Exhibit 10.4
OMNIBUS WAIVER, AMENDMENT AND REAFFIRMATION OF PERFORMANCE UNDERTAKING
THIS OMNIBUS WAIVER, AMENDMENT AND REAFFIRMATION OF PERFORMANCE
UNDERTAKING, dated as of November 14, 2006 (this "Waiver"), is by and among:
(a) Invacare Corporation, an Ohio corporation ("Invacare"), Healthtech
Products, Inc., a Missouri corporation, and Invacare Supply Group, Inc., a
Massachusetts corporation (each of the foregoing including Invacare, an
"Originator" and collectively, the "Originators"),
(b) Invacare Receivables Corporation, a Delaware corporation ("IRC"
and, together with the Originators, the "Companies"),
(c) Park Avenue Receivables Company, LLC ("Conduit"), and
(d) JPMorgan Chase Bank, N.A., individually (together with Conduit,
the "Purchasers") and as agent (together with its successors and assigns in
such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Originators and IRC are parties to that certain
Receivables Sale Agreement, dated as of September 30, 2005 (the
"Receivables Sale Agreement");
WHEREAS, IRC, as Seller, Invacare, as Servicer, the Purchasers and the
Agent are parties to that certain Receivables Purchase Agreement dated as
of September 30, 2005, as heretofore amended (the "Receivables Purchase
Agreement" and, together with the Receivable Sale Agreement, the
"Agreements");
WHEREAS, ▇▇▇▇▇▇▇▇ has executed that certain Performance Undertaking
dated as of September 30, 2005, in favor of IRC (the "Performance
Undertaking); and
WHEREAS, the parties wish to (a) waive a Termination Event under the
Receivables Sale Agreement and an Amortization Event under the Receivables
Purchase Agreement, (b) amend the Receivables Purchase Agreement, and (c)
reaffirm the Performance Undertaking, in each case, on the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises herein contained, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined shall have their meanings as attributed to such terms in the
Agreements.
2. Limited Waivers; Amendment.
2.1. Limited Waivers.
(a) Any Potential Termination Event or Termination Event that may
have arisen (or that may at any time hereafter prior to December 15,
2006 arise) under Section 5.1(c) of the Receivables Sale Agreement by
virtue of Invacare's failure to observe at all times the financial
covenant set forth in Section 11.3 of each of the note purchase
agreements executed in connection with the Senior Unsecured Notes (as
defined in the Five-Year Credit Agreement) and incorporated by
reference into Section 5.2(k) of the Five-Year Credit Agreement
(collectively, the "Cross-Defaults") is hereby waived for the period
commencing on the date hereof through the earliest to occur of (i)
December 15, 2006, (B) any Potential Termination Event or Termination
Event other than the Cross Defaults, (C) the breach or nonperformance
by any of the Companies of any covenant, agreement or condition set
forth in this Waiver, and (D) the date on which any representation or
warranty in Section 3 hereof fails to be true and correct.
(b) Any Amortization Event or Potential Amortization Event that
may have arisen (or that may at any time hereafter prior to December
15, 2006 arise) under Section 9.1(c) of the Receivables Purchase
Agreement by virtue of the Cross-Defaults is hereby waived for the
period commencing on the date hereof through the earliest to occur of
(i) December 15, 2006, (B) any Potential Amortization Event or
Amortization Event other than the Cross Defaults, (C) the breach or
nonperformance by any of the Companies of any covenant, agreement or
condition set forth in this Waiver, and (D) the date on which any
representation or warranty in Section 3 hereof fails to be true and
correct.
2.2. Amendments.
(a) The definitions of the following terms in the Receivables
Purchase Agreement are hereby amended and restated in their entirety
to read as follows:
"Dilution Stress Factor" means (a) at any time the Servicer's
ratio of Total Debt to Adjusted EBITDA is less than 3.0, 1.75, (b) at
any time between September 28, 2006 and the Liquidity Termination Date
until the Agent otherwise notifies the Seller Parties, 1.75, and (c) at
any other time unless the Agent otherwise notifies the Seller Parties,
2.00.
"Liquidity Termination Date" means December 15, 2006 or such
later date as extended pursuant to the terms of this Agreement.
"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
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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 and at all times between September 28, 2006
and the Liquidity Termination Date until the Agent otherwise notifies
the Seller Parties, only 80% of the amount described in clause (a)(i)
shall be counted for purposes of computing the Loss Ratio.
"Purchase Limit" means $75,401,750.
(b) Clause (xv) of the definition of "Eligible Receivable" is
hereby amended and restated in its entirety to read as follows:
(xv) which is not subject to any right of rescission,
set-off, counterclaim, any other defense (including defenses
arising out of 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 and at all times
between September 28, 2006 and the Liquidity Termination Date
until the Agent otherwise notifies the Seller Parties, only 80%
of the accrued amount of contractual rebates shall be counted as
a contra pursuant to the foregoing clause (a),
(c) Schedule A to the Receivables Purchase Agreement is hereby
amended to deleted "$100,000,000" where it appears and substitute in
lieu thereof "$75,401,750."
3. Certain Representations. In order to induce the Agent and the
Purchasers to enter into this Waiver, each of the Companies hereby
represents and warrants to the Agent and the Purchasers that, after giving
effect to the waivers contained in Section 2 hereof, (a) no Termination
Event, Potential Termination Event, Amortization Event or Potential
Amortization Event exists and is continuing as of the Effective Date (as
defined in Section 4 below), (b) each of the Agreements to which such
Company is a party, as amended hereby, constitutes the legal, valid and
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binding obligations of such Company enforceable against such Company 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 and (c) each of such Company's
representations and warranties contained in each of the Agreements to which
it is a party is true and correct as of the Effective Date as though made
on such date (except for such representations and warranties that speak
only as of an earlier date).
4. Effective Date; Conditions Precedent. This Waiver shall become
effective as of the date hereof (the "Effective Date") upon receipt by the
Agent of (a) counterparts of this Waiver, duly executed by each of the
parties hereto, (b) a copy of a waiver of the Cross-Defaults executed by
the requisite lenders under the Five-Year Credit Agreement on terms and
conditions acceptable to the Agent, (c) a copy of a waiver of the breach of
Section 11.3 of each of the note purchase agreements executed in connection
with the Senior Unsecured Notes, duly executed by the requisite
noteholders, on terms and conditions acceptable to the Agent, (d)
counterparts of an amended and restated Fee Letter, duly executed by the
Agent, the Conduit, IRC and ▇.▇. ▇▇▇▇▇▇ Securities Inc., and (e) payment of
a fully-earned and non-refundable Waiver Fee (as defined in the Fee Letter)
in immediately available funds.
5. Ratification; Reaffirmation of Performance Undertaking. Except as
expressly modified hereby, the Agreements, as amended hereby, is hereby
ratified, approved and confirmed in all respects. By its signature below,
Invacare hereby consents to the terms of this Waiver and hereby confirms
that its Performance Undertaking remains unaltered and in full force and
effect.
6. Reference to Agreement. From and after the Effective Date hereof,
each reference in the Agreements to "this Agreement", "hereof", or
"hereunder" or words of like import, and all references to the Agreements
in any and all agreements, instruments, documents, notes, certificates and
other writings of every kind and nature shall be deemed to mean the
Agreements in each case, as modified by this Waiver.
7. Costs and Expenses. The Seller agrees to pay all reasonable costs,
fees, and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent) incurred by the Agent in
connection with the preparation, execution and enforcement of this Waiver.
8. CHOICE OF LAW. THIS WAIVER SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF NEW YORK.
9. Execution in Counterparts. This Waiver 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 taken together shall constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties have executed this Waiver as of the date
first above written.
PARK AVENUE RECEIVABLES COMPANY, LLC
BY: JPMORGAN CHASE BANK, N.A., ITS ATTORNEY-IN-FACT
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
JPMORGAN CHASE BANK, N.A., INDIVIDUALLY AND AS AGENT
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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INVACARE CORPORATION,
HEALTHTECH PRODUCTS, INC. AND
INVACARE SUPPLY GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
INVACARE RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
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