by any Originator of any Receivable
under the Receivables Sale Agreement is or may be voidable under any section of
the Bankruptcy Reform Act of 1978 (11 U.S.C. xx.xx. 101 et seq.), as amended.
(t) Enforceability of Contracts. Seller represents and warrants that each
Contract with respect to each Eligible Receivable is effective to create, and
has created, a legal, valid and binding obligation of the related Obligor to pay
the Outstanding Balance of the Eligible Receivable created thereunder and any
accrued interest thereon, enforceable against the Obligor in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Seller represents and warrants that each
Receivable included in the Net Receivables Balance as an Eligible Receivable on
the date of its purchase under the Receivables Sale Agreement was an Eligible
Receivable on such purchase date, and Servicer represents that, to the extent it
compiles any report computing the Net Receivables Balance based upon information
received by it from Seller or any Originator, it has not included any Receivable
in the Net Receivables Balance other than a Receivable identified by Seller or
such Originator as an Eligible Receivable.
(v) Net Receivables Balance. Each of Seller and Servicer represents and
warrants that it has determined that, immediately after giving effect to each
purchase hereunder, the Net Receivables Balance is at least equal to the sum of
(i) the Aggregate Capital, plus (ii) the Aggregate Reserves.
(w) Accounting. The manner in which such Seller Party accounts for the
transactions contemplated by this Agreement and the Receivables Sale Agreement
does not jeopardize the true sale nature of the transaction between the
Originators and Seller under the Receivables Sale Agreement.
Section 5.2 Financial Institution Representations and Warranties. Each
Financial Institution hereby represents and warrants to the Agent and Conduit
that:
(a) Existence and Power. Such Financial Institution is a corporation or a
banking association duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Financial Institution
of this Agreement and the performance of its obligations hereunder are within
its corporate powers, have been duly authorized by all necessary corporate
12
action, do not contravene or violate (i) its certificate or articles of
incorporation or association or by-laws, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or any of its property is bound, or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, and do not result in the creation or imposition of any Adverse
Claim on its assets. This Agreement has been duly authorized, executed and
delivered by such Financial Institution.
(c) Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding
obligation of such Financial Institution enforceable against such Financial
Institution in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
ARTICLE VI.
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The
initial Incremental Purchase of a Purchaser Interest under this Agreement is
subject to the conditions precedent that (a) the Agent shall have received on or
before the date of such purchase those documents listed on Schedule B and (b)
the Agent shall have received all fees and expenses required to be paid on such
date pursuant to the terms of this Agreement and the Fee Letter.
Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each
purchase of a Purchaser Interest and each Reinvestment shall be subject to the
further conditions precedent that (a) in the case of each such purchase or
Reinvestment the Servicer shall have delivered to the Agent on or prior to the
date of such purchase, in form and substance satisfactory to the Agent, all
Monthly Reports and other interim reports as and when due under Section 8.5; (b)
the Facility Termination Date shall not have occurred; (c) the Agent shall have
received such other approvals, opinions or documents as it may reasonably
request; and (d) on the date of each such Incremental Purchase or Reinvestment,
the following statements shall be true (and acceptance of the proceeds of such
Incremental Purchase or Reinvestment shall be deemed a representation and
warranty by Seller that such statements are then true):
(i) the representations and warranties set forth in Section 5.1
are true and correct on and as of the date of such Incremental
Purchase or Reinvestment as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Incremental Purchase or Reinvestment, that will constitute
13
an Amortization Event, and no event has occurred and is continuing, or
would result from such Incremental Purchase or Reinvestment, that
would constitute a Potential Amortization Event; and
(iii) the Aggregate Capital does not exceed the Purchase Limit
and the aggregate Purchaser Interests do not exceed 100%.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by the Agent or any Purchaser, occur automatically on each day that the
Servicer shall receive any Collections without the requirement that any further
action be taken on the part of any Person and notwithstanding the failure of
Seller to satisfy any of the foregoing conditions precedent in respect of such
Reinvestment. The failure of Seller to satisfy any of the foregoing conditions
precedent in respect of any Reinvestment shall give rise to a right of the
Agent, which right may be exercised at any time on demand of the Agent, to
rescind such Reinvestment and direct Seller to pay to the Agent for the benefit
of the Purchasers an amount equal to the Collections prior to the Amortization
Date that shall have been applied to the affected Reinvestment.
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been paid in full and this Agreement terminates
in accordance with its terms:
(a) Financial Reporting. Each Seller Party will maintain, for itself and
each of its Subsidiaries, a system of accounting established and administered in
accordance with GAAP. Seller will furnish or cause to be furnished to the Agent:
(i) Annual Reporting. As soon as available and in any event
within the earlier of (A) five (5) days after the time period
specified by the Securities and Exchange Commission under the Exchange
Act for annual reporting or (B) within 90 days after the end of each
fiscal year of Invacare, (a) a copy of the consolidated balance sheet
of Invacare and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income and cash flow of
Invacare and its Subsidiaries for such fiscal year, with a customary
audit report of Ernst & Young, or other nationally recognized
independent certified public accountants selected by Invacare, without
qualifications unacceptable to the Purchasers and (b) comparable
unaudited financial statements of Seller in reasonable detail and duly
certified by an Authorized Officer of Seller as having been prepared
in accordance with GAAP.
(ii) Quarterly Reporting. As soon as available and in any event
within the earlier of (A) five (5) days after the time period
specified by the Securities and Exchange Commission under the Exchange
Act for quarterly reporting or (B) within 50 days after the end of
each of the first three fiscal quarters of each fiscal year of
Invacare, (a) the consolidated balance sheet of Invacare and its
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Subsidiaries as of the end of such quarter, and the related
consolidated statements of income and cash flow for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding date or period of the
preceding fiscal year, all in reasonable detail and duly certified
(subject to normal year-end adjustments) by an Authorized Officer of
Invacare as having been prepared in accordance with GAAP and (b)
comparable unaudited financial statements of Seller in reasonable
detail and duly certified by an Authorized Officer of Seller as having
been prepared in accordance with GAAP.
(iii) Compliance Certificate. Together with the financial
statements required in clauses (i) and (ii) above, a compliance
certificate in substantially the form of Exhibit V signed by an
Authorized Officer of the applicable Seller Party and dated the date
of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of Invacare, copies of all
financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements (other than registration statements on SEC
Form S-8) which Invacare or any of its Subsidiaries files with the
Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction
Document from an Originator, the Provider or any Collection Bank,
copies of the same.
(vii) Other Information. To the extent it may lawfully do so,
promptly, from time to time, such other information, documents,
records or reports relating to the Receivables or the financial
condition, operations or business of such Seller Party as the Agent
may from time to time reasonably request in order to protect the
interests of the Agent and the Purchasers under or as contemplated by
this Agreement.
(b) Notices. Such Seller Party will notify the Agent in writing of any of
the following promptly upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of an Authorized Officer of such Seller Party.
(ii) Judgment and Proceedings. (A) (1) The entry of any judgment
or decree against the Servicer or any of its respective Subsidiaries
if the aggregate amount of all judgments and decrees then outstanding
15
against the Servicer and its Subsidiaries exceeds $10,000,000 after
deducting (a) the amount with respect to which the Servicer or any
such Subsidiary is insured and with respect to which the insurer has
acknowledged responsibility in writing, and (b) the amount for which
the Servicer or any such Subsidiary is otherwise indemnified if the
terms of such indemnification are reasonably satisfactory to the
Agent, and (2) the institution of any litigation, arbitration
proceeding or governmental proceeding against the Servicer which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect; and (B) the entry of any judgment or decree
or the institution of any litigation, arbitration proceeding or
governmental proceeding against Seller.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has had, or could reasonably be expected to have, a
Material Adverse Effect.
(iv) Termination Date. The occurrence of the "Termination Date"
under and as defined in the Receivables Sale Agreement.
(v) Defaults Under Other Agreements. The occurrence of a default
or an event of default under any other financing arrangement pursuant
to which Seller is a debtor or an obligor, or the occurrence of a
default or an event of default under any financing arrangement
pursuant to which Servicer is a debtor or an obligor if such financing
arrangement involves a monetary obligation or line of credit of at
least $5,000,000 in aggregate amount.
(vi) Downgrade of Invacare. At any time while Invacare has rated
debt securities outstanding, any downgrade in the rating of any
Indebtedness of Invacare by Standard & Poor's Ratings Group or by
Xxxxx'x Investors Service, Inc., setting forth the Indebtedness
affected and the nature of such change.
(c) Compliance with Laws and Preservation of Corporate Existence. Such
Seller Party will comply with all applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Such Seller Party will preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where its business is conducted, except
where the failure to so preserve and maintain or qualify could not reasonably be
expected to have a Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Agent from time to time
such information with respect to it and the Receivables as the Agent may
reasonably request. Such Seller Party will, from time to time during regular
business hours as requested by the Agent upon reasonable notice and at the sole
cost of such Seller Party, permit the Agent, or its agents or representatives
(and shall cause each Originator to permit the Agent or its agents or
representatives), (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of such Person relating to the
Receivables and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of such Person for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to such
16
Person's financial condition or the Receivables and the Related Security or
any Person's performance under any of the Transaction Documents or any
Person's performance under the Contracts and, in each case, with any of the
officers or employees of Seller or the Servicer having knowledge of such
matters (each of the forgoing examinations and visits constituting a
"Review"); provided, however, that unless an Amortization Event occurs and
is continuing, the Seller Parties shall only be responsible for the costs
and expenses of one Review in any one calendar year.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause each Originator to)
maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without limitation,
records adequate to permit the immediate identification of each new
Receivable and all Collections of and adjustments to each existing
Receivable). The Servicer will (and will cause each Originator to)
give the Agent notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(ii) The Servicer will (and will cause each Originator to) (A) on
or prior to the date hereof, xxxx its master data processing records
and other books and records relating to the Purchaser Interests with a
legend, acceptable to the Agent, describing the Purchaser Interests
and (B) upon the request of the Agent following the occurrence and
continuance of an Amortization Event, deliver to the Agent all
invoices included in the Contracts (including, without limitation, all
multiple originals of any such invoice) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Servicer
will (and will cause each Originator to) timely and fully (i) perform and comply
in all material respects with all provisions, covenants and other promises
required to be observed by it under the Contracts related to the Receivables,
and (ii) comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the related Contract.
(g) Performance and Enforcement of Receivables Sale Agreement. Seller will,
and will require each Originator to, perform each of their respective
obligations and undertakings under and pursuant to the Receivables Sale
Agreement, will purchase Receivables thereunder in strict compliance with the
terms thereof and will diligently enforce the rights and remedies accorded to
Seller under the Receivables Sale Agreement. Seller will take all actions to
perfect and enforce its rights and interests (and the rights and interests of
the Agent and the Purchasers as assignees of Seller) under the Receivables Sale
Agreement as the Agent may from time to time reasonably request, including,
without limitation, making claims to which it may be entitled under any
indemnity, reimbursement or similar provision contained in the Receivables Sale
Agreement.
17
(h) Ownership. Seller will (or will cause each Originator to) take all
necessary action to (i) vest legal and equitable title to the Receivables (other
than Foreign Receivables), the Related Security (to the extent covered by
Article 9 of the UCC) and the Collections purchased under the Receivables Sale
Agreement irrevocably in Seller, free and clear of any Adverse Claims other than
Adverse Claims in favor of the Agent and the Purchasers, including, without
limitation, the filing of all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Seller's interest in such Receivables (other than
Foreign Receivables), Related Security (to the extent covered by Article 9 of
the UCC) and Collections and such other action to perfect, protect or more fully
evidence the interest of Seller therein as the Agent may reasonably request);
provided that Seller shall not be required to comply with any Assignment of
Claims Acts, and (ii) establish and maintain, in favor of the Agent, for the
benefit of the Purchasers, a valid and perfected first priority undivided
percentage ownership interest (and/or a valid and perfected first priority
security interest) in all Receivables (other than Foreign Receivables), Related
Security (to the extent covered by Article 9 of the UCC) and Collections to the
full extent contemplated herein, free and clear of any Adverse Claims other than
Adverse Claims in favor of the Agent for the benefit of the Purchasers
(including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect the Agent's (for the benefit of the
Purchasers) interest in such Receivables (other than Foreign Receivables),
Related Security (to the extent covered by Article 9 of the UCC) and Collections
and such other action to perfect, protect or more fully evidence the interest of
the Agent for the benefit of the Purchasers as the Agent may reasonably
request); provided that Seller shall not be required to comply with any
Assignment of Claims Acts.
(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
Seller's identity as a legal entity that is separate from each Originator, the
Provider and their respective Affiliates (collectively, the "Invacare Group").
Therefore, from and after the date of execution and delivery of this Agreement,
Seller shall take all reasonable steps, including, without limitation, all steps
that the Agent or any Purchaser may from time to time reasonably request, to
maintain Seller's identity as a separate legal entity and to make it manifest to
third parties that Seller is an entity with assets and liabilities distinct from
those of the members of the Invacare Group and not just a division of any member
thereof. Without limiting the generality of the foregoing and in addition to the
other covenants set forth herein, Seller will:
(A) conduct its own business in its own name and not have
any employees;
(B) compensate all employees, consultants and agents
directly, from Seller's own funds, for services provided to
Seller by such employees, consultants and agents and, to the
extent any employee, consultant or agent of Seller is also an
employee, consultant or agent of any member of the Invacare
Group, allocate the compensation of such employee, consultant or
agent between Seller and such member of the Invacare Group, as
applicable, on a basis that reflects the services rendered to
Seller and member of the Invacare Group, as applicable;
18
(C) clearly identify its offices (by signage or otherwise)
as its offices and, if such office is located in the offices of a
member of the Invacare Group, Seller shall lease such office at a
fair market rent;
(D) have a separate telephone number, which will be answered
only in its name and separate stationery, invoices and checks in
its own name;
(E) conduct all transactions with each member of the
Invacare Group strictly on an arm's-length basis, allocate all
overhead expenses (including, without limitation, telephone and
other utility charges) for items shared between Seller and such
member of the Invacare Group on the basis of actual use to the
extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
(F) at all times have a Board of Directors consisting of not
less than three members, at least one member of which is an
Independent Director;
(G) observe all corporate formalities as a distinct entity,
and ensure that all corporate actions relating to (A) the
selection, maintenance or replacement of the Independent
Director, (B) the dissolution or liquidation of Seller or (C) the
initiation of, participation in, acquiescence in or consent to
any bankruptcy, insolvency, reorganization or similar proceeding
involving Seller, are duly authorized by unanimous vote of its
Board of Directors (including the Independent Director);
(H) maintain Seller's books and records separate from those
of any member of the Invacare Group and otherwise readily
identifiable as its own assets rather than assets of any member
of the Invacare Group;
(I) prepare its financial statements separately from those
of any member of the Invacare Group and insure that any
consolidated financial statements of any member of the Invacare
Group that include Seller and that are filed with the Securities
and Exchange Commission or any other governmental agency have
notes clearly stating that Seller is a separate corporate entity
and that its assets will be available first and foremost to
satisfy the claims of the creditors of Seller;
(J) except as herein specifically otherwise provided,
maintain the funds or other assets of Seller separate from, and
not commingled with, those of any other member of the Invacare
Group and only maintain bank accounts or other depository
accounts to which Seller alone (or Servicer on Seller's behalf)
is the account party, into which Seller alone (or Servicer on
Seller's behalf) makes deposits and from which Seller alone (or
Servicer on Seller's behalf, or the Agent hereunder) has the
power to make withdrawals;
(K) pay all of Seller's on-going operating expenses from
Seller's own assets (except for certain payments by a member of
19
the Invacare Group pursuant to allocation arrangements that
comply with the requirements of this Section 7.1(i));
(L) operate its business and activities such that: it does
not engage in any business or activity of any kind, or enter into
any transaction or indenture, mortgage, instrument, agreement,
contract, lease or other undertaking, other than the transactions
contemplated and authorized by this Agreement, the Receivables
Sale Agreement and the other Transaction Documents; and does not
create, incur, guarantee, assume or suffer to exist any
indebtedness or other liabilities, whether direct or contingent,
other than (1) as a result of the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business, (2) the incurrence of
obligations under this Agreement, (3) the incurrence of
obligations, as expressly contemplated in the Receivables Sale
Agreement, to make payment to each Originator thereunder for the
purchase of Receivables from such Originator under the
Receivables Sale Agreement, and (4) the incurrence of operating
costs and expenses in the ordinary course of business of the type
otherwise contemplated by this Agreement (including, without
limitation, any necessary insurance, third-party service
provider, Independent Director, Lock-Box and legal costs and
expenses);
(M) maintain its corporate charter in conformity with this
Agreement, such that it does not amend, restate, supplement or
otherwise modify its Certificate of Incorporation or By-Laws in
any respect that would impair its ability to comply with the
terms or provisions of any of the Transaction Documents,
including, without limitation, this Section 7.1(i);
(N) maintain its legal separateness such that it does not
merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series
of transactions, and except as otherwise contemplated herein) all
or substantially all of its assets (whether now owned or
hereafter acquired) to, or acquire all or substantially all of
the assets of, any Person, nor at any time create, have, acquire,
maintain or hold any interest in any Subsidiary.
(O) maintain at all times the Required Capital Amount (as
defined in the Receivables Sale Agreement) and refrain from
making any dividend, distribution, redemption of capital stock or
payment of any subordinated indebtedness which would cause the
Required Capital Amount to cease to be so maintained; and
(P) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the
non-consolidation opinion issued by Xxxxxx, Halter & Xxxxxxxx
LLP, as counsel for Seller, in connection with the closing or
initial Incremental Purchase under this Agreement and relating to
substantive consolidation issues, and in the certificates
accompanying such opinion, remain true and correct in all
material respects at all times.
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(j) Collections. Such Seller Party will cause (1) all proceeds from all
Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect. In the event
any payments relating to Receivables are remitted directly to Seller or any
Affiliate of Seller, Seller will remit (or will cause all such payments to be
remitted) directly to a Collection Bank and deposited into a Collection Account
within two (2) Business Days following receipt thereof, and, at all times prior
to such remittance, Seller will itself hold or, if applicable, will cause such
payments to be held in trust for the exclusive benefit of the Agent and the
Purchasers. Seller will maintain exclusive ownership of, and (together with the
Agent) dominion and control (subject to the terms of this Agreement and the
applicable Collection Account Agreement) over, each Lock-Box and Collection
Account and shall not grant the right to take dominion and control of any
Lock-Box or Collection Account at any time or upon the occurrence of a future
event to any Person, except to the Agent as contemplated by this Agreement and,
except that prior to the delivery of a Collection Notice with respect to a
Collection Account by the Agent in accordance with the terms hereof, Seller may
authorize the Servicer to make deposits to and withdrawals from such Collection
Account.
(k) Taxes. Such Seller Party will file all tax returns and reports required
by law to be filed by it and will promptly pay all taxes and governmental
charges at any time owing, except any such taxes which are not yet delinquent or
are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books. Seller will pay when due any taxes payable in connection with the
Receivables, exclusive of franchise taxes and taxes on or measured by income or
gross receipts of Conduit, the Agent or any Financial Institution.
(l) Insurance. Seller will maintain in effect, or cause to be maintained in
effect, at Seller's own expense, such casualty and liability insurance as Seller
shall deem appropriate in its good faith business judgment.
(m) Payment to Originators. With respect to any Receivable purchased by
Seller from an Originator, such sale shall be effected under, and in strict
compliance with the terms of, the Receivables Sale Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to such Originator in respect of the purchase price for such Receivable.
(n) Receivables Sale Agreement and Performance Undertaking Seller will
maintain the effectiveness of, and diligently enforce the provisions of, the
Receivables Sale Agreement and the Performance Undertaking. Seller will perform
its obligations as "Buyer" under the Receivables Sale Agreement. Seller will not
amend, restate, supplement, cancel, terminate or otherwise modify the
Receivables Sale Agreement or the Performance Undertaking, or give any consent,
waiver, directive or approval thereunder or waive any default, action, omission
or breach under the Receivables Sale Agreement or Performance Undertaking or
otherwise grant any indulgence thereunder, without (in each case) the prior
written consent of the Agent.
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Section 7.2 Negative Covenants of the Seller Parties. Until the date on
which the Aggregate Unpaids have been paid in full and this Agreement terminates
in accordance with its terms:
(a) Name Change, Offices and Records. Seller will not change its name,
identity or corporate structure (within the meaning of Section 9-507(c) of any
applicable enactment of the UCC), change its state of organization or relocate
any office where Records are kept unless it shall have: (i) given the Agent at
least forty-five (45) days' prior written notice thereof and (ii) delivered to
the Agent all financing statements, instruments and other documents reasonably
requested by the Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Except as may be required
by the Agent pursuant to Section 8.2(b), such Seller Party will not add or
terminate any bank as a Collection Bank, or make any change in the instructions
to Obligors regarding payments to be made to any Lock-Box or Collection Account,
unless the Agent shall have received, at least ten (10) days before the proposed
effective date therefor, (i) written notice of such addition, termination or
change and (ii) with respect to the addition of a Collection Bank or a
Collection Account or Lock-Box, an executed Collection Account Agreement with
respect to the new Collection Account or Lock-Box; provided, however, that the
Servicer may make changes in instructions to Obligors regarding payments if such
new instructions require such Obligor to make payments to another existing
Collection Account or Lock-Box, as applicable.
(c) Modifications to Contracts and Credit and Collection Policy. No Seller
Party will, and no Seller Party will permit any Originator to, make any change
to the Credit and Collection Policy that could reasonably be expected to
materially and adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables. Except as provided
in Section 8.2(d), the Servicer will not, and will not permit any Originator to,
extend, amend or otherwise modify the terms of any Receivable or any Contract
related thereto in any material respect other than in accordance with the Credit
and Collection Policy.
(d) Sales, Liens. Seller will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any financing statement) or with respect to, any Receivable (other
than Foreign Receivables), Related Security or Collections, or upon or with
respect to any Contract under which any such Receivable arises, or any Lock-Box
or Collection Account, or assign any right to receive income with respect
thereto (other than, in each case, the creation of the interests therein in
favor of the Agent and the Purchasers provided for herein), and Seller will
defend the right, title and interest of the Agent and the Purchasers in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under Seller or any Originator.
(e) Net Receivables Balance. At no time prior to the Amortization Date
shall Seller permit the Net Receivables Balance to be less than an amount equal
to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.
(f) Termination Date Determination. Seller will not designate the
Termination Date (as defined in the Receivables Sale Agreement), or send any
written notice to any Originator in respect thereof, without the prior written
consent of the Agent (not to be unreasonably withheld or delayed), except with
respect to the occurrence of such Termination Date arising pursuant to Section
5.1(d) of the Receivables Sale Agreement.
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(g) Restricted Junior Payments. From and after the occurrence and
continuance of any Amortization Event, Seller will not make any Restricted
Junior Payment if, after giving effect thereto, Seller would fail to meet its
obligations set forth in Section 7.2(e).
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer.
(a) The servicing, administration and collection of the Receivables shall
be conducted by such Person (the "Servicer") so designated from time to time in
accordance with this Section 8.1. Invacare is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the
terms of this Agreement. The Agent may at any time during the continuance an
Amortization Event, designate as Servicer any Person to succeed Invacare or any
successor Servicer.
(b) Invacare may delegate, and Invacare hereby advises the Purchasers and
the Agent that it has delegated, to each of the other Originators, as a
sub-servicer of the Servicer, certain of its duties and responsibilities as
Servicer hereunder in respect of the Receivables originated by such Originator.
Without the prior written consent of the Agent and the Required Financial
Institutions (such consent not to be unreasonably withheld or delayed), Invacare
shall not be permitted to delegate any of its duties or responsibilities as
Servicer to any Person other than (i) the other Originators and (ii) with
respect to Charged-Off Receivables, outside collection agencies in accordance
with its customary practices. The Originators, as sub-servicers, shall not be
permitted to further delegate to any other Person any of the duties or
responsibilities of the Servicer delegated to it by Invacare. If at any time
during the continuance of an Amortization Event, the Agent shall designate as
Servicer any Person other than Invacare, all duties and responsibilities
theretofore delegated by Invacare to any Originator may, at the discretion of
the Agent, be terminated forthwith on notice given by the Agent to Invacare and
to Seller.
(c) Notwithstanding the foregoing subsection (b), (i) while Invacare or any
of its Affiliates is Servicer, Invacare shall be and remain primarily liable to
the Agent and the Purchasers for the full and prompt performance of all duties
and responsibilities of the Servicer hereunder regardless of the appointment of
any sub-servicer, and (ii) while Invacare or any of its Affiliates is Servicer,
the Agent and the Purchasers shall be entitled to deal exclusively with Invacare
in matters relating to the discharge by the Servicer of its duties and
responsibilities hereunder. The Agent and the Purchasers shall not be required
to give notice, demand or other communication to any Person other than Invacare
in order for communication to the Servicer and its sub-servicer or other
delegate with respect thereto to be accomplished. Invacare, at all times that it
is the Servicer, shall be responsible for providing any sub-servicer or other
delegate of the Servicer with any notice given to the Servicer under this
Agreement.
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Section 8.2 Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect each Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections directly
to a Lock-Box or Collection Account. The Servicer shall effect a Collection
Account Agreement substantially in the form of one of the agreements included in
Exhibit VI hereto with each bank maintaining a Collection Account at any time.
In the case of any remittances received in any Lock-Box or Collection Account
that shall have been identified, to the satisfaction of the Servicer, to not
constitute Collections or other proceeds of the Receivables or the Related
Security, the Servicer shall promptly remit such items to the Person identified
to it as being the owner of such remittances. From and after the date the Agent
delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the
Agent may request that the Servicer, and the Servicer thereupon promptly shall
instruct all Obligors with respect to the Receivables, to remit all payments
thereon to a new depositary account specified by the Agent and, at all times
thereafter, Seller and the Servicer shall not authorize any Person to deposit or
otherwise credit to such new depositary account any cash or payment item other
than Collections.
(c) The Servicer shall administer the Collections in accordance with the
procedures described herein and in Article II. The Servicer shall set aside and
hold in trust (but, prior to the occurrence of an Amortization Event, shall not
be required to segregate) for the account of Seller and the Purchasers their
respective shares of the Collections in accordance with Article II. The Servicer
shall, upon the request of the Agent during the continuance of an Amortization
Event, segregate, in a manner acceptable to the Agent, all cash, checks and
other instruments received by it from time to time constituting Collections from
the general funds of the Servicer or Seller prior to the remittance thereof in
accordance with Article II. If the Servicer shall be required to segregate
Collections pursuant to the preceding sentence, the Servicer shall segregate and
deposit with a bank designated by the Agent such allocable share of Collections
of Receivables set aside for the Purchasers on the first Business Day following
receipt by the Servicer of such Collections, duly endorsed or with duly executed
instruments of transfer.
(d) Prior to the occurrence and continuance of an Amortization Event, the
Servicer may, in accordance with the Credit and Collection Policy, extend the
maturity of any Receivable or adjust the Outstanding Balance of any Receivable
as the Servicer determines to be appropriate to maximize Collections thereof;
provided, however, that such extension or adjustment shall not alter the status
of such Receivable as a Delinquent Receivable, Defaulted Receivable or
Charged-Off Receivable or limit the rights of the Agent or the Purchasers under
this Agreement. Notwithstanding anything to the contrary contained herein, from
and after the occurrence of an Amortization Event and during the continuance
thereof, the Agent shall have the absolute and unlimited right to direct the
Servicer to commence or settle any legal action with respect to any Receivable
or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Seller and the Purchasers all
Records that (i) evidence or relate to the Receivables, the related Contracts
and Related Security or (ii) are otherwise necessary or desirable
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to collect the Receivables and shall, as soon as practicable upon demand of the
Agent during the continuance of an Amortization Event, deliver or make available
to the Agent all such Records, at a place reasonably selected by the Agent. The
Servicer shall, as soon as practicable following receipt thereof turn over to
Seller any cash collections or other cash proceeds received with respect to
Indebtedness not constituting Receivables. The Servicer shall, from time to time
at the request of any Purchaser, furnish to the Purchasers (promptly after any
such request) a calculation of the amounts set aside for the Purchasers pursuant
to Article II; provided, however, that at such times that an Amortization Event
shall not be in existence, the Purchasers shall not request such computation
more frequently than once per month.
(f) Any payment by an Obligor in respect of any indebtedness owed by it to
any Originator or Seller shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Obligor (starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 8.3 Collection Notices. At any time during the continuance of an
Amortization Event or a Potential Amortization Event, the Agent is authorized to
date and to deliver to the Collection Banks the Collection Notices. Seller
hereby transfers to the Agent for the benefit of the Purchasers, effective when
the Agent delivers such notice, the exclusive ownership and control of each
Lock-Box and the Collection Accounts. In case any authorized signatory of Seller
whose signature appears on a Collection Account Agreement shall cease to have
such authority before the delivery of such notice, such Collection Notice shall
nevertheless be valid as if such authority had remained in force. Seller hereby
authorizes the Agent, and agrees that the Agent shall be entitled during the
continuance of an Amortization Event to (i) endorse Seller's name on checks and
other instruments representing Collections, (ii) enforce the Receivables, the
related Contracts and the Related Security and (iii) take such action as shall
be necessary or desirable to cause all cash, checks and other instruments
constituting Collections of Receivables to come into the possession of the Agent
rather than Seller.
Section 8.4 Responsibilities of Seller. Anything herein to the contrary
notwithstanding, the exercise by the Agent and the Purchasers of their rights
hereunder shall not release the Servicer, any Originator or Seller from any of
their duties or obligations with respect to any Receivables or under the related
Contracts. The Purchasers shall have no obligation or liability with respect to
any Receivables or related Contracts, nor shall any of them be obligated to
perform the obligations of Seller.
25
Section 8.5 Reports. The Servicer shall prepare and forward to the Agent
(i) on the 12th Business Day of each month, a Monthly Report, (ii) from and
after the occurrence of an Amortization Event, at such times as Agent shall
request, an interim report in form reasonably acceptable to the Agent showing
the amount of Eligible Receivables, and (iii) at such times as the Agent shall
reasonably request, a listing by Obligor of all Receivables together with an
aging of such Receivables.
Section 8.6 Servicing Fees. The Purchasers hereby agree that Seller shall
pay over to Servicer a fee (the "Servicing Fee") on the first calendar day of
each month, in arrears for the immediately preceding month, equal to 1.00% per
annum of the average aggregate Outstanding Balance of all Receivables during
such period, as compensation for its servicing activities.
ARTICLE IX.
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of the
following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail (i) to make any payment or deposit required
hereunder when due and, solely in the case of any Aggregate Unpaids that do not
constitute Capital, such failure shall continue for one (1) Business Day, or
(ii) to perform or observe any term, covenant or agreement hereunder (other than
as referred to in clause (i) of this paragraph (a) and paragraph 9.1(e)) and
such failure shall continue for three (3) consecutive Business Days following
the earlier of (A) notice from any Agent of such non-performance or
non-observance, or (B) the date on which an Authorized Officer of such Seller
Party otherwise becomes aware of such non-performance or non-observance.
(b) Any representation, warranty, certification or statement made by any
Seller Party in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect (unless already qualified as to materiality) when made
or deemed made.
(c) Failure of Seller to pay any Indebtedness when due, or failure by any
other Seller Party to pay any part of the principal of, the premium, if any, or
the interest on, or any other payment of money due under any of its Indebtedness
(other than Indebtedness hereunder), beyond any period of grace provided with
respect thereto, which individually or together with other such Indebtedness as
to which any such failure exists has an aggregate outstanding principal amount
in excess of $10,000,000; or any Seller Party or any of their respective
Subsidiaries shall fail to perform or observe any other term, covenant or
agreement contained in any agreement, document or instrument evidencing or
securing any such Indebtedness having such aggregate outstanding principal
amount, or under which any such Indebtedness was issued or created, beyond any
period of grace, if any, provided with respect thereto and such Seller Party has
been notified by such creditor of such default, the effect of any such failure
is either (i) to cause, or permit the holders of such Indebtedness (or a trustee
on behalf of such holders) to cause, any payment of such Indebtedness to become
due prior to its due date or (ii) to permit the holders of such Indebtedness (or
26
a trustee on behalf of such holders) to elect a majority of the board of
directors of such Seller Party.
(d) (i) Any Seller Party or any "Borrower" under the Five-Year Credit
Agreement (each, a "Material Party") shall be dissolved or liquidated (or any
judgment, order or decree therefor shall be entered) or shall generally not pay
its debts as they become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute, or (ii) there shall be instituted against such
Material Party, any proceeding or case seeking to adjudicate it bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its assets, rights, revenues or property, and, with respect
to any Material Party other than Seller, if such proceeding is instituted
against such Material Party and is being contested by such Material Party in
good faith by appropriate proceedings, such proceeding shall remain undismissed
or unstayed for a period of 60 days or any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any Material Party and, with respect to any Material
Party other than Seller, is not released, vacated or fully bonded within 60 days
after its issue or levy; or (iii) any Material Party shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection (d).
(e) Seller shall fail to comply with the terms of Section 2.6 hereof.
(f) As at the end of any calendar month:
(i) the average of the Delinquency Ratios for the three months then
most recently ended shall exceed 18%;
(ii) the average of the Default Ratios for the three months then most
recently ended shall exceed 8%; or
(iii) the average of the Dilution Ratios for the three months then
most recently ended shall exceed 9%
(g) A Change of Control shall occur.
(h) The Interest Coverage Ratio shall be less than 3.0 to 1.0; calculated
as of the end of each fiscal quarter for the four most recently ended fiscal
quarters.
(i) The Consolidated Net Worth of Invacare and its Subsidiaries (as defined
in the Five-Year Credit Agreement) at any time shall be less than the sum of (i)
$525,000,000, plus (ii) 50% of cumulative Consolidated Net Income of Invacare
and its Subsidiaries (as defined in the Five-Year Credit Agreement), if any, for
the three-month periods ending September 30, 2004 and December 31, 2004, and for
each fiscal year of Invacare ending December 31, 2005 and thereafter.
27
(j) The ratio, determined as of the end of each of Invacare's fiscal
quarters for the four most recently ended fiscal quarters, of Consolidated Total
Debt of Invacare and its Subsidiaries (as defined in the Five-Year Credit
Agreement) to Consolidated Adjusted EBITDA of Invacare and its Subsidiaries (as
defined in the Five-Year Credit Agreement) for the four most recently ended
fiscal quarters shall exceed (i) during the period from and including the
Effective Date (as defined in the Five-Year Credit Agreement) through December
30, 2006, 3.50 to 1.0, and (ii) commencing December 31, 2006 and thereafter,
3.25 to 1.0.
(k) (i) One or more final judgments for the payment of money shall be
entered against Seller or (ii) one or more judgments or orders shall be rendered
against or shall affect Servicer or any of its Subsidiaries which does or could
have a Material Adverse Effect, and either, as relates to clause (ii), (a) such
judgment or order shall have remained unsatisfied or uninsured for a period of
21 days and Servicer or Subsidiary, as applicable, shall not have taken action
necessary to stay enforcement thereof by reason of pending appeal or otherwise,
prior to the expiration of the applicable period of limitations for taking such
action or, if such action shall have been taken, a final order denying such stay
shall have been rendered or (ii) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order.
(l) The "Termination Date" under and as defined in the Receivables Sale
Agreement shall occur under the Receivables Sale Agreement or any Originator
shall for any reason cease to transfer, or cease to have the legal capacity to
transfer, or otherwise be incapable of transferring Receivables to Seller under
the Receivables Sale Agreement; provided that upon 30 days' prior written notice
to the Agent, an Originator may cease to sell or contribute Receivables (as
defined in the Receivables Sale Agreement) to the Seller under the Receivables
Sale Agreement without causing an Amortization Event under this Agreement if
such Originator has consolidated or merged with or into another Originator, and
provided further, upon 30 days' prior written notice to the Agent, Healthtech
Products, Inc. may cease to sell or contribute Receivables (as defined in the
Receivables Sale Agreement) to the Seller under the Receivables Sale Agreement
without causing an Amortization Event under this Agreement if the average
Outstanding Balance of Healthtech Products, Inc.'s Receivables in each of the
preceding 4 months represent less than 5% of the average total Outstanding
Balance of all Receivables in such months.
(m) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent for the benefit of the Purchasers
shall cease to have a valid and perfected first priority security interest in
the Receivables (other than Foreign Receivables), the Related Security and the
Collections with respect thereto and the Collection Accounts.
(n) Provider shall fail to perform or observe any term, covenant or
agreement required to be performed by it under the Performance Undertaking, or
the Performance Undertaking shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Provider, or Provider shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability.
28
Section 9.2 Remedies. Upon the occurrence and during the continuation of an
Amortization Event, the Agent may, or upon the direction of the Required
Financial Institutions shall, take any of the following actions: (i) replace the
Person then acting as Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by each Seller Party; provided, however, that upon the occurrence of an
Amortization Event described in Section 9.1(d)(ii), or of an actual or deemed
entry of an order for relief with respect to any Seller Party under the Federal
Bankruptcy Code, the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
waived by each Seller Party, (iii) to the fullest extent permitted by applicable
law, declare that the Default Fee shall accrue with respect to any of the
Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices
to the Collection Banks, and (v) notify Obligors of the Purchasers' interest in
the Receivables. The aforementioned rights and remedies shall be without
limitation, and shall be in addition to all other rights and remedies of the
Agent and the Purchasers otherwise available under any other provision of this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1 Indemnities.
10.1.1 Indemnity by Seller. Without limiting any other rights that the
Agent or any Purchaser may have hereunder or under applicable law, Seller hereby
agrees to indemnify (and pay upon demand to) the Agent and each Purchaser and
their respective assigns, officers, directors, agents and employees (each, an
"Indemnified Party") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by a Purchaser of an interest in the Receivables,
excluding, however:
(a) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect
of Receivables that are uncollectible on account of the insolvency, bankruptcy
or lack of creditworthiness of the related Obligor (or otherwise to the extent
that such Indemnified Amounts constitute credit recourse with respect to any
Receivable);
29
(c) taxes imposed by the jurisdiction in which such Indemnified Party's
principal executive office is located, on or measured by the overall net income
of such Indemnified Party to the extent that the computation of such taxes is
consistent with the characterization for income tax purposes of the acquisition
by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to
Seller secured by the Receivables, the Related Security, the Collection Accounts
and the Collections;
(d) with respect to Foreign Receivables, losses incurred due to the Agent's
or any Purchaser's inability to receive Collections with respect to such Foreign
Receivables as a result of Seller's failure to perfect Agent's security interest
hereunder or the sale of such Foreign Receivables under the Transaction
Documents in jurisdictions outside of the United States over and above the
Capital actually funded against such Foreign Receivables, together with accrued
CP Costs or Yield, as applicable; or
(e) with respect to Governmental Receivables, losses incurred due to the
inability of the Agent or any Purchaser to receive Collections with respect to
such Governmental Receivables arising as a result of Seller's failure to comply
with Assignment of Claims Acts over and above the Capital actually funded
against such Governmental Receivables, together with accrued CP Costs or Yield,
as applicable.
provided, however, that nothing contained in this sentence shall limit the
liability of Seller or limit the recourse of the Purchasers to Seller for
amounts otherwise specifically provided to be paid by Seller under the terms of
this Agreement. Without limiting the generality of the foregoing
indemnification, Seller shall indemnify the Agent and the Purchasers for
Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, regardless of whether reimbursement therefor would
constitute recourse to Seller) relating to or resulting from:
(i) any representation or warranty made by any Seller Party or
any Originator (or any officers of any such Person) under or in
connection with this Agreement, any other Transaction Document or any
other information or report required to be delivered by any such
Person pursuant hereto or thereto, which shall have been false or
incorrect when made or deemed made;
(ii) the failure by Seller, the Servicer or any Originator to
comply with any applicable law, rule or regulation with respect to any
Receivable or Contract related thereto, or the nonconformity of any
Receivable or Contract included therein with any such applicable law,
rule or regulation or any failure of any Originator to keep or perform
any of its obligations, express or implied, with respect to any
Contract; provided that the Seller Parties shall not be required to
comply with any Assignment of Claims Acts;
(iii) any failure of Seller, the Servicer or any Originator to
perform its duties, covenants or other obligations in accordance with
the provisions of this Agreement or any other Transaction Document;
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(iv) any products liability, personal injury or damage suit, or
other similar claim arising out of or in connection with merchandise
or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables by a Seller
Party or any of its Affiliates at any time with other funds;
(vii) any investigation, litigation or proceeding specifically
related to or arising from this Agreement or any other Transaction
Document, the sale of Receivables under the Receivables Sale Agreement
or use of the proceeds of an Incremental Purchase or a Reinvestment,
the ownership of the Purchaser Interests or any other investigation,
litigation or proceeding relating to Seller, the Servicer or any
Originator in which any Indemnified Party becomes involved
specifically as a result of any of the transactions contemplated
hereby;
(viii) any failure to vest and maintain vested in the Agent for
the benefit of the Purchasers, or to transfer to the Agent for the
benefit of the Purchasers, legal and equitable title to, and ownership
of, a first priority perfected undivided percentage ownership interest
(to the extent of the Purchaser Interests contemplated hereunder) or
security interest in the Receivables, the Related Security and the
Collections, free and clear of any Adverse Claim (except as created by
the Transaction Documents);
(ix) any Amortization Event described in Section 9.1(d);
(x) any failure of Seller to acquire and maintain legal and
equitable title to, and ownership of any Receivable (other than
Foreign Receivables) and the Related Security and Collections with
respect thereto from any Originator, free and clear of any Adverse
Claim (other than as created hereunder); or any failure of Seller to
give reasonably equivalent value to the applicable Originator under
the Receivables Sale Agreement in consideration of the transfer by
such Originator of any Receivable, or any attempt by any Person to
void such transfer under statutory provisions or common law or
equitable action;
(xi) the inability to xxx the Obligor on any Foreign Receivable
in courts in the United States of America due to its failure to
maintain an office in the United States of America to the extent
losses therefrom do not exceed the amount of Capital actually funded
against such Foreign Receivable, together with accrued CP Costs or
Yield, as applicable;
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(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable (other than Foreign Receivables), the
Related Security and Collections with respect thereto, and the
proceeds of any thereof, whether at the time of any Incremental
Purchase or Reinvestment or at any subsequent time; provided that the
Seller Parties shall not be required to comply with any Assignment of
Claims Act;
(xiii) any action or omission by any Seller Party which reduces
or impairs the rights of the Agent or the Purchasers with respect to
any Receivable or the value of any such Receivable;
(xiv) avoidance by any Person of any Incremental Purchase or
Reinvestment hereunder under statutory provisions or common law or
equitable action; and
(xv) the failure of any Receivable included in the calculation of
the Net Receivables Balance as an Eligible Receivable to be an
Eligible Receivable at the time so included.
Notwithstanding the foregoing, in no event shall Seller be liable to pay any
Indemnified Amounts arising in connection with Foreign Receivables or Government
Receivables, except to the extent the Purchasers actually funded against such
Receivables.
10.1.2. Indemnity By Servicer. Without limiting any other rights which any
such Person may have hereunder or under applicable law, Servicer agrees to
indemnify and each Indemnified Party for any and all Indemnified Amounts
incurred by any of them arising out of or relating to: (i) any breach by
Servicer of any of its obligations or duties under the Transaction Documents,
(ii) the inaccuracy of any representation made by Servicer hereunder or in any
certificate or written statement delivered pursuant hereto or any other
Transaction Document, (iii) any commingling of any funds by Servicer or any of
its Affiliates relating to the Receivables with any of its funds or the funds of
any other Person, (iv) any action or omission by Servicer which reduces or
impairs the rights of the Agent or the Purchasers with respect to any Receivable
or the value of any such Receivable, (v) any investigation, litigation or
proceeding relating to Servicer in which any Indemnified Party becomes involved
specifically as a result of its servicing activities hereunder, (vi) any
Amortization Event described in Section 9.1(d) with respect to the Servicer, and
(vii) Servicer's inclusion of any Receivable in the calculation of the Net
Receivables Balance as an Eligible Receivable to be an Eligible Receivable at
the time so included if Seller or an Originator had previously advised Servicer
that such Receivable was not an Eligible Receivable. The foregoing indemnity by
Servicer shall exclude Indemnified Amounts of the type described in the
exclusion clause of Section 10.1 to the extent applicable.
Section 10.2 Increased Cost and Reduced Return. If after the date hereof,
any Funding Source shall be charged any fee, expense or increased cost on
account of the adoption of any applicable law, rule or regulation (including any
applicable law, rule or regulation regarding capital adequacy), any accounting
principles or any change in any of the foregoing, or any change in the
interpretation or administration thereof by the Financial Accounting Standards
32
Board ("FASB"), any governmental authority, any central bank or any comparable
agency charged with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of law) of any
such authority or agency (a "Regulatory Change"): (i) that subjects any Funding
Source to any charge or withholding on or with respect to any Funding Agreement
or a Funding Source's obligations under a Funding Agreement, or on or with
respect to the Receivables, or changes the basis of taxation of payments to any
Funding Source of any amounts payable under any Funding Agreement (except for
changes in the rate of tax on the overall net income of a Funding Source or
taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems
applicable any reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of a Funding
Source, or credit extended by a Funding Source pursuant to a Funding Agreement
or (iii) that imposes any other condition the result of which is to increase the
cost to a Funding Source of performing its obligations under a Funding
Agreement, or to reduce the rate of return on a Funding Source's capital as a
consequence of its obligations under a Funding Agreement, or to reduce the
amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon demand by the
Agent (such demand to set forth in reasonable detail the calculation of any
additional amounts requested by Agent or such Funding Source), Seller shall (a)
pay to the Agent, for the benefit of the relevant Funding Source, such amounts
charged to such Funding Source or such amounts to otherwise compensate such
Funding Source for such increased cost or such reduction, and (b) if doing so
would reduce or eliminate the additional amounts requested by Agent or such
Funding Source, elect to convert any affected Purchaser Interests (whether then
existing or arising in the future) of Conduit to Purchaser Interests of the
Financial Institutions (or, without committing Conduit to purchase any Purchaser
Interest, convert any affected Purchaser Interests of the Financial Institutions
to Purchaser Interests of Conduit), so long as Seller pays all applicable Broken
Funding Costs. For the avoidance of doubt, if the issuance of FASB
Interpretation No. 46, or any other change in accounting standards or the
issuance of any other pronouncement, release or interpretation, causes or
requires the consolidation of all or a portion of the assets and liabilities of
Company or Seller with the assets and liabilities of the Agent, any Financial
Institution or any other Funding Source, such event shall constitute a
circumstance on which such Funding Source may base a claim for reimbursement
under this Section. All claims for reimbursement of any amount other than a tax
under this Section 10.2 must be made to the Seller within 270 days of the
incurrence thereof.
Section 10.3 Other Costs and Expenses. Seller shall pay to the Agent and
Conduit on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder, including without limitation, the costs of Conduit's auditors
auditing the books, records and procedures of the Seller Parties, reasonable
fees and out-of-pocket expenses of legal counsel for Conduit and the Agent with
respect thereto and with respect to advising Conduit and the Agent as to their
respective rights and remedies under this Agreement; provided, however, that
insofar as the costs of Conduit's auditors auditing the books, records and
procedures of the Seller Parties are concerned, unless an Amortization Event
occurs and is continuing, such audit will constitute a Review for purposes of
the proviso to Section 7.1(d). Seller shall pay to the Agent on demand any and
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all costs and expenses of the Agent and the Purchasers, if any, including
reasonable counsel fees and expenses in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following an Amortization Event.
Notwithstanding the foregoing, no Funding Source that is not organized
under the laws of the United States, or a state thereof, shall be entitled to
reimbursement or compensation under this Agreement unless and until it has
delivered to the Seller two (2) duly completed and signed originals of United
States Internal Revenue Service Form W-8BEN or W-8ECI, as applicable, certifying
in either case that such Funding Source is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes.
ARTICLE XI.
THE AGENT
Section 11.1 Authorization and Action. Each Purchaser hereby designates and
appoints JPMorgan Chase to act as its agent hereunder and under each other
Transaction Document, and authorizes the Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with any Purchaser, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for any Seller Party or any of such Seller Party's successors or assigns. The
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Agent hereunder
shall terminate upon the payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to file each of the Uniform Commercial
Code financing statements on behalf of such Purchaser (the terms of which shall
be binding on such Purchaser).
Section 11.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and each other Transaction Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 11.3 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties made by any Seller Party contained in this Agreement, any other
34
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement, or any other Transaction Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of any Seller Party to perform its
obligations hereunder or thereunder, or for the satisfaction of any condition
specified in Article VI, or for the perfection, priority, condition, value or
sufficiency of any collateral pledged in connection herewith. The Agent shall
not be under any obligation to any Purchaser to ascertain or to inquire as to
the observance or performance of any of the agreements or covenants contained
in, or conditions of, this Agreement or any other Transaction Document, or to
inspect the properties, books or records of the Seller Parties. The Agent shall
not be deemed to have knowledge of any Amortization Event or Potential
Amortization Event unless the Agent has received notice from Seller or a
Purchaser.
Section 11.4 Reliance by Agent. The Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Seller), independent accountants and
other experts selected by the Agent. The Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of Conduit or the Required Financial Institutions or all of the
Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Conduit or
the Required Financial Institutions or all of the Purchasers, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 11.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Seller
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Financial Institutions
agree to reimburse and indemnify the Agent and its officers, directors,
employees, representatives and agents ratably according to their Pro Rata
Shares, to the extent not paid or reimbursed by the Seller Parties (i) for any
amounts for which the Agent, acting in its capacity as Agent, is entitled to
reimbursement by the Seller Parties hereunder and (ii) for any other expenses
incurred by the Agent, in its capacity as Agent and acting on behalf of the
35
Purchasers, in connection with the administration and enforcement of this
Agreement and the other Transaction Documents.
Section 11.7 Agent in its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with Seller or any Affiliate of Seller as though the Agent were not the
Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant
to this Agreement, the Agent shall have the same rights and powers under this
Agreement in its individual capacity as any Purchaser and may exercise the same
as though it were not the Agent, and the terms "Financial Institution,"
"Purchaser," "Financial Institutions" and "Purchasers" shall include the Agent
in its individual capacity.
Section 11.8 Successor Agent. The Agent may, upon five days' notice to
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Financial Institutions during such
five-day period shall, with the consent of Seller (not to be unreasonably
withheld or delayed) unless an Amortization Event has occurred and is
continuing, appoint from among the Purchasers a successor agent. If for any
reason no successor Agent is appointed by the Required Financial Institutions
during such five-day period, then effective upon the termination of such five
day period, the Purchasers shall perform all of the duties of the Agent
hereunder and under the other Transaction Documents and Seller and the Servicer
(as applicable) shall make all payments in respect of the Aggregate Unpaids
directly to the applicable Purchasers and for all purposes shall deal directly
with the Purchasers. After the effectiveness of any retiring Agent's resignation
hereunder as Agent, the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Transaction Documents and the
provisions of this Article XI and Article X shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while it
was Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII.
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments.
(a) Each of the Seller Parties and the Financial Institutions hereby agrees
and consents to the complete or partial assignment by Conduit of all or any
portion of its rights under, interest in, title to and obligations under this
Agreement (i) to the Financial Institutions pursuant to a Funding Agreement,
(ii) to any other commercial paper conduit administered by the Agent having
short term credit ratings at least as high as those of the Conduit or (iii) with
the consent of Seller (not to be unreasonably withheld or delayed), to any other
Person, and upon any such assignment, Conduit shall be released from its
obligations so assigned. Further, each of the Seller Parties and each Financial
Institution hereby agree that any assignee of Conduit of this Agreement or all
or any of the Purchaser Interests of Conduit shall have all of the rights and
benefits under this Agreement as if the term "Conduit" explicitly referred to
such party, and no such assignment shall in any way impair the rights and
36
benefits of Conduit hereunder. Neither Seller nor the Servicer shall have
the right to assign its rights or obligations under this Agreement.
(b) Any Financial Institution may at any time and from time to time, with
the consent of Conduit and Seller (not to be unreasonably withheld or delayed)
assign to one or more Persons ("Purchasing Financial Institutions") all or any
part of its rights and obligations under this Agreement pursuant to an
assignment agreement, substantially in the form set forth in Exhibit VII hereto
(the "Assignment Agreement") executed by such Purchasing Financial Institution
and such selling Financial Institution; provided that (i) Seller's consent shall
not be required with respect to any assignment made after the occurrence and
during the continuance of an Amortization Event, and (ii) any partial assignment
shall be in a minimum amount of $5,000,000. Each assignee of a Financial
Institution must (i) be an Eligible Assignee and (ii) agree to deliver to the
Agent, promptly following any request therefor by the Agent or Conduit, an
enforceability opinion in form and substance satisfactory to the Agent and
Conduit. Upon delivery of the executed Assignment Agreement to the Agent, such
selling Financial Institution shall be released from its obligations hereunder
to the extent of such assignment. Thereafter the Purchasing Financial
Institution shall for all purposes be a Financial Institution party to this
Agreement and shall have all the rights and obligations of a Financial
Institution under this Agreement to the same extent as if it were an original
party hereto and no further consent or action by Seller, the Purchasers or the
Agent shall be required.
(c) Each of the Financial Institutions agrees that in the event that it
shall cease to have a short-term debt rating of A-1 or better by Standard &
Poor's Ratings Group and P-1 by Xxxxx'x Investor Service, Inc. (an "Affected
Financial Institution"), such Affected Financial Institution shall be obliged,
at the request of Conduit or the Agent, to assign all of its rights and
obligations hereunder to (x) another Financial Institution or (y) another
funding entity nominated by the Agent and acceptable to Conduit, and willing to
participate in this Agreement through the Liquidity Termination Date in the
place of such Affected Financial Institution; provided that the Affected
Financial Institution receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Financial Institution's Pro Rata Share of
the Aggregate Capital and Yield owing to the Financial Institutions and all
accrued but unpaid fees and other costs and expenses payable in respect of its
Pro Rata Share of the Purchaser Interests of the Financial Institutions.
Section 12.2 Participations. Any Financial Institution may, in the ordinary
course of its business at any time sell to one or more Persons (each a
"Participant") participating interests in its Pro Rata Share of the Purchaser
Interests of the Financial Institutions, its obligation to pay Conduit its
Acquisition Amounts or any other interest of such Financial Institution
hereunder. Notwithstanding any such sale by a Financial Institution of a
participating interest to a Participant, such Financial Institution's rights and
obligations under this Agreement shall remain unchanged, such Financial
Institution shall remain solely responsible for the performance of its
obligations hereunder, and Seller, Conduit and the Agent shall continue to deal
solely and directly with such Financial Institution in connection with such
Financial Institution's rights and obligations under this Agreement. Each
Financial Institution agrees that any agreement between such Financial
Institution and any such Participant in respect of such participating interest
shall not restrict such Financial Institution's right to agree to any amendment,
37
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section 13.1(b)(i).
ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Waivers and Amendments.
(a) No failure or delay on the part of the Agent or any Purchaser in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing in accordance with the provisions of this Section
13.1(b). Conduit, Seller and the Agent, at the direction of the Required
Financial Institutions, may enter into written modifications or waivers of any
provisions of this Agreement, provided, however, that no such modification or
waiver shall:
(i) without the consent of each affected Purchaser, (A) extend
the Liquidity Termination Date or the date of any payment or deposit
of Collections by Seller or the Servicer, (B) reduce the rate or
extend the time of payment of Yield or any CP Costs (or any component
of Yield or CP Costs), (C) reduce any fee payable to the Agent for the
benefit of the Purchasers, (D) except pursuant to Article XII hereof,
change the amount of the Capital of any Purchaser, any Financial
Institution's Pro Rata Share (except pursuant to a Funding Agreement)
or any Financial Institution's Commitment, (E) amend, modify or waive
any provision of the definition of Required Financial Institutions or
this Section 13.1(b), (F) consent to or permit the assignment or
transfer by Seller of any of its rights and obligations under this
Agreement, (G) change the definition of "Eligible Receivable," "Loss
Reserve" "Dilution Reserve" "Yield and Servicing Reserve," or "Special
Concentration Limit," or (H) amend or modify any defined term (or any
defined term used directly or indirectly in such defined term) used in
clauses (A) through (G) above in a manner that would circumvent the
intention of the restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to
affect the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Financial
Institutions, but with the consent of Seller, the Agent may amend this Agreement
solely to add additional Persons as Financial Institutions hereunder, and (ii)
the Agent, the Required Financial Institutions and Conduit may enter into
38
amendments to modify any of the terms or provisions of Article XI, Sections 11.1
through 11.7, Section 13.3 or any other provision of this Agreement without the
consent of Seller, provided that such amendment has no negative impact upon
Seller. Any modification or waiver made in accordance with this Section 13.1
shall apply to each of the Purchasers equally and shall be binding upon Seller,
the Purchasers and the Agent.
Section 13.2 Notices. Except as provided in this Section 13.2, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature pages hereof or at such other
address or telecopy number as such Person may hereafter specify for the purpose
of notice to each of the other parties hereto. Each such notice or other
communication shall be effective (i) if given by telecopy, upon the receipt
thereof, (ii) if given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or (iii)
if given by any other means, when received by an Authorized Officer at the
address specified in this Section 13.2. Seller hereby authorizes the Agent to
effect purchases and Tranche Period and Discount Rate selections based on
telephonic notices made by any Person whom the Agent in good faith believes to
be acting on behalf of Seller. Seller agrees to deliver promptly to the Agent a
written confirmation of each telephonic notice signed by an authorized officer
of Seller; provided, however, the absence of such confirmation shall not affect
the validity of such notice. If the written confirmation differs from the action
taken by the Agent, the records of the Agent shall govern absent manifest error.
Section 13.3 Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 10.2 or 10.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of such Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of such
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest. Section 13.4 Protection of Ownership Interests of the Purchasers.
(a) Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may be necessary or desirable, or that the Agent may request, to perfect,
protect or more fully evidence the Purchaser Interests, or to enable the Agent
or the Purchasers to exercise and enforce their rights and remedies hereunder.
At any time during the continuance of an Amortization Event, the Agent may, or
the Agent may direct Seller or the Servicer to, notify the Obligors of
Receivables, at Seller's expense, of the ownership or security interests of the
Purchasers under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Receivables be made directly to the
Agent or its designee. Seller or the Servicer (as applicable) shall, at any
Purchaser's request, withhold the identity of such Purchaser in any such
notification.
39
(b) If any Seller Party fails to perform any of its obligations hereunder,
the Agent or any Purchaser may (but shall not be required to) perform, or cause
performance of, such obligations, and the Agent's or such Purchaser's costs and
expenses incurred in connection therewith shall be payable by Seller as provided
in Section 10.3. Each Seller Party irrevocably authorizes the Agent at any time
and from time to time in the sole discretion of the Agent, and appoints the
Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to
execute on behalf of Seller as debtor and to file financing statements necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchasers in the Receivables
(other than Foreign Receivables) and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Receivables as a financing statement in such offices as the Agent in its
sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Purchasers in the Receivables;
provided that without the prior written consent of the Seller (other than during
the continuance of an Amortization Event) the Agent will not take any actions to
comply with any Assignment of Claims Acts. This appointment is coupled with an
interest and is irrevocable.
Section 13.5 Confidentiality.
(a) Each Seller Party and each Purchaser shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential or proprietary information with respect to
the Agent and Conduit and their respective businesses obtained by it or them in
connection with the structuring, negotiating and execution of the transactions
contemplated herein, except that such Seller Party and such Purchaser and its
officers and employees may disclose such information to such Seller Party's and
such Purchaser's external accountants, consultants (other than investment banks
and other financing sources) and attorneys and as required by any applicable
law, Governmental Authority or order of any judicial or administrative
proceeding.
(b) Anything herein to the contrary notwithstanding, each Seller Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Agent, the Financial Institutions or Conduit by each other, (ii)
by the Agent or the Purchasers to any prospective or actual assignee or
participant of any of them and (iii) by the Agent to any nationally recognized
statistical rating agency rating the Commercial Paper, any Commercial Paper
dealer or provider of a surety, guaranty or credit or liquidity enhancement to
Conduit or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which JPMorgan Chase acts as the administrative
agent and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of the
confidential nature of such information. In addition, the Purchasers and the
Agent may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
Section 13.6 Bankruptcy Petition. Seller, the Servicer, the Agent and each
Financial Institution hereby covenants and agrees that, prior to the date that
is one year and one day after the payment in full of all outstanding senior
indebtedness of Conduit, it will not institute against, or join any other Person
in instituting against, Conduit any bankruptcy, reorganization, arrangement,
40
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.
Section 13.7 Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of Conduit, the Agent
or any Financial Institution, no claim may be made by any Seller Party or any
other Person against Conduit, the Agent or any Financial Institution or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and each Seller Party hereby waives,
releases, and agrees not to xxx upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 13.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF NEW YORK.
Section 13.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH
PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY
SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE
AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT
EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY
IN A COURT IN NEW YORK, NEW YORK.
Section 13.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
41
Section 13.11 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the final
and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof superseding
all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns (including
any trustee in bankruptcy). This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms and
shall remain in full force and effect until terminated in accordance with its
terms; provided, however, that the rights and remedies with respect to (i) any
breach of any representation and warranty made by any Seller Party pursuant to
Article V, (ii) the indemnification and payment provisions of Article X, and
Sections 13.5 and 13.6 shall be continuing and shall survive any termination of
this Agreement.
Section 13.12 Counterparts; Severability; Section References. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
Section 13.13 JPMorgan Chase Roles. Each of the Financial Institutions
acknowledges that JPMorgan Chase acts, or may in the future act, (i) as
administrative agent for Conduit or any Financial Institution, (ii) as issuing
and paying agent for the Commercial Paper, (iii) to provide credit or liquidity
enhancement for the timely payment for the Commercial Paper and (iv) to provide
other services from time to time for Conduit or any Financial Institution
(collectively, the "JPMorgan Chase Roles"). Without limiting the generality of
this Section 13.13, each Financial Institution hereby acknowledges and consents
to any and all JPMorgan Chase Roles and agrees that in connection with any
JPMorgan Chase Role, JPMorgan Chase may take, or refrain from taking, any action
that it, in its discretion, deems appropriate, including, without limitation, in
its role as administrative agent for Conduit, and the giving of notice to the
Agent of a purchase pursuant to a Funding Agreement.
Section 13.14 Characterization.
(a) It is the intention of the parties hereto that each purchase hereunder
shall constitute and be treated as an absolute and irrevocable sale, which
purchase shall provide the applicable Purchaser with the full benefits of
ownership of the applicable Purchaser Interest. Except as specifically provided
in this Agreement, each sale of a Purchaser Interest hereunder is made without
recourse to Seller; provided, however, that (i)
42
Seller shall be liable to each Purchaser and the Agent for all representations,
warranties, covenants and indemnities made by Seller pursuant to the terms of
this Agreement, and (ii) such sale does not constitute and is not intended to
result in an assumption by any Purchaser or the Agent or any assignee thereof of
any obligation of Seller or any Originator or any other person arising in
connection with the Receivables, the Related Security, or the related Contracts,
or any other obligations of Seller or any Originator.
(b) In addition to any ownership interest which the Agent may from time to
time acquire pursuant hereto, Seller hereby grants to the Agent for the ratable
benefit of the Purchasers, a continuing security interest in all of Seller's
right, title and interest in, to and under all Receivables now existing or
hereafter arising, the Collections, each Lock-Box, each Collection Account, all
Related Security, all other rights and payments relating to such Receivables,
and all proceeds of any thereof prior to all other liens on and security
interests therein to secure the prompt and complete payment of the Aggregate
Unpaids. The Agent and the Purchasers shall have, in addition to the rights and
remedies that they may have under this Agreement, all other rights and remedies
provided to a secured creditor under the UCC and other applicable law, which
rights and remedies shall be cumulative. To the extent permitted by applicable
law, the Agent is hereby authorized to file UCC financing statements against the
Seller listing the collateral granted hereunder as "all assets" or other words
of similar effect. This Agreement shall constitute a security agreement under
applicable law.
[SIGNATURE PAGES FOLLOW]
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.
INVACARE RECEIVABLES CORPORATION, as Seller
By:/s/ Xxxx Xxxxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Assistant Treasurer
Address:
Invacare Receivables Corporation
c/o Invacare Corporation
Xxx Xxxxxxxx Xxx
Xxxxxx, Xxxx 00000
Attn: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
INVACARE CORPORATION, as Servicer
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Financial Officer
Address:
Invacare Corporation
Xxx Xxxxxxxx Xxx
Xxxxxx, Xxxx 00000
Attn: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
00
XXXX XXXXXX XXXXXXXXXXX COMPANY, LLC
BY: JPMORGAN CHASE BANK, N.A., ITS ATTORNEY-IN-FACT
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
Address: c/o JPMorgan Chase Bank, N.A., as Agent
Asset Backed Securities
Suite IL1-0079
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Parco Funding Manager
Fax: (000) 000-0000
JPMORGAN CHASE BANK, N.A., as a Financial Institution and as Agent
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
Address: JPMorgan Chase Bank, N.A.
Asset Backed Securities
Suite IL1-0594,
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: ABS Transaction Manager
Fax: (000) 000-0000
45
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Accrual Period" means each calendar month, provided that the initial
Accrual Period hereunder means the period from (and including) the date of the
initial purchase hereunder to (and including) the last day of the calendar month
thereafter.
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Invacare or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Adjusted EBITDA" shall mean , with respect to any person, for any period,
the sum of (a) EBIT for such period, plus (b) all amounts deducted in
determining such EBIT on account of depreciation and amortization expense, minus
(c) any extraordinary, unusual or non-recurring gains or other income (or plus
any extraordinary, unusual or non-recurring non-cash losses) of Invacare and its
Subsidiaries (as defined in the Five-Year Credit Agreement), and related tax
effects, in accordance with GAAP, plus (d) any non-cash losses or charges
related to restructuring efforts during such period, plus (e) any cash charges
related to restructuring efforts during such period up to an aggregate amount of
$25,000,000 since the Effective Date (as defined in the Five-Year Credit
Agreement). Notwithstanding anything herein, in any financial statements of
Invacare or in GAAP to the contrary, for purposes of calculating and determining
Adjusted EBITDA, (i) any Acquisition made by Invacare or any of its Subsidiaries
(as defined in the Five-Year Credit Agreement), including through mergers or
consolidations and including any related financing transactions, during the
period for which such Adjusted EBITDA was calculated shall be deemed to have
occurred on the first day of the relevant period for which such Adjusted EBITDA
was calculated on a pro forma basis acceptable to the Agent, but without giving
effect to any projected synergies resulting from such Acquisition and (ii) any
amounts which are attributable to any asset, investment or person which has been
divested by Invacare or any Subsidiary (as defined in the Five-Year Credit
Agreement) during the period for which such Adjusted EBITDA was calculated shall
be excluded from the calculation of Adjusted EBITDA and such divestiture shall
be deemed to have occurred on the first day of the relevant period for which
such Adjusted EBITDA was calculated.
"Adverse Claim" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
46
"Affected Financial Institution" has the meaning specified in Section
12.1(c).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person or any Subsidiary of such Person. A Person shall be
deemed to control another Person if the controlling Person owns greater than 25%
of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"Agent" has the meaning set forth in the preamble to this Agreement.
"Aggregate Capital" means, on any date of determination, the aggregate
amount of Capital of all Purchaser Interests outstanding on such date.
"Aggregate Reduction" has the meaning specified in Section 1.3.
"Aggregate Reserves" means, on any date of determination, the product of
(a) the sum of the Loss Reserve, the Dilution Reserve and the Yield and
Servicing Reserve times (b) the Net Receivables Balance.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of all
Aggregate Capital and all other unpaid Obligations (whether due or accrued) at
such time.
"Agreement" means this Receivables Purchase Agreement, as it may be amended
or modified and in effect from time to time.
"Amortization Date" means the earliest to occur of (i) the Business Day
immediately prior to the occurrence of an Amortization Event set forth in
Section 9.1(d)(ii), (ii) the Business Day specified in a written notice from the
Agent following the occurrence of any other Amortization Event, (iii) the date
which is 30 Business Days after the Agent's receipt of written notice from
Seller that it wishes to terminate the facility evidenced by this Agreement.
"Amortization Event" has the meaning specified in Article IX.
"Applicable Margin" means the Applicable Margin (as such term is defined in
the Five-Year Credit Agreement) plus 15 basis points.
"Assignment Agreement" has the meaning set forth in Section 12.1(b).
"Assignment of Claims Acts" means the provisions of United States Code, 31
U.S.C. ss. 3727 and 41 U.S.C. ss. 15, and similar laws of any other domestic or
foreign jurisdiction.
"Authorized Officer" means, with respect to any Person, its president,
corporate controller, treasurer, chief financial officer or credit manager.
"Broken Funding Costs" means for any Purchaser Interest which: (i) has its
Capital reduced without compliance by Seller with the notice requirements
47
hereunder or (ii) does not become subject to an Aggregate Reduction following
the delivery of any Reduction Notice or (iii) is assigned under any Funding
Agreement or terminated prior to the date on which it was originally scheduled
to end; an amount equal to the excess, if any, of (A) the CP Costs or Yield (as
applicable) that would have accrued during the remainder of the Tranche Periods
or the tranche periods for Commercial Paper determined by the Agent to relate to
such Purchaser Interest (as applicable) subsequent to the date of such
reduction, assignment or termination (or in respect of clause (ii) above, the
date such Aggregate Reduction was designated to occur pursuant to the Reduction
Notice) of the Capital of such Purchaser Interest if such reduction, assignment
or termination had not occurred or such Reduction Notice had not been delivered,
over (B) the sum of (x) to the extent all or a portion of such Capital is
allocated to another Purchaser Interest, the amount of CP Costs or Yield
actually accrued during the remainder of such period on such Capital for the new
Purchaser Interest, and (y) to the extent such Capital is not allocated to
another Purchaser Interest, the income, if any, actually received during the
remainder of such period by the holder of such Purchaser Interest from investing
the portion of such Capital not so allocated. In the event that the amount
referred to in clause (B) exceeds the amount referred to in clause (A), the
relevant Purchaser or Purchasers agree to pay to Seller the amount of such
excess. All Broken Funding Costs shall be due and payable hereunder upon demand.
"Business Day" means any day on which banks are not authorized or required
to close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York is open for business, and, if the applicable Business Day
relates to any computation or payment to be made with respect to the LIBO Rate,
any day on which dealings in dollar deposits are carried on in the London
interbank market.
"Calculation Period" means a calendar month.
"Capital" of any Purchaser Interest means, at any time, (A) the Purchase
Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of
Collections and other payments received by the Agent which in each case are
applied to reduce such Capital in accordance with the terms and conditions of
this Agreement; provided that such Capital shall be restored (in accordance with
Section 2.5) in the amount of any Collections or other payments so received and
applied if at any time the distribution of such Collections or payments are
rescinded, returned or refunded for any reason.
"Capital Lease" of any person shall mean any lease which, in accordance
with GAAP, is capitalized on the books of such person.
"Cash Discount Factor" means, for the Calculation Period most recently
ended and the two prior Calculation Periods, 1.25 times the greatest amount of
cash discount credits issued in any one of such Calculation Periods.
"Change of Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 50% or more of the outstanding shares of voting stock of
Invacare or the failure by Invacare to control directly or indirectly more than
100% of the voting stock of Seller.
48
"Charged-Off Receivable" means a Receivable: (i) as to which the Obligor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 9.1(d) (as if references to Seller Party therein refer to
such Obligor); (ii) as to which the Obligor thereof, if a natural person, is
deceased; (iii) which, consistent with the Credit and Collection Policy, would
be written off Seller's books as uncollectible due to insolvency or other credit
issues with respect to the primary Obligor; or (iv) which has been identified by
Seller as uncollectible due to insolvency or other credit issues with respect to
the primary Obligor.
"Collection Account" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited and which is listed on Exhibit IV.
"Collection Account Agreement" means an agreement substantially in the form
of one of the agreements included in Exhibit VI among an Originator, Seller, the
Agent and a Collection Bank.
"Collection Bank" means, at any time, any of the banks holding one or more
Collection Accounts.
"Collection Notice" means a notice, in substantially the form of Annex A to
Exhibit VI, from the Agent to a Collection Bank.
"Collection Receivable" means a Receivable identified as being "in
collection" in accordance with the Credit and Collection Policy.
"Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable received by any Originator
or Seller Party, including, without limitation, all yield, Finance Charges or
other related amounts accruing in respect thereof and all cash proceeds of
Related Security with respect to such Receivable.
"Commercial Paper" means promissory notes of Conduit issued by Conduit in
the commercial paper market.
"Commitment" means, for each Financial Institution, the commitment of such
Financial Institution to purchase Purchaser Interests from (i) Seller and (ii)
Conduit, in an amount not to exceed (i) in the aggregate, the amount set forth
opposite such Financial Institution's name on Schedule A to this Agreement, as
such amount may be modified in accordance with the terms hereof and (ii) with
respect to any individual purchase hereunder, its Pro Rata Share of the Purchase
Price therefor.
"Commitment Availability" means at any time the positive difference (if
any) between (a) an amount equal to the aggregate amount of the Commitments at
such time minus (b) the Aggregate Capital at such time.
"Conduit" has the meaning set forth in the preamble to this Agreement.
"Concentration Limit" means, at any time, for any Obligor, an amount equal
to (i) 1/3 of the percentage in clause (i) of the definition of "Loss Reserve"
49
times (ii) the aggregate Outstanding Balance of all Net Eligible Receivables, or
such other greater amount (a "Special Concentration Limit") for such Obligor
designated by the Agent; provided, that in the case of an Obligor and any
Affiliate of such Obligor, the Concentration Limit shall be calculated as if
such Obligor and such Affiliate are one Obligor; and provided, further, that
Conduit or the Required Financial Institutions may, upon not less than three
Business Days' notice to Seller, cancel any Special Concentration Limit.
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for Invacare and its
consolidated Subsidiaries (as defined in the Five-Year Credit Agreement) of the
amounts signified by such term for all such persons determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, all interest accrued
by Invacare and its Subsidiaries (as defined in the Five-Year Credit Agreement)
calculated on a consolidated basis during such period.
"Consolidated Net Income" of any person shall mean, for any period, the net
income (after deduction for income and other taxes of such person determined by
reference to income or profits of such person) for such period (but without
reduction for any net loss incurred for any fiscal year during such period), all
as determined in accordance with GAAP.
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation (i) all reimbursement obligations of such person in respect
of any letters of credit, surety bonds or similar obligations; (ii) all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the financial condition
of such other person; and (iii) any contingent consideration payable in
connection with any Acquisition to the extent that such person is contractually
obligated to make such payment and the amount of such payment can be determined.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and all instruments,
agreements, invoices or other writings pursuant to which such Receivable arises
or which evidences such Receivable.
"CP Costs" means, for each day, the sum of (i) discount or yield accrued on
Pooled Commercial Paper on such day, plus (ii) any and all accrued commissions
50
in respect of placement agents and Commercial Paper dealers, and issuing and
paying agent fees incurred, in respect of such Pooled Commercial Paper for such
day, plus (iii) other costs associated with funding small or odd-lot amounts
with respect to all receivable purchase facilities which are funded by Pooled
Commercial Paper for such day, minus (iv) any accrual of income net of expenses
received on such day from investment of collections received under all
receivable purchase facilities funded substantially with Pooled Commercial
Paper, minus (v) any payment received on such day net of expenses in respect of
Broken Funding Costs related to the prepayment of any Purchaser Interest of
Conduit pursuant to the terms of any receivable purchase facilities funded
substantially with Pooled Commercial Paper. In addition to the foregoing costs,
if Seller shall request any Incremental Purchase during any period of time
determined by the Agent in its sole discretion to result in incrementally higher
CP Costs applicable to such Incremental Purchase, the Capital associated with
any such Incremental Purchase shall, during such period, be deemed to be funded
by Conduit in a special pool (which may include capital associated with other
receivable purchase facilities) for purposes of determining such additional CP
Costs applicable only to such special pool and charged each day during such
period against such Capital.
"Credit and Collection Policy" means Seller's credit and collection
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in Exhibit VIII hereto, as modified from time to time
in accordance with this Agreement.
"Cut-Off Date" means the last day of a Calculation Period.
"Deemed Collections" means the aggregate of all amounts Seller shall have
been deemed to have received as a Collection of a Receivable. Seller shall be
deemed to have received a Collection in full of a Receivable if at any time any
of the representations or warranties in clauses (i), (j), (s), (t), (u) or (x)
of Section 5.1 or, to the extent they related to such Receivable, any of the
representations or warranties in clause (g) or (r) of Section 5.1, are deemed to
have been untrue in any respect when made with respect to such Receivable. If
(i) the Outstanding Balance of any Receivable is reduced as a result of any
defective or rejected goods or services, any discount or any adjustment or
otherwise by Seller (other than cash Collections on account of the Receivables
or as otherwise permitted by Section 8.2(d)), or (ii) the Outstanding Balance of
any Receivable is reduced or canceled as a result of a setoff in respect of any
claim by the Obligor thereof (whether such claim arises out of the same or a
related or an unrelated transaction), the applicable Originator shall be deemed
to have received a Collection to the extent of such reduction or cancellation.
"Default Fee" means with respect to any amount due and payable by Seller in
respect of any Aggregate Unpaids, an amount equal to the interest on any such
unpaid Aggregate Unpaids at a rate per annum equal to 2% above the Prime Rate.
"Default Ratio" means, as of any Cut-Off Date, the ratio (expressed as a
percentage) computed by dividing (x) the total Outstanding Balance of Defaulted
Receivables plus (i) the amount of Receivables which became Charged-Off
Receivables before becoming Defaulted Receivables during the Calculation Period
that includes such Cut-Off Date and (ii) the amount of Receivables that were
converted to a note receivable or a Collection Receivable before becoming
Defaulted Receivables during the Calculation Period that includes such Cut-Off
Date, by (y) the aggregate sales generated by the Originators during the
51
Calculation Period occurring six months prior to the Calculation Period ending
on such Cut-Off Date.
"Defaulted Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for 121-150 days from the original due date for such
payment; provided that once a Receivable becomes a Charged-Off Receivable, it
shall no longer be a Defaulted Receivable.
"Delinquency Ratio" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables as to which any payment or part
thereof remains unpaid for more than 120 days plus the aggregate Outstanding
Balance of all Collection Receivables outstanding for less than 121 days divided
by (ii) the aggregate Outstanding Balance of all Receivables at such time.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for 61 days or more from the original due date for such
payment.
"Designated Obligor" means any Obligor designated in writing by the Agent,
in the exercise of reasonable credit judgment, as being unacceptable to it.
"Dilution Horizon Ratio" means, as of any Cut-off Date, a ratio (expressed
as a decimal), computed by dividing (i) the aggregate amount of Receivables
generated by the Originators during the current Calculation Period plus 50% of
the aggregate amount of Receivables generated by the Originators during the
prior Calculation Period, by (ii) the Net Receivables Balance.
"Dilution Ratio" means, as of any Cut-Off Date, a ratio (expressed as a
percentage), computed by dividing (a) the total amount of Dilutions during the
Calculation Period ending on such Cut-Off Date (excluding any credits related to
rebates or cash discounts), by (b) the aggregate amount of Receivables generated
by the Originators during the Calculation Period that ended two Cut-Off Dates
prior to such Cut-Off Date.
"Dilution Reserve" means as of the last day of any calendar month, a
percentage equal to the greater of (i) 5.00% and
(ii) [(DSF x ED) + ((DS - ED) x DS)] x DHR ED
where:
DSF = the Dilution Stress Factor at such time;
ED = the Expected Dilution Ratio at such time;
DS = the Dilution Spike Ratio at such time; and
DHR = the Dilution Horizon Ratio at such time.
52
"Dilution Spike Ratio" means, on any date of determination, the greatest
2-month rolling average of the Dilution Ratio (as determined as of the last day
of each calendar month) during the immediately preceding twelve (12) calendar
months ending on or prior to such date of determination.
"Dilution Stress Factor" means, at any time, if Servicer's ratio of Total
Debt to Adjusted EBITDA is less than 3.0, 1.75, otherwise, 2.0.
"Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in the third sentence of the definition of "Deemed
Collections.".
"Discount Rate" means, the LIBO Rate or the Prime Rate, as applicable, with
respect to each Purchaser Interest of the Financial Institutions.
"EBIT" shall mean, with respect to any person, for any period, the sum of
(a) operating net income or loss plus (b) all amounts deducted in determining
such operating net income or loss on account of (i) Consolidated Interest
Expense and (ii) taxes based on or measured by income, all as determined in
accordance with GAAP, plus (c) the amount of any one-time charge taken as a
result of the cumulative effect from changes to GAAP after the effective date of
the Five-Year Credit Agreement.
"Eligible Assignee" means (a) any "bankruptcy remote" special purpose
entity which is administered by the Agent (or any Affiliate of the foregoing)
that is in the business of acquiring or financing receivables, securities and/or
other financial assets and which issues commercial paper notes that are rated at
least A-1 by S&P and P-1 by Xxxxx'x, or (b) any bank or other financial
institution with a rating of its short-term securities equal to or higher than
(i) A-1 by S&P and (ii) P-1 by Xxxxx'x having a combined capital and surplus of
at least $250,000,000.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which (a) if a natural person, is a resident of the
United States or, if a corporation or other business organization, is
organized under the laws of the United States or any political subdivision
thereof and has a billing address in the United States; (b) is not an
Affiliate of any of the parties hereto and (c) is not a Designated Obligor;
provided, however, that (A) Foreign Receivables with an aggregate
Outstanding Balance that does not exceed 2% of the total Outstanding
Balance of all Receivables and (B) Government Receivables with an aggregate
Outstanding Balance that does not exceed 1% of the total Outstanding
Balance of all Receivables may be included as "Eligible Receivables" if
such Receivables otherwise meet the requirements of this definition,
(ii) the Obligor of which is not the Obligor of any Charged-Off
Receivable at the time of purchase or Reinvestment,
(iii) which is not at the time of purchase or Reinvestment a
Delinquent Receivable or a Collection Receivable and which is not owing
from an Obligor as to which more than 35% of the aggregate Outstanding
Balance of all Receivables owing from such Obligor are Receivables as to
which payment, or part thereof, remains unpaid for more than 120 days,
53
(iv) which by its terms is due and payable within 60 days after the
original billing date therefor and has not had its payment terms extended;
provided, however, that Receivables due in 61-150 days of the original
billing date therefor that have not had their payment terms extended may
also be Eligible Receivables if the weighted average term for all
Receivables does not exceed 75 days,
(v) which is an "account" within the meaning of Section 9-102 of the
UCC of all applicable jurisdictions,
(vi) which is denominated and payable only in United States dollars in
the United States,
(vii) which arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms and constitutes the portion of such
Receivable not subject to offset, counterclaim or other defense,
(viii) arises under a Contract that does not contain a confidentiality
provision that purports to restrict the ability of any Purchaser to
exercise its rights under this Agreement, including, without limitation,
its right to review the Contract,
(ix) which arises under a Contract that contains an obligation to pay
a specified sum of money, contingent only upon the sale of goods or the
provision of services by the applicable Originator,
(x) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which no part of the Contract related thereto is in violation of any
such law, rule or regulation,
(xi) which satisfies in all material respects the applicable
requirements of the Credit and Collection Policy,
(xii) which was generated in the ordinary course of the applicable
Originator's business,
(xiii) which arises solely from the sale of goods or the provision of
services to the related Obligor by the applicable Originator, and not by
any other Person (in whole or in part),
(xiv) as to which the Agent has not notified Seller that the Agent has
determined in the exercise of its commercially reasonable credit judgment
that such Receivable or class of Receivables is not acceptable as an
Eligible Receivable, including, without limitation, because such Receivable
arises under a Contract that is not acceptable to the Agent,
(xv) which is not subject to any right of rescission, set-off,
counterclaim, any other defense (including defenses arising out of
54
violations of usury laws) of the applicable Obligor against the applicable
Originator or any other Adverse Claim, and the Obligor thereon holds no
right as against such Originator to cause such Originator to repurchase the
goods or merchandise the sale of which shall have given rise to such
Receivable (except with respect to sale discounts effected pursuant to the
Contract, or defective goods returned in accordance with the terms of the
Contract); provided that (a) if such dispute, offset, counterclaim or
defense affects only a portion of the Outstanding Balance of such
Receivable, then such Receivable may be deemed an Eligible Receivable to
the extent of the portion of such Outstanding Balance which is not so
affected, and (b) Receivables of any Obligor which has any accounts payable
by the applicable Originator or by a wholly-owned Subsidiary of such
Originator (thus giving rise to a potential offset against such
Receivables) may be treated as Eligible Receivables to the extent that the
Obligor of such Receivables has agreed pursuant to a written agreement in
form and substance satisfactory to the Agent, that such Receivables shall
not be subject to such offset, and provided, further, that at any time
while Invacare's ratio of Total Debt to Adjusted EBITDA is less than 3.00,
only 80% of the accrued amount of contractual rebates shall be counted as a
contra pursuant to the foregoing clause (a),
(xvi) as to which the applicable Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon by
the applicable Obligor, and
(xvii) all right, title and interest to and in which has been validly
transferred by the applicable Originator directly to Seller under and in
accordance with the Receivables Sale Agreement, and Seller has good and
marketable title thereto free and clear of any Adverse Claim.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the regulations thereunder.
"Expected Dilution Ratio" means, on any date of determination, the average
of the Dilution Ratios (in each case, as determined as of the last day of each
calendar month) during the immediately preceding twelve (12) calendar months
ending on or prior to such date of determination.
"Facility Account" means Seller's Account No. 983959756 at National City
Bank.
"Facility Termination Date" means the earliest of (i) September 30, 2008,
(ii) the Liquidity Termination Date, and (iii) the Amortization Date.
"Federal Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as amended and any successor statute thereto.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum for each day during such period equal to (a) the
55
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it.
"Fee Letter" means that certain letter agreement dated as of the date
hereof among Seller, Conduit and the Agent, as it may be amended or modified and
in effect from time to time.
"Finance Charges" means, with respect to a Contract, any finance, interest,
late payment charges or similar charges owing by an Obligor pursuant to such
Contract.
"Financial Institutions" has the meaning set forth in the preamble in this
Agreement.
"Five-Year Credit Agreement" means the Credit Agreement, dated as of
January 14, 2005 (as amended, supplemented or otherwise modified from time to
time), by and among Invacare and certain Subsidiaries thereof, as Borrowers,
various financial institutions and Agent.
"Foreign Receivable" means a Receivable that does not meet the definition
of "Eligible Receivable" due to the operation of subclause (i)(a) thereof.
"Funding Agreement" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of Conduit.
"Funding Source" means (i) any Financial Institution or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up purchase support or facilities to Conduit.
"GAAP" means generally accepted accounting principles in effect in the
United States of America as of the date of this Agreement.
"Government Receivable" means a Receivable, the Obligor of which is a
Governmental Authority.
"Governmental Authority" means the government of the United States or any
foreign government or, in each case, any state, province, municipality or other
political subdivision thereof or therein or any court, agency, instrumentality
thereof or therein.
"ICC" shall mean Invacare Credit Corporation, an Ohio corporation, together
with its successors and assigns
"Incremental Purchase" means a purchase of one or more Purchaser Interests
which increases the total outstanding Aggregate Capital hereunder.
56
"Indebtedness" shall mean, with respect to any Person, such Person's (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, except for trade accounts
payable arising in the ordinary course of business that are not more than 90
days past due or as are reasonably being contested, (iv) obligations as lessee
under leases which have been in accordance with generally accepted accounting
principles, recorded as capital leases, (v) obligations to purchase property or
services if payment is required regardless of whether such property is delivered
or services are performed (generally called "take or pay" contracts), but such
obligations shall only be included in an amount equal to the difference between
the amount of the required payment and the value to such Person or a Subsidiary
of such Person of the goods or services required to be delivered in connection
with such required payment, (vi) obligations in respect of currency or interest
rate swaps or comparable transactions valued at the maximum termination payment
payable by the obligor, other than any such contracts entered into as xxxxxx
against Indebtedness of the kinds referred to in clauses (i) and (ii) above,
(vii) any obligation of any Person other than such Person, if such obligation is
secured by any lien on the property of such Person or any of its Subsidiaries,
provided that, the amount of any such Indebtedness shall be limited to the
greater of the then book value or fair market value of the property securing any
such lien, (viii) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA and (ix) Contingent Obligations.
"Independent Director" shall mean a member of the Board of Directors of
Seller who is not at such time, and has not been at any time during the
preceding five (5) years, (A) a director, officer, customer, supplier, employee
or affiliate of Seller, any Originator, or any of their respective Subsidiaries
or Affiliates (other than his or her service as an Independent Director), (B)
the beneficial owner (at the time of such individual's appointment as an
Independent Director or at any time thereafter while serving as an Independent
Director) of any of the outstanding common shares of any Seller Party or any of
their respective Subsidiaries or Affiliates having general voting rights or (C)
the immediate family member of any of the foregoing.
"Interest Coverage Ratio" shall mean, as of any date, the ratio of (a)
Consolidated EBIT as calculated for the four most recently ended consecutive
fiscal quarters of Invacare to (b) Consolidated Interest Expense as calculated
for the same four fiscal quarters.
"JPMorgan Chase" means JPMorgan Chase Bank, N.A. in its individual capacity
and its successors.
"Lease Receivables Securitization Transaction" means any asset
securitization transaction associated with any leasing or commercial purchase
program of Invacare or ICC.
"LIBO Rate" means the rate per annum equal to the sum of (i) (a) the
applicable British Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant Tranche Period, and having
a maturity equal to such Tranche Period, provided that, (i) if Reuters Screen
FRBD is not available to the Agent for any reason, the applicable LIBO Rate for
the relevant Tranche Period shall instead be the applicable British Bankers'
57
Association Interest Settlement Rate for deposits in U.S. dollars as reported by
any other generally recognized financial information service as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Tranche Period,
and having a maturity equal to such Tranche Period, and (ii) if no such British
Bankers' Association Interest Settlement Rate is available to the Agent, the
applicable LIBO Rate for the relevant Tranche Period shall instead be the rate
determined by the Agent to be the rate at which JPMorgan Chase offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Tranche Period, in the approximate amount to be funded at the LIBO
Rate and having a maturity equal to such Tranche Period, divided by (b) one
minus the maximum aggregate reserve requirement (including all basic,
supplemental, marginal or other reserves) which is imposed against the Agent in
respect of Eurocurrency liabilities, as defined in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time
(expressed as a decimal), applicable to such Tranche Period plus (ii) the
Applicable Margin per annum. The LIBO Rate shall be rounded, if necessary, to
the next higher 1/16 of 1%.
"Lien" shall mean any pledge, assignment, deed of trust, hypothecation,
mortgage, security interest, conditional sale or title retaining contract,
financing statement filing, or any other type of lien, charge, encumbrance or
other similar claim or right.
"Liquidity Termination Date" means September 28, 2006 or such later date as
extended pursuant to the terms of this Agreement.
"Lock-Box" means each locked postal box with respect to which a bank which
has executed a Collection Account Agreement has been granted exclusive access
for the purpose of retrieving and processing payments made on the Receivables
and which is listed on Exhibit IV.
"Loss Horizon Ratio" means, as of any Cut-Off Date, the ratio (expressed as
a decimal) computed by dividing (a) the sum of (i) the aggregate amount of
Receivables generated by the Originators during the four Calculation Periods
ending on such Cut-Off Date and (ii) 50% of the aggregate amount of Receivables
generated by the Originators during the Calculation Period ending four Cut-Off
Dates prior to such Cut-Off Date, by (b) the Net Receivables Balance as of such
Cut-Off Date.
"Loss Ratio" means, as of any Cut-Off Date, the ratio (expressed as a
percentage) computed by dividing (a) the sum of (i) the total Outstanding
Balance of Defaulted Receivables plus (ii) the amount of Receivables which
became Charged-Off Receivables before becoming Defaulted Receivables during the
Calculation Period that includes such Cut-Off Date, plus (iii) the amount of
Receivables that were converted to notes receivable or Collection Receivables
before becoming Defaulted Receivables during the Calculation Period that
includes such Cut-Off Date, by (b) the aggregate sales generated by the
Originators during the Calculation Period occurring six months prior to the
Calculation Period ending on such Cut-Off Date; provided, however, that at any
time while Invacare's ratio of Total Debt to Adjusted EBITDA is less than 3.00,
only 80% of the amount described in clause (a)(i) shall be counted for purposes
of computing the Loss Ratio.
58
"Loss Reserve" means, for any Calculation Period, the greater of (i) 22%
and (ii) the product (expressed as a percentage) of (a) 2.0, times (b) the
highest three-month rolling average Loss Ratio during the 12 Calculation Periods
ending on the immediately preceding Cut-Off Date, times (c) the Loss Horizon
Ratio as of the immediately preceding Cut-Off Date.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of Seller or Invacare and its Subsidiaries,
taken as a whole, (ii) the ability of Seller or, at such times as Invacare is
the Servicer, the Servicer to perform its obligations under this Agreement or
the Provider to perform its obligations under the Performance Undertaking, (iii)
the legality, validity or enforceability of this Agreement or any other
Transaction Document, (iv) any Purchaser's interest in the Receivables generally
or in any significant portion of the Receivables, the Related Security or the
Collections with respect thereto, or (v) the collectibility of the Receivables
generally or of any material portion of the Receivables.
"Monthly Report" means a report, in substantially the form of Exhibit IX
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 8.5.
"Net Eligible Receivable" means the total Eligible Receivables minus the
Cash Discount Factor.
"Net Receivables Balance" means, at any time, the Net Eligible Receivables
reduced by the aggregate amount by which the Outstanding Balance of all Eligible
Receivables of each Obligor and its Affiliates exceeds the Concentration Limit
for such Obligor.
"Net Worth" of any person shall mean, as of any date, the amount of
stockholders' equity, exclusive of the cumulative effect of Other Comprehensive
Earnings (either positive or negative), all on a consolidated basis and in
accordance with GAAP.
"Obligations" shall have the meaning set forth in Section 2.1.
"Obligor" means a Person obligated to make payments pursuant to a Contract.
"Originator" means each of Invacare Corporation, an Ohio corporation,
Healthtech Products, Inc., a Missouri corporation, and Invacare Supply Group,
Inc., a Massachusetts corporation, in its capacity as seller under the
Receivables Sale Agreement.
"Other Comprehensive Earnings (Loss)" shall mean the reported increases or
decreases in Invacare's reported Net Worth resulting from (a) foreign currency
translation adjustments, (b) unrealized gains (losses) on available securities
held for sale, and (c) the cumulative effect of Invacare's adoption of FAS 133.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Participant" has the meaning set forth in Section 12.2.
59
"Performance Undertaking" means that certain Performance Undertaking, dated
as of September 30, 2005, by Provider in favor of Seller, substantially in the
form of Exhibit X, as the same may be amended, restated or otherwise modified
from time to time.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pooled Commercial Paper" means Commercial Paper notes of Conduit subject
to any particular pooling arrangement by Conduit, but excluding Commercial Paper
issued by Conduit for a tenor and in an amount specifically requested by any
Person in connection with any agreement effected by Conduit.
"Potential Amortization Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by JPMorgan Chase or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes
"Pro Rata Share" means at any time for each Financial Institution, a
percentage equal to (i) the Commitment of such Financial Institution at such
time, divided by (ii) the aggregate amount of all Commitments of all Financial
Institutions hereunder.
"Proposed Reduction Date" has the meaning set forth in Section 1.3.
"Provider" means Invacare Corporation, an Ohio corporation, and its
successors.
"Purchase Limit" means $100,000,000.
"Purchase Notice" has the meaning set forth in Section 1.2.
"Purchase Price" means, with respect to any Incremental Purchase of a
Purchaser Interest, the amount paid to Seller for such Purchaser Interest which
shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date and (iii) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable purchase date over the
aggregate outstanding amount of Aggregate Capital determined as of the date of
the most recent Monthly Report, taking into account such proposed Incremental
Purchase.
"Purchasers" means Conduit and each Financial Institution.
"Purchaser Interest" means, at any time, an undivided percentage interest
(computed as set forth below) associated with a designated amount of Capital,
selected pursuant to the terms and conditions hereof in (i) each Receivable
arising prior to the time of the most recent computation or recomputation of
such undivided interest, (ii) all Related Security with respect to each such
Receivable, and (iii) all Collections with respect to, and other proceeds of,
each such Receivable. Each such undivided percentage interest shall equal:
60
C
----------------------
NRB - AR
where:
C........= the Capital of such Purchaser Interest.
AR.......= the Aggregate Reserves.
NRB......= the Net Receivables Balance.
Such undivided percentage interest shall be initially computed on its date of
purchase. Thereafter, until the Amortization Date, each Purchaser Interest shall
be automatically recomputed (or deemed to be recomputed) on each day prior to
the Amortization Date. The variable percentage represented by any Purchaser
Interest as computed (or deemed recomputed) as of the close of the business day
immediately preceding the Amortization Date shall remain constant at all times
thereafter.
"Purchasing Financial Institution" has the meaning set forth in Section
12.1(b).
"Receivable" means any right to payment from a Person (other than an
Affiliate of any Seller Party) owed to Seller, including, without limitation,
any right to payment constituting an account, chattel paper, instrument or
general intangible, arising in connection with the sale of goods or the
rendering of services by an Originator, and further includes, without
limitation, the obligation to pay any Finance Charges with respect thereto.
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Receivable separate
from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction; provided further, that any
indebtedness, rights or obligations referred to in the immediately preceding
sentence shall be a Receivable regardless of whether the account debtor or
Seller treats such indebtedness, rights or obligations as a separate payment
obligation.
"Receivables Sale Agreement" means that certain Receivables Sale Agreement,
dated as of September 30, 2005, among Originators and Seller, as the same may be
amended, restated or otherwise modified from time to time.
"Records" means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"Reduction Notice" has the meaning set forth in Section 1.3.
"Regulatory Change" has the meaning set forth in Section 10.2.
"Reinvestment" has the meaning set forth in Section 2.2.
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"Related Security" means, with respect to any Receivable:
(i) all of Seller's interest in the inventory and goods (including
returned or repossessed inventory or goods), if any, the sale of which by
the applicable Originator gave rise to such Receivable, and all insurance
contracts with respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to the
Contract related to such Receivable or otherwise,
(iv) all enforcement rights or rights to receive payment with respect
to service contracts and other contracts and agreements associated with
such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller's right, title and interest in, to and under the
Receivables Sale Agreement in respect of such Receivable and all of
Seller's right, title and interest in, to and under the Performance
Undertaking, and
(vii) all proceeds of any of the foregoing.
"Required Financial Institutions" means, at any time, Financial
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.
"Required Notice Period" means the number of days required notice set forth
below applicable to the Aggregate Reduction indicated below:
AGGREGATE REDUCTION REQUIRED NOTICE PERIOD
Up to $100,000,000 two Business Days
Over $100,000,000 five Business Days
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of
Seller now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock or in any junior class of stock of Seller, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of capital
stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
62
or similar payment and any claim for rescission with respect to the Subordinated
Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
capital stock of Seller now or hereafter outstanding, and (v) any payment of
management fees by Seller (except for reasonable management fees to any
Originator or its Affiliates in reimbursement of actual management services
performed).
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Parties" has the meaning set forth in the preamble to this
Agreement.
"Servicer" means at any time the Person (which may be the Agent) then
authorized pursuant to Article VIII to service, administer and collect
Receivables.
"Servicing Fee" has the meaning set forth in Section 8.6.
"Settlement Date" means (A) the date which is two Business Days following
the date specified in Section 8.5(i), and (B) the last day of the relevant
Tranche Period in respect of each Purchaser Interest of the Financial
Institutions.
"Settlement Period" means (A) in respect of each Purchaser Interest of
Conduit, the immediately preceding Accrual Period, and (B) in respect of each
Purchaser Interest of the Financial Institutions, the entire Tranche Period of
such Purchaser Interest.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of Seller.
"Termination Date" has the meaning set forth in Section 2.2.
"Termination Percentage" has the meaning set forth in Section 2.2.
"Terminating Financial Institution" means any Financial Institution that
notifies the Seller and the Agent that it will not be extending its Commitment
beyond the Liquidity Termination Date.
"Terminating Tranche" has the meaning set forth in Section 4.3(b).
"Total Debt" as of any date for any person, shall mean: (a) all debt for
borrowed money and similar monetary obligations evidenced by bonds, notes,
debentures, Capital Lease obligations or otherwise; (b) all liabilities secured
by any Lien existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (c) all
reimbursements obligations under outstanding letters of credit in respect of
63
drafts which (i) may be presented or (ii) have been presented and have not yet
been paid, (d) the aggregate outstanding amount of all Lease Receivables
Securitization Transactions (as defined in the Five-Year Credit Agreement),
based on the aggregate outstanding amount sold, assigned, discounted or
otherwise transferred or financed, whether or not shown as a liability on a
consolidated balance sheet of such person, as reasonably satisfactory to the
Agent (but excluding any amounts outstanding under any Trade Receivables
Securitization Transaction permitted pursuant to Section 5.2(n) of the Five-Year
Credit Agreement), and (e) all Contingent Liabilities relating to any of the
obligations of others similar in character to those described in the foregoing
clauses (a) through (d), but excluding all recourse obligations of Invacare, ICC
or any other wholly-owned Subsidiary under certain third party financing
arrangements offered to customers which are acceptable to the Agent (including
arrangements with De Xxxx Xxxxxx).
"Trade Receivables Securitization Transactions" means any trade receivables
securitization transaction involving Invacare or any Subsidiary, whether
reflected on or off the balance sheet of Invacare or such Subsidiary.
"Tranche Period" means, with respect to any Purchaser Interest held by a
Financial Institution:
(a) if Yield for such Purchaser Interest is calculated on the basis of
the LIBO Rate, a period of one, two, three or six months, or such other
period as may be mutually agreeable to the Agent and Seller, commencing on
a Business Day selected by Seller or the Agent pursuant to this Agreement.
Such Tranche Period shall end on the day in the applicable succeeding
calendar month which corresponds numerically to the beginning day of such
Tranche Period, provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Tranche Period shall end
on the last Business Day of such succeeding month; or
(b) if Yield for such Purchaser Interest is calculated on the basis of
the Prime Rate, a period commencing on a Business Day selected by Seller,
provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Purchaser Interest which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the Agent.
"Transaction Documents" means, collectively, this Agreement, each Purchase
Notice, the Receivables Sale Agreement, each Collection Account Agreement, the
Performance Undertaking, the Fee Letter, the Subordinated Note (as defined in
the Receivables Sale Agreement) and all other instruments, documents and
agreements executed and delivered in connection herewith.
64
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Yield" means for each respective Tranche Period relating to Purchaser
Interests of the Financial Institutions, an amount equal to the product of the
applicable Discount Rate for each Purchaser Interest multiplied by the Capital
of such Purchaser Interest for each day elapsed during such Tranche Period,
annualized on a 360 day basis.
"Yield and Servicing Reserve" means, on any date, 1.0%.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.
65
EXHIBIT II
FORM OF PURCHASE NOTICE
[DATE]
JPMorgan Chase Bank, N.A., as Agent
1 Bank One Plaza
Asset-Backed Securities
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: PARCO Manager
Re: PURCHASE NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement, dated as of
September 30, 2005, by and among Invacare Receivables Corporation (the
"Seller"), Invacare Corporation, as Servicer, the Financial Institutions, Park
Avenue Receivables Company, LLC ("Conduit"), and JPMorgan Chase Bank, N.A., as
Agent (the "Receivables Purchase Agreement"). Capitalized terms used herein
shall have the meanings assigned to such terms in the Receivables Purchase
Agreement.
The Agent is hereby notified of the following Incremental
Purchase:
Purchase Price: $
--------------------------
Date of Purchase:
---------------------------
Requested Discount Rate: [LIBO Rate] [Prime Rate]
[Pooled Commercial Paper rate]
Please wire-transfer the Purchase Price in immediately available funds on
the above-specified date of purchase to:
[Account Name]
[Account No.]
[Bank Name & Address]
[ABA #]
Reference: Invacare Receivables Corporation
Telephone advice to: [Name] @ tel. no. ( ) ________________
Please advise [Name] at telephone no. ( ) _________________
if Conduit will not be making this purchase.
66
In connection with the Incremental Purchase to be made on the above listed
"Date of Purchase" (the "Purchase Date"), the Seller hereby certifies that the
following statements are true on the date hereof, and will be true on the
Purchase Date (before and after giving effect to the proposed Incremental
Purchase):
(i) the representations and warranties of the Seller set forth in
Section 5.1 of the Receivables Purchase Agreement are true and correct on
and as of the Purchase Date as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from the
proposed Incremental Purchase, that will constitute an Amortization Event
or a Potential Amortization Event;
(iii) the Facility Termination Date has not occurred, the Aggregate
Capital does not exceed the Purchase Limit and the aggregate Purchaser
Interests do not exceed 100%; and
(iv) the amount of Aggregate Capital is $_________ after giving effect
to the Incremental Purchase to be made on the Purchase Date.
Very truly yours,
INVACARE RECEIVABLES CORPORATION
By:
--------------------------------------------------
Name:
Title:
67
EXHIBIT III
STATE OF ORGANIZATION; PLACES OF BUSINESS; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER AND
ORGANIZATIONAL IDENTIFICATION NUMBER
------------------------------------------------------------ -------------------
Legal Name Invacare Receivables
Corporation
----------
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
State or Organization Delaware
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
Principal Place of Business 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
Chief Executive Officer 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
Location(s) of Records 0000
Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
Federal Employer Identification Number 00-0000000
------------------------------------------------------------ -------------------
------------------------------------------------------------ -------------------
Organizational Identification Number 3894600
------------------------------------------------------------ -------------------
68
EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS
---------------------------------------------------- ---------------------------
LOCK-BOX RELATED COLLECTION ACCOUNT
---------------------------------------------------- ---------------------------
---------------------------------------------------- ---------------------------
Xxxxxx Trust and Savings Bank Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Lock Box No. 33416 Deposit Account No. 0000000
---------------------------------------------------- ---------------------------
---------------------------------------------------- ---------------------------
PNC Bank, National Association PNC Bank, National Association
Two PNC Plaza, 31st Floor Two PNC Plaza, 31st Floor
000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx Pittsburgh, Pennsylvania
Lockbox No. 642878 Account No. 1011561967
---------------------------------------------------- ---------------------------
69
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: JPMorgan Chase Bank, N.A., as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of September 30, 2005 among Invacare
Receivables Corporation (the "Seller"), Invacare Corporation (the "Servicer"),
the Purchasers party thereto and JPMorgan Chase Bank, N.A., as agent for such
Purchasers (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ________________ of Seller.
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the
transactions and conditions of Seller and its Subsidiaries during the
accounting period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes an Amortization Event or Potential Amortization Event, as each
such term is defined under the Agreement, during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth in paragraph 5 below.
4. Schedule I attached hereto sets forth financial data and
computations evidencing the compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and
correct.
5. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
70
THE FOREGOING CERTIFICATIONS, TOGETHER WITH THE COMPUTATIONS SET FORTH IN
SCHEDULE I HERETO AND THE FINANCIAL STATEMENTS DELIVERED WITH THIS
CERTIFICATE IN SUPPORT HEREOF, ARE MADE AND DELIVERED THIS DAY
OF , ____.
71
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of
the Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended:
72
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
Exhibit to be created based upon executed agreement.
73
EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Assignment Agreement") is entered into as
of the ___ day of ____________, ____, by and between _____________________
("Assignor") and __________________ ("Assignee").
PRELIMINARY STATEMENTS
A. This Assignment Agreement is being executed and delivered in accordance
with Section 12.1(b) of that certain Receivables Purchase Agreement dated as of
September 30, 2005 by and among Invacare Receivables Corporation, Invacare
Corporation, as Servicer, Park Avenue Receivables Company, LLC, JPMorgan Chase
Bank, N.A., as Agent, and the Financial Institutions party thereto (as amended,
modified or restated from time to time, the "Purchase Agreement"). Capitalized
terms used and not otherwise defined herein are used with the meanings set forth
or incorporated by reference in the Purchase Agreement.
B. Assignor is a Financial Institution party to the Purchase Agreement, and
Assignee wishes to become a Financial Institution thereunder; and
C. Assignor is selling and assigning to Assignee an undivided ____________%
(the "Transferred Percentage") interest in all of Assignor's rights and
obligations under the Purchase Agreement and the Transaction Documents,
including, without limitation, Assignor's Commitment and (if applicable) the
Capital of Assignor's Purchaser Interests as set forth herein.
AGREEMENT
The parties hereto hereby agree as follows:
1. The sale, transfer and assignment effected by this Assignment Agreement
shall become effective (the "Effective Date") two (2) Business Days (or such
other date selected by the Agent in its sole discretion) following the date on
which a notice substantially in the form of Schedule II to this Assignment
Agreement ("Effective Notice") is delivered by the Agent to Conduit, Assignor
and Assignee. From and after the Effective Date, Assignee shall be a Financial
Institution party to the Purchase Agreement for all purposes thereof as if
Assignee were an original party thereto and Assignee agrees to be bound by all
of the terms and provisions contained therein.
2. If Assignor has no outstanding Capital under the Purchase Agreement, on
the Effective Date, Assignor shall be deemed to have hereby transferred and
assigned to Assignee, without recourse, representation or warranty (except as
provided in paragraph 6 below), and the Assignee shall be deemed to have hereby
irrevocably taken, received and assumed from Assignor, the Transferred
74
Percentage of Assignor's Commitment and all rights and obligations associated
therewith under the terms of the Purchase Agreement, including, without
limitation, the Transferred Percentage of Assignor's future funding obligations
under Section 4.1 of the Purchase Agreement.
3. If Assignor has any outstanding Capital under the Purchase Agreement, at
or before 12:00 noon, local time of Assignor, on the Effective Date Assignee
shall pay to Assignor, in immediately available funds, an amount equal to the
sum of (i) the Transferred Percentage of the outstanding Capital of Assignor's
Purchaser Interests (such amount, being hereinafter referred to as the
"Assignee's Capital"); (ii) all accrued but unpaid (whether or not then due)
Yield attributable to Assignee's Capital; and (iii) accruing but unpaid fees and
other costs and expenses payable in respect of Assignee's Capital for the period
commencing upon each date such unpaid amounts commence accruing, to and
including the Effective Date (the "Assignee's Acquisition Cost"); whereupon,
Assignor shall be deemed to have sold, transferred and assigned to Assignee,
without recourse, representation or warranty (except as provided in paragraph 6
below), and Assignee shall be deemed to have hereby irrevocably taken, received
and assumed from Assignor, the Transferred Percentage of Assignor's Commitment
and the Capital of Assignor's Purchaser Interests (if applicable) and all
related rights and obligations under the Purchase Agreement and the Transaction
Documents, including, without limitation, the Transferred Percentage of
Assignor's future funding obligations under Section 4.1 of the Purchase
Agreement.
4. Concurrently with the execution and delivery hereof, Assignor will
provide to Assignee copies of all documents requested by Assignee which were
delivered to Assignor pursuant to the Purchase Agreement.
5. Each of the parties to this Assignment Agreement agrees that at any time
and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to affect the purposes of
this Assignment Agreement.
6. By executing and delivering this Assignment Agreement, Assignor and
Assignee confirm to and agree with each other, the Agent and the Financial
Institutions as follows: (a) other than the representation and warranty that it
has not created any Adverse Claim upon any interest being transferred hereunder,
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made by any other
Person in or in connection with the Purchase Agreement or the Transaction
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of Assignee, the Purchase Agreement or any other instrument
or document furnished pursuant thereto or the perfection, priority, condition,
value or sufficiency of any collateral; (b) Assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Seller, any Obligor, any Affiliate of the Seller or the performance or
observance by the Seller, any Obligor, any Affiliate of the Seller of any of
their respective obligations under the Transaction Documents or any other
instrument or document furnished pursuant thereto or in connection therewith;
(c) Assignee confirms that it has received a copy of the Purchase Agreement and
copies of such other Transaction Documents, and other documents and information
as it has requested and deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (d) Assignee will,
75
independently and without reliance upon the Agent, Conduit, the Seller or any
other Financial Institution or Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Purchase Agreement and
the Transaction Documents; (e) Assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Transaction Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and (f) Assignee
agrees that it will perform in accordance with their terms all of the
obligations which, by the terms of the Purchase Agreement and the other
Transaction Documents, are required to be performed by it as a Financial
Institution or, when applicable, as a Purchaser.
7. Each party hereto represents and warrants to and agrees with the Agent
that it is aware of and will comply with the provisions of the Purchase
Agreement, including, without limitation, Sections 4.1 and 13.6 thereof.
8. Schedule I hereto sets forth the revised Commitment of Assignor and the
Commitment of Assignee, as well as administrative information with respect to
Assignee.
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. Assignee hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of all senior indebtedness for
borrowed money of Conduit, it will not institute against, or join any other
Person in instituting against, Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers of the
date hereof.
[ASSIGNOR]
By: _________________________
Title:
[ASSIGNEE]
By: __________________________
Title:
76
[CONSENTED TO:
INVACARE RECEIVABLES CORPORATION
By: ________________________________
Title: ______________________________]
77
SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _____________, ______
Transferred Percentage: ____________%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
X-0 X-0 X-0 X-0
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Assignor Commitment (prior to Commitment (after Outstanding Capital Ratable Share of
giving effect to the giving effect to the (if any) Outstanding Capital
Assignment Agreement) Assignment Agreement)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
X-0 X-0 X-0
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Assignee Commitment (after Outstanding Capital Ratable Share of
giving effect to the (if any) Outstanding Capital
Assignment Agreement)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Address for Notices
Attention:
Phone:
Fax:
78
SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO: ________________________, Assignor
TO: ________________________, Assignee
The undersigned, as Agent under the Receivables Purchase Agreement dated as
of ______, ____ by and among ___________, a _________ corporation, _________, as
Servicer, Park Avenue Receivables Company, LLC, JPMorgan Chase Bank, N.A., as
Agent, and the Financial Institutions party thereto, hereby acknowledges receipt
of executed counterparts of a completed Assignment Agreement dated as of
____________, ____ between __________________, as Assignor, and
__________________, as Assignee. Terms defined in such Assignment Agreement are
used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Effective Date will be --------------, ----.
2. Conduit hereby consents to the Assignment Agreement as required by
Section 12.1(b) of the Receivables Purchase Agreement.
3. Pursuant to such Assignment Agreement, the Assignee is required to pay
$____________ to Assignor at or before 12:00 noon (local time of Assignor) on
the Effective Date in immediately available funds.]
Very truly yours,
JPMORGAN CHASE BANK, N.A.,
individually and as Agent
By: __________________________
Title:_______________________
00
XXXX XXXXXX RECEIVABLES COMPANY, LLC
BY: JPMORGAN CHASE BANK, N.A., ITS ATTORNEY-IN-FACT
By: ____________________________
Name:
Title:
80
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
SEE EXHIBIT V TO RECEIVABLES SALE AGREEMENT
81
EXHIBIT IX
FORM OF MONTHLY REPORT
[GRAPHIC OMITTED]
82
[GRAPHIC OMITTED]
83
[GRAPHIC OMITTED]
84
[GRAPHIC OMITTED]
85
[GRAPHIC OMITTED]
86
EXHIBIT X
[FORM OF] PERFORMANCE UNDERTAKING
THIS PERFORMANCE UNDERTAKING (this "Undertaking"), dated as of September
30, 2005, is executed by Invacare Corporation, an Ohio corporation ("Invacare"
or "Performance Guarantor"), in favor of Invacare Receivables Corporation, a
Delaware corporation (together with its successors and assigns, "Recipient").
RECITALS
Healthtech Products, Inc., a Missouri corporation, and Invacare
Supply Group, Inc., a Massachusetts corporation (each of the
foregoing, a "Subsidiary Originator" and together with Invacare, the
"Originators"), Invacare, and Recipient have entered into a
Receivables Sale Agreement, dated as of September 30, 2005 (as
amended, restated or otherwise modified from time to time, the "Sale
Agreement"), pursuant to which the Originators are selling or
contributing to Recipient their respective right, title and interest
in their accounts receivable and certain related rights subject to the
terms and conditions contained therein.
Recipient, Invacare, as Servicer, Park Avenue Receivables
Company, LLC, JPMorgan Chase, N.A., individually and as Agent, have
entered into a Receivables Purchase Agreement, dated as of September
30, 2005 (as amended, restated or otherwise modified from time to
time, the "Purchase Agreement"), pursuant to which Recipient is
selling undivided interests in its assets to the Agent for the benefit
of the Purchasers subject to the terms and conditions contained
therein.
Performance Guarantor owns, directly or indirectly, one hundred
percent (100%) of the capital stock of each of the Subsidiary
Originators and Recipient. As a result, each of the Subsidiary
Originators (and, accordingly, Performance Guarantor) is expected to
receive substantial direct or indirect benefits from the Originators'
sale or contribution of accounts receivable to Recipient pursuant to
the Sale Agreement (which benefits are hereby acknowledged).
As an inducement for Recipient to acquire and to continue to
acquire the Subsidiary Originators' accounts receivable pursuant to the
Sale Agreement, Performance Guarantor has agreed to guarantee the due
and punctual performance by each of the Subsidiary Originators of its
respective obligations under the Sale Agreement.
AGREEMENT
NOW, THEREFORE, Performance Guarantor hereby agrees as follows:
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings attributed thereto in the Sale Agreement or the
Purchase Agreement, and "Guaranteed Obligations" means, collectively, all
covenants, agreements, terms, conditions and indemnities to be performed and
observed by any of the Subsidiary Originators under and pursuant to the Sale
Agreement and each other document executed and delivered by any of them pursuant
87
to the Sale Agreement, including, without limitation, the due and punctual
payment of all sums which are or may become due and owing by any of the
Subsidiary Originators under the Sale Agreement, whether for fees, expenses
(including reasonable counsel fees), indemnified amounts or otherwise, whether
upon any termination or for any other reason.
Section 2. Guaranty of Performance of Guaranteed Obligations. Performance
Guarantor hereby guarantees to Recipient, the full and punctual payment and
performance by each of the Subsidiary Originators of its Guaranteed Obligations.
This Undertaking is an absolute, unconditional and continuing guaranty of the
full and punctual performance of all Guaranteed Obligations under the Sale
Agreement, and each other document executed and delivered by any of the
Subsidiary Originators pursuant to the Sale Agreement and is in no way
conditioned upon any requirement that Recipient first attempt to collect any
amounts owing by the Subsidiary Originators to Recipient, the Agent or any
Purchaser from any other Person or resort to any collateral security, any
balance of any deposit account or credit on the books of Recipient, the Agent or
any Purchaser in favor of any of the Subsidiary Originators or any other Person
or other means of obtaining payment. Should any of the Subsidiary Originators
default in the payment or performance of any of its Guaranteed Obligations,
Recipient (or the Agent as its collateral assignee) may cause the immediate
performance by Performance Guarantor of such Guaranteed Obligations and cause
any payment of Guaranteed Obligations to become forthwith due and payable to
Recipient (or the Agent as its collateral assignee) by Performance Guarantor,
without demand or notice of any nature (other than as expressly provided
herein), all of which are hereby expressly waived by Performance Guarantor.
Notwithstanding the foregoing, this Undertaking is not a guarantee of collection
of any of the Receivables and the Performance Guarantor shall not be responsible
for any Guaranteed Obligations to the extent the failure to perform such
Guaranteed Obligations by the related Subsidiary Originator results from
Receivables being uncollectible on account of the insolvency, bankruptcy or lack
of creditworthiness of the related Obligor.
Section 3. Performance Guarantor's Further Agreements to Pay. Performance
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to Recipient (and its assigns), forthwith upon demand in funds
immediately available to Recipient, all reasonable costs and expenses (including
court costs and reasonable legal expenses) incurred or expended by Recipient in
connection with the Guaranteed Obligations, this Undertaking and the enforcement
thereof, together with interest on amounts recoverable under this Undertaking
from the time when such amounts become due until payment, at a rate of interest
(computed for the actual number of days elapsed based on a 365-day year) equal
to the Prime Rate plus 2% per annum, such rate of interest changing when and as
the Prime Rate changes (except to the extent such interest would duplicate any
Default Fee payable under the Receivables Sale Agreement).
Section 4. Waivers by Performance Guarantor. Performance Guarantor waives
notice of acceptance of this Undertaking, notice of any action taken or omitted
by Recipient (or the Agent as its collateral assignee) in reliance on this
Undertaking, and any requirement that Recipient (or the Agent as its collateral
assignee) be diligent or prompt in making demands under this Undertaking, giving
notice of any Termination Event, Amortization Event, other default or omission
by any of the Subsidiary Originators or asserting any other rights of Recipient
under this Undertaking. Performance Guarantor warrants that it has adequate
means to obtain from the Subsidiary Originators, on a continuing basis,
information concerning their financial condition, and that it is not relying on
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Recipient to provide such information, now or in the future. Performance
Guarantor also irrevocably waives all defenses (i) that at any time may be
available in respect of the Guaranteed Obligations by virtue of any statute of
limitations, valuation, stay, moratorium law or other similar law now or
hereafter in effect or (ii) that arise under the law of suretyship, including
impairment of collateral. Recipient (or the Agent as its collateral assignee)
shall be at liberty, without giving notice to or obtaining the assent of
Performance Guarantor and without relieving Performance Guarantor of any
liability under this Undertaking, to deal with each of the Subsidiary
Originators and with each other party who now is or after the date hereof
becomes liable in any manner for any of the Guaranteed Obligations, in such
manner as Recipient in its sole discretion deems fit, and to this end
Performance Guarantor agrees that the validity and enforceability of this
Undertaking, including without limitation, the provisions of Section 7 hereof,
shall not be impaired or affected by any of the following: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitutions for,
the Guaranteed Obligations or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed Obligations or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Obligations or any
part thereof; (c) any waiver of any right, power or remedy or of any Termination
Event, Amortization Event, or default with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification, with
or without consideration, of any other obligation of any Person or entity with
respect to the Guaranteed Obligations or any part thereof; (e) the
enforceability or validity of the Guaranteed Obligations or any part thereof or
the genuineness, enforceability or validity of any agreement relating thereto or
with respect to the Guaranteed Obligations or any part thereof; (f) the
application of payments received from any source to the payment of any payment
obligations of any Subsidiary Originator or any part thereof or amounts which
are not covered by this Undertaking even though Recipient (or its assigns) might
lawfully have elected to apply such payments to any part or all of the payment
obligations of Subsidiary Originators or to amounts which are not covered by
this Undertaking; (g) the existence of any claim, setoff or other rights which
Performance Guarantor may have at any time against Subsidiary Originators in
connection herewith or any unrelated transaction; (h) any assignment or transfer
of the Guaranteed Obligations or any part thereof; or (i) any failure on the
part of any Subsidiary Originator to perform or comply with any term of the Sale
Agreement or any other document executed in connection therewith or delivered
thereunder, all whether or not Performance Guarantor shall have had notice or
knowledge of any act or omission referred to in the foregoing clauses (a)
through (i) of this Section 4.
Section 5. Unenforceability of Guaranteed Obligations Against Subsidiary
Originators. Notwithstanding (a) any change of ownership of Originators or the
insolvency, bankruptcy or any other change in the legal status of Originators;
(b) any change in or the imposition of any law, decree, regulation or other
governmental act which does or might impair, delay or in any way affect the
validity, enforceability or the payment when due of the Guaranteed Obligations;
(c) the failure of any of the Subsidiary Originators or Performance Guarantor to
maintain in full force, validity or effect or to obtain or renew when required
all governmental and other approvals, licenses or consents required in
connection with the Guaranteed Obligations or this Undertaking, or to take any
other action required in connection with the performance of all obligations
pursuant to the Guaranteed Obligations or this Undertaking; or (d) if any of the
moneys included in the Guaranteed Obligations have become irrecoverable from any
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of the Subsidiary Originators for any other reason other than final payment in
full of the payment Guaranteed Obligations in accordance with their terms, this
Undertaking shall nevertheless be binding on Performance Guarantor. This
Undertaking shall be in addition to any other guaranty or other security for the
Guaranteed Obligations, and it shall not be rendered unenforceable by the
invalidity of any such other guaranty or security. In the event that
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of any of the
Subsidiary Originators or for any other reason with respect to any of the
Subsidiary Originators, all such amounts then due and owing with respect to the
Guaranteed Obligations under the terms of the Sale Agreement, or any other
agreement evidencing, securing or otherwise executed in connection with the
Guaranteed Obligations, shall be immediately due and payable by Performance
Guarantor.
Section 6. Representations and Warranties. Performance Guarantor hereby
represents and warrants to Recipient that:
(a) Power and Authority; Due Authorization. It has all requisite corporate
power to own or lease the properties used in its business and to carry on its
business as now being conducted and as proposed to be conducted, and to execute
and deliver this Undertaking and to engage in the transactions contemplated by
this Undertaking.
(b) No Conflict. The execution and delivery by it of this Undertaking, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree of which it is aware binding on or affecting it or its property, and
do not result in the creation or imposition of any Adverse Claim on its assets
or the assets of its Subsidiaries (except as created by the Transaction
Documents) except, in each of the foregoing cases, where such contravention or
violation would not have a Material Adverse Effect; and no transaction
contemplated hereby requires compliance with any bulk sales act or similar law.
(c) Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution and delivery by Performance Guarantor of this
Undertaking and the performance of its obligations hereunder.
(d) Binding Effect. This Undertaking, when delivered, will be, the
Performance Guarantor's legal, valid and binding obligation, enforceable against
it in accordance with its terms; except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and except that the remedy of specific performance
and injunctive and other forms of equitable relief are subject to equitable
defenses and to the discretion of the court before which any proceedings may be
brought.
Section 7. Subrogation; Subordination. Notwithstanding anything to the
contrary contained herein, until the Guaranteed Obligations are paid in full,
Performance Guarantor: (a) will not enforce or otherwise exercise any right of
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subrogation to any of the rights of Recipient, the Agent or any Purchaser
against any of the Subsidiary Originators, (b) hereby waives all rights of
subrogation (whether contractual, under Section 509 of the United States
Bankruptcy Code, at law or in equity or otherwise) to the claims of Recipient,
the Agent and the Purchasers against any of the Subsidiary Originators and all
contractual, statutory or legal or equitable rights of contribution,
reimbursement, indemnification and similar rights and "claims" (as such term is
defined in the United States Bankruptcy Code) which Performance Guarantor might
now have or hereafter acquire against any of the Subsidiary Originators that
arise from the existence or performance of Performance Guarantor's obligations
hereunder, (c) will not claim any setoff, recoupment or counterclaim against any
of the Subsidiary Originators in respect of any liability of Performance
Guarantor to any of the Subsidiary Originators and (d) waives any benefit of and
any right to participate in any collateral security which may be held by the
Agent or any Purchaser. The payment of any amounts due with respect to any
indebtedness of any of the Subsidiary Originators now or hereafter owed to
Performance Guarantor is hereby subordinated to the prior payment in full of all
of the Guaranteed Obligations. Performance Guarantor agrees that, after the
occurrence of any default in the payment or performance of any of the Guaranteed
Obligations, Performance Guarantor will not demand, xxx for or otherwise attempt
to collect any such indebtedness of any of the Subsidiary Originators to
Performance Guarantor until all of the Guaranteed Obligations shall have been
paid and performed in full. If, notwithstanding the foregoing sentence,
Performance Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness while any Guaranteed Obligations are still unperformed or
outstanding, such amounts shall be collected, enforced and received by
Performance Guarantor as trustee for Recipient (and the Agent as its collateral
assignee) and be paid over to Recipient (or the Agent as its collateral
assignee) on account of the Guaranteed Obligations without affecting in any
manner the liability of Performance Guarantor under the other provisions of this
Undertaking. The provisions of this Section 7 shall be supplemental to and not
in derogation of any rights and remedies of Recipient under any separate
subordination agreement which Recipient may at any time and from time to time
enter into with Performance Guarantor.
Section 8. Termination of Performance Undertaking. Performance Guarantor's
obligations hereunder shall continue in full force and effect until all
Guaranteed Obligations are finally paid and satisfied in full and the Purchase
Agreement is terminated, provided that this Undertaking shall continue to be
effective or shall be reinstated, as the case may be, if at any time payment or
other satisfaction of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the bankruptcy, insolvency, or
reorganization of any of the Subsidiary Originators or otherwise, as though such
payment had not been made or other satisfaction occurred, whether or not
Recipient (or the Agent as its collateral assignee) is in possession of this
Undertaking. No invalidity, irregularity or unenforceability by reason of the
federal bankruptcy code or any insolvency or other similar law, or any law or
order of any government or agency thereof purporting to reduce, amend or
otherwise affect the Guaranteed Obligations shall impair, affect, be a defense
to or claim against the obligations of Performance Guarantor under this
Undertaking.
Section 9. Effect of Bankruptcy. This Performance Undertaking shall survive
the insolvency of any of the Subsidiary Originators and the commencement of any
case or proceeding by or against any of the Subsidiary Originators under the
federal bankruptcy code or other federal, state or other applicable bankruptcy,
insolvency or reorganization statutes. No automatic stay under the federal
bankruptcy code with respect to any of the Subsidiary Originators or other
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federal, state or other applicable bankruptcy, insolvency or reorganization
statutes to which any of the Subsidiary Originators is subject shall postpone
the obligations of Performance Guarantor under this Undertaking.
Section 10. Setoff. Regardless of the other means of obtaining payment of
any of the Guaranteed Obligations, Recipient is (and from and after the
occurrence of an Amortization Event under and as defined in the Purchase
Agreement which is not waived in writing in accordance with the terms thereof,
the Agent is) hereby authorized at any time and from time to time, without
notice to Performance Guarantor (any such notice being expressly waived by
Performance Guarantor) and to the fullest extent permitted by law, to set off
and apply any deposits and other sums against the obligations of Performance
Guarantor under this Undertaking, whether or not Recipient (or, if applicable,
the Agent) shall have made any demand under this Undertaking and although such
obligations may be contingent or unmatured.
Section 11. Taxes. All payments to be made by Performance Guarantor
hereunder shall be made free and clear of any deduction or withholding. If
Performance Guarantor is required by law to make any deduction or withholding on
account of tax or otherwise from any such payment, the sum due from it in
respect of such payment shall be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, Recipient receive a net
sum equal to the sum which they would have received had no deduction or
withholding been made.
Section 12. Further Assurances. Performance Guarantor agrees that it will
from time to time, at the request of Recipient (or the Agent as its collateral
assignee), provide information relating to the business and affairs of
Performance Guarantor as Recipient may reasonably request. Performance Guarantor
also agrees to do all such things and execute all such documents as Recipient
(or the Agent as its collateral assignee) may reasonably consider necessary or
desirable to give full effect to this Undertaking and to perfect and preserve
the rights and powers of Recipient hereunder.
Section 13. Successors and Assigns. This Performance Undertaking shall be
binding upon Performance Guarantor, its successors and permitted assigns, and
shall inure to the benefit of and be enforceable by Recipient and its successors
and assigns. Performance Guarantor may not assign or transfer any of its
obligations hereunder. Recipient may not assign or transfer any of its rights
hereunder except that Recipient may pledge (and hereby notifies the Performance
Guarantor that it has pledged) Recipient's right, title and interest hereunder
to the Agent, for the benefit of the Purchasers, under the Purchase Agreement.
Section 14. Amendments and Waivers. No amendment or waiver of any provision
of this Undertaking nor consent to any departure by Performance Guarantor
therefrom shall be effective unless the same shall be in writing and signed by
Recipient, the Agent and Performance Guarantor. No failure on the part of
Recipient to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.
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Section 15. Notices. All notices and other communications provided for
hereunder shall be made in writing and shall be addressed as follows: if to
Performance Guarantor, at the address set forth beneath its signature hereto,
and if to Recipient, at the addresses set forth beneath its signature hereto, or
at such other addresses as each of Performance Guarantor or any Recipient may
designate in writing to the other. Each such notice or other communication shall
be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by
mail, three (3) Business Days after the time such communication is deposited in
the mail with first class postage prepaid or (c) if given by any other means,
when received at the address specified in this Section 15.
Section 16. GOVERNING LAW. THIS UNDERTAKING SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
Section 17. CONSENT TO JURISDICTION. EACH OF PERFORMANCE GUARANTOR AND
RECIPIENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS UNDERTAKING, THE AGREEMENTS OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF PERFORMANCE GUARANTOR
AND RECIPIENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM.
Section 18. Bankruptcy Petition. Performance Guarantor hereby covenants and
agrees that, prior to the date that is one year and one day after the payment in
full of all outstanding senior Indebtedness of Recipient, it will not institute
against, or join any other Person in instituting against, Recipient any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
Section 19. Miscellaneous. This Undertaking constitutes the entire
agreement of Performance Guarantor with respect to the matters set forth herein.
The rights and remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any other agreement, and this Undertaking shall be
in addition to any other guaranty of or collateral security for any of the
Guaranteed Obligations. The provisions of this Undertaking are severable, and in
any action or proceeding involving any state corporate law, or any state or
federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of Performance Guarantor hereunder
would otherwise be held or determined to be avoidable, invalid or unenforceable
on account of the amount of Performance Guarantor's liability under this
Undertaking, then, notwithstanding any other provision of this Undertaking to
the contrary, the amount of such liability shall, without any further action by
Performance Guarantor or Recipient, be automatically limited and reduced to the
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highest amount that is valid and enforceable as determined in such action or
proceeding. Any provisions of this Undertaking which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise specified, references herein to "Section"
shall mean a reference to sections of this Undertaking.
signature page follows
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IN WITNESS WHEREOF, Performance Guarantor has caused this Undertaking to be
executed and delivered as of the date first above written.
INVACARE CORPORATION
By: ______________________________
Name: ____________________________
Title: _____________________________
Address for Notices:
Xxx Xxxxxxxx Xxx
Xxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Acknowledged and accepted:
INVACARE RECEIVABLES CORPORATION
By: ________________________________
Name: _____________________________
Title: ______________________________
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SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
FINANCIAL INSTITUTION COMMITMENT
JPMorgan Chase Bank, N.A. $100,000,000
96
SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
